Jobs Blasts DRM

by on February 6, 2007 · 8 comments

Wow.

Steve Jobs just posted an essay on DRM on Apple’s website. I started reading it expecting to hate it, until I got to this:

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.

In 2006, under 2 billion DRM-protected songs were sold worldwide by online stores, while over 20 billion songs were sold completely DRM-free and unprotected on CDs by the music companies themselves. The music companies sell the vast majority of their music DRM-free, and show no signs of changing this behavior, since the overwhelming majority of their revenues depend on selling CDs which must play in CD players that support no DRM system.

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? There appear to be none. If anything, the technical expertise and overhead required to create, operate and update a DRM system has limited the number of participants selling DRM protected music. If such requirements 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.

I’ve often quoted Steve Jobs’ statement from 2003 that DRM doesn’t work. I had assumed that he had changed his tune once he realized how lucrative DRM lock-in could be. But I guess not.

I’m honestly not sure why he chose to speak out now. One possibility is that the rumors that iTunes Store sales are stagnating are true, and Jobs believes that DRM is the culprit. This statement ratchets up the pressure for the labels to accelerate their long-rumored abandonment of DRM.

Another possibility is that Jobs doesn’t want to abandon DRM, but is even more worried about having European government dictating technology design to him, and so he’s willing to pick a fight with the labels as part of a broader effort to forestall European regulation. Perhaps they’re keen to put the DRM problems in the lap of the labels, rather than Apple’s lap, in the hopes that that will sicc the Eurocrats on the music industry instead of them.

The final possibility is that Jobs simply has more integrity than I gave him credit for, and has decided that since there’s no longer a compelling business reason to keep quiet about the subject, he would speak his mind.

In any event, this seems like pretty big news. To my knowledge, Jobs has not spoken out this strongly against DRM since the launch of the iTMS four years ago. To have the guy in charge of one of the world’s most successful DRM schemes publicly state that it’s bad for everyone, including the labels, will certainly make it all the harder for anyone to argue with a straight face that using DRM is a good business strategy.

  • http://www.davidmcelroy.org/ David McElroy

    Just from watching Jobs for years, this sounds like something he’d say and mean sincerely. I always got the impression that he embraced DRM simply because it was the only way the labels would do deals. He’s not the sort of person to have thought DRM was a bad idea and then decide it WAS a good idea and change again now. It seems much more reasonable to assume that he always preferred non-DRM as a business model, but it wasn’t an option for him.

    As for why he’s pushing the issue now, it seems likely that he’s trying to set the agenda for the coming debate with the music industry. Apple’s DRM problems in Europe are probably forcing him in that direction sooner than he otherwise would, but it would have happened in time anyway. The advantage to going ahead and publicly discussing it this way is that it puts more pressure onto the labels to consider the non-DRM option. The natural evolution of what’s going on in Europe would be for DRM to be decreed to be interoperable. I think he’s going public in an effort to bypass that option and go straight to unprotected sales.

  • http://www.davidmcelroy.org/ David McElroy

    Just from watching Jobs for years, this sounds like something he’d say and mean sincerely. I always got the impression that he embraced DRM simply because it was the only way the labels would do deals. He’s not the sort of person to have thought DRM was a bad idea and then decide it WAS a good idea and change again now. It seems much more reasonable to assume that he always preferred non-DRM as a business model, but it wasn’t an option for him.

    As for why he’s pushing the issue now, it seems likely that he’s trying to set the agenda for the coming debate with the music industry. Apple’s DRM problems in Europe are probably forcing him in that direction sooner than he otherwise would, but it would have happened in time anyway. The advantage to going ahead and publicly discussing it this way is that it puts more pressure onto the labels to consider the non-DRM option. The natural evolution of what’s going on in Europe would be for DRM to be decreed to be interoperable. I think he’s going public in an effort to bypass that option and go straight to unprotected sales.

  • http://enigmafoundry.wordpress.com eee_eff

    I’m honestly not sure why he chose to speak out now. One possibility is that the rumors that iTunes Store sales are stagnating are true, and Jobs believes that DRM is the culprit. This statement ratchets up the pressure for the labels to accelerate their long-rumored abandonment of DRM.

    The site http://www.allofmp3.com has provided a very important service to the content industry, showing that if prices are lowered, purchases will increase, in a highly elastic manner. So allofmp3.com has done important market research. But this is something that Jobs knew intuitively.

    Recall that movie houses did very well during the 1930′s.

    Using those two pieces of information, the content industry may be able to weather the coming downturn.

  • http://enigmafoundry.wordpress.com/ enigma_foundry

    I’m honestly not sure why he chose to speak out now. One possibility is that the rumors that iTunes Store sales are stagnating are true, and Jobs believes that DRM is the culprit. This statement ratchets up the pressure for the labels to accelerate their long-rumored abandonment of DRM.

    The site http://www.allofmp3.com has provided a very important service to the content industry, showing that if prices are lowered, purchases will increase, in a highly elastic manner. So allofmp3.com has done important market research. But this is something that Jobs knew intuitively.

    Recall that movie houses did very well during the 1930′s.

    Using those two pieces of information, the content industry may be able to weather the coming downturn.

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