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.

Reader Comments

lrd

This all boils down to platform envy. In short, there's a small group of people, maybe influential, who dislike Apple. Maybe it centers around their lust for a single platform—and definitely not an American one—or those Apple commercials making fun of Windows users or something else. But these people and not the general public are the ones making a stink. They'd like nothing better than to see Apple go down in flames and let someone else, preferably a European company, flourish in its place.

manpan

DRM is not about piracy as the music and video industries claim. It is about limiting the legit fair-use rights of consumers, stopping consumers from time-shifting content from one format to another. A few years back, Sony Music Group—well, the recently merged Sony BMG actually—released CDs infected with spyware; they were meant to be copy protected CDs, but the DRM was so bad it had viruses. My reasons for avoiding DRM include that it sometimes causes a security crisis and puts unfair restrictions on the consumer. Steve Jobs was right to call for an end to all DRM. With 90% of all music sold on CDs—and most CDs being free of any copy protection—why should the other 10% have copy protection?

I am a proud member of DefectiveByDesign.org, a Web site run by the Electronic Frontier Foundation (www.eff.org), devoted to helping rid the world of any and all DRM technologies.

anonymous

This has nothing to do with European anti-Americanism and everything to do with stopping companies that break antitrust laws. Microsoft was let off the hook in the U.S., and look what happened: The company is still in noncompliance here at home with the requirements imposed on it during the final settlement in which the Justice Department case against it ended. It continues trying to do the same in Europe, but the EU is taking a harder line. Now it is going after Apple for limiting consumer choice and preventing other online download services from accessing the iPod. The sooner we rid the world of DRM the better.

Rich

If more than 90% of all music sold is distributed on CDs, explain to me the need for DRM on music sold online.

Jimmy

This has everything to do with anti-Americanism. Don't you think the French or the other European nations would be fighting for DRM if Apple where a European company? I think they would. Apple DRM is easy to get around, and I don't understand what the big deal is. This stuff isn't brain surgery.

RBoylin

Due to the lack of DRM protection on music CDs, many industry players are losing significant money to theft. They're reluctant to dismiss the use of DRM, because they feel the principle of protected content is worth defending. If they didn't have the market flooded with existing CD players, the industry would attempt some DRM scheme on physical content distribution. Sony's failure probably didn't convince them the principle wasn't worth the effort. Digital film distribution is a different matter in fair use patterns and costs. The present system of video theft will likely continue to provide the bulk of illegal product, but the ability of crackers to defeat DRM is rewarded much more than film-content theft is. Despite Apple's rights in the music sphere, the real battle will be over video DRM schemes. Microsoft has been ignored by the Europeans in the music DRM discussion due to its lack of market success. Its DRM scheme for video now infects the PCs sold to run Vista, with significant effects on performance and compatibility.

JJ Irons

The Europeans (or anyone else) screaming about iTunes' and Apple's DRM are a joke. Apple's iTunes represent a small percentage of available music. It is a well-established fact that the great majority of music available worldwide on either CDs or from online sources is DRM-free already. If it is true that 90% of all music stolen (oops! I meant to say sold) has no DRM, then you really don't have a gripe. You can get any song you want and put it on any player you want. Apple's DRM is not preventing anyone from having any song he or she desires. You just can't do it through iTunes, and focusing on iTunes is like making the gnat buzzing around your head a bigger problem than the elephant in your kitchen. What about all of the artists, recording studios, record labels, etc., who do not get their due for their creations and hard work? Why do folks think they should be able to have music for free? Can I come to your house and just help myself to whatever you have? I don't think so. Just because Apple came out with a great integrated online store and music player, that doesn't give anyone the right to destroy it. It locks no one in except those locked in by their own choice.

ted

I think the industry leaders have the right idea here. They keep signing artists who will produce a song with the life expectancy (about 2 months) of any pet of my daughter's, and therefore they don't really have to worry about piracy. There is no good solution to this. The reality is that until there's a better solution to getting music to the people and how the artists and publishers can make money, this will be an argument that won't stop. My only worry is that all the effort is going toward trying to make a screen door airtight—and not to figuring out how to get the artists paid and wanting to make more good music.

joshmshep

Down with DRM.

Dan S.

