A Must Read: Steve Jobs Makes the Case for Abolishing DRM

[Jeremy Charette]

<div class='os_post_top_link'><a href='http://www.apple.com/hotnews/thoughtsonmusic/' target='_blank'>http://www.apple.com/hotnews/thoughtsonmusic/</a><br /><br /></div><i>"Why would the big four music companies agree to let Apple and others distribute their music without using DRM systems to protect it? The simplest answer is because DRMs haven’t worked, and may never work, to halt music piracy. Though the big four music companies require that all their music sold online be protected with DRMs, these same music companies continue to sell billions of CDs a year which contain completely unprotected music...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. So if the music companies are selling over 90 percent of their music DRM-free, what benefits do they get from selling the remaining small percentage of their music encumbered with a DRM system? There appear to be none."</i><br /><br /> <img src="http://www.digitalmediathoughts.com/images/11143.jpg" /> <br /><br />Stop reading these words, and hit the jump. <a href="http://www.apple.com/hotnews/thoughtsonmusic/">Now.</a> My commentary later.

[Jeremy Charette]

So why would Steve Jobs be willing to open up competition by eliminating FairPlay? Because millions of people already use iTunes, and because it's a well-designed, easy to use store interface. Jobs knows that he's got possibly the best music store open on the internet. Even if DRM were abolished, and several hundred new internet music stores opened up tomorrow, consumers would still flock to iTunes. He's reached market saturation with the iPod and the iTunes Music Store, and he's looking for ways to expand the revenue stream.

How do you sell more music? Make it more appealing to the masses. As Jobs points out, the vast majority of music is still sold on CDs. Why? Well, not everyone has an MP3 player (or an iPod). Many of those that have an iPod (like me) refuse to purchased DRM'd music. If DRM-free music were offered on iTunes, I'd buy it, as I'm sure would millions of other consumers.

Eliminating DRM expands Apple's potential customer base. Now the iTMS can not only serve iPod users, but also Zune users, and every other MP3 player on the market.

The Big Four won't allow DRM to go away for a variety of reasons, but here's one: it will sabotage album sales. Billions of CDs are sold still, and the record companies see revenue from the entire album, not just individual songs. Most internet music buyers purchase songs, not albums. If fewer people buy CDs, fewer people buy albums, therefore overall revenue goes down. And that's just the tip of the iceberg. Figure in backlash from Wal-Mart and other big box retailers, the potential for unpaid music redistribution (pirating), the increased cost of producing CDs in lower volumes...it'll never happen.

But oh, how Steve Jobs and I wish it would.

[Tim Williamson]

Wow, pretty interesting stuff. I wonder what the state of digital music will be like in 5 years.

[Doug Johnson]

I have always been very much against DRM to the point where the only times I have purchased DRM'd music have been when that is the only way to get a particular track.

That said, I develop commercial software for a living so I understand the music company's desire to protect their copyrights to some degree.

But I do not think that DRM is the way to go. It is too limiting, too awkward, and just plain annoying to people who purchase music legally. And it raises too many questions: e.g. If I purchase music from company X now, are they going to be around in 5 or 10 years when I need to play my music on a new computer or music player?

Perhaps a better solution would be watermarking purchased tracks. When a track is purchased online, sell it without DRM, but include an inaudible watermark identifying the person who purchased it. That way the person who made the legal purchase can do what he/she wants to do (copy between computers, players, etc) unhindered. But if someone decides to distribute their tracks online, the source could be identified and appropriate legal action taken if necessary. If a music store's customers know that they can be identified if they distribute the music purchased illegally, this would be a strong incentive not to distribute. This model has been used with photographs with some success.

I know this idea will upset a lot of privacy advocates, but in my mind this is a happy meeting place. It removes the restrictions from those who purchase their music legally, and should remove the incentive to become involved in illegal music piracy.

[sojourner753]

DRM free music may help iTunes, but it could be trouble for iPod. Hardware is where Apples fortune lines. Just as its Software/OS where Microsoft's fortune lies. Thats why each on sells there other part hardware/software for a steal.

