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iPO Reports - Steve Jobs Open Letter to DRM Critics: Tell the Labels
Tuesday, February 6th, 2007 at 4:30 PM - by
Apple Inc. CEO Steve Jobs published Tuesday an open letter on Apple's Web site directly attacking criticism of the DRM scheme used to protect music downloaded from iTunes. The lengthy letter breaks down into three main components: The way in which the Big Four record labels' DRM demands have tied Apple's hands with FairPlay, the idea that Apple would embrace selling music unencumbered by DRM if allowed, and the suggestion to foreign governments that they work over the labels to change their own DRM demands rather than trying to force Apple to open up FairPlay.
When Mr. Jobs unveiled what was then called the iTunes Music Store in 2003, he said that Apple wanted to sell music without DRM, but that the labels had insisted their music be protected from illegal copying. Since then, however, Apple has seemingly benefitted from its DRM by not licensing FairPlay to third party manufacturers and online music stores.
With iPod and iTunes owning the lion's share of the market for players and download stores, many, including foreign governments have complained about the lack of interoperability, and in some cases demanded that Apple open up FairPlay. Today's open letter cuts to the heart of all these issues, at least from Steve Jobs's and Apple's perspective.
According to the letter, Apple would like to sell music without DRM, but it is the labels themselves that are tying Apple's hands. While Apple offered (and still offers) the most lenient of copying restrictions of all the major download services (selling major label music) -- a playlist can be burned to CD up to five times, and a song can be played on up to five computers -- one still can't take one's legally purchased music anywhere one wants.
"Obtaining such rights from the music companies was unprecedented at the time," wrote Mr. Jobs, "and even today is unmatched by most other digital music services. However, a key provision of our agreements with the music companies is that if our DRM system is compromised and their music becomes playable on unauthorized devices, we have only a small number of weeks to fix the problem or they can withdraw their entire music catalog from our iTunes store."
In other words, Mr. Jobs said that Apple does not license FairPlay to third parties because the specific nature of its license from the labels means that any breach in the DRM scheme that went unrepaired for too long would allow the labels to pull their catalogs from Apple's iTunes Store.
He added that history has shown if Apple were to license FairPlay out to other companies, eventually the keys to FairPlay would leak, and Apple would be unable to fix said leaks in time because so many different companies would be involved. So, his argument goes, Apple must keep FairPlay as an Apple-only solution in order to meet its obligations to the labels.
"Perhaps," he noted, "this same conclusion contributed to Microsoft's recent decision to switch their emphasis from an 'open' model of licensing their DRM to others to a 'closed' model of offering a proprietary music store, proprietary jukebox software and proprietary players."
Mr. Jobs next attacked the notion that buying music on iTunes in the first place locked consumers into using an iPod. Using general data, he said that there is an average of 22 iTunes downloads on each iPod sold to date, which makes up less than 3% of the total music on the most popular iPod (the iPod nano), which holds 1,000 songs. He didn't point out that it's an even smaller percentage of the music on hard drive iPods (up to 80GB), which are capable of holding a substantially higher number of songs.
"The remaining 97% of the music is unprotected and playable on any player that can play the open formats" wrote Mr. Jobs. "It's hard to believe that just 3% of the music on the average iPod is enough to lock users into buying only iPods in the future. And since 97% of the music on the average iPod was not purchased from the iTunes store, iPod users are clearly not locked into the iTunes store to acquire their music."
Despite that, however, Mr. Jobs said the best of all worlds would be to abolish DRM altogether:
"Imagine a world where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat. If the big four music companies would license Apple their music without the requirement that it be protected with a DRM, we would switch to selling only DRM-free music on our iTunes store. Every iPod ever made will play this DRM-free music."
That's a very strong statement, in that Mr. Jobs is stating for the public record that given the opportunity his company would sell music with no DRM at all, but Mr. Jobs took it a bit further. He said that doing so would not only benefit consumers, it would also help the labels.
He wrote, "If [the barrier to entry of providing a DRM scheme for downloaded music] were removed, the music industry might experience an influx of new companies willing to invest in innovative new stores and players. This can only be seen as a positive by the music companies."
He also noted that the labels themselves sell unprotected music in the form of CDs. While the labels have tried from time to time to cripple CDs with various DRM schemes, all have failed in the market place, and were either quickly broken, caused problems on customer computers, or sometimes simply failed to play at all.
"So if the music companies are selling over 90 percent of their music DRM-free," Mr. Jobs wrote, "what benefits do they get from selling the remaining small percentage of their music encumbered with a DRM system? There appear to be none."
His conclusion punched straight to the heart of the issue, as he attacked those who have attacked Apple, saying they should redirect their grievances to the labels.
"Much of the concern over DRM systems has arisen in European countries," he wrote. "Perhaps those unhappy with the current situation should redirect their energies towards persuading the music companies to sell their music DRM-free. For Europeans, two and a half of the big four music companies are located right in their backyard. The largest, Universal, is 100% owned by Vivendi, a French company. EMI is a British company, and Sony BMG is 50% owned by Bertelsmann, a German company. Convincing them to license their music to Apple and others DRM-free will create a truly interoperable music marketplace. Apple will embrace this wholeheartedly."
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