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[Misereatur]

Jobs' Thoughts on Music

Since Apple does not own or control any music itself, it must license the rights to distribute music from others, primarily the ?big four? music companies: Universal, Sony BMG, Warner and EMI. These four companies control the distribution of over 70% of the world?s music. When Apple approached these companies to license their music to distribute legally over the Internet, they were extremely cautious and required Apple to protect their music from being illegally copied. The solution was to create a DRM system, which envelopes each song purchased from the iTunes store in special and secret software so that it cannot be played on unauthorized devices.

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Today?s most popular iPod holds 1000 songs, and research tells us that the average iPod is nearly full.  This means that only 22 out of 1000 songs, or under 3% of the music on the average iPod, is purchased from the iTunes store and protected with a DRM. The remaining 97% of the music is unprotected and playable on any player that can play the open formats.  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.

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The third alternative is to abolish DRMs entirely. 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.

Why would the big four music companies agree to let Apple and others distribute their music without using DRM systems to protect it? The simplest answer is because DRMs haven?t worked, and may never work, to halt music piracy. Though the big four music companies require that all their music sold online be protected with DRMs, these same music companies continue to sell billions of CDs a year which contain completely unprotected music. That?s right! No DRM system was ever developed for the CD, so all the music distributed on CDs can be easily uploaded to the Internet, then (illegally) downloaded and played on any computer or player.

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Much of the concern over DRM systems has arisen in European countries.  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.

That is a pretty bold statement coming from Jobs, I'm looking forward to see what happens next.

[Johnny C]

I read that on Tuesday or Wednesday, I think? It's a good piece. I hope the sheer well of money that is iTunes makes some label execs actually sit up and listen to what he's saying because it could actually sell more music.

[SpacemanSpiff]

It's interesting, but I think it especially shows another thing: Steve Jobs is an excellent business man with great intuition and timing.
If you have followed the news on, say, Slashdot or Gizmodo, you might have noticed that several people associated with the big four are rethinking their stance towards DRM. They've been rethinking this rather loudly and publicly lately, probably to find out what kind of reaction they'll get from the average consumer and whether the reaction will be strong enough to warrant abandoning DRM. The creation of Merlin and its cooperation with Myspace to sell DRM-free indie music has also put pressure on the big four.
Some of them have already stopped producing and selling copy-protected CDs, because these apparently don't sell as well. The message is slowly getting through and I'm fairly sure that Steve only makes these statements because he feels safe enough. The big four won't be completely pissed off because they've been thinking about this anyway. But this statement from Steve Jobs does create lots of positive PR for Apple and iTunes. And I guess also puts a bit more pressure on the big four.

[dancarter]

I agree, his timing is particularly good given that several other groups have already announced DRM free music sharing.  It also smacks as a bit...hmm, how shall I say, opportunistic I suppose, given that iTunes is the leader in realy heavy DRM legislation(though you can't blame them, as it is to appease big labels) and are also the ones people seem to be pissed off at because you can purchase the tracks and have ownership of them but iTunes doesn't enable format changes as an option for switching to different media.  I'm not a fan of this whole "iPod or nothing" thinking, though I don't think many people are.  There's a strange little bit of this odd secondary propriatory/exclusivity thing going on with Apple that bothers me and this new statement seems kind of...two-faced?  Something.  I mean it's good that someone with as big a name as Jobs is stepping up, but he's riding coat tails just a bit.

[KharBevNor]

It's not like cracking DRM is hard. I mean, how harsh is iTunes DRM? I'd rather eat my own spleen than give apple money, so I have no idea.

[grrraham]

I don't want to misattribute statements, so I won't say it was Steve Jobs, since I can't remember for sure.
But when the music store first came out someone who was a higher up in Apple was definitely quoted saying that they barely make anything, or in some cases even lose money on every song they sell. That the music store's first purpose is to get people to buy iPods.
DRM definitely helps in that regard.

[jhocking]

Thanks for the link, I just passed it on to some friends I know would be interested in that.