Steve Jobs Asks Record Labels To Abolish DRM
Apple CEO Steve Jobs has posted his Thoughts on Music in the 'Hot
News' section of the Apple website. He starts off by explaining the background to Apple's
DRM on iTunes:
"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."
Fair enough, Apple had to play by the rules of 'the big 4' record labels. Apple’s DRM system then, called FairPlay, is all about protecting the copyright of the music companies. And who can argue with the success of that strategy - Jobs notes later in the article that up till the end of 2006, customers purchased a total of 90 million iPods and 2 billion songs from the iTunes store.
The crux of the article is Jobs' 3 alternatives to DRM for the future:
1) "...continue on the current course, with each manufacturer [meaning Apple iPod/iTunes, Microsoft Zune, Sony] competing freely with their own “top to bottom” proprietary systems for selling, playing and protecting music."
However Jobs argues that there is no lock-in, since "97% of the music on the average iPod was not purchased from the iTunes store".
2) "...Apple to license its FairPlay DRM technology to current and future competitors with the goal of achieving interoperability between different company’s players and music stores."
However Jobs doesn't like this option, as it'd mean revealing "secrets" about the DRM to competitors. Also Apple would then not be able to guarantee "to protect the music it licenses from the big four music companies."
3) Which leaves the third scenario: abolish DRMs entirely. At which point Jobs passes the ball firmly back into the record companies court, arguing that "DRMs haven’t worked, and may never work, to halt music piracy."
Conclusion
In effect (and Apple fans please don't get upset with this phrasing of words), this article is a piece of propaganda from Apple. The position is that Apple and Steve Jobs hate DRM just as much as you and I, so they will gladly support the abolition of DRM - if the big record companies choose to do so. Apple is positioning itself on our side, in the war against DRM. This is all very well, and a very commendable stance from Jobs and Apple. But I'm left feeling that surely there's more Apple can do to fight DRM than to simply give a hospital pass to the record companies? Apple is after all totally dominant in the online music industry, so it now has considerable power of its own. They are not totally at the mercy of record labels.... are they?! Because that's what this article from Steve Jobs makes it out to be.
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"They are not totally at the mercy of record labels.... are they?! Because that's what this article from Steve Jobs makes it out to be."
Yes, they are! Can't you read? :-)
This is in the studios' court now. If SJ is speaking out this publicly, you can only imagine what he's saying to them privately.
Didn't they have to get here in the first place? I mean they couldn't have just sat on the sidelines for 5 years saying, "We won't do it 'til it's DRM-Free!" And even now, Apple still has less power than WalMart. And Apple still needs to get the indsutry to transition forward.
It's much more than propaganda, but your conclusion is little more than sour grapes.
Which label is going to call the bluff first, by agreeing to go DRM free in iTunes?
CD Baby?
Personally, all it comes down to is personal gain. While the iPod has a massive section of the MP3 player market, there are still various other players out there. These players cannot any music from iTunes... therefore no one will purchase them. If you don't purchase, they don't recieve the money they want.
Not only that, but with courts in some countries demanding iTunes either stop selling the music or share their technology, Apple is hoping to take the third route and keep their technology hidden, while still making money in those countries.
In the end, it all comes down to cash.
tf, how is my conclusion sour grapes? I'm simply pointing out that Apple, being the dominant online music vendor, is in a much stronger position than Steve Jobs lets on in that article. I like the fact he's put Apple's anti-DRM position out there, don't get me wrong. But to put the ball totally in the record labels court seems disingenuous to me.
Like a lot of people, I'm the happy owner of an iPod. So I fully support it going DRM-free. But come on Apple, there's more you can do to make that happen than simply do a hospital pass to the record companies.
#1 raises an interesting point.
This was a public statement - one has to imagine that it's part of something much bigger happening behind closed doors.
It doesn't make sense to me that Apple would just publish this out of the blue. Despite what's there, it's obvious that Apple does benefit, at least somewhat, from the DRM lock in between iTunes and iPod. And I can't imagine they're really unhappy with that, given the utter dominance of both platforms. I also can't believe that the EU decision is driving it.
