thomas fitzgerald.net

Steve Jobs’ open letter, “Thoughts on Music” which appeared on Apple’s Hot News section of the company’s website has caused an earthquake in the news. What could pass for a blog entry has made headlines around the world, unprecedented in it’s openness from the normally tight lipped Apple. In the letter, a frank discussion of the issues of interoperability of digital music, Jobs mulls the potential options to satisfy those calling for Apple to open up iTunes and the iPod. His conclusion being that the best approach is to abandon DRM all together. A bold move from the world’s largest provider of DRM encoded content, and even more so a brilliant tactical move. With Apple facing pressure over iTunes in Europe and its contracts with the Record Labels up for re-negotiation, Steve Jobs has firmly put the ball back in the music industry’s court. But will it make any difference?

There are very few fans of Digital Rights Management outside the music industry. The problem with DRM is that it was a knee jerk reaction to the problem of internet Piracy that clearly wasn’t fully thought through. In the end DRM only serves to frustrate consumers, and does nothing to fight wide scale piracy because all music is already available DRM free on CD. Jobs writes:

“In 2006, under 2 billion DRM-protected songs were sold worldwide by online stores, while over 20 billion songs were sold completely DRM-free and unprotected on CDs by the music companies themselves. The music companies sell the vast majority of their music DRM-free, and show no signs of changing this behavior, since the overwhelming majority of their revenues depend on selling CDs which must play in CD players that support no DRM system.”

Of course Record companies have tried repeatedly to enforce some kind of copy protection onto CD’s without success. The most infamous of which is the Sony Root-Kit fiasco.

The problem with the idea of DRM free downloads is that the record companies and the entertainment industry in general has always fought to resist the effect of the Internet on their business. They have been dragged kicking and screaming into the Internet age, while their complex system of international distribution rights and licensing deals is grossly out of date in a global economy. Rather than modernize its business the industry is using technology, litigation and law enforcement to force the world to conform to its out dated business model.

Most consumers believe that when you purchase something it should be yours to do with as you please. The record companies on the other hand see it differently. DRM implies a model more like software, where you purchase a license to use it rather than purchasing it out right. All this is stemming from a so-called drive to kill piracy. They are slowly and deliberately eroding the concept of ownership. Restrictive and aggressive copy protection will not fight piracy though, if anything it encourages it. Providing easy accessibility to reasonably priced content without treating your customers like criminals is the only way that piracy will ever be fought, and even then, all the technology in the world will never completely stamp it out, so why punish the average consumer?

That may seem like a bleak outlook, but things could be about to change. The record companies never wanted to cede control of their content to anyone, but with iTunes, they pretty much gave that control to Apple and have been openly vocal about it ever since. The very DRM that they insisted on has come back to haunt them. Record labels want digital music to be a success, but they want more control over pricing and distribution, something that Apple is unwilling to give them with the iTunes store. That is why the record labels have also been pushing for Apple to open up Fair Play to other companies. They desperately need content from other sources to be playable on the iPod, because otherwise any potential store can never hope to gain traction, but even licensed fair play still gives Apple control. They may have nowhere else to turn but to DRM free music. (The infamous deal between Universal and Microsoft over the zune where Microsoft pays Universal a royalty fee for every player sold is likely an attempt to make sure Microsoft knows just who is in charge.)

This may sound idealistic, but there is evidence that at least some of the record companies are considering it. In the New York Times today John Markoff writes:

“More recently, the industry has been abuzz with rumors that one or more of the major companies is preparing to lift restrictions on some portions of their digital catalog.

Jeanne Meyer, a spokeswoman for EMI, said, “The lack of interoperability between a proliferating range of digital platforms and devices is increasingly becoming a real issue for music consumers.”

In December last The Register wrote that

“At the In The City music convention held in Manchester in October, Columbia UK boss Mike Smith predicted music would be DRM-free within 12 months.”

DRM free music would be a win-win scenario for everyone. Consumers want it. Electronics manufacturers would relish it and Record companies could dramatically increase their online sales. It would unlikely effect Apple in any negative way. The iTunes and iPod are two very strong brands that can stand on their own, and now Apple has firmly thrown their weight behind the idea. In the end it may be economics that forces that forces the Record Companies hands. If they believe they can make more money and more sales through unlocked content the dollar signs might overcome the paranoia. All they need is someone to convince them of that. If only someone with legendary marketing and motivational skills would support the idea…..

Further Reading:
Daring Fireball: Reading Between The Lines on “Jobs’ Thoughts on Music”
My Previous Thought on the Matter
MacNN: Norway Responds to Jobs’ Open Letter