The 2/19/07 article did not mention the meat of the business issue, and BW is a business magazine? Steve Jobs is the ultimate marketer (Apple, Next, Pixar, and now Disney). He has the data saying online music sales are flattening. Now you can say, "Oh this is just a lull" or ask, "Is the market at its saturation point?" The latter is certain to be the case. Most persons are honest. We learned this in the 1970s when analog tapes were going to kill the business, and it went on to record sales as music lovers shared their interests via custom mixes of many artists. Today is no different. Yes, that part of the bell curve is going to pirate music no matter what, just like in the 1970s; it is just more transparent today. What the industry needs to do is find the customers that love music (and they have alienated with the flavor of the day) and build a relationship.
Dan

Pancho S

Asking iTunes to instate interoperability with other players is as absurd as forcing the makers of toaster ovens to add a microwave option in their device. When people buy a song on the iTunes store, they know what the limitations are, just like when you buy a toaster oven and know it won't microwave your food. An even better example are VHS and DVD movies, or a tad more recent, the infamous blue-ray. iTunes is not taking control of the song and making it available only to be heard on iTunes. They are just selling a version of it, and as such, their version only plays on their players. Tough luck.

Enzo Matrix

DRM by its very nature is illegal and totally useless. DRM punishes legal users for a crime they did not commit. DRM has never worked. If the big cartel (MPAA/RIAA) wants more money, they need to sue the maker of DRM for making a totally useless—and illegal—product. It's time to outlaw DRM once and for all. There are only two cures for the entertainment industry piracy problems: 1) A lower price 2) A quality product. Remember music and movies are two of the only products you cannot get a refund for if not satisfied with the quality. (Why do you think there are so many flops? Hollywood doesn't care. They don't have to offer refunds.)

Sam

A lot of these comments miss one of the main points in the article: iTunes does not have a choice in offering the music in another format, as Jobs says himself. I believe that, too. I wouldn't be surprised if the RIAA has iTunes on its knees when it comes to licensing. Personally, one of the main reasons I don't get anything off of iTunes is that I don't own an iPod, and I don't plan to. I don't need one. I don't feel "trapped" like a hopeless and choiceless consumer that's been forced into this position, though.

Bigleon

First just software; tomorrow our hardware will be restricted. Remember when they wanted to ban VCR recorders?

Kjk

The whole issue is irrelevant. Most of the music in the world is sold unprotected on CDs. Apple offers an easy way to buy music via the iTunes Music Store. This music is playable on any computer with Mac OS or Windows and can be transferred to a CD and played on any CD player. It can be played on millions and millions of iPods and some Motorola phones, too. What's the point? The point is that other digital music stores have failed, and they are trying to shake Apple. Envy. That is what it is.

James

Why are you too lazy to burn the files to a CD-RW and then just erase the disk? That's the most simple way to get rid of the DRM. Otherwise, go illegally and download it. I get all my music from iTunes because they have a huge selection to choose from. It's cheaper to buy a whole CD on iTunes than it is to buy it from a store.

edd

So, say for the sake of argument that DRMs are wiped out. What we're stuck with then is still a lot of legal music shops selling absolute crap quality for premium prices. I not only want no DRM but also want music to be available in every currently common format, from low bit sampling rates up to the very highest so I can make up my own mind about what format and quality I want. Personally I would not mind paying more for better quality.

Oh yeah, I also want predigital-age music to be available in nondigitally remastered format as I just like my Louis Armstrong to sound like black and white mono and not full color wall-to-wall surround sound.

Nick

So if I buy a movie on a Blu-Ray disk, I should be able to play it on my friend's HD-DVD player, right? Or on my older DVD player in my bedroom? Oh, I can't. Damn. So now my choice is to accept this limitation and buy the movie, or not accept this limitation and decline to purchase both the movie and the newer HD technology. Or wait until the government standardizes an HD-DVD technology and makes all machines compatible.

The same is true for iTunes music. I know I can't transfer the music to a SanDisk player directly, but I can burn a CD, re-rip the file and then transfer it. I can accept this limitation and buy the music from iTunes, or I can not accept this limitation and just buy a CD. I choose to buy most of my music (classical) on CD, because I want to rip the music in lossless or higher bit-rates than iTunes. It's my free choice. If CDs went away tomorrow, I would be upset—not with the DRM, but with the compressed music quality.

Eytan

Until such a time that Real, Sony, and Microsoft make their DRM music play on the Mac, Europe can scream as loudly as it wants. Apple's DRM is the only cross-platform DRM out there, with the fewest restrictions of all (as everyone says here, it is the only DRM format whereby all purchased music can be burned to CD).

DRM should be abolished, and instead all files you purchase and download should be "watermarked" in such a way that while you truly have fair usage rights, such as being able to move it to various formats (multiple HDs, different players, CDs, etc,), if you end up distributing it widely, it can be traced back to you. Instead of restricting our ways to use it, why not track and go after the people who disobey "fair" usage rights and spread the content everywhere?

