A Few More "Thoughts on Music"

Apple's Jobs left a few music downloading scenarios off his list. Here's a suggestion for testing his proposal to ditch DRM

by Arik Hesseldahl

The first time I heard the phrase "digital rights management" was in 2000. It came from the mouth of Dick Brass, who at the time headed up Microsoft's (MSFT) automotive computing division.

I didn't like the phrase from the start. The reason is, it made me think of credit card bills, and nothing irritates me more than credit card bills, especially when they're getting bigger. The context was a breakfast chat over Microsoft's ideas for in-car computing. Cars would one day have entertainment centers playing digital music and video files, and would need some kind of "digital rights management" technology, Brass explained. That way the seller could keep track of the media consumed in my car and charge me—and my card—accordingly.

The Jobs Proposal

My disdain for DRM hasn't diminished. And now the phrase is front-page news, following the Feb. 6 philosophical manifesto from Apple (AAPL) Chief Executive Steve Jobs (see BusinessWeek.com, 2/7/07, "Steve Jobs' Music Manifesto"). For more than three years Apple has operated the most successful example of how digital media can be sold over the Internet and still be protected by DRM technology that inhibits it from being copied and redistributed in violation of copyright laws. Now, Jobs says he's ready to "wholeheartedly" ditch DRM—if the major recording labels, including EMI and Sony BMG, can be convinced that they no longer need it.

Jobs' essay, "Thoughts on Music," lays out three alternatives for the future, then goes on to explain why some won't work. First, he says, the market can continue as it is. Apple, Sony (SNE), and Microsoft all use DRM technology to limit where purchased downloaded songs can be played. With a market share of 80% of the music download business, Apple is clearly the big dog in this race and for now could afford to maintain the status quo. Its iTunes Store—which operates at a small profit—is essentially a marketing tool to sell the hugely profitable iPod. The market could continue like this indefinitely, he says, and from his point of view, he's correct. Each year brings better players and more choices from the various digital media vendors.

But what's missing is interoperability. Songs purchased on iTunes simply won't play on non-iPod players, like Microsoft's Zune or SanDisk's (SNDK) Sansa. Nor can songs purchased from other online music stores easily