So why now, and what's Apple trying to get out of it?
What more can Apple do? Seriously...
What do you know about what Apple IS doing? Oh, you don't know. Where is your evidence that he isn't fighting hard in the background?
Most would agree that with his power this public statement is a hugely powerful move.
Complaining that he could do more when no one else has any power to do anything is lame. He is clearly doing something. The DRM haters would like to pretend that if Jobs said no DRM would be dead tomorrow. It's not that easy.
Its pretty easy to remove drm from itunes store purchased music. So the 3rd option seems to be pretty accurate. DRM hasnt worked, and unlikely it will work in the future. Save everyone time and money, and generate more interest in online music (generating more sales). Get rid of it.
Or not. Who cares...
Sorry richard, but I agree.. your conclusion does sound like sour grapes. You insist they should do more... but you do't offer any ideas for what that might be. I see a limited range of choices open to Apple.
1) They could promote DRM free music in the iTunes store, giving it more prominent placement over DRMed music or offering DRM free music for a lower price per song than DRMed music or making DRM free music available in lossless formats.
2) They could refuse to sell music that is DRMed.
That's pretty much it.
Choice #1 is viable, but doesn't address the fact that 70% of the music is owned by labels who refuse to release in a DRM free format.
Yeah, you can promote obscure and edge stuff, but if someone wants the new hot release, it's coming from one of the big four.
If Apple buries the music that people are looking for in favor of things that fewer people want they're creating a poor user experience.
If Apple decides not to sell any music from the big four, they simply force customers to go somewhere else.
Both of those choices would significantly hurt Apple and would not benefit their customers.
The labels control the music - if you want a villain, look to them. But right now, with a billion songs sold from iTunes, what we're saying one thing and doing another. We're saying "DRM is evil" as we buy a DRMed song. The labels need to be convinced that even more people would say "I'll buy this song" if they removed DRM - otherwise, why should they bother?? I can see different ways to do that - offer 10 current popular albums with and without DRM for example - but it's not an action that Apple can take unilaterally.
I may be splitting hairs, but 3% of the music on an iPod (being DMR protected) is not nearly the same as 3% of the music owned or being listened to. This is a distortion of the fact.
What's interesting is that this is something Bill Gates and Steve Jobs more or less agree on.
From TechCrunc: http://www.techcrunch.com/2006/12/14/bill-gates-on-the-future-of-drm/
So if you take the power of Apple + the power of Microsoft, maybe Richard is right. Are they really doing enough to push around the record labels?
You are a bozo, I am unsubscribing from your blog!
Richard,
You're right in your conclusion that Apple is totally dominant in the online music business, Jobs clearly states that the online music market on a whole is patheticly small. For Apple to only have 3% adoption on their own player shows that Apple (nor any other digital music ecommerce site) has any leverage over the content owners because digital music owners are, on the whole, not buying music in MP3, AAC, WMA, or any other format. They must be doing one of two things: ripping CDs (which is legal), or stealing music by sharing on P2P networks.
So, I don't think Steve has the leverage you think he has.
What is this talk of "sour grapes"?! What do I have to be sour about - I don't stand to profit or benefit from Apple's anti-DRM PR at all.
Put it this way, I don't accept Jobs' assertion that Apple has no lock-in via alternative 1 - proprietary systems like iPod/iTunes and Zune. While technically there is no lock-in, Apple has all but got the market sewn up. The only real threat to them is anti-trust lawsuits and other non-market intervention.
Again, I want to emphasize that I think Apple's anti-DRM sentiments are noble and admirable. But it's a cop-out to suggest that the dominant market leader in online music systems is helpless and it's up to record companies to fix DRM. For example they could offer incentives to the record labels to pass on non-DRM music to iTunes. They could work with music bands on it - didn't Apple do a deal with U2 in the recent past? I don't have all the answers for sure, and it's complex, but I just think there's more Apple can do than pass the buck to record labels. Just my 2c.
