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Jobs to DRM: Drop Dead

Itunes_7 Steve Jobs posted an essay of sorts today on Apple.com dubbed "Thoughts on Music." It's not really about music, though; it's about the way the major record labels have been selling their products online. In particular, Jobs urged the labels to drop their demand that downloadable tracks be fitted with electronic locks, enabling Apple to sell songs in open formats such as MP3 or AAC.

His words carry more weight than the average Beatles lover's, given Apple's dominance in the online music market (accounting for 85% of the sales in the U.S. in early January). The iTunes Store has sold more than 2 billion songs; eMusic, which claims to be No. 2, has sold 100 million. And all of the songs sold by iTunes are locked by Apple's proprietary FairPlay digital rights management system, which Apple developed when the major labels insisted on some form of copy protection.

The problem with DRM systems, Jobs noted, is that the ones in use today don't interoperate. People who shop at the iTunes store can transfer tracks directly to just one brand of music player, the iPod. Similarly, well more than a million people subscribe to Napster and Rhapsody, but they can't play the songs they rent or buy from those services on iPods. This kind of confusion hangs like a wet blanket on the digital-music market.

So why not license FairPlay to other companies? Doing so would increase the chances of the DRM being hacked, Jobs argued, because it would force Apple to share secrets that are critical to the DRM's security. He doesn't mention other approaches, such as the Coral Consortium, that try to achieve interoperability without compromising security. But no matter -- Jobs is absolutely right in arguing that DRM on 99-cent downloads is pointless. As long as CDs are sold without electronic locks, there will be plenty of sources of pirated music online. In other words, DRM has no effect on the problem it ostensibly tries to solve.

But Jobs isn't just thinking about music buyers' interests. Apple is under attack in Europe for using FairPlay to lock iPod buyers into using iTunes, and iTunes shoppers into buying iPods. If he'd written the essay in HTML, Jobs might have linked to a copy of the letter he received from Norway's official consumer advocate, telling him that FairPlay was illegal. Jobs says the lock-in argument is hard to believe, given that the average iPod has only 22 songs on it that were purchased from the iTunes store. That's an average, though; I'm guessing the median would be much higher, especially if you consider actual iPods in use (eliminating all of the ones with dead batteries, broken displays and the like). Even so, Jobs is right on this point, too. The lock-in argument is ridiculous. Songs bought from the iTunes store can be burned onto CD and re-ripped into any format the buyer chooses. The same is true for any other music store. Yes, it might be inconvenient, but if that's a concern, people can stick to CDs.

Here's hoping the major labels follow Jobs' suggestion and drop DRM from their permanent downloads, reserving the locks for services like Napster-to-Go that couldn't exist without them. In the meantime, it would be nice to see Apple offer independent-label music as unlocked AAC or MP3 files, just as eMusic and other indie-only retailers do. Who knows, maybe shoppers at the iTunes store will notice the difference and vote with their dollars against DRM, making an even more compelling case for the major labels to change.

Update: The RIAA has responded by giving its own, novel intepretation to Jobs' essay: 

Appleā€™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 Jobs was offering to share FairPlay with his competitors -- in fact, there's a pretty explicit rejection of that option in his essay -- but then, the RIAA was probably just tweaking him. So give the RIAA points for having a sense of humor, which is something perhaps Mitch Bainwol can license to the chuckles-impaired Steve Jobs. And now, here are the obligatory RIAA-bashing sentences. If interoperability is their goal, the major record companies can solve the problem without Apple's help: they can drop their demand for DRM on permanent downloads. In fact, that's the only way to solve the interoperability problem across the device spectrum. So, how about it?


Deja vu (wireless version)

Ampd_mobile How appropriate: the day after Prince rescues the category of big-game halftime shows, Amp'd Mobile makes an announcement that's straight out of 1999. The one-year-old mobile-phone company, whose service caters to Net-obsessed and entertainment-gluttonous youths, said it has signed deals with three production shops to develop content exclusively for Amp'd subscribers. The most recognizable name in the bunch is Jack Black, who (along with two producing partners) will create short videos for the service. The other recruits are Donick Cary, creator of the "Lil' Bush: Resident of the United States" mobile-optimized cartoon, and ICEBOX, an online animation firm founded by a group of TV writers.

The way Amp'd trumpeted its new ties with Black and Icebox co-founder Howard Gordon (an executive producer of "The X-Files") reminded me of Shockwave.com's dalliance with Hollywood talent in the late 1990s. The site (an arm of Macromedia at the time, but later merged into Atom Films) signed development deals with Tim Burton, David Lynch, Matt Stone/Trey Parker (whose X-rated cartoon never aired), Jim Belushi and others, only to abandon video after the dot-com bubble burst. Shockwave.com's experience suggested that it's dangerous to try to build a nascent medium by hiring expensive talent from other media. One of the lessons from YouTube, MySpace and such dot-bomb survivors as Atom and iFilm is that the road to solvency is rarely paved with Hollywood development deals.

Just look at ICEBOX. Launched just after the bubble burst, ICEBOX styled itself as a proving ground for cartoons. The goal was to develop an large audience for characters and concepts, then move them to TV networks. But the high cost of creating original animations forced ICEBOX to go into the deep freeze less than a year later; instead of producing shows on spec, it would fund projects only when it had a buyer lined up.

Maybe the timing is better for Amp'd than it was for Shockwave, ICEBOX and other first-generation dot-com video plays. Online video is so commonplace today, it doesn't seem like much of a stretch to extend it to cell phones. The problem is, relatively few people in the U.S. have been willing to pay to download videos or surf the Web on their cell phones. Amp'd designed its service specifically for those types of customers; according to the Wall Street Journal, the average Amp'd user spends more than $30 a month on such things (out of a total bill of about $100), compared to less than $8 a month for the big carriers' customers (whose total bill is $50 to $60). Of course, it remains to be seen whether these Amp'd customers (whose ranks topped the 100,000 threshold in January) are typical of a new, media-hungry generation of users, or if they're just well-off and bored.

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Times editorial writer Jon Healey pens opinion pieces about a variety of business issues, and blogs about technologies that are changing the entertainment industry's business model.

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