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Apple's Anti-DRM Stance: Why It's More Talk Than Action

Posted by: Peter Burrows on September 17

CORRECTION: In the second to last paragraph of this story, I wrote that “buying unprotected music takes far more clicks and energy than buying from the regular iTunes store.” It is not true that it takes more clicks. I failed to note that Apple only sells the DRM-free version of music for which it has the rights to do so.

Ditching DRM is suddenly de rigueur. We’ve got MySpace getting into the market with DRM-free music. And there’s a new industry consortium called the Digital Entertainment Content Ecosystem, which aims to abandon current schemes for preventing piracy in favor of a more user-friendly approach. Rather than restrict you from playing that song or movie you just bought to one kind of device or service, you’d be able to choose from many. I also wrote recently about Dell’s plans to take a crack at solving this problem.

At the heart of all these efforts is a desire to break Apple’s chokehold on digital media, to make more room for others. Trouble is, they are likely to fail (Here’s Om Malik’s take on MySpace. As for DECE, one analyst says “those who can’t compete consort”). One reason: most consumers don’t seem to care if music has DRM or not. So far, Amazon—the first powerful player to get the rights to sell all of the major music labels’ songs in unprotected MP3 format—hasn’t taken the market by storm. A year ago, some of my sources were suggesting Amazon would be closing in on 20% of the download market by now. I’m not counting Amazon out, but they’re still in single digits and don’t seem to have great momentum.

In fact, one major label has been running a test in recent months with around a dozen big music retailers and online music services to gauge the importance of DRM on purchase decisions.

I’m told these include Amazon, Wal-Mart, BestBuy and Napster (before it was purchased by BestBuy); Amazon denies knowledge of any such test, while the others didn't respond to my inquiries to confirm their participation. What matters is that so far, the results suggest that DRM isn't high on consumers' list of concerns. "DRM-free sales are very good at Amazon and Walmart,” says one source familiar with the test. “But DRM-enabled products are doing just about as well. It could be that we’re just in transition. But there doesn’t seem to be this overwhelming consumer demand for everything MP3.”

This leaves Apple right where it wants to be: it can claim it’s against that nasty old DRM (remember Steve Jobs’ memo on the topic a year ago?), without any pressing need to do anything about it. A company spokesperson says Apple has no plans to join DECE. And what has Apple done to enhance its iTunes Plus store, since it opened in 2007 after Apple secured rights to sell EMI's catalog with no DRM? Not much at all. Instead, it's stuck to its lucrative status quo: selling songs protected by Apple's Fairplay DRM system, thereby keeping consumers locked into using iPods and iTunes.

Of course, Apple fans will blame Fairplay's survival on Sony, Universal and Warner, which have refused to give Apple the DRM-free rights they’ve granted to Amazon and now MySpace. And yes, there is definitely a "Get Apple" aspect to all of this. These labels, and all those iPod and iTunes rivals, have finally figured out that their best hope against Apple is to let bits flow more freely between their devices and services.

But my guess is that Steve Jobs doesn’t really mind being discriminated against by these labels. It lets him claim his hands are tied. That’s the party line from Apple PR, which insists the company is doing its best with a limited DRM-free library. Even without those three big labels, PR claims that roughly half of the eight million-plus tracks on iTunes are also available on iTunes Plus (besides EMI, this includes indies).

Personally, I don’t buy it. First of all, if Apple can convince NBC’s Jeff Zucker to come back into the iTunes fold, wooing the music labels shouldn’t be so difficult. Heck, they’re in far worse shape than NBC, and need iTunes sales more than Zucker does.

Then there’s the iTunes Plus shopping experience. It just doesn’t meet Apple’s typical level of ease-of-use and general excellence. Sure, there’s a single button on the main iTunes store, and a small, unexplained “+” next to songs that are available without DRM. But buying unprotected music takes far more clicks and energy than buying from the regular iTunes store. And Apple offers a lousy deal for people that might want to swap their DRMed songs for non-DRMed versions. The only option is to upgrade every single DRMed song in your iTunes library, at $.30 a crack. There’s no way to avoid paying the fee for songs you no longer care about.

That doesn't seem like the approach one would expect from a company committed to the vision Jobs laid out in that "Thoughts on Music" memo. He wrote of his hope for "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."

Yes, I think he'd embrace such a world. But don't expect Apple to do much to create it.

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Reader Comments

Reality Check

September 18, 2008 08:52 AM

"lucrative status quo: selling songs protected by Apple's Fairplay DRM system, thereby keeping consumers locked into using iPods and iTunes."

Um, I'm not locked into anything. I can play any mp3, or most other non-DRM formats, from any source on my iPod. I can buy a CD and rip it if I wish (takes all of 2 minutes). I can burn CD's of the songs I buy at iTunes and use them in my car or home stereo. I can use my iTunes purchases on up to 5 computers at a time...how many people need to use them on 6 at a time?

And if I ever felt the need to use my purchases where DRM won't let me, I can simply burn a CD and re-rip it. A small amount of work, but hardly "locked". And a lot better than the dead music services that simply cut folks off - remember the phrase "plays for sure"?


Snafu

September 18, 2008 10:09 AM

That's extra work and extra cost and extra limitations.

Steve

September 18, 2008 10:24 AM

Pure rubbish. If Apple was in favor of DRM, why would it offer as much content as possible in the iTunes plus (DRM free format)? Is there any evidence to suggest the other major labels will allow Apple to sell DRM free content? No? End of story then.