Phil Holmer

The European governments' complaint against Apple for using DRM seems completely misguided. Apple did not institute DRM on its own or for any monetary gain. The music companies forced it on Apple as a requirement for licensing their music for downloading on iTunes. For a European bureaucrat to say to Apple, "Since you sell the music, it's your job to get the music companies to change their policies" is absurd. The music companies are the people to whom these European governments should be talking. If the purpose of the anti-DRM movement is to benefit consumers, they are aiming in the wrong direction when they target iTunes or any other online music store. If they try to force online music stores to drop DRM in violation of the stores' licensing agreements with the music companies, they risk losing access to online stores altogether, as almost happened in France with iTunes. How does this serve the interests of the average consumer?

jbelkin

The EU bureaucrats are focused on the wrong, American company while ignoring the European labels that control 75% of the marketplace. So whatever they say has to be taken with a grain of salt. If anything, they should thank Apple for making online digital music the only digital format that makes it 100% legal to convert to a DRM-free track. Prior to Apple's entering the market and setting the most friendly DRM rules, it was all over the board but mostly all restrictive.

Am I for DRM? Of course, but not if we have to have a DRM. Fairplay is the best 2-foot fence.

iTunes Store tracks are like Fendi putting a Fendi handbag next to Fendi shoes; they look nice together, but you can still buy them separately. It's all just bureaucrats trying to justify their jobs and picking on an American company. By no measure is it monopolistic. The only monopoly belongs to the European record labels.

eliakim

It's simply the European anti-Americanism whose prey happens to be Apple in this particular sphere of business.

The music companies are not going to sell music without DRM; at least they haven't in the past. Who knows what they will do in the future? And thus, if Apple wanted to sell music online, it was going to have to involve some DRM.

Now, this DRM (from Apple) is so liberal that it can burn whatever copies of your music to CD and then you can export that music to anything else that you want—with "no DRM" attached. Apple designed it to be that way. It's not an accident. Apple allows that removal of the DRM from its products.

That they make it so easy to remove the DRM and yet the Europeans are complaining so much about it, shows that they simply do not want an American company showing up so big in online music sales. They don't care about using "other DRM" that locks out other particular players on the market—because they haven't complained about the "other DRM" in the same fashion. That's because Microsoft doesn't have the "music store" that sells the music online like Apple does. There's the catch.

And so, it's simply bureaucratic anti-Americanism from the Europeans regarding a successful online music store from which all their people are buying songs like hot cakes, too (as are the Americans).

Long Live the Rebel Alliance

Whether the Europeans are legally right or wrong is a pointless question that will be swept away by history. DRM is dead. Everybody knows it but the ones purveying it (and half of them even know it). A new legal regime is going to have to arrive to fit what people are actually doing. This has happened before—technology allowed copyright to be invented and now, 200 years later, in a wonderfully exponential rush of poetic justice, technology is allowing copyright to be uninvented. For decades, copyright holders they have used the power to control inherent in their reproduction tools to run roughshod over cultural rights. (150 years? Who do they think they're kidding? This is like when playground autocrats say the word "bajillion." Obviously there has been no check on this power.) Now their tools have grown so powerful that they can't control them anymore, and by extension, they can't control us.

Looks like they'll have to learn to make a living again in Shakespeare's world. Poor babies.

Me

Um, have Euro-regulators forced Windows software makers to make their titles Mac OSX operable? No. So where's the logic here?

Reginald W

Neither of your commentators addressed the issue of Apple DRM. The issue is the interoperability of buying a track from one digital music store and being able to play it on any digital music player. Your commentators talked about DRM and how it is needed and how it shouldn't exist. Neither one really addresses the question posed and are thus mere voices trying to express their view, not address the question posed. Bad journalism is the result.

The old way of doing business had someone create the technology (CDs as an example) and sell the process of creating CDs to the music studios or others to create the music that was then sold to stores to sell to consumers. The technology to play the CDs was sold to equipment makers to sell the stereo's, etc. to the consumer. No one was trying to do everything with the technology from manufacturer to consumer including the store.

In the above scenario, it is in the best interest of everyone that everything be compactible and work together.

The new way, of course, is very different. As the music is digital, it is only a series of ones and zeros that can be adapted to play on anything digital. The music studios look at it as each method of playing requires separate licensing and DRM is required so someone can't copy lest the studios lose a nickel and cry.

