The [Ninja Turtles] henchmen Bebop and Rocksteady have hijacked the musical genres for us just like the Lone Ranger hijacked the William Tell Overture for our parents.

- xkcd

Tuesday, February 06, 2007

Steve Jobs Writes Us a Letter

Who here owns an iPod? Who here doesn't own an iPod because they think it's ridiculous that iTunes locks you down to a single brand of MP3 player with its purchased tracks so refuses to use it out of anger?

Well, if you answered 'yes' to either of those questions, a letter Steve Jobs put up on apple.com today entitled 'Thoughts on Music' may be of interest to you.

In it, Jobs tries to lay out exactly why the iTunes ecosystem works the way he does. Essentially puts the blame on the record companies and restrictions they had in licensing songs for purchase off of iTunes.

Fundamentally most of his points focus on the fact that the large majority of music that is sold, is purchased via CD. This format contains no encryption, allowing the free copying from the disc to any number of devices.

To back up his claim he trots out some numbers. He says that the average iPod owner has about 22 iTunes purchased tracks on their iPod and that the average iPod contains about 1000 songs and is almost always filled with music. He continues:
[U]nder 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. Its 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.
Jobs then argues that, were the situation up to him, there would be no DRM on music and that all tracks sold by Apple on the iTunes store would be freely moveable from one portable music player to the next.

Continue on for the rest of my take

As far as opening FairPlay DRM system to other online music vendors, Jobs states that Apple itself has a difficult time keeping its entire chain protected (and the contracts with the record companies force Apple to fix the encryption any time it is broken or else they can remove their music from the iTunes store) so adding numerous other companies into the mix would increase the likelihood that the software will be cracked and introduce too many weak links in the chain, preventing the seamless updating that goes on now when the FairPlay system is broken.

The letter, if taken at face value, is a nice outline to how Apple would like to be viewed. A champion of music listeners rights and the victim of those big, bad record companies. He tries to label the music labels as hypocrites, saying "So if the music companies are selling over 90 percent of their music DRM-free, what benefits do they get from selling the remaining small percentage of their music encumbered with a DRM system?"

What makes that statement so interesting though, is the fact that it hinges on the fact that the current distribution media is not DRMed. The problem is that you can't argue that just because the previous ecosystem (before the internet and online piracy became a serious issue) doesn't have protection for this issue, that it shouldn't be pursued in the future. Where is the legal/moral argument that DRM and DMCA is inherently flawed? Instead we get weak arguments about the difficulties in applying DRM to a previously open system.

Even though this letter is entirely focused on music, you can see its relevance to video downloads as well. So if you look at the statement above and replace music companies with movie or TV studios, you'll see that his justification for DRM free media isn't really valid. All of the video that is sold today (anything on DVD) is protected by a form of DRM (a completely broken and for all intents and purposes now open system) so should it be sold online with DRM?

There are other points about all DRM systems being breakable that he makes:
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.

I can agree with this poitn but the faulty logic on the other argument makes me question the validity of his other points.

I'm also slightly put off by the fact that he limits the discussion entirely to music. This makes me think he's simply picking a medium in which they have more of a position of influence. Not that there's anything wrong with that; it just shows that they're unwilling to say that they have a strong opinion about how ALL copyrighted media should be distributed digitally.

In the end, I think most people get frustrated by the existence of DRM. It's aggravating when some record company puts a rootkit (bad Sony!) on your CD so that you don't rip it onto your iPod. Still, I have a hard time believing that Apple would really rather sell music that didn't lock you into continually buying iPods.

Realistically, I think this is an easy argument for Jobs to make because he knows that DRM free is not likely to happen. With all the criticism Apple gets for not opening its DRM, this is an opportunity to shift the blame to a third party. The paragraph about not opening FairPlay was a far briefer than the arguments about why DRM is bad and how great things are with CDs.

I am a huge fan of my iPod and would much rather be locked in with a company like Apple that's not trying to license its DRM scheme when compared to others that are actively trying to make money by locking down the system (cough::Microsoft::cough). I just am not quite sure what to make of this letter. If anyone has a better opinion, I'd be glad to hear it.

10 Comments:

At 2/06/2007 4:10 PM, Blogger fulsome said...

I really think this guy has another good take on it.

In short, he thinks Apple has to say this because they are under monopoly-based pressure, especially in the EU.

 
At 2/06/2007 4:34 PM, Blogger dontEATnachos said...

yeah, it's obvious that is what spurred this reaction. The question is, why doesn't Apple just start charging a fee to license the FairPlay DRM? I'd think that it would be, to them at least, about the same as switching to MP3. Only this way they'd get to make money off of it.

The fact that they're not doing that (essentially passing up the opportunity to make free cash by selling the license) is what baffles me.

 
At 2/06/2007 4:38 PM, Blogger fulsome said...

Apple doesn't like to sublicense anything. I think they'd rather make the same amount of money selling mp3s and no longer have to keep engineers around to fix FairPlay. It probably works out about the same in $$$ long term.

Also, I do think Apple considers the PR+ in this case. They have technological + fan base superiority. I don't think they want to jeopardize either.

 
At 2/06/2007 6:47 PM, Blogger billy pilgrim said...

One more thing to consider is that Apple doesn't make any significant money on the iTunes sales.