I am anxiously awaiting the day when all content will be DRM free. The record labels have gone on record saying that they intend to offer DRM free music to Apple's competitors in order to level the playing field. Until there is evidence to suggest Apple is the bottleneck, I'll continue to the blame with the record labels. Nothing in this article provides a convincing reason to think otherwise.

Mark U.

September 18, 2008 11:10 AM

It's overstating the case, to put it mildly, that buying iTunes Plus tracks "takes far more clicks and energy" than buying protected tracks. You turn on a preference in your account settings to show you Plus tracks when they are available -- a one-time step -- and otherwise the purchase process is exactly the same.

Where Apple could be doing more is with the bitrate of protected songs. 128Kbps was fine at launch several years ago, but it is no longer competitive and sounds demonstrably worse that the 256Kbps (or greater) tracks offered by Amazon and other other stores. Where possible, I buy from Amazon for precisely this reason. I'd prefer no DRM, but it never gets in my way, so my differentiator is sound quality. Apple's tracks just sound worse than everyone else's. This is an area that, I imagine, Apple could fix if they wanted to, without having to get the labels' permission.

M Dumais

September 18, 2008 11:44 AM

Mr. Burrows, I do not agree with you. Your article is more about discrediting Apple than objectively analyzing the facts.
As an aside, it looks chic to use foreign language expression in a text as a way to make one looks knowegeable but one has to make sure to write it properly. There is an 'U' missing in de word 'rigueUr' , so it is 'de rigueur' to check the spelling before posting because it may have the opposing effect.
aurevoir, m dumais

MonkeyT

September 18, 2008 11:46 AM

As long as there are both DRM and non-DRM files, there will always have to be an action taken by the user to choose between them. Only one can be a default, and since the record labels won't let the vast majority of tunes be DRM-free on iTunes, that default has been chosen to be the one that inconveniences the least amount of business traffic. When the labels say all can be sold without DRM, those inconveniences will go away.

James Bailey

September 18, 2008 04:58 PM

I might not be typical or an important market segment but I've stopped buying all DRM protected music. I have a lot of DRM encumbered music from iTunes from before the EMI announcement and none after (except the free stuff that Apple gives away every week.)

I won't be buying any new music until it is free of DRM (and preferably a higher bit rate. Maybe I'm alone but this is the clueless music industry you are reporting on. They could see a 80% decline between DRM and non-DRM and decide to call it inconsequential without blinking.

E

September 18, 2008 07:15 PM

Actually, now that the prices are the same, if the tracks are available DRM free that is ALL that is available. There are no longer DRM encumbered versions of those files. There is also no longer a need (or a way) to select it in options, and the number of clicks is the same as if it were DRMd files. You really need to fix your article...
I am saddened to see that you can no longer choose which files to upgrade (you used to be able to) but at the rate that they are trickling out, it has not been an issue...

Neurotic Nomad

September 18, 2008 08:07 PM

It's obvious that few of the commenters have read the entire article.

The first part is inflammatory (nice for the hit count), but you support your argument fully.

I wholeheartedly agree with your point. Apple is not doing ANYTHING (good or bad) about DRM.

They need to throw their weight around for Joe Consumer and musicians by doing more to convince musicians to go indie and/or the Majors into dropping DRM.

The stalemate is between the musicians and the RIAA with Apple in the middle, doing nothing except watching the customers get screwed and profiting from it.

Hey, Apple! Re-design the iTunes Store to have a "DRM-Free" Setting for the browsing experience, or at least a DRM-Free Section that gets refreshed as often as all the other sections.

veggiedude

September 18, 2008 08:55 PM

I bought music last night from iTunes and it was DRM free. I bought the latest Coldplay album a few weeks ago also DRM free. I will only buy music/video that is DRM free from iTunes. It has a selection that is getting bigger all the time.

KenC

September 18, 2008 09:40 PM

Interesting argument and conclusion.

If Apple were truly dragging its feet on DRM, all a label would have to do is release the information that Apple refused its offer of DRM-free tracks. Given how adversarial some of the labels have been to Apple, you'd think that would be a no-brainer in their battle to avoid having Apple dominate the online distribution of music. Since they haven't, then it's obvious, your argument and conclusion are false.

Sometimes the obvious answer is the right one. Clearly, the labels are doing whatever they can to promote alternatives to iTMS, including colluding on selling DRM-free tracks thru Amazon and other stores. The music industry has a long history of collusion.

The DECE is a smokescreen. It purports to be user-friendly, but a true user-friendly system would eliminate the use of DRM to begin with.

Your argument boils down to Apple can convince Zucker, so why can't it convince the labels, and iTunes Plus is hard. That's not much of an argument.

The bottom line is that Apple's DRM, Fairplay, is NOT onerous to users. That's why DRM is not high on customer's list of concerns. That's why the iTMS succeeded in the first place. Nothing has changed. Apple has hit the sweet spot. They have a winning combination of jukebox, music store and music player. Having a Myspace or DECE store, only addresses part of Apple's winning combination.

RipRagged

September 19, 2008 01:04 AM

Here's my guess. Apple is taking notes. When they're ready, they'll scream antitrust from the rafters.

The record companies are in collusion with each other and anyone who they think can help them bust Apple down a notch.

If that isn't a violation of antitrust laws, then burn the book.

After another year or two, Apple is going to eat the RIAA for lunch. When that happens, it will be nice to have a $20B+ nest egg for resigning important acts.

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A blog on the daily doings of Apple and the many companies in its orbit, with insight and analysis by two longtime Apple-watchers BusinessWeek Senior Writer Peter Burrows and BusinessWeek.com Senior Technology Writer Arik Hesseldahl.

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