Apple, EMI to Offer DRM-free 'Premium' Tracks, but No Beatles

As expected, Apple and EMI Group announced a deal yesterday to sell a large selection of the latter's music catalog on Apple's iTunes online music store, without anticopying (digital-rights management [DRM]) software. From next month, iTunes will sell DRM-free EMI songs with higher sound quality at 256 kbps, compared to the 128 kbps standard, but at a 30% premium: $1.29/song vs. $0.99/song. In a press release, Apple said iTunes customers can upgrade previously purchased EMI songs to DRM-free versions for $0.30/song. DRM-free means such songs from iTunes are playable on devices other than iPods. Also, due to the higher quality, songs will take up twice as much space. EMI also plans to offer DRM-free tracks to other digital music services. Analysts seem to agree other record labels will have to offer DRM-free tracks, especially if EMI's sales increase. Separately, The Wall Street Journal reports the European Commission sent a statement of objections to Apple and four music companies including EMI last Friday, regarding possible antitrust violations with the pricing structure of iTunes, in which prices vary by country. "Apple has always wanted to operate a single pan-European iTunes Store ... and we don't think Apple did anything to violate EU law," said a company spokesman. Shares of Apple gained 0.8% to $93.65 and EMI's OTC ADRs rose 3.5% to $9.00.

Sources: Press release, Associated Press, Bloomberg, Red Herring, The Wall Street Journal
Commentary: Steve Jobs Figures Dealmaking, Dollars Have Killed DRM • EMI Group To Sell Catalog on iTunes Without DRM Protection • Report: Warner Music Prepared to Sweeten Bid for EMI
Stocks/ETFs to watch: EMI Group plc (EMIPY.PK), Apple (AAPL). Competitors: Warner Music Group (WMG), Sony (SNE), Digital Music Group (DMGI), Napster (NAPS), Microsoft (MSFT). ETFs: Internet Architecture HOLDRS (IAH)

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.