Since the manufacturers are not wanting to create their own DRM, they go to someone who has created it, namely Microsoft. Apple does not want to use Microsoft since they do not support Macintosh, so Apple goes it alone. Apple's product is superior based upon the consumer demand and is thus incompatible with the licensed DRM from Microsoft, which is now in the minority but runs on many more stores and player manufacturers' models.

The reason for Apple's Fairplay was so that there would be content, as in music, available on the iPod. Microsoft's and Real's DRM platforms are only playable on Windows natively, not on Macintosh, Linux, Unix, or any other platform. Fairplay via iTunes works on Macintosh and Windows natively. This is for DRM'd products as there is software from Microsoft and Real that plays unprotected music on the Macintosh and Linux and other software that plays unprotected music on other operating systems.

Technology changes on a constant, almost daily basis. That Apple has created a DRM technology was because of the demands of the music studios. It had to play on Apple's equipment, and since Apple is responsible for fines if a bug/error/hack causes Fairplay to be broken, Apple will not license Fairplay to others, even if that is Microsoft's method of business. As Microsoft is not interested in making its software work on other platforms, trying to create a monopoly for Windows, Apple has to create the entire platform of player, software, and store.

As to the question of interoperability, when the other manufacturers are willing to put their software on other platforms besides Windows, leave Apple alone, as it is the only player in the game that supports more than one computer platform. The whiners on this are the ones who are not able to get into the game due to their limited exposure (Windows only) and inferior design of their players and music stores. Amazing how everything is "free enterprise" until you have a product that nobody wants, and then free enterprise doesn't work.

Reginald W

Bert C

I don't feel restricted by the current iTunes DRM; it's mostly transparent to me. Most of my music is still from CDs, but iTunes' ease of use has already changed my preference—to buying current music from Apple. It's absurd for European countries to go after Apple, since it's only complying with the music industry's requirement that it have DRM. Some music labels feel the current DRM is still not secure enough. Go ask Apple Corps Ltd why it's not comfortable releasing Beatles songs online.

Scarlet Squirrel

Why don't all the people complaining about Apple's proprietary use of Fairplay go bark up the music labels' tree? That's the very point Steve Jobs himself was trying to make in his well-written article. Apple designed Fairplay only because the music labels required it. I've seen endless posts blaming Apple, when the real problem is the music labels.

I don't blame Apple for sticking to its guns. The world expects Apple to do all the hard work and assume all the risks required to make Fairplay interoperable and at the same time freely open a doorway to Apple's competitors so they can have a free ride. And yet when something goes wrong, Apple is the only one they blame. If those doing all the complaining have any real interest in true interoperability between players, why don't they assume the responsibility themselves? Let the complainers negotiate with the labels and then fund and engineer from scratch a standardized DRM that everyone would want to use and be happy with—one that would work with all players, even the iPod. And since there are already so many iPods in existence (nearly 2 billion songs sold), the new DRM would not really be designed to displace Fairplay, but instead to supplement it. And as long as Apple supported the new DRM standard on iPods (just like it supports AIFF, MP3, etc.), iPods could play it, as could all other players, too. And should a problem later crop up with the new DRM for any reason (hacked code, mass piracy, etc.), then it wouldn't be Apple's responsibility to resolve, nor would Apple have to worry or face risks. The risk of the broken DRM would lie solely with the company that had created it.

But unless the people who are doing all this complaining are willing to step up to the plate and take on the creation, responsibility, and management of such a standardized DRM system themselves, they should just shut the heck up, because they really have no right to complain.

DaveMTL

As a Canadian who occasionally reads European papers, I have noticed Europeans are far less anti-Apple than most think. Apple is only mentioned because of its obvious overwhelming success. Their points are quite valid and really should be settled by European law. We in Canada (as is the case in the U.S.) have a defined set of usage rules for CD music. It essentially trusts the user to use the music in a manner that does not evade the responsibility of compensating the artist for his efforts. We need the exact same thing for online music. The law should specify the usage rules, and all DRMs should follow the same rules. I think the principal reason Apple chose Fairplay was to give uniformity and therefore simplicity of usage to the music consumer. I don't have to crack my skull in two to determine if I'm allowed to do something with a piece of music since all my music comes with the same rules—which is not the case when buying music from other stores using MS's DRM scheme that allows variance by songs based on where you bought the track. Steve Jobs had the right idea. Dump DRM, drop the price of music (by about 20 cents per track), and increase the quality of compression (a bit), then watch everyone skip many of these pirate sites. With strong piracy laws and no DRM (by law), 90% of the people would choose the convenience of buying from an elegant site that does a better job helping customers find and discover new music and old favourites.

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