Bring on the MP3 Price War

With Amazon's entry into the DRM-free MP3 download business, are signs pointing the floodgates finally opening for music that's free of barbaric restrictions? It certainly seems that way now that half of the Big Four record labels are offering DRM-free tracks (though Universal is doing so only as a part of a six-month experiment), leaving only Warner and Sony as the sole DRM holdouts. (Sony, of course, will almost certainly be the last to cave in. I'd guess 2010 before it finally comes around and only after witnessing a market share that plummets to the cellar.)

But now that DRM is finally on the way out, is this good news for MP3 pricing, as well? It certainly seems that way. Amazon is already undercutting Apple's iTunes (by over 30 percent on many tracks), and if other big players can get into this game, that might drop another 15 percent or so. The studios reportedly earn 70 cents on every track sold, but if online sales volume increases at the pace it has been in recent months, there's no reason the retailers couldn't put some pressure on the wholesale price, as well. Also, the labels themselves could get into this game on a much bigger scale than they have in the past, bringing down prices ever further. (Well, maybe that part is just wishful thinking.)

What we need now is a little more competition here. TheStreet.com notes that eMusic has long been selling DRM-free tracks from lesser-known artists for as little as a quarter each. Obviously they're dealing with companies that don't have the dominating leverage of the EMIs and Warner Musics of the world, but that 25 cent price point could become a real thorn in the industry's side sometime... and not too long from now.

LINK: Let the MP3 Price Wars Begin