Apple’s International iTunes Controversy
The revolt by European regulators against Apple’s digital rights management (DRM) technology that protects music tracks from copyright infringement —and restricts iTunes interoperability with all digital music players—is wrongheaded. Pro or con?
Pro: Music Purveyors Need Protection
In practically every modern medium, someone, somewhere has to get paid. Movie theaters charge admission fees. Cable TV companies charge subscription fees. Magazines and newspapers charge a price on the newsstand. There is no reason major recording companies should not enjoy the same right to charge for the digital distribution of their content, and as such prevent those who haven’t paid from enjoying it.
DRM technology, in its most basic form, is intended to ensure that music consumers pay for the right to play. Artists who create music, studios that produce it, and labels that distribute it all deserve the right to enforce the expectation that those who play their music have paid for it.
For all the best of intentions, DRM hasn’t stopped piracy altogether, leading some to the irrational conclusion that DRM should be dispensed with entirely, and that digitally distributed music should be sold without any means to protect it from being copied in a way that violates copyright laws. This is no solution.
Where the use of DRM may need improvement is not in ensuring that people pay before they play, but in tying a digital music file down to different scenarios of use. Current schemes, the most popular of which is Apple’s (AAPL) FairPlay, limit the number of copies that can be made, or limit the types of devices on which it can be played.
In FairPlay’s case, users who buy a song from iTunes can copy their songs on up to three computers. They may also burn them onto a CD an unlimited number of times, but a particular combination of songs, or "playlist." containing protected tracks can be burned to only seven CDs. These are reasonable rules that allow for a wide range of usage scenarios suitable for any honest consumer.
One area where it fails is interoperability, which is the complaint of regulators in several European countries. FairPlay songs can play only on iPods, within Apple’s iTunes software on a Mac or PC, or on CDs governed by the rules cited above. But they can’t be played on other portable players. French lawmakers tried to force interoperability on Apple, but now the call is growing to forgo using DRM entirely.
Neither approach to this problem is correct. A universally compatible DRM system created as a result of industry innovation, coupled with selective yet rigorous copyright enforcement actions, is the only true solution that is fair to all parties
Con: Let’s Say Good Riddance to DRM
If the intent of DRM technology was to prevent or impede digital piracy, it isn’t working. By one estimate, the number of songs freely available for download from file-sharing sites operating on the fringes of copyright law was 15 billion in 2006. The number of songs sold on the most successful online store, Apple’s iTunes, over the course of fewer than three years is just above 2 billion. If market forces are any indication, then maintaining the DRM status quo in the digital music industry is comparable to cleaning up an oil spill with a damp sponge.
Clearly the market is telling us something: Large numbers of consumers are gravitating toward the product with the lowest price (free) and the fewest use restrictions (none) for which they run a marginal risk of ever being sued or prosecuted for copyright violations. Dispensing with DRM controls on commercially sold music tracks would eliminate the use restrictions and erase any lingering concerns about legal trouble.
However, presuming that the labels would still wish to charge the going rate per track of 99 cents presents a price competition problem. The answer would be to create a class of digital music product superior in some way to what’s available for free. Commercial digital tracks would have to offer more than equal flexibility and a legal peace of mind. They’d have to be better than the freebies available on the file-sharing networks.
That said, it’s equally wrong for governments to force any kind of change on the industry. The digital music market is young, and the companies playing in it need to find their own solutions.
Most people still buy their music legally on CDs, and then rip them to their computers and portable players. Imposing artificial reforms via regulation, legislation, or lawsuits launched ostensibly on behalf of consumers may cause permanent damage to a market still in its formative stages.
But would unleashing tracks with no restrictions cause a surge in piracy? Most likely not. Assuming that the risk of some penalty remains for using a file-sharing site, at least some consumers now turning to file-sharing networks would turn instead to the legal commercial alternatives, allowing record labels to capture some revenue from transactions that would not have taken place otherwise.
Most consumers have honorable intentions and won’t run afoul of copyright laws in the course of normal use of the music they’ve bought. And those who intend to act as conduits for digital piracy can already do so by buying a CD or recirculating copies of already-pirated tracks. If anything, the recording studios and artists have more to gain by dropping their DRM requirements than they have to lose.—A.H.