On Apple and DRM

Steve Jobs, in his recent "low key" posting on the Apple site "Thoughts on music", set the cat amongst the pigeons. After hinting that DRM doesn't work because "there are many smart people in the world, some with a lot of time on their hands, who love to discover such secrets and publish a way for everyone to get free (and stolen) music", he outlined three alternatives for the future:

1. status quo (everyone develops their own vertically integrated solution like the iTunes Store or the Zune Marketplace);
2. Apple could license FairPlay to other manufacturers so that songs bought through iTunes could be played on other players; or
3. abolish DRM and sell all music DRM-free and encoded in open and licensable formats.

The above is not exactly earth shattering. In my opinion, they are stating the obvious. However, Jobs then goes on to say that Apple would "embrace in a heartbeat" the DRM-free option if only the Big 4 record labels would let them (that's SongBMG, Universal, EMI and Warner). In other words, Jobs is saying "Don't blame me, blame them. We would gladly give you all what you want if they would just let us".

An important question to ask however is, why now? As has been reported on Ars Technica amongst many other places, Canada's Nettwerk Records and one of their major artists, Barenaked Ladies have been trying to convince Apple to let them sell their products through the iTunes Store as a DRM-free product, only to be told no. Of course, there are some side issues to this, including offering consumers a consistent experience (how many confused customers would complain that they could share some songs and not others, and why is the store broken?) but the fact remains that the opportunity has been there. Similarly, I'm sure many indie artists have tried to sell their songs DRM-free with the same result.

As these stories from ZDNet and CNet highlight, Apple is currently facing a number of anti-trust style lawsuits in Norway, Germany and France as European governments seek to "open up" the market currently dominated by Apple and iTunes. One of Apple's arguments against these sort of lawsuits is that, on average, each iPod has only 22 songs bought from the iTunes Store, meaning that the rest of the songs on an iPod have been obtained from other sources anyway (most likely ripped from CDs they already own - CDs being the major way music is distributed and is by and large DRM-free, excluding some reprehensible attempts from Sony with their root kits and EMI's abysmal Copy Control technology).

Similarly, another ZDNet editorial makes note that now is a good time for Apple. No DRM means no lawsuits in Europe. Even if DRM remains, Apple still owns the market. In fact, Apple is so dominant that it is probably the only company that could get away with taking a stance. The record industry is ripe for change, eager to break down Apple's stranglehold and take back some of the power they have ceded to Jobs and of course, DRM-free music is already available. The aforementioned Nettwerk already sells high bit-rate MP3s (192 kbps, as compared to 128kpbs AAC files from iTunes) from their website and eMusic has sold DRM-free tracks for many years with some success.

Not surprisingly, the RIAA appears to have missed the point. This LA Times article quotes the RIAA as saying:

Apple’s offer to license Fairplay to other technology companies is a welcome breakthrough and would be a real victory for fans, artists and labels. There have been many services seeking a license to the Apple DRM. This would enable the interoperability that we have been urging for a very long time.

I don't think anyone else in the world seriously thought that Jobs was offering to open up FairPlay (in fact, Jobs argues the opposite when he highlights that opening up FairPlay just increases opportunities for enterprising individuals to hack away at the DRM system). Whether the RIAA is making a point of its own or is just plain stupid remains to be seen.

The Economist sums it up best:

Mr Jobs’s argument, in short, is transparently self-serving. It also happens to be right.