“If non-DRM’ed music sells (and the premium is $1.29 vs. $0.99), then the other labels will wake up and smell the dinero.”
I wonder if the premium is for the 256kbs quality or the no DRM? Both? This does not seem to provide any material cost incentive to purchase digitally versus purchasing the CD itslef as a 12 song album would be around $13.99 (they’ll likely discount the $15.48 per song to $13.99 or so). If you have the CD you can record it in any format you wish ( AAC, mp3, Ogg Vorbis, whatever) and at any bitrate you wish. I’ll be interested to see how this plays out...
For one, there's convenience. You don't have go to to a store, and you don't have to rip your CD. If you still use CDs, you can still burn any CDs you want with only a practically imperceptible lower quality than an original.
There's also the ability of per-song purchasing. Often, several of the songs on a CD are just filler. But Apple currently prices albums at 10x the song price, so I'd expect $12.99 for an album.