The DRM-free music era begins; What's next for Apple?

Summary:With Apple's iTunes update, the DRM-free era officially begins. The big question is what comes next for Apple?

With Apple's iTunes update, the DRM-free era officially begins. The big question is what comes next for Apple?

Apple move to sell DRM-free tunes from EMI may be a boon initially since other rivals are still saddled with clunky copyright protection schemes. Amazon plans to go DRM-free, but not until later in the year.

The longer-term picture is a little more unsettled. Here are a few items we're about to find out about:

  • Will music buyers pay more to ditch DRM? Apple is selling DRM-free music for $1.29. The DRM-free music sounds better due to a higher encoding rate, but ditching evil software is the big sell here. Will folks buy it?
  • How many people will upgrade an entire DRM library to DRM-free with one click? Will some iTunes customers upgrade by accident?
  • Will Apple's dominance be weakened without DRM? Copyright protection software helped tether iTunes customers to the iPod. As the world goes DRM-free that lock-in effect erodes. It won't happen overnight, but it is a risk. "While today's news is a positive for consumers, we believe it weakens one of Apple's long-term competitive advantages in the digital content segment. As we have noted previously, DRM-free content reduces the switching costs for consumers wishing to exit the iPod-iTunes ecosystem, which reduces barriers to entry for Apple's potential competitors," wrote J.P. Morgan analyst Bill Shope in a research note.

There won't be answers to those questions initially, but it does bear watching. For now, it's clear sailing for Apple--especially ahead of its developers forum the week of June 11. Morgan Stanley upped its stock target for Apple shares to $150 from $110.

Topics: Apple

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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