Steve Jobs' Music Manifesto

Under pressure to loosen restrictions on copyright protection technology, Apple's CEO turns the tables and puts the onus on the music biz

by Arik Hesseldahl

Leave it to Steve Jobs to go from controversy to PR coup in a matter of words—1,800 of them, to be exact. That's how many it took for the Apple (AAPL) chief executive to issue a dramatic about-face that could recast Apple's role in the long-standing debate over copyright protection software. His company is under increasing pressure from governments in Europe and consumers around the world to loosen restrictions on music downloaded from the iTunes music store and what songs can be played on the iPod.

In a carefully worded statement, Jobs took the onus for lifting those restrictions off his company and put it squarely on the music industry. At issue is the so-called FairPlay software that prevents iTunes songs from being played on non-iPod music players and keeps music purchased at other services from being played on the iPod. Apple embedded FairPlay into iPods and iTunes at the behest of the music labels, and now Jobs is calling on those companies to stop requiring digital music distributors like iTunes to use copyright protection technology.

Change of Heart

In the final paragraph of the essay, "Thoughts On Music," posted to Apple's Web site on Feb. 6, Jobs said that convincing music labels, like Viviendi-Universal (V), Britain's EMI and Sony-BMG (SNE) to allow their music to be sold online without digital rights management (DRM) technology would "create a truly interoperable music marketplace"—one that Apple would embrace "wholeheartedly."

The request couldn't be better timed, say industry insiders. While some critics in the music industry have carped about Apple's strategy for years, the industry as a whole has been showing an increasing openness to loosening at least some demands. The Recording Industry Association of America, which represents the major labels, wants changes that would let users play downloaded music across a variety of devices (see BusinessWeek.com, 1/5/07, "Music Fans: Dismantle DRM").

But before that effort could gain traction, Jobs has taken the upper hand, says Bob Kohn, who founded and later sold eMusic, the leading seller of non-DRM music, mostly from indie bands. Regardless of what direction the industry takes now, Apple can now claim the moral high ground. "He may be counting (on the idea) that the labels will still not give up on DRM," says Kohn, who's now CEO of RoyaltyShare, which processes royalties on digital tracks. That lets him "play the hero to consumers." Or if the labels do drop DRM, then Apple can claim credit, rather than be blamed, says Kohn. "It's a PR ploy, and he'll come out ahead either way."

Fear of Leaks

Arguing for the removal of DRM controls on songs sold online, which governs how many copies are made of a song and on what devices the song can be played, constitutes a change of heart—or at least a change in his public statements—for Jobs nearly four years after Apple first launched the iTunes Music Store in mid-2003. The backbone of the iTunes store is Apple's FairPlay, which allows customers who buy music on iTunes to copy songs to as many as five computers and to all the iPods that they happen to own.

Companies have lobbied Apple to license its FairPlay technology, saying that were it to do so, FairPlay might evolve into a de facto industry standard that all music and hardware vendors would adapt. Jobs said in the essay that licensing FairPlay might seem like a good idea at first and that Apple might benefit by charging a licensing fee to each company who chose to use it.