This is a fascinating argument, and sure to draw out the iPod fanatics. I own an iPod and I also recall what the *legal* online music industry was like in 2002. The only reason Apple is dominant is because they were the first ones to actually get all of these companies to put their music online in one place. It wasn't like Apple was in a tremendous bargaining position to begin with.
IMHO, it was amazing that apple was able to get the record companies to do what they did at the time. And I suspect Jobs has his hands full trying to keep the price at 99 cents while record cos. want to push it higher.
I am glad Jobs puts this in the record companies' laps, because that's where it squarely should be.
Does Apple offer record labels the option to sell DRM-free music through iTMS? My understanding is the answer is No and, for many independent labels, iTMS DRM is only there for iTunes/iPod lock-in.
jc, is it possible to remove DRM from the most recent versions of iTunes? Besides burning to CD and re-ripping, I mean...
Personally, I think the music labels have their heads stuck in the sand. The future of buying music isn't CDs. I own hundreds of them. At this point, each one of them has been ripped and put on my computer/mp3 player. The discs are now stored in my attic. The adoption of mp3 players as the next "walkman" and the ability to control mp3 players through one's car stereo will further drive the CD to extinction.
The key is not to cooperate with the record companies, but compete with them. Eliminate the production costs of the CDs, give more royalties to the artist, decrease the price of the digital file and sell all the music DRM free online.
I for on despise the fact that I have to pay nearly the same amount for an album's tracks on iTunes that I can buy on Amazon.com with the media for the same price. It would be awesome if production costs could be lowered by not having to manufacture the CDs, and the savings could be passed on to the customers.
I don't see what the problem is with DRM, but not all the labels even sell via itunes.
Despite Apple being the dominant online music store, I still can't buy some bands from itunes. From my own personal taste, Tool, AC/DC, and Metallica spring to mind.
I don't know who the label is, sony maybe?
Marks (10) might have already noted this, but stating that iPods contain only 3% DRM material is a huge distortion. I'd argue that the vast majority of iPod owners get nowhere near full. My wife and I have six between us - 90% of the audio/video content on them was purchased through iTunes or audible.
Outside of that, it's hard to fault Jobs here. Apple's hardware is so superior to competing devices that they win DRM or not. More movement in the digital media purchase means more devices selling. I imagine the average device is well over $100 (vs the $21.78 they make on iTunes sales.) I doubt any change in DRM requirements would result in a net loss for Apple.
For the record, I didn't get "sour grapes" out of your conclusion. Not that I know exactly what that phrase means.
Who says that Apple won't be raising this with the labels in its upcoming negotiations? There had better be a good reason when you go public before the start of private negotiations, isn't there?
So of course there are self-serving reasons, but most bloggers, including you, have got the wrong ones. Go check out www.macworld.com/news/2002/03/04/jobs/ where it says, and most Jobs fans remember: ‚ÄúIf you legally acquire music, you need to have the right to manage it on all other devices that you own,‚Ä? said Jobs.‚Ä?
This is a year before the iTunes store opened up on 4/28/2003. I think Steve found the labels didn’t agree with him, but his desire to open up the store led him to give in on it. Note also that Apple bought Fairplay from Veridisc sometime around the end of 2002 (couldn’t locate the exact date). There’s good reason to believe that Apple was not working on DRM but had to get it in order to open up the store.
As for self-serving reasons: MS holds key DRM patents, which makes enhancing FairPlay for new innovative uses (such as wifi sharing) difficult unless Apple is willing to pay MS for licenses.
And there's another self-serving reason: Apple's negotiations with the labels are coming up. Last year, Apple's fight was to just maintain the 99 cent song and Jobs uttered the words "greedy labels". This year, it looks as if there will be some movement to abolish DRM. So he's just getting consumers to be on his side when he confronts the labels with this, and thus reduce the cost he'll have to pay to get it from the labels. Remember that Universal's going in position is a few dollars per iPod sold, a la its Zune deal.
And there's nothing wrong with it being self-serving. As an Apple shareholder, that's what I would expect from its CEO.
As for the option of mixing DRM and DRM-free music in the iTunes store per rick gregory's comment, Apple would not go for that.
