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February 7, 2007

Steve Jobs observes that Emperor DRM lacks clothes

Posted by David Hunter at 12:31 PM ET.

The tech world is all abuzz ([1], [2]) about Steve Job’s open letter suggesting putting an end to Digital Rights Management for music downloads. The more cynical observe that he only brought up the subject after a number of European national governments (not the EU) started actions of various sorts against Apple due to the perceived “lock-in” that comes from music purchased at Apple’s market leading iTunes online store only being playable on Apple’s iPod. 

I’ve always viewed the lock-in argument as one of those odd eruptions to which governments are inexplicably prone when they spot someone having fun without their permission, since it is well known (and Jobs reiterates it in his letter) that the overwhelming majority of music on iPods doesn’t come from iTunes. The number of people that are actually  ”locked in” to the iPod is vanishingly small, but that won’t make much difference to the bureaucrats mounting their chargers to redress a perceived injustice inflicted by a large foreign company.

Jobs’s big punchline, of course, is the observation is that Apple is forced into tightly obscured, if not secured, DRM by the demands of the four big music publishers (2.5 of which are European) who control 70% of the market and that the chances of an oxymoronic “open DRM” satisfying them are negligible. Therefore, he posits that the real solution is to remove DRM entirely, particularly since the primary source of music for portable media players is CDs which are not copy protected.

Some of the big four are experimenting with DRM free downloads so there may actually be some room there for a solution, but I’d bet that a more likely result is the offering of goofy “iPod N” editions in the offended nations which lack “for pay” iTunes music access, just like the European mandated Windows XP and Vista N editions lack Microsoft’s Media Player. Whatever the solution turns out to be in Europe, it presumably will apply equally to all the other online music distributors including Microsoft since they have the same licensing restrictions. However, an “open DRM” might be even more annoying to them due their offering of subscription licenses unlike Apple. I don’t think Microsoft really wants to figure out the infrastructure to securely swap a Zune Pass with some arbitrary other vendor’s unit.

Perhaps a more interesting question for Microsoft are the implications of the possible audio DRM solutions for video DRM where the market is more fragmented, but where Microsoft provides the technology for many of the current video download competitors (e.g. see Wal-Mart’s announcement this week). Since there is no source of quality DRM-free movie content, it is harder to make the no DRM case and since Microsoft is nearly a de facto standard, maybe the bureaucrats will decide that Microsoft should publish full interoperability information. Where have I heard that one before?

Filed under Antitrust, Apple, Argo, Coopetition, DRM, Digital Media, General Business, Governmental Relations, Legal, Media Player, Microsoft, Technologies, Zune

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4 Responses to “Steve Jobs observes that Emperor DRM lacks clothes”

  1. Microsoft Weekly Miscellany, February 9, 2007 -- Microsoft News Tracker Says:

    [...] Microsoft Says They Like DRM in response to Steve Job’s open letter. Meanwhile, big four music publisher EMI appears to be testing the DRM free download waters. [...]

  2. Microsoft announces PlayReady mobile DRM technology -- Microsoft News Tracker Says:

    [...] I guess Microsoft isn’t joining Steve Jobs’ “no DRM” bandwagon any time soon, but that’s no surprise although the “interoperability program” mentioned seems to give due homage to the European governments that have Jobs so vexed. [...]

  3. EMI drops DRM for music catalog, Apple has first dibs -- Microsoft News Tracker Says:

    [...] Since that most music on iPods doesn’t come from iTunes anyhow, it’ll be interesting to see whether the higher quality than MP3 rips of CDs coupled with lack of DRM results in more sales, but I am doubtful that it will be significant. The biggest effect will likely be the postive PR for EMI and Apple and the pressure on the other players to get on board. Filed under Coopetition, Digital Media, Technologies, Apple, DRM, Microsoft, EMI [...]

  4. EMI announces DRM free music with Apple’s help -- Cool Tech Reviews Says:

    [...] EMI is willing to sign up other vendors too, but Apple is first out of the gate and this is a great PR victory for Steve Jobs after his open letter calling for an end to DRM. The general belief at the moment is that most music on iPods and other digital music players is actually ripped from CDs and not downloaded, so it will be interesting to see if the higher quality coupled with lack of DRM changes that. Maybe the end of the CD is in sight? Posted at 10:56 am. Filed under Companies, Portable Audio, Apple, Brands, iPod, Internet, MP3 Player, iTunes, Video Downloads, Music downloads, EMI   [link]         [...]

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