The iPod plays two kinds of music: music crippled with Apple's DRM and MP3s. If you want to cripple your music with Apple's DRM, you have to give Apple total control over your track-pricing. No other store can carry Apple-crippled music. Every time we buy an Apple-crippled track, it gets that much harder and more expensive to switch away from the iPod and iTunes.
For record companies, there are only two choices: sell Apple-crippled music and increase Apple's control over the online music business, or sell uncrippled music. Uncrippled music -- MP3s and other open files -- are superior to the crippled versions. You can play them on more devices and do more with them. No customer seeks out music because it's crippled -- DRM doesn't sell music. None of the iTunes customers bought music because they wanted music that was locked to the iPod and wouldn't play on competing devices.
People who don't want to pay for music just download it from P2P, where all the music is already available for free, without DRM. If you want to convince people to buy your music, you can't start by making it worse than the free stuff.
So it's inevitable that Universal would come around to this position. They're not selling DRM-free tracks through iTunes (where Apple charges a 30 percent premium) -- they're selling them through Apple's competitors. But since they're MP3s, they'll work in iTunes and on iPods, so Apple customers can get $0.99, DRM-free, iPod-compatible Universal music.
The offer of Universal’s music under the new terms is being framed as a test, to run into January, allowing executives to study consumer demand and any effect on online piracy. If Universal decides to adopt the practice permanently, it will probably pressure other record companies to follow suit. That could stoke a wider debate about how to treat intellectual property in the digital era. Universal’s artists include the Black Eyed Peas and 50 Cent.Link (Thanks, Dion!)
The effort is likely to be seen as part of the industry’s wider push to increase competition to iTunes and shift leverage away from Apple, which wields enormous clout in determining prices and other terms in digital music. A month ago, Universal notified Apple that it would not agree to a new long-term contract to sell music through iTunes.
Universal threatens to drop iTunes Store contract
Apple said to be in talks to buy Universal Music
Barenaked Ladies guy on Universal's DRM SpiralFrog service
Why Zune shouldn't pay blood money to Universal
Universal and Amazon to sell DRM-free MP3s
RIAA and Universal accused of extortion
Universal Music CEO: iPod owners are thieves