Earlier this year, eMarketer released its Digital Downloading: Music, Movies and TV report, and predicted that digital music spending in the US would approach $5 billion in 2010, up from $1.9 billion in 2006.
The report stated: "Imposing stringent restrictions on how a consumer can use the digital products they purchase is not having the effect of securing revenue for the copyright holder, but pushing the consumer completely away.
"Restrictive DRM is keeping illegal file-sharing alive and well. The iTunes experience has shown the media sector that consumers are more than prepared to pay for online content. It is now time for media companies to show a little more trust in their customers and stop telling them what they cannot do, and begin listening to what their customers want to do."
Apparently, EMI was listening. The company's recent announcement that it would offer the bulk of its digital music catalog on iTunes DRM-free is an important step in the evolution of digital music.
Not only will iTunes users be able to play their DRM-free tracks on music players other than the iPod, Apple also announced that the DRM-free music will be available at higher sound quality than the DRM-enabled tracks. iTunes users will have to pay $1.29 per DRM-free track, but the DRM-enabled tracks will continue to be available for $0.99.
Apple CEO Steve Jobs predicted that "well over half of the 5 million tracks offered on iTunes today will be also offered in DRM-free versions by the end of this calendar year."
Senior Analyst Ben Macklin, who wrote the Digital Downloading report, says this means the death of DRM is at hand. Another eMarketer Analyst, Paul Verna, is more circumspect.
"On the surface, the EMI-Apple decision is a major step in the right direction for the music industry. It promises to stimulate the legitimate download market by giving consumers what they have long demanded: the freedom to do as they please with the music they purchase," says Mr. Verna.
"That said, the way EMI and Apple are implementing this experiment raises as many questions as it answers," he continues. "How will consumers react to the higher price points that EMI and Apple are charging for DRM-free tracks? Will the existence of multiple SKUs at digital retail confuse and alienate consumers? Does anybody really care about sound quality? Will other major labels follow EMI's lead? And, perhaps most importantly, will EMI's risky move pay off in the form of increased sales, or will it backfire by eliminating the last remaining barrier to digital piracy?"
Depending on how these questions are answered, eMarketer's $5 billion prediction could turn out to be conservative, especially if other major label groups follow EMI's lead and completely eliminate DRM from the online music space.