Liveblogging the EMI press conference

Mgagh? Just five more minutes, mom. I’m awake, I’m awake. Good morning. We’re online with the EMI press conference with special guest Steve Jobs as we speak. The Wall Street Journal has pretty much stolen the press conference’s thunder by reporting that the issue at stake will be DRM.

So here we are. First of all, the options for the audio-only webcast are Windows Media and Real Audio; clearly Stevie J. didn’t have a hand in that. We’ll be updating live, so follow the jump for the latest.

Update: The webcast has now concluded. Read on for the entire event.

Came in a little late, since my MacBook doesn’t have RealAudio or WindowsMedia installed. Heard what I presumed was EMI’s CEO Eric Nicoli doing introductions. The live performance is actually music from the album The Good, The Bad & The Queen, which is by an unnamed band comprised of Blur/Gorillaz member Damon Albarn, Clash bassist Paul Simonon, former Verve guitarist Simon Tong and Afrobeat pioneer and Africa 70 drummer Tony Allen. This’ll be followed by a video of a new piece by The Chemical Brothers and then by the announcement.

Nice tracks. Interesting sound, definitely.

So here we go, into the announcement itself. EMI is committed to “embracing change” and developing products that consumers want to buy.

3 important components in digital music: good value for money, offer choice, simple and easy to use.

Consumers will pay more for a file they could use on any player. Ran tests in January making available standard and higher quality download. Higher quality tracks outsold standard by 10 to 1.

Premium digital downloads will be DRM-free; secondly, higher quality. Wholesale price premium, while premium albums will be at same wholesale price as standard album.

Talking about the report of the demise of the album. EMI still believes the album is very important, but many prefer to buy original tracks.

Facility to upgrade to premium from standard. Same with music videos, it sounds like.

The Good, The Bad, and the Queen will have new single enabled for download in high-quality, DRM-free.

iTunes is the first partner to support these products. Eric’s talking up Stevie J. “This is a man who takes aesthetics very seriously, indeed.”

And here’s Steve to do some talking.

“I just wrote down a few things I want to say…and then we’re going to answer questions.” Sure, Steve, it’s on a cocktail napkin, right? “The next big step forward. The move to interoperable DRM-free music.” Entire DRM-free catalog will be available in May. All music on iTunes currently DRM-encoded, and 128kbps AAC. He’s pointing out that the record companies have made $1.5 billion from iTunes, and the overhead is extremely low. “It’s all worked out very well.”

Taking things to the next level involves two issues: interoperable. Even though most users have run into this problem. Users want to know they have the choice. Second issues is quality: audiophiles can still tell the difference. Time to reconsider deliver higher audio quality than currently available.

New versions of songs will be sold alongside. DRM-free and 256kbps! audio quality. Virtually indistinguishable. $1.29/song. $1.29€/song; £.99. Vast majority will pay the additional money. You can set up iTunes to buy these automatically when they’re available. All EMI tracks will be available in this format, worldwide. iTunes customers can upgrade their entire library to the newer version for $.30/song. DRM-free albums with higher quality will be available at same prices. And, of course, the same versions that are available today will still be available at the same price.

Apple will reach out to all the other major and independent labels to convince them to go DRM-free. They estimate that more than half of the tracks on iTunes will be available DRM-free by the end of the calendar year.

“Some doubted Apple’s sincereity when we proposed a solution earlier in the year, because we had too much to lose buy breaking the propreitary bond between iTunes and the iPod.” Ha ha ha ha ha. “Doing the right thing for the customer. The right thing for the customer going forward is to tear down the walls. That starts here today.”

Eric Nicoli is back. They’ll be taking questions now.

“Sky News. When are the Beatles tracks going on? Will they be DRM-free?”
Steve: “I want to know that, too.”
Eric: “We’ll working on it, but we hope it will be soon.”

“Guardian. Doesn’t having a split system make things more complicated? Higher prices and two products?”
Steve: “People are going to have a choice and they’re going to make that choice, and you can set iTunes one way or the other. Why not offer one choice? We don’t want to take anything away. They can still buy exactly what they’ve been buying. I think the majority will choose the higher-quality DRM version, but we’ll find out.”

“BBC. Impact on the iPod-iTunes relationship in terms of putting music on other players?”
Steve: “The only music that has been in question is music bought off the iTunes Store. Can do the reburn CD trick. But we compete on having the best store and best players, and if customers agree, we’ll do well. If not, we’ll get a message that we have to work harder.”

Someone asked how this impacts the Norway consumer groups.
“We’re not offering anything online to customers that they can’t get on a CD today.”