If I could get Apple's content free, like TV shows and music I'd still probably buy another player besides the iPod. Matter of fact, having a DRM free library available would be more insentive to buy the Zune. But thats just me. There are other players out there that may appeal to others.

I still like my Zen Vision:M

[Jeremy Charette]

Um, Apple's content wouldn't be "free". You'd still have to pay for it.

If you mean you'd "steal" Apple's content by downloading it from illegal torrent sites then:

1) Shame on you.
2) So what? The average consumer would rather pay for the convenience of going to iTMS and getting all the content they want in one place than having to fish around a bunch of torrent sites for it.

[sojourner753]

Um, Apple's content wouldn't be "free". You'd still have to pay for it.

If you mean you'd "steal" Apple's content by downloading it from illegal torrent sites then:

1) Shame on you.
2) So what? The average consumer would rather pay for the convenience of going to iTMS and getting all the content they want in one place than having to fish around a bunch of torrent sites for it.

I assume you're replying to me. If you re-read my post you see that I never once implied stealing music but that each company makes their largest profit margins off of opposite sides of the coin and therefore dont try to make their fortunes off the other.

Removing DRM would make the music free, but it does open up the option to chose either another store or another device.

Truthfully Apple wouldn't cares as much about people abandoning their store if they continue to buy their hardware. Including the iPod and even their computers. Microsoft isn't as concerned about the hardware. Its always been about the Windows ecosystem.

Not to say neither cares about the other side of the coin, but they know where their bread is buttered.

[whydidnt]

Certainly an interesting read. Jobs makes the point that many of us have over the years regarding DRM. It does nothing to stop pirates and everything to inconvenience consumers. I think the real point of this article is for Apple to try and convince the European courts that their recent rulings don't make sense because Apple is just doing what the music companies demand.

While what he says makes total sense, I wouldn't hold my breath waiting for the "big 4" to change their minds and agree to non-DRMed downloads. We've all known for some time that DRM is not about protecting content, but about content providers wanting us to pay multiple times for the same content. They want us to buy the CD to listen to in our cars, and then re-buy the songs to listen to on our MP3 players. If they had their way we'd all send them a quarter every time we listened to a song on the radio!

We've been hearing for years that the ITMS is a loss leader for iPods. I don't know why Apple doesn't just refuse to allow people in the effected countries to buy music from the ITMS. They can still buy the iPods, use iTunes, download podcasts, etc. Just can't pay the .99 to download -- if citizens of these countries really want to continue to buy digital content from Apple they can complain to their elected officials about the way the laws are written.

[ale_ers]

I agree with the point that Jobs is making. The European Union is going after the wrong party. DRM is there for 'the big 4' not for Apple or Microsoft or Napster and the like. Bill Gates made a similar statement a month or so back, saying that DRM doesn't work, but they have to have it right now.

Of course, I think Jobs might have thought differently a few years back when he didn't have such a large share of the market, but he is still right. To recap, the market leader (Jobs) would prefer no DRM, the new entrant (Bill Gates) would prefer no DRM, the consumer would prefer no DRM.

I remember the discussion we had a while back about Amazon wanting the have a DRM free music store. I think that is the only way someone is going to make a big splash against Apple, Microsoft and all the others. Charge a little more for songs that can play on any MP3 player and give consumers what they want. But...I hope I am wrong....I don't see the Labels ever letting it happen.

[ale_ers]

Perhaps a better solution would be watermarking purchased tracks. When a track is purchased online, sell it without DRM, but include an inaudible watermark identifying the person who purchased it. That way the person who made the legal purchase can do what he/she wants to do (copy between computers, players, etc) unhindered. But if someone decides to distribute their tracks online, the source could be identified and appropriate legal action taken if necessary. If a music store's customers know that they can be identified if they distribute the music purchased illegally, this would be a strong incentive not to distribute. This model has been used with photographs with some success.

That's an great idea. Similarly, eReader has a DRM scheme where your credit card is needed to open a book. The idea is that no one is going to share the book on the 'net and give out their credit card number.