August 27, 2016

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Apple Offers to Sell DRM-Free Music

The Net is buzzing with talk about the open letter posted by Apple CEO Steve Jobs yesterday. In an apparent reversal, Jobs offers to sell MP3 files, free of anti-copying DRM technology, on the iTunes Music Store if the major record companies allow it.

Much as I would like to see Apple renounce DRM entirely, that’s not quite what Jobs is saying. The letter describes three possible futures for Apple’s music technology: (1) continue the current path with a closed Apple-only DRM system; (2) license Apple’s DRM technology to other companies to build compatible systems; and (3) sell DRM-free music.

Apple’s preferred outcome, Jobs says, is outcome (3), selling DRM-free music. This is notable, and somewhat surprising, as the consensus has been that Apple strategy has been to seek outcome (1), using its proprietary DRM to lock customers in to its iTunes-iPod world. If Apple really prefers to eliminate DRM, that is news.

But this part of the letter might just be cheap talk. As Jobs points out in the letter, Apple sells music at the pleasure of the record companies. And if the record companies announce tomorrow that they don’t want Apple to use DRM, then Apple will have little choice but to smile and go along.

So there is little downside to Apple saying that they they willing to get rid of DRM. In this respect, Apple is like the kid who says he is willing to go to the dentist, because he knows that no matter what he says he’s going to see the dentist whenever his parents want him to.

The least-discussed aspect of the letter is its praise for the status quo (outcome (1)). Jobs says that the current system is working well:

The first alternative is to continue on the current course, with each manufacturer competing freely with their own “top to bottom” proprietary systems for selling, playing and protecting music. It is a very competitive market, with major global companies making large investments to develop new music players and online music stores. Apple, Microsoft and Sony all compete with proprietary systems. Music purchased from Microsoft’s Zune store will only play on Zune players; music purchased from Sony’s Connect store will only play on Sony’s players; and music purchased from Apple’s iTunes store will only play on iPods. This is the current state of affairs in the industry, and customers are being well served with a continuing stream of innovative products and a wide variety of choices.

His real scorn is for outcome (2), where Apple licenses its DRM technology to other companies. It’s easy to see why this is the worst outcome for Apple – the company loses its ability to lock in customers, but everybody still has to put up with the cost and hassle of using DRM.

What the letter really does, in typical Jobsian fashion, is frame the debate. It does this in two respects. First, it sets up a choice between two alternatives: stay the course, or get rid of DRM entirely. Second, it points the finger at the major record companies as the ones making the choice.

This is both a clever PR move and a proactive defense against European antitrust scrutiny. Mandatory licensing is a typical antitrust remedy in situations like this, so Apple wants to take licensing off the table as an option. Most of all, Apple wants to deflect the blame for the current situation onto the record companies. Steve Jobs is a genius at this sort of thing, and it looks like he will succeed again.

Comments

  1. I’m delighted to see a forceful anti-DRM statement coming from Jobs, a man with a truly impressive ability to package technology and sell it to the people at large. Hopefully this will help spread opposition to DRM beyond geek circles(as well as cut down on the number of Apple fans who are all too willing to defend fairplay as somehow being “good” DRM).

    That said, though, I find it hard to take Jobs at his word. The ITMS sells music from numerous sources beyond the big 4. Many of the smaller sources already do not insist on DRM. Any band or label on emusic.com, for example, is clearly supportive of uncrippled music formats. Creative commons licensed artists are generally the same way. The ITMS contains music from these sources. There is no compelling technical reason why all tracks in the ITMS need fall under the same DRM scheme(or even exist in the same format or bitrate). It would be technically trivial for them to sell these tracks as unencumbered AAC. They do not.

    Obviously, Apple cannot directly force any label to authorized sale of uncrippled tracks. However, until they follow through on their alleged preference with music that they could already sell unencumbered Jobs’ statement is so much dishonest PR fluff.

  2. I’m delighted to see you point out the self-serving nature of Job’s comments in such a clear manner.

    Jobs leaves the obvious “option 4” unsaid, a mix of DRM an DRM free music sold on iTunes depending on the wishes of each label or band. Apple could technologically do do this easily. However, Jobs isn’t ranting about the evils of DRM he’s just trying to head off compulsory licensing of FairPlay without admitting that is what he’s doing.

  3. Ed,

    Steve Jobs did give an explanation of why Apple is unwilling to go the licensing route. While I agree that option 2 would be the worst outcome for Apple, you haven’t actually said where you disagree with Jobs’ reasoning behind that decision not to license FairPlay. If you don’t, are there any other possibilities that he didn’t cover?

