I was walking out of a fun little Palo Alto cafe yesterday after having lunch with a friend (also a music biz guy) when I spotted an abandoned Wall Street Journal. The Marketplace section was on top, and in the middle above the fold were pictures of two pretty gorgeous models. But that's not what caught my eye.

The headline that grabbed my attention was this: In a Turnabout, Record Industry Releases MP3s.

So I picked up the paper, brought it home, and read with interest the story that starts like this:

The music industry has long resisted selling music in the MP3 format, which lacks the copy protections that prevent songs from being duplicated endlessly. But now, Blue Note Records and its marquee artist, jazz-pop singer Norah Jones, are selling her latest single through Yahoo Inc. as an MP3—despite the risk that may add to piracy problems.

It took a little bit of looking around at Yahoo!, but I finally found the song and, being your dutiful blogger/reporter (and a Norah Jones fan), I bought the song. Same price as iTunes, 99¢, and a bit rate of 192K. In what I can only think of as somebody trying hard not to leave any money on the table, the folks who are selling the Relient K MP3 through Y! Music have two versions available: 128K for 99¢ and a 320K "High Quality" version for $1.25.

Some of you out there can probably tell the difference between a 128K MP3 and a 320K MP3, and if you can you are either listening through incredible headphones or you have names like Spot or Rover. But what's 26 cents between friends?

Anyway, that's not the point. The point is that Record Labels, who have a very strong vested interest in keeping things exactly like they were in 1986, are experimenting with selling MP3s that do not have DRM (digital rights management to the techies and lawyers, copy protection to most of us) embedded in them.

Granted, they are only dipping a toe or two in the water, and they are doing that with Jones, Relient K, Jessica Simpson, Jesse McCartney and Panic at the Disco. An interesting mix that speaks to the philosophies of various labels.

(How many of you thought Panic at the Disco was on an indie label, by the way? If you look at their MySpace site you'll see their label name is Fueled By Ramen, which certainly sounds indie, and you'll see that their "label type" is indie, but FBR is part of Atlantic Records, which itself is part of Warner Music Group. They are no more independent than a married man on a business trip who "forgets" his wedding ring.)

And of course that's not the point either. The point is that Record Labels are finally admitting, in a very cautious, very measured way, that it really wasn't piracy that has been killing them for the last 10 years.

By the way, one of the fun things on the Y! Music site where you can buy these unprotected MP3s is some language that says, "Want to know why MP3 downloads are way cooler?" The first reason they give is that these files will play on any MP3 player, including an iPod. Now that's market power. And a very soft slap at Apple, whose iTunes songs will not play on any MP3 player.

But that's also not the point. The point is that Record Labels, who have leaned far too heavily on lawyers and far too lightly on consumers, IMHO, now understand that DRM doesn't stop piracy but does help technology companies (Apple) control the music world. And they don't like it.

Maybe, just maybe, those of who make music and those of us who want to buy MP3s will benefit from this great awakening. And maybe the Record Labels will too.