DRM Free iTunes!!

Yes!  It is true.  Apple announced today that the entire iTunes library will soon be DRM-free.  Now, you can play any and all iTunes purchases on any device or computer you care to.  All I can say is HALLE-friggin’-LUAH.

It appears that a combination of consumer complaining, Amazon and Wal-Mart’s move to DRM-free, and an agreement by “the big four” to lighten up on rights helped to force Apple’s hand in creating a stir at MacWorld that would garner enough attention to over shadow the speculation on Steve Job’s health.

If that’s not enough, Apple also announced that tracks will now be offered at different prices, with older catalogue items going for 69 cents, while newer releases going for $1.29.  Some tracks will still be offered at 99 cents, but Apple assures that most of the catalogue will be at the lower price point, lowering overall iTunes costs.  Supposedly, for 30 cents a track, you can “remove” DRM from existing iTune purchases in your library, but I don’t think that will last for long.  Why am I paying an additional 30 cents for a song I already bought and they already paid licensing on?  Um, no.  However, all in all…great news.

So, why now?  Well…..glad you asked.  You see, part of the announcement also detailed how Apple will begin to offer iTunes via 3G technology to it’s fast-growing population of iPhone-aholics.  That provides the labels with a captive audience of 5 million tech-savvy, heavy spenders.  Oh, and by the way, the correlation between music listeners and iPhone users is extremely high.

Will opening iPhones to over-air, iTunes purchases at affordable prices keep the sinking music industry afloat?  It will certainly provide a short-term spike in sales, however with music now DRM-free, sharing will be easier and may actually discourage purchases among those technophiles who can simply transfer music between devices.

One thing is sure — the music industry is morphing, changing.  While it won’t go quietly into the dark night, it is becoming more conducive to the market…as it should be.

  Apple Marketing SVP, Phillip Schiller, gives us the details

 

iPhone Revisited

A little over a year ago, I published a post entitled, Catalyst of Change, regarding the newly introduced iPhone and the anticipated impact the exclusive AT&T/Apple would have on the wireless market and technology, as a whole.

This week, I picked up a USA Today newspaper while traveling on business and the Money section had a substantial article on AT&T’s relatively new CEO, Randall Stephenson. 

USA Today

Stephenson is pictured with Apple’s new iPhone 3G and the article by Leslie Cauley explains that the affordable $199 pricetag on the new sensation is his brainchild.  Now, consider this…analysts estimate that AT&T is paying about $300 per device, so they are basically taking a $100 loss on each “unit” sold.  However, the “Unlimited” plan, which most subscribers sign up for goes for $129.99 per month, so AT&T recovers their “loss” in the first month, with an upside of nearly $3,000 per user over the 24 month contract.  AT&T has estimated that it has doubled it’s 3G users in the past year (from 8% to 18%, with substantial potential), so there has been tremendous movement to higher priced plans that are more than paying for infrastructure and any subsidies on equipment.

While I still think that the iPhone has forever changed the landscape of the cellular phone industry despite no previous experience in that arena, the initial hype has not proved to deliver the goods.  AT&T indicates that is has sold more than 2 million original iPhones in the last year.  While this figure makes the iPhone the best-selling by a country mile, it’s far short of the Goldman Sach’s prediction of 14 million sold by the end of 2008 through the exclusive AT&T channel.  Also, 1.4 million (or 70%) of those were sold in the first 90 days of release.  That means that while AT&T averaged over 450,000 units per month for the first 90 days, that number drops dramatically to an average per month of 65,000 for the remaining 9 months.

Now, perhaps many consumers were waiting on the next generation of iPhone as it has been reported that first weekend sales of the iPhone 3G doubled the initial launch (estimated 500,000, compared to an estimated 270,000 for the original iPhone).  I personally know four people who stood in line.  No doubt, the $199 vs. the $599 price tag helped.  However, Apple has once again created a “must have” in the marketplace.  Stephenson was astute enough to realize that if he drops the price point for a time and provides more “evangelists” out there, demand may actually increase instead of falling off as the original device did.   Either way, Apple needs to keep the innovations coming. 

Stephenson also announced that Apple and AT&T have extended their “exclusivity” agreement through the year 2010, replacing the deal originally struck between AT&T and Apple that gave Apple a cut of the iPhone service revenue.   Not only does this exclusivity hurt other wireless providers in the present tense, it forces them to spend development dollars on 3G and 4G capabilities when they can’t even provide the premier Smart Phone product, on their network.  Sure, there are/will be other 3G and 4G handsets, but let’s face it…Apple has set the standard, particularly at the low $199 price point set by AT&T.  That’s comparable to the cost of my BlackBerry, that has tons less functionality.  And, just think if Apple and AT&T agree to extend the exclusivity past 2010?

AT&T self-proclaims that it is “all about wireless”.  I take this to mean that traditional land-line telephones will continue to be replaced by Voice-Over Internet Protocol (VOIP) and wireless technologies.  I can envision the day when each person will have one universal phone number that can be accessed via computer, Smart Phone and even, TV.  And, speaking of those innovations….it appears that Steve Jobs and Apple have that well in hand….

Apple Patent for Broadcasting via iPod/iPhone

Perhaps finally, we’ll come into the 21st century.