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ITunes to Sell Songs Without Restrictions
Four Record Companies Back Tiered Pricing Plan

By Mike Musgrove
Washington Post Staff Writer
Wednesday, January 7, 2009

Apple kicked off its final Macworld trade show in San Francisco yesterday with announcements about new versions of the company's photo management software and an update to its productivity suite. But in true Apple tradition, it was the company's "one last thing" that had people talking: ITunes will now sell songs without any restrictions and at three prices: 69 cents, 99 cents and $1.29.

During the keynote, Philip W. Schiller, Apple's vice president of worldwide marketing, announced that music from four major record companies would be available through iTunes without the anti-piracy restrictions, allowing Apple to move away from a uniform price plan in which all songs were offered at a standard rate of 99 cents.

Software restrictions on song files have been around since the advent of the digital music era, as some music publishers sought technological means to keep their products from being easily circulated by pirates on the Web. Some iTunes rivals, such as Amazon.com, have in recent years begun offering songs that are free from such "digital rights management" controls. Record label EMI agreed to let Apple sell its music free from anti-copying restrictions in 2007, but other major labels had been slower to allow their music to be sold DRM-free.

Phil Leigh, senior analyst at the Tampa-based market research firm Inside Digital Media, said that the move represents an industry shift toward song file formats that can be easily copied or played on any digital music device.

"It looks like the music industry is saying that DRM-free tracks are the way to go, that's the industry standard from this point forward," he said.

Record companies will now be able to charge more for popular new songs, said Leigh, though their older music will be available from Apple at a cheaper price than before.

"More songs will be offered at 69 [cents] than at $1.29," Schiller said.

Customers who have already purchased songs from iTunes will be able to pay 30 cents per song to "upgrade" their iTunes music collection to a restriction-free format if they choose.

The iTunes music store, which has been online for six years, has rung up total sales of 6 billion songs, according to the company. The service holds a library of 10 million songs today, 8 million of which are now available as "iTunes Plus" files. The company intends to make its entire catalog available in the DRM-free format, as negotiations with music publishers for the right to do so are finalized, by the end of March.

The iTunes announcements drew the loudest applause from the audience during the presentation, in which the company highlighted new features such as facial recognition software built into an upcoming version of its photo management application.

Schiller took the stage in place of Apple chief executive Steve Jobs, who this week disclosed a "hormone imbalance" as the reason for a dramatic weight loss in recent months that has left investors and Apple watchers concerned about the company's future. The company announced last month that it would not attend the Macworld trade show after this year.

Staff writer Rob Pegoraro in San Francisco contributed to this report.

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