  4. To answer AndrewJ’s question, yes, there are at least two options that Jobs didn’t discuss: supporting or switching to an interoperable DRM regime, such as Marlin/Coral, or enabling the stop-gap form of interoperability Microsoft floated in the pre-Zune launch days. Under the latter approach, a service provider lets customers download free copies of the songs they bought from competitors. This would be possible only if a) the copyright holders agree to waive their usual fees, and b) service providers could confirm with the original seller what their customers claim to have bought.

  5. avatar Tomer Chachamu says:

    JTP, Sake: Most Apple fanatics would reply that mixing DRMed iTMS music and non-DRMed iTMS music would confuse customers and make a poor user experience. I disagree. I think there is a far better explanation for this.

    The record labels (individually) want to keep their tunes on an equal level with everybody elses, so they mandate that iTunes will not sell /any/ song (theirs or others) for under 99p, and will not sell songs without DRM.

  6. It amazes me the number of people who say it would be “technically trivial” to sell un-protected music from the iTMS.

    Unless you work there, and have actually looked at the source code involved, you are not qualified to offer this sort of opinion

  7. Ed, haven’t you argued the point that DRM and interoperability have conflicting goals? That seems to be Jobs’ basis for rejecting option 2.

    Plus, option 1 isn’t completely win-win for Apple. Apparently, there are types of content that Apple isn’t willing to sell themselves (porn) or isn’t able to with iTunes (live streaming). In these cases, it would benefit Apple to license FairPlay to other content retailers, but Apple doesn’t.

    The situation must be more complicated that Apple sticking with option 1 simply to lock users into iTunes.

  8. Tomer Chachamu attributes a sense of fairness to the RIAA that they don’t deserve: they have actually been trying to introduce variable pricing (with popular tracks to cost more) but Apple has been able to keep things simple. I think it would be more accurate to say they hate their competitors just as much as their customers, perhaps less if you recall the CD-pricing collusion case of a couple of years back.

  9. Jeff, it is indeed technically trivial to sell a mix of music formats from a properly-designed store. iTunes already offers more than one type of file for download (songs vs. booklets).

    There’s no reason for DRM vs. non-DRM to be any more difficult to offer, assuming Apple hasn’t made some very, very boneheaded moves in their implementation. If the critics you’re responding to are guilty of anything, it’s giving Apple the benefit of the doubt by assuming that a well-funded Silicon Valley company, full of bright engineers, can master the task of distributing encrypted files without painting themselves into a corner.

    But let’s assume a worst-case scenario, and suppose that the iTunes Music Store is, for some bizarre reason, totally incapable of selling a file that isn’t encrypted, and that it can’t be fixed. That still doesn’t mean the combined iTMS+iTunes system can’t deliver unprotected files: they could simply encrypt all “non-DRM” files with the same key, then bundle that key with every copy of iTunes and let the client decrypt it as soon as it’s downloaded.

  10. In fact, that’s more complicated than it needs to be. They could keep the encryption exactly as it is, and simply tell the client “this file is unprotected”, which would cause the client to decrypt it (using the key associated with your account) as soon as it’s downloaded, leaving a plain AAC.

  11. Maybe someone from Europe could explain something to me. I’m confused about this “European antitrust scrutiny” and the “mandatory licensing” that will likely be imposed on Apple.

    Instead of attempting to force open Apple’s FairPlay, why not simply do nothing? By that I mean, do not protect FairPlay.

    In the US the DMCA protects FairPlay. If anyone or any company tried to break the FairPlay locks, Apple would sue under the DMCA.

    But if a government simply stepped out of the way, companies would be free to do anything they wanted. Wouldn’t that be the most sensible approach?

    Basically, if Apple wants to have a vertical business model, that’s fine. But simply stand out of the way when someone comes to knock it down.

  12. I’m not sure I really see the point in protecting music online from file sharing, as it doesn’t take hundred-person teams of people to create music: it just takes a small gig or even one person in many cases. If the U.S. decides to allow free music sharing, then the worst possible outcome is that the current for-profit record sales industry collapses and some small teams of musicians will continue to create music (based on television, advertising, concert revenue streams, or paid for out of pocket…the rest will drop off the face of the Earth). I actually think this would be the best possible outcome for the quality of the music, but regardless it seems likely that the sales industry would not actually collapse due to conventional retailers selling CDs. Once the costs are accounted for, the social benefit would obviously be enormous. Using this same utilitarian logic, it would seem that the industries which require large teams to produce their content (movies, games) should be protected from individual file-swapping. One supposes that this situation could be implemented simply by passing a law which excludes music (and whichever other types of content are typically produced by small teams) from the criminal clauses of the Copyright law when distributed by individuals without profit motive. Perhaps I’m wrong here, but it seems that there is a very large social cost associated with trying to stop everyone from sharing music, which can’t easily be justified (especially in the “Internet era”) against the estimated change in income to the industry if such a loophole law were established. If there is a huge hole in this logic just point it out, as I am skeptical and like reasoning from premise to conclusion.

