Amazon MP3 has the only digital music catalogue that offers DRM-free tunes from all four major labels, with around 3.3 million tracks in the library, they are packing some weight. If that fact doesn't have Apple quaking in their boots, the competitive pricing should. We couldn't care less how Amazon and Apple get down and dirty, but as they are bound to be set for a fight, teeth gnashing and all, it can only mean good things for customers. DRM-free music will have a bigger global presence, and that should solidify its worth in the consumer market. Also, the ensuing price war is not going to be too bad either. After all, iTunes surely cannot keep their offerings priced above the competition, whilst simultaneously offering DRM gimped and comparatively expensive ($1.29), DRM-free tracks. It's about to get interesting—watch this space. [Amazon]

Monday, in fact, is the day the service goes live, and we cannot hold our wee we're so excited. Initially, only Windows Vista and XP will be supported, but the Macboys and girls see some action on March 18th.

The system will work by tracking all downloads, royalties will then be issued accordingly. It isn't too clear how that revenue will be generated, but expect some anal advertising to bombard a PC near you if you do give it a whirl. Still, we can't help our cynical judgement chiming in—how did Noah get two of every species on a wooden boat? He didn't—do you know what I mean? Nevertheless, we wait and hope for a legal, free, P2P music service, but we think eternal world peace is a little more likely by Monday. [Boy Genius Reports]

Right now, though, only two labels are watermarking tracks—Universal and Sony BMG. EMI and Warner aren't lacing their files yet, but it's a definite future possibility, and the watermarks could be used in conjunction with a filtering plan like AT&T's, which was recently confirmed by an AT&T exec. Ironically, Microsoft doesn't support network filtering, so we wonder how it would feel about its new, patented digital watermarking tech being used for the cause. [Wired, Digital Home Thoughts]

No wonder labels don't want to deal with iTunes, this kind of deal is pure money: Imeem's paying the labels so that its users can do free promo work for them! Why pay to advertise your artists when someone else can pay you to do it? Hell, users even do all of the uploading work. If you recall, this kind of arrangement's familiar to Universal—they got kickbacks on every Zune sold—and more immediately, they've got a service going with Nokia that intuition says they're not hooked into for charity or a good time on your part.

While this deal's not really making too much headway in their battle against iTunes, it shows they're looking pretty much anywhere and everywhere that'll make 'em a buck while they look for an endrun around Steve. They probably won't get his contract with the devil canceled anytime soon, but it looks like they've found that internet thing they were looking for. Maybe they'll find that "Facebook" thing next. [WSJ]

To go all Energizer bunny and keep beating the drum, the only way they're going to right the ship to continuing sailing on oceans of green is take their own CEO's diatribe on the piss-poor state of the industry to heart. His past remarks show he's clearly less clueless than the CEO of the largest record label, and he's managed to keep Warner as the only Big Four label still publicly traded.

On the other hand, for all his acuity, perhaps what he really needs is some common sense and maybe some face-time with us common folk consumers who just wanna be able to buy his product with reasonable terms (no DRM) at decent prices. [Yahoo!/Reuters, Flickr]

"There's no one in the record industry that's a technologist," Morris explains. "That's a misconception writers make all the time, that the record industry missed this. They didn't. They just didn't know what to do. It's like if you were suddenly asked to operate on your dog to remove his kidney. What would you do?"

Personally, I would hire a vet. But to Morris, even that wasn't an option. "We didn't know who to hire," he says, becoming more agitated. "I wouldn't be able to recognize a good technology person — anyone with a good bullshit story would have gotten past me."

We expected our business would remain blissfully unaffected even as the world of interactivity, constant connection and file sharing was exploding. And of course we were wrong. How were we wrong? By standing still or moving at a glacial pace, we inadvertently went to war with consumers by denying them what they wanted and could otherwise find and as a result of course, consumers won."

He then went on to wag his finger at the mobile industry for offering content that's "boring, banal and basic," telling them they need to step up or suffer the same fate as his own realm:

"People want a more interesting form of mobile music content. They want it to be easy to buy with a single click - yes, a single click, not a dozen. And they want access to it, quickly and easily, wherever they are. 24/7. Any player in the mobile value chain who thinks they can provide less than a great experience for consumers and remain competitive is fooling themselves."

