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Rumor: Apple Drops iTunes DRM, Enables 3G Downloads

There's an intriguing rumor ahead of today's Apple keynote at Macworld: The company has successfully negotiated with the major record labels to drop DRM copy protection from all tracks in iTunes. And, as a major bonus, it's likely to allow direct download of tunes over the airwaves to iPhones.

iTunes DRM has often been a bone of contention—it was part of the agreement Apple had made with the labels who, of course, own the track copyright and wanted to protect it, so the tracks had to also be tied to Apple hardware. Partly through this agreement Apple was able to create a flat-rate per-track model (broken briefly by the higher-resolution and DRM-free iTunes Plus tracks) so that every track cost the same. The word is that this may disappear under the new agreement, with hits costing potentially "more" than 99 cents, but less popular tracks selling for less—perhaps down to 79 cents.

New additions to the iTunes archive would be available DRM-free, and tracks in the archive that are currently protected would over time be converted too.

A different rumor ties in to this one: Over-the-air music downloads are apparently coming to the iPhone. Currently the device's own iTunes widget is limited to purchasing tracks when you're in a Wi-Fi zone, but 3G downloads would free-up users to grab tracks wherever they liked. That's going to be attractive to the labels, that imagine more spontaneous purchases of music by people who hear a track when out and about. Pricing for accessing tracks in this way hasn't been hinted at, but it's likely that they'll cost a little more—possibly to offset cellphone carrier's worries about data consumption.

It's not hard to imagine both these rumors slotting into a new negotiated agreement between Apple and the labels. And the fact that dumping the DRM would lift some of the legal challenges Apple's currently facing around the world—in Norway, for example, where there's a formal complaint about the in-built DRM tie between purchased tracks and Apple hardware—makes it seem a win-win for Apple.

It also seems a win-win for the recording industry. In one swoop the consumer's main bugbear with iTunes tracks goes away, and the labels get input into a potentially revenue-enhancing pricing scheme. With Apple via iTunes now the number one music retailer, and leaving even the once-mighty Walmart's onine DRM-free music store for dust, this all makes sense.

There's even the scope for a tie-in with a separate rumor regarding iPhone tethering. So far this hasn't been enabled, requiring mobile computer users to use a separate 3G dongle or find a Wi-Fi zone even when carrying a data-capable iPhone. There's a strong suspicion that during MacWorld an iPhone tethering plan for AT&T will hit the news—and it's arguable that if Apple's negotiated allowing 3G music downloads with the networks, then a data plan isn't so very different.

But these are just rumors, and as already noted, Apple is very good at surprises, and none of this may come true today.