Apple's claim of purchasing simplicity has led them to hold steady on the common 99 cent song price (though they eventually gave in on album pricing), and on a common set of DRM restrictions (5 computers, 7 playlist burns, unlimited iPods) unlike at other stores.
"The position is that Apple and Steve Jobs hate DRM just as much as you and I, so they will gladly support the abolition of DRM"
Apple does not lock their operating system onto one single Mac. They'd like you to pay for one copy per Mac, but they don't enforce it through DRM (or TRM chips) like Microsoft does with Vista.
So one could argue that DRM free music is a continuation of their existing DRM policies.
1. I agree that it's a propoganda exercise - it's a shot across the bows of the record labels. I think in particular those executives who are publicly blaming Apple for not 'opening up'.
2. The internal MS emails exposed in the recent court case show the problems MS have had establishing an 'open' DRM platform across 3rd party devices. Hence the Zune.
3. The crucial point - why doesn't iTMS sell MP3s where artists sell MP3 files on emusic or playlouder. Is that their choice, or is it an agreement with the majors not to sell/promote non-DRM music on the same store? I don't buy the argument that it would 'confuse' consumers.
In response to
>The key is not to cooperate with the record companies, but >compete with them. Eliminate the production costs of the >CDs, give more royalties to the artist, decrease the price >of the digital file and sell all the music DRM free online.
>I for on despise the fact that I have to pay nearly the >same amount for an album's tracks on iTunes that I can buy >on Amazon.com with the media for the same price. It would >be awesome if production costs could be lowered by not >having to manufacture the CDs, and the savings could be >passed on to the customers.
You're missing the point. The physical manufacturing and distribution cost of CDs have been pretty marginal for years, compared to the costs of recording, marketing, promotion - and those artist royalties we're all so keen on, of course. It's a bit like soap powder - a lot of the cost you're paying for is the advertising, not the product.
Even back in the days of vinyl, artists could bypass the label system and work directly with a pressing plant - or fund/own their own recordings and only licence them to labels. Bypassing the industry has always been possible - these days mySpace and YouTube offer the opportunities that the music press used to.
You just need to accept that also means bypassing the attention of the audience that can only be reached by heavy rotation video.
The interesting thing about the record companies is that they think they have control of everything. I remember last year when they wanted royalty from the sales of iPods because they believed that their music was responsible for the sale of iPods. When in fact, the iPods are responsible for the sale of digital music.
So really, as long as the big 4 think they're all powerful, they will remain so. Someone just needs to tip over their rocking chair and maybe Steve Jobs can do it.
This has been discussed widely on the Pho List mailing list and the videoblogging yahoo group. There's one very OBVIOUS thing that apple can do. So obvious in fact that Steve Jobs is a hypocrit if he doesn't follow through and put his money where is mouth is.
Apple can offer musicians the opportunity to sell non-DRM mp3's. The major labels aren't the ONLY ones with music to sell. There are plenty of independant musicians. You might say why would Apple deal with any idnependant artists and labels... but then why should the major four labels do as steve jobs asks? It's hypocracy pure and simple.
Yes Apple could offer non-DRM music in MP3 or AAC or whatever. It's something I'd love to see them do. Since they don't I buy much of that stuff off eMusic - after all, it's not like the iTunes store is the only option.
One thing I'd like to know is whether Apple's contracts with the big four allow them to sell non-protected music. I can see the labels wanting this not to happen since it merely puts pressure on them to end DRM, but I don't know if this provision even exists.
Now, I expect someone to say "Well, Apple doesn't have to agree to that provision if it is in there." Sure... but if they lose the big four, most of the music in the iTMS goes away and since those sales are a minority of the labels' sales, but a majority of the songs sold from the iTMS who would get hurt more by that? Right... Apple. Now, put yourself in the place of someone who is responsible for making decisions that are good for Apple and their shareholders... What would you do?
I would love to see Apple press the labels for an end to DRM and to do everything they can to make this happen - but I don't expect the company to risk its business in order to do so.