    Of course the relevance of this argument is that if it is valid and was implemented then all the discussion about “music DRM” would evaporate.

  13. Ima,

    The EU has passed a law that is equivalent to the US DMCA (the EU Copyright Directive).

    But, you’re right, if governments want to fix the problem of anti-consumer lock-in, the simple solution is to repeal the DMCA/EUCD type DRM laws.

  14. I think this open letter also has to be seen in the context of the Norwegian consumer organisation (forbrukerombudet) and other European consumer organisations and their objections to iTunes. They are going to take Apple to court if they do not make more consumer friendly versions of their iTunes store.
    http://www.forbrukerombudet.no/index.gan?id=11037079&subid=0

    Is it not better for Steve Jobs then to say publicly that they are agains DRM, but are only doing as the record labels tell them to. Than to get a public legal battle, where Apple fight tooth and nail for their proprietary DRM and their consumer lock in. Apple can not be seen as the bad boy in public or their sales will plumit.

  15. Ed,

    Is brilliant rhetoric the cause or just an enabler of Jobs’ likely victory? In other words, is he right that the music industry is responsible for deciding the future of DRM (and not apple)?

    Since you actually didn’t provide any reasons to the contrary (and I can’t think of any myself), I am persuaded that Jobs is correct.

    Michael

  16. Mike,

    Jobs is right that it’s up to the major record companies whether their music is sold with or without DRM. But he’s leaving out something important: thus far Apple has not allowed smaller record companies to offer DRM-free songs via the iTunes store.

  17. Ed,

    I don’t think Apple thus far allows smaller record companies to offer DRM-free songs via the iTunes store because of consistency. The iTunes store so far has been very consistent in its treatment of prices (it is rare to find a song that’s not 99 cents or an album that’s not 9.99). Whether one sees consistency as a strong point is up to debate, but look at the criticism that came up when it was discovered that many songs purchased from the Zune Marketplace are not allowed to be transferred wirelessly to other zune users. Look at the wildly varying usage rights that were in place in the WMA music stores. This is what Apple does not want the iTunes store to become.

    Consistency has always been something the iTunes store has been praised for, and because of this Apple did not allow the record companies to set variable prices for older tracks versus billboard hits in iTunes.

  18. avatar Lawrence D'Oliveiro says:

    About the technicalities of selling non-copy-protected music: it appears that iTMS downloads are in fact already unprotected: the copy protection is applied *after* the music file has already been downloaded to the buyer’s PC. That was the secret behind iTMS cracks like PyMusique: they could intercept the downloaded file *before* the copy-protection encryption had been applied.

  19. Jim: Add a lock icon to DRMed tracks in the store listing.

    iTunes has been praised because it allows you to easily buy a song and have it playing on your computer/iPod in a matter of seconds. Adding additional information about tracks, especially when it allows users more freedom to play their purchased music, will not tarnish that praise.

  20. Missing from the discussion is option #2. The record companies need only remove the requirement that Apple GUARANTEE that the DRM is fixed within a short time if it is breached. Apple in general can guarantee the iTMS, iTunes, iPod troika will keep the lockup intact. This might also be why MSMS/ZP/Zune chose the same direction. Marlin/Coral might work, but who is responsible for fixing breaches? And if Apple or Microsoft license their DRM, and the 3rd party player is breached (consider PowerDVD exposing HD title keys), should they have to fix all their stuff too? Can they force firmware upgrades?

    I would also compare this to the Movie DRM. DeCSS is broken but left unfixed because it can’t be fixed. Except for legal threats, DVDs are functionally as unprotected as CDs. HD looks to be a game. And Jobs didn’t mention the video half of iTMS – removing DRM from the movies and TV shows.

    They could theoretically adopt some HD content protection and then say “we did our part”, but what would the contracts actually require – disabling existing content when something is breached?

  21. Jeff: Software has its attribute “soft”, as opposed to hardware, because you can do virtually anything, within broad bounds. If the designers/implementers of itunes have “hard”-coded themselves into a particular content format (which I doubt), this is inexusable, but certainly not unfixable. Since when has committing a fundamental oversight (AKA screwing up) been a good excuse of why something “cannot be done”?

  22. I thought it an interesting point that only 3% of music currently on iPods is DRM protected – that does seem to put a bit of a dent in the lock-in theory, Also there is te general theme that it’s hard to maintain the DRM, so I think perhaps Jobs is serious that the move to DRM free is desirable (personally can’t see a mix of some free and some DRM’d having any appeal to anyone).

    He also says “…so all the music distributed on CDs can be easily uploaded to the Internet, then (illegally) downloaded and played on any computer or player” perhaps this means that in the future with no DRM the wrath of the industry will fall on downloaders rather than the uploaders (perhaps I’m wrong but it seems to me that both downloading and uplading are illegal).