The LA Times (reg. req.) was first to report that Universal Music Group (UMG) will have significantly lower prices for digital music downloads (Net Music That's a Steal — but Not Stolen). Prices will reportedly be $.99 for a single and $9.99 for an entire album. The downloads will also allow some portability, such as burning to CD. These cheaper downloads will be made available using Liquid Audio's proprietary format and will be distributed through Liquid Audio's retail partners. See also C|Net News (Universal, Sony to trim download prices).
The new pricing by UMG for downloads is a welcome move. Although $.99 still seems excessive for a single, it is much better than the current offerings and shows that reality is finally starting to get through to recording industry executives. However, there is still a long way to go. In particular, it is not clear (as some who have commented on this news have said) that the downloads will be free of "crippleware" that restricts use of the song files...
The LA Times article does say that it will be permissible to download music and burn it to CD or, presumably, transfer it to a portable device such as an MP3 player. However, that does not mean that the downloads will be free of all restrictions. Liquid Audio, the system UMG will use, permits rights-owners to control the number of times a song may be burned to CD or transferred to a portable device. A Liquid Audio spokesperson said that the average number of burns their clients permit to CD is 3 (that is when they permit burning to CD at all). I explained why any restrictions on music portability will not work in this LawMeme article (Digital Rights Management Roundup - SDMI Zombie Pronounced Dead, Again).
A UMG spokesperson would not confirm the LA Times article, nor respond to questions regarding any possible restrictions on the ability to burn. The spokesperson would also not confirm the pricing, but said the new pricing structure would not be officially announced until later this summer.
However, the fact that UMG has chosen Liquid Audio as the download format is not very positive. If UMG did not plan to have crippleware restrictions, it makes little sense for them to adopt Liquid Audio as a format. One might argue that Liquid Audio is a superior format or smaller in size, but it seems likely that these advantages would be more than outweighed by the transaction or percentage based fees UMG will have to pay to Liquid Audio for every download.
One possibility for choosing Liquid Audio that the articles raise is that UMG intends to embed watermarks in every track in order to permit tracking of those who share music via P2P networks. However, it isn't clear why watermarking couldn't be done in another, less-expensive format. Watermarking also doesn't make a lot of sense. Providing individual watermarks for every downloaded track would be immensely expensive. Furthermore, it will not really help identify who the pirates are. For example, I download a song, burn it onto CD for use in my car. My car is broken into and my burned CD stolen and subsequently used to put the music on P2P. Such scenarios may be unlikely, but they give those accused of copyright infringement another significant layer of defense. Moreover, even if the tracking works (highly dubious assumption), considering the number of other paths for music to get onto P2P networks, embedding individual watermarks seems an awful lot of overhead in a vain attempt to track piracy.
Therefore, until UMG states definitively that they are not adding any crippleware restrictions, I remain unconvinced that recording industry executives have a clue.
Additional Resources
Slashdot readers debate the merits of this move (Universal, Sony Cutting Prices on Downloaded Music).
The Shifted Librarian welcomes the lower prices (Admitting It Is the First Step on the Road to Recovery.... ).