Selling Digital Music without Copy-protection Makes Sense
It was uncharacteristically low-key for the industry’s greatest showman. But the essay published this week by Steve Jobs, the boss of Apple, on his firm’s website under the unassuming title “Thoughts on Music” has nonetheless provoked a vigorous debate about the future of digital music, which Apple dominates with its iPod music-player and iTunes music-store. At issue is “digital rights management” (DRM)—the technology guarding downloaded music against theft. Since there is no common standard for DRM, it also has the side-effect that songs purchased for one type of music-player may not work on another. Apple’s DRM system, called FairPlay, is the most widespread. So it came as a surprise when Mr. Jobs called for DRM for digital music to be abolished.
This is a change of tack for Apple. It has come under fire from European regulators who claim that its refusal to license FairPlay to other firms has “locked in” customers. Since music from the iTunes store cannot be played on non-iPod music-players (at least not without a lot of fiddling), any iTunes buyer will be deterred from switching to a device made by a rival firm, such as Sony or Microsoft. When French lawmakers drafted a bill last year compelling Apple to open up FairPlay to rivals, the company warned of “state-sponsored piracy”. Only DRM, it implied, could keep the pirates at bay.
This week Mr. Jobs gave another explanation for his former defence of DRM: the record companies made him do it. They would make their music available to the iTunes store only if Apple agreed to protect it using DRM. They can still withdraw their catalogues if the DRM system is compromised. Apple cannot license FairPlay to others, says Mr Jobs, because it would depend on them to produce security fixes promptly. All DRM does is restrict consumer choice and provide a barrier to entry, says Mr Jobs; without it there would be far more stores and players, and far more innovation. So, he suggests, why not do away with DRM and sell music unprotected? “This is clearly the best alternative for consumers,” he declares, “and Apple would embrace it in a heartbeat.”
Why the sudden change of heart? Mr Jobs seems chiefly concerned with getting Europe’s regulators off his back. Rather than complaining to Apple about its use of DRM, he suggests, “those unhappy with the current situation should redirect their energies towards persuading the music companies to sell their music DRM-free.” Two and a half of the four big record companies, he helpfully points out, are European-owned. Mr Jobs also hopes to paint himself as a consumer champion. Apple resents accusations that it has become the Microsoft of digital music.
Apple can afford to embrace open competition in music players and online stores. Consumers would gravitate to the best player and the best store, and at the moment that still means Apple’s. Mr Jobs is evidently unfazed by rivals to the iPod. Since only 3% of the music in a typical iTunes library is protected, most of it can already be used on other players today, he notes. (And even the protected tracks can be burned onto a CD and then re-ripped.) So Apple’s dominance evidently depends far more on branding and ease of use than DRM-related “lock in”.
The music giants are trying DRM-free downloads. Lots of smaller labels already sell music that way. Having seen which way the wind is blowing, Mr Jobs now wants to be seen not as DRM’s defender, but as a consumer champion who helped in its downfall. Wouldn’t it lead to a surge in piracy? No, because most music is still sold unprotected on CDs, people wishing to steal music already can do so. Indeed, scrapping DRM would probably increase online-music sales by reducing confusion and incompatibility. With the leading online store, Apple would benefit most. Mr Jobs’s argument, in short, is transparently self-serving. It also happens to be right.
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