Apple, labels both win with DRM-free iTunes, tiered pricing:

Today, Apple promised that by the end of this quarter, all 10 million iTunes songs will be DRM-free, and released at the higher-quality 256 kbps iTunes Plus bitrate. This policy change applies across the board to all four major music labels (Universal Music Group, Sony BMG, Warner Music Group, and EMI) as well as thousands of independent labels.

In addition to that, Apple gave in and will finally allow labels to set the price of tracks to 69¢, 99¢, or $1.29 based on a “demand-based pricing system.” This is something the labels have been asking for since the beginning of iTunes.

Everyone’s a winner. Except, of course, for people who have MP3 players that cannot play AAC files…