Anyways, we totally agree with him up to that point: The music industry should get with the program, open up new avenues of sales with reasonable prices, decent bitrates and no DRM. Tossing "ringtones, videos and other combinations" in with albums isn't really more choice, and it's not going to save your business. If you're so enthralled with the iPhone "throw[ing] all the accepted notions about pricing, billing platforms and brand loyalty right out the window," why don't you follow suit?

And yeah, the mobile industry should offer up content we actually want, without gouging the hell out of us just or locking it down tighter than Maid Marian's knickers in Robin Hood: Men in Tights just because it's on our phone. [Apple Insider, Flickr]

As Idolator's editor had guessed, the shitty 160kbps files should've been a tipoff something else was in the works besides the $80 feel-good bonus-laden package. Which, had fans known a regular CD release is coming out, would they have dropped that much coin? Some, sure, but all? And what about the poor bastards that paid full price (or more) for the middling quality MP3s?

What makes the move so goddamn dirty is that it was complete subterfuge—had they said they were planning a CD release in the first place it wouldn't be so bad. Instead, they cheated fans and rode a sky-high wave of good press while planning to do the same old, same old the entire time. There's no way I'm buying their album now, in any form. It would've nonetheless made for a more interesting experiment if they'd foregone the traditional channels altogether, a bold break rather than a toe in the water. [Financial Times via Idolator]

The thing is, iTunes is kind of a crappy "control" in this little experiment if the only variable being tested is the presence of DRM, because its sales dwarf every other store in the test. Moreover, Universal's buying AdWords to drive traffic to the DRM-free downloads, throwing in yet another variable. It doesn't line up very well with the scientific method I was taught in high school.

Reading between the lines, it seems clear that what's really being tested isn't DRM-free downloads, it's the non-iTunes market—is it possible to really move digital music without the iTunes/iPod machine?—and Universal's ability to flex its atrophying muscles.

EMI's move to DRM-free tracks months ago was dismissed by some as a risky and desperate play, a sign of its weakness as the smallest label of the Big Four—its shareholders recently approved its sale to a private equity firm. Universal, on the other hand, is the biggest label in the world.

That doesn't mean it's not a sign of weakness. iTunes isn't the only store that's not a part of the test: None of the participating outlets have hardware linked to it. If iTunes was the only control here, why isn't Zune a part of the game? Where's eMusic for that matter? Universal looks like its angling to promiscuitize the digital music market—make the same music easily available from many sources that will play on any device—in order to make labels still matter, and stave off its own impending irrelevance.

The broader, more positive take on the move—which isn't necessarily divorced from the other one—is that the industry is beginning to realize they don't have a choice: DRM-free is the only way to really spur the digital music market, and ultimately for them to even hope to generate the kind of revenue they used to. This rosier outlook would include, in our opinion, Universal selling DRM-free music on iTunes at some point in the future.

Will the two remaining Big Four labels follow suit and explore DRM-free downloads? Undoubtedly, this as much of a test for Warner and Sony BMG as it is for Universal. If Universal pulls the plug in January (and Sony and Warner will know before we do), probably not, unless they're looking for an edge against the competition. If this test becomes policy, it seems safe to say that left with little choice, the others will fall in line in short order.

From there, the real question is the iTunes question: What are the labels going to do about it?

Universal's full press release:

CHART-TOPPING HITS MARK OPEN-MP3 TEST BY UNIVERSAL MUSIC GROUP (UMG)
MARKET LEADER REMOVES DRM PROTECTION IN THOUSANDS OF TITLES DURING TEST
PARTICIPANTS INCLUDE GOOGLE, BEST BUY, RHAPSODY, AMAZON.COM, WAL-MART & PURETRACKS, AMONG OTHERS

New York, New York...Universal Music Group (UMG), the world's leading music company, today announced that it is continuing the testing of digital sales of tracks and albums without digital rights management (DRM) by making thousands of its albums and tracks available from its digital repertoire in MP3 form without DRM enabling, for a limited time.

"Universal Music Group is committed to exploring new ways to expand the availability of our artists' music online, while offering consumers the most choice in how and where they purchase and enjoy our music," stated Doug Morris, Chairman and Chief Executive Officer of UMG. "This test, which is a continuation of a series of tests that UMG began conducting earlier in the year, will provide valuable insights into the implications of selling our music in an open format."

As UMG's most comprehensive and extensive testing to date, the experiment will run from August to January and analyze such factors as consumer demand, price sensitivity and piracy in regards to the availability of open MP3s.

MP3s can be played on a full range of devices including dedicated MP3 players, mobile phones and the iPod. Regardless of the outcome of these tests, UMG will continue to support innovative digital models such as subscription and ad-supported services which rely on DRM as an enabling technology.

Albums and tracks that will be available during this test run the gamut from artists such as Amy Winehouse, Fall Out Boy, 50 Cent, Black Eyed Peas, Daddy Yankee, Mika, The Pussycat Dolls, Gwen Stefani, Maroon 5, Dr. Dre, Don Omar, Sting, Sugarland, Diana Krall, Paulina Rubio, Shania Twain, Nelly and Prince, to Bing Crosby, Elvis Costello, Reba McEntire, Count Basie, Dizzy Gillespie, Stevie Wonder, Johnny Cash and Patsy Cline, among many others.

Participants including Google, Wal-Mart, Best Buy Digital Music Store, Rhapsody, Transworld, Passalong Networks, Amazon.com and Puretracks, will offer downloads to consumers in the DRM-free audio format of their choice in a variety of bit rates. For the most part, the DRM free downloads will be offered at standard wholesale prices.

As part of this test, Universal will also be driving traffic to DRM-free downloads using Google's AdWords(tm) advertising program. Google ads will connect consumers directly to digital retailer gBox, Inc. (www.gbox.com) download store making the search and buying process as simple as possible. Because many consumers are searching for music and music related news and information online, Google is a powerful way to drive consumers to this test.

In addition, DRM-free downloads will also be available through artist and label-branded websites, including will.i.am.com, sum41.com, evefans.com, www.common-music.com, ryan-adams.com, blaqkaudio.com, dianakrall.com, sectionquartet.com, as well as defjam.com, islandrecords.com and classicsandjazz.co.uk, among many others.

Paul Jessop, CTO of the RIAA, told Ars after the talk that the labels could "all fold tomorrow, [or] they could all hold out." We're glad that that's sorted out. Nonetheless, the pressure's on—from consumers, from Apple, and recently, from EMI, so holding out's looking less and less feasible if the labels want to get their product out there and into our ears. – Matt Buchanan

Exec: Music labels "about to cave in the next six months" on DRM [Ars Technica]
Image via Flickr

One unnamed record exec actually admits that "EMI struck a deal that puts all of us at a disadvantage." More interesting is the exec's subsequent nugget that "If Universal goes, then everyone has to follow." Reuters hints that Universal is in fact contemplating a DRM-free partnership with...Amazon. The labels are clearly wary of the monster 100 million-selling iPod/iTunes machine.

Given that Apple has the upper hand here—one that seems to be getting stronger—and will probably be taking from the labels at the negotiating table rather than giving, why has "there has even been talk of [the labels] getting a cut of sales of iPods themselves"? It's never going to happen. Ever.

If "privately, executives accept that following EMI's move it is only a matter of time" why not go ahead and make the move and start chalking up more sales online now, rather than later? It would be in their best interest to take the initiative while they still wield a fair amount of bargaining power—Steve smells weakness, and if they crawl back later, he's going to take them for the ride of their lives. – Matt Buchanan

Apple seen having upper hand in music negotiations [Reuters via Mac Rumors]

The other companies have already started talking with Apple or are about to, and they're also leaning on Apple to introduce such a model, believing it would "increase consumption of music," as well as entitle them to a monthly royalty check much bigger than the ones they collect from other services with subscriptions, given iTunes' 85 percent market share.

While Jobs could rally public support last time (and probably again) to shoot down the variable pricing structure—who wants higher prices?—it'll be interesting to see what kind of argument he could muster against a subscription model, if in fact, Apple still isn't interested in it. What do you guys think? – Matt Buchanan

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The Times claims that the move shows the "recording industry is recognizing that it might have to loosen its control to attract the giant audience found in largely unregulated corners of the Internet." Wrong.

I don't see how freely distributing what amounts to unprotected ads, taking advantage of users' bandwidth for distribution, is loosening control or "rethink[ing] the rules of distribution."

Nothing has changed, other than that the ads are no longer fake files from MediaDefender which promote Coke—now they're just promotional material for the labels themselves. Utter garbage. – Matt Buchanan

Music Labels Offer Teasers to Download [NYT]