Will mobile markets have DRM-free music?
Eric: DRM-free tracks available to all retailers around the world.

“Times. Are you giving the greenlight for people to share unprotected tracks?”
Eric: “We have to trust consumers. Some will choose to steal is inevitable. Doesn’t diminish our commitment to fighting piracy. At the same time, the key is to giving consumers the best possible experience. To trust them, to educate them. That way we’ll grow sales rather than diminish them.”

“Music Week. Talks with any of the other majors yet? Confident the others will follow?”
Steve: “Can’t speak for others. EMI is pioneering something that will become very popular. What we’re announcing here is providing the consumer nothing more than they get off every CD they buy. No CDs ship with DRM. Sony tried that; it didn’t work out so well.”

“Music Week as well. Some majors being more difficult than othres. Can you tell us who?”
Steve: “There’s always the leaders and the followers, but it’s a win for everybody. Consumers get what they want. Music companies make more by offering more value for more money.”

“Will you be pulling DRM from videos. Particularly Disney.”
Steve: “Video is different from music. Doesn’t distribute their content DRM-free. Different situation, wouldn’t hold them in parallel at all.”

“WSJ. What was the moment you decided to do this? Steve’s letter? Will the sales make up for the decline of physical music sales?”
Eric: “We knew Steve’s views before the letter. We know consumers find it frustrating. We expect sales to grow, we remain optimistic that digital growth will outstrip physical decline. Digital is still in its infancy. Opportunity is massive.”

“Financial Times. Fall in iPod sales because link is broken?”
Steve: People have always been able to take music from elsewhere and put it on their iPod, people have always been able to burn music and re-rip it. “Magical link” has not really been there. Based on the best-and-easiest-to-use music store and players. Trying as hard as we can to work with everybody to make best music store we can.
“Which other retailers besides iTunes?”
Eric: Hope that all digital retailers will embrace this.

“Will Apple buy out EMI?”
Steve; “We heard rumors EMI was buying out Apple, too. Neither is true.”

“What’s the point of DRM on £l.79 tracks? Why not remove it completely?”
Steve: “For those customers that are very price-sensitive. We don’t want to raise prices on anybody. If people want to pay that prices, we don’t want to tell them to pay more. We want to entice them into paying more from higher value.”
Eric: “Not everybody cares about sound quality, wants interoperability and needs it. But many do, and that’s where the opporunity is and we feel it justifies a premium.”

“Guardian. More flexible pricing on iTunes generally? Will consumers feel cheated?”
Steve: “Most people feel good about choices. The consumers can make it either way they want. This is more flexibility: two choices instead of one. Life is a balance between total freedom and simplicity. We try to strike the local maximums. Customers have really loved iTunes, we’ve done a pretty good job of that.”

“Other stores like eMusic or Napster’s subscription service? Will they have to go with £.79?”
Eric: “We don’t set retail price. Retailers can buy the premium or not. Products and prices are available to everybody.”

“Given that Warner is opposed to the idea of removing DRM? Is the Warner acquisition less likely? Is this the silver bullet that will turn EMI around?”
Eric: “You’ll have to ask Warner’s how they feel about this intitiatve. It’s a major step. I think we’ll benefit from it, but I don’t think there are silver bullets in this business. Digital growth is a very important part of our future strategy.”

“80GB iPod will hold 20,000 tunes at 128? How many will it hold at 256?”
Steve: “It’s proportional. Storage has been going up, prices have been coming down.”

“20% increase in price. How do you account for that? Same machines to compress tracks, so why does it cost more?”
Steve: “Not increasing the price, since you can buy the same product you bought yesterday. This is a new product that has more features. It’s not a price increase, it’s a second product that you get to choose to buy or not.”

And that was the last question. We’re wrapping up.

Phew. That was quite a big deal. Initial impressions? Positioning DRM-free tracks as a second product is very clever. People will probably pay more, and $.30 is not a huge increase. If the new tracks had just been DRM-free, I think people would have balked, but seeing as how they’ve increased the sound-quality to 256kbps as well, I expect them to sell incredibly well, since many people have talked about being willing to pay more for a higher-quality track.

And the more DRM-free tracks that get sold will no doubt help encourage other music companies to jump into the DRM-free market, since the one thing record companies hate is not making money. We’ll have to see if Steve’s prediction of half of the catalog on iTunes being available DRM-free by the end of the year is true or not, but I have a good feeling about it.

We’ll have more info and analysis on this issue as it develops. Stay tuned.