The record companies are making something like 89 or 90 cents on each of those songs, so after royalties Apple is only making a penny or two.

The record companies are also pressuring Apple to raise the prices on those songs, especially on new releases and big hits. So basically they are insisting on maintaining their O& P numbers as if the downloads were CDs, although they don't have any production or shipping costs to speak of.

 
At 2/06/2007 7:52 PM, Blogger dontEATnachos said...

That's the thing though, does apple want to get out of the digital download business?

Because if they switch to an open DRM free model, the companies will definitely be able to start selling tracks on smaller websites and saying, "hey, this works on your iPod." By going with a small vendor but maintaining iPod compatibility, record labels get to start controlling the price again themselves.

That would mean that the record companies could easily stop selling tracks on iTunes and force the $3 per track fee that they want through the smaller vendor.

In this scenario, Apple no longer has the leverage the $.99 prices that it's fighting so hard to keep, people are no longer compelled to keep buying iPods once they have one, and other companies get to make all that money that would have otherwise gone to them.

I just don't understand why this would be good business unless Apple KNOWS that the record companies will never sell DRM free music, but by putting the onus on them to do that, it frees Apple of responsibility in the court and public's eyes.

By doing this they're essentially arguing "We don't want to do DRM, we're not keeping it to ourselves to maintain a monopoly, we're doing it because licensing it to others would be too hard and won't work. We'd just sell it DRM free but the record companies won't let us do that. So if you want to take legal action to force an open system, do it to the people who are actually requiring this encryption."

It's actually a brilliant strategy. They know that the labels have more money and resources to fight this kind of thing and they're never going to give up on their DRM baby, but now Apple doesn't have to do any of the fighting for them. They've made the issue of having DRM not a given which is actually a big deal.

 
At 2/07/2007 7:58 AM, Blogger Chuckles said...

I have to agree with dEn here. The technical issues are being forced onto Appleby their contracts. I don't know jack about EU law of any kind, although I am willing to bet that most of the illegal actions in America are still illegal over there, but going after the record companies soothes my weary conscience. I don't know that this letter and this defense would win in an American monopoly trial however.

"I'm sorry your honor, but our contracts with these other guys required us to operate a monopoly in order to be able to sell this product. They are the accountable people."

I don't think that would wash in court. Essentially, Apple is saying that it signed contracts that were offered in bad faith, but is forced to uphold those contracts due to the threat contained within said contracts. If contract law works the way I have been told it might (you sign, it binds), then Apple might be able to sue to break the contract if it were then brought to court under monopoly charges, but I have no idea if that would fly either.

All the same, I don't really care. The only music I want to listen to these days, I would just buy the album to support the artists anyway. Also, iPods suck.

 
At 2/08/2007 9:35 PM, Blogger mdhatter said...

the only poitive about DRM is that it keeps the music industry scumbags in music industry jobs.

Look, it took decades of effort to concentrate most of the scumbags into one industry (managing/stealing from most of the bipolar narcissists). This is a win-win situation people.

If they all lost their music industry (paid for by DRM) jobs it would mean a flood of scumbags into other industries, and a whole lot of fairly paid (and thus less-inspired) bipolar narcissists.

ending DRM will affect the quality of everything, especially the music itself.

"So Bye, Bye Miss American Pie, Took my Chevy to the levee, but the levee was dry"

 
At 2/08/2007 9:37 PM, Blogger mdhatter said...

--brought to you by Stomach Virus '07--

 
At 2/08/2007 9:49 PM, Anonymous the Uncanny Canadian said...

I agree with Chuckles on all points, except that the iPod sucks. Except my old iPod, which did, in fact, suck. I will always buy the new CD on sale at Newbury Comis for $9.99 than the same music without the liner notes, packaging, and DRM for $9.99 from the Apple store. Alternatively, I will pay up to and including $13.99 to buy said CD directly from the band during their live show.

 
At 2/09/2007 9:07 AM, Blogger dontEATnachos said...

To illustrate this point: Last month I was convinced that I needed to buy the Zutons album. It had come out in England months and months ago but when it was supposed to come out retail here in the Fall, it never did.

Instead, it showed up on iTunes. The entire album for a mere $8. However, rather than spend my heard earned money on a crappy version of the album that has been lossily compressed and is protected by dumb DRM, I went and bought the CD from an importer and paid $19 for it.

I can honestly say that the CD rocks and it sounds so much better in uncompressed PCM format.

If they would ever sell lossless PCM tracks online I would start buying them in a second (you can burn them to CD with no loss in quality and then rip them back to MP3/AAC for iPod use). However, that's exactly why they'll never do that.

Still, it seems frustrating that record and movie companies want to charge you for fair use (recompressing say a Blu-ray movie that you bought for DVD, iPod or PSP use is against the DMCA law because you're breaking the encryption).

I've said before that if the DRM was merely an effort to restrict the use of media to Fair Use, I wouldn't be as nearly as opposed to it as I am now. As it stands, they're actually taking away my rights and trying to make money off of it and that pisses me off.

The worst part is that for a while I was trying to avoid buying discs that were released by people who were members of the RIAA and it seemed like EVERYONE(even smaller ones like Fat Wreck Chords) were all members. Annoying.

 

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