Inside The Major Label Negotiations With iTunes

SEATTLE (Hypebot) – Two years after Steve Jobs declared that DRM was dead and a year after Amazon launched its DRM-free download store with all four major labels, the vast majority of tracks on iTunes are still delivered with a little piece of code that restricts transfer and use. What is taking so long?

Perhaps deep down Steve Jobs doesn't really want to unlock iTunes. After all, Apple has profited greatly from the closed loop between the iPod and iTunes. But since early summer, reports have come from all corners that iTunes, which currently offers only EMI and some indie product DRM free, was very close to a deal with the other three major labels to drop restrictions completely.

Months later there is still no deal. Sources tell Hypebot that each label is looking for a different concession before they allow iTunes to drop DRM:

Warner Music Group wants variable pricing on the track level including some hit product above $.99 cents.

Sony BMG wants to work with iTunes using the agency model. As it is with Rhapsody, Amazon and others, Sony BMG is the actual seller of tracks and iTunes would be the agent delivering them. Sony BMG's concern is that competition will drive track prices lower and the agency model allows them to maintain complete control.

Universal wants watermarking on the individual track purchase level. Apparently other download stores have agreed or are close to agreeing to do the same. How it will affect consumers remains unclear.

Three major labels with three very different sets of demands. Will Steve Jobs bend that far? Will the labels blink? It's hard to see why either side is in any hurry to amend their position. After all, iTunes with DRM already sells more tracks than anyone else and consumers who want their downloads DRM-free now have multiple alternatives.