Apple Unveils Higher Quality DRM-Free Music on the iTunes Store (Reuters story). EMI's entire catalog, about 20% of the iTunes music catalog, will be available as DRM-free AAC files for $1.29, and iTunes customers that already bought DRM-encumbered $0.99 versions will be allowed to upgrade for $0.30. And the newer files are higher quality, too.

Something other reports are missing, but can be seen in EMI's press release: Full albums will be available at the higher bitrate and without DRM with no change in price, effectively a discount on albums full of the higher quality DRM-free tracks.

While this is in line with Steve Jobs' "Thoughts On Music", it's still a huge surprise. Some doubted Jobs would back up his claim that they'd be happy to distribute music without DRM. Many doubted any of the "big four" music companies would go along with it. And this particular implementation—two different versions of the same song at different prices—runs counter to Apple's tendency to go to great lengths to keep pricing simple, one rationale many people assumed was partly behind Apple's unwillingness to charge anything other than $0.99 per song while the music companies were demanding prices be raised.

This sounds like a trade: Apple will charge an extra $0.30 per song and presumably give EMI a larger cut, and EMI will allow Apple to distribute DRM-free music. This is huge for customers, especially music collectors, because they can buy out the DRM, or they can live with the DRM at the old price. And it benefits Apple, because it opens up a new market for a more expensive product without impinging upon current customers.

This is also huge because it opens up a category of iTunes-purchased music that can work on non-iPod music players, where previously iTunes-purchased music was iPod-only. Beyond the why-wouldn't-I-just-buy-an-iPod piece of junk portable players, this also includes computers running Linux. Governments concerned that the iPod-bound DRM gave Apple an unfair market advantage in the music player market have less to worry about.

Something tells me many people will stick with the cheaper iPod-bound DRM'd music, just as something tells me that many people will continue to buy iPods even if other players are compatible with (more expensive) iTunes tracks. For customers that ignore the DRM issue (as many, many have so far), the new iTunes pricing still favors iPods, so it's still not a level playing field.

This is the kind of move that will get me buying all my music from iTunes. Will the other music companies follow suit?