I'll Bet He's Wrong About That (continued)

Wow. The end of DRM is coming quicker than even I thought it would. Last fall I said on this blog that at least one major label would sell music in unprotected mp3 format within two years.

A couple weeks ago I posted that there were rumors flying at Midem (the big music conference) that at least one major music label was going to sell music in mp3 format.

I thought the reason the labels were going to do this was to get out of the grip that iTunes has on digital music distribution. If you buy a song with iTunes DRM (called fairplay) on it, you can't play it on any other digital music device. That has given iTunes a near monopoly on the sale of digital music. The only other music store that has any real share is eMusic which sells in mp3 format so their music can be played on an iPod.

According to the Wall Street Journal, Steve Jobs, the person who showed the labels how to sell music successfully online, has come out in favor of dropping DRM and selling in unprotected mp3 format. That's awesome and I would have never expected that to happen. When Apple is willing to give up a huge competitive advantage in recognition of the issues that DRM is causing its customers, well that has to get everyone's attention. It sure got mine.

Update: Here is Jobs' letter to the music industry.

Comments

[Griffin Caprio]

It's a little boring to hear people point to fairplay as the reason the iPod & iTS have given Apple a near monopoly selling digital music.

While it's not in dispute that you can't play iTS files on other music devices, what's important to remember is that most of the people buying those files are doing so because they have an iPod. Very few are buying iPods to play files bought on iTS. Sure, Steve Jobs says that iTS is meant to sell more iPods, but that's not 100% the case. If it was, the iPod would only be able to play iTS files & AAC files.

People who expect the playing field to level when/if iTS opens up it's format will realize that the biggest reason Apple dominates is user experience, not DRM. After all, you can't appreciate something until you experience an amateurish attempt to copy it.

Keep up the good writing. I enjoy your blog.

Griffin

[fred]

griffin,

i have several digital music devices that are not mobile devices like an iPod. the main one being a digital music server. if i could play fairplay protected files on that server, i'd buy everything from iTunes. but i can't. now maybe i am in the minority, but over time i won't be. this is an issue that is going to get worse over time and it's really great that Steve Jobs has stepped up and recognized that DRM is not going to work.

[steve]

two things:

first, my understanding is that while iTunes is a big plus for the iPod business, and is more successful than any other such music download service, iTunes itself is *not* successful -- it makes no money and even this many years into the iPod phenomenon, download sales account for an insignificant fraction of music sales.

and if indeed iTunes is not successful, that's a great reason for Jobs to try to get the download music business blown open. maybe just maybe in a world without DRM a lot more people would use iTunes a lot more often.

second, i have read in a variety of reliable reports that (though Apple vociferously denies it) while the typical iPod user has filled up their iPod with music (as Steven Jobs brags about in his letter), in fact the typical iPod user has only ever bought a dozen or two downloads from iTunes.

in other words, even iPod users aren't using iTunes, they're ripping their CDs into mp3s like everybody else.

so again, if iTunes is not a success and iPod users are ignoring iTunes/fairplay (and all DRM) anyway, Apple/Jobs may as well throw in the DRM towel, and work like hell to leverage iTunes leadership position into a massive, profitable (if tiny margin) business (or at least, crush everybody else and figure out how to make money later, a la Amazon.)

only the magnificent, fearless Steve Jobs could make a limping business look like a big success (the fawning media certainly help,) and also make a plea for help (abandoning DRM will be great for the iPod businesses, which are undoubtedly going to be under intense pressures soon) look like a visionary leadership position...

[Griffin Caprio]

Fred,

Ah, you bring up a good point. Yes, I was constricting my comment to just portable music players.

But in your case, you can just get more Apple hardware ;)

Griffin

[Scott]

Well, technically, he came out in favor of selling unprotected mp4s (AAC), not mp3s.

[KenC]

Personally, I've felt that this was Steve's plan all along. He put in DRM to get the labels to agree to begin with, but Steve made the DRM easy to bypass by burning CDs, with the long-term plan to ease into DRM-free music, once he had bargaining power.

[Lloyd Fassett]

Well, now there's a a good bit of Irony that I can't read Steve Job's thoughts on DRM because it's behind a wall at WSJ, but I can read it at apple.com

[Eric Anondson]

steve: second, i have read in a variety of reliable reports that (though Apple vociferously denies it) while the typical iPod user has filled up their iPod with music (as Steven Jobs brags about in his letter), in fact the typical iPod user has only ever bought a dozen or two downloads from iTunes.

Um, Apple doesn't deny it. Read Steve Jobs' letter again, but closely. Steve Jobs himself says that only 3% of an average iPod's content was purchased from the iTunes Store. How is Apple "vociferiously denying" it when the CEO himself says it in his letter that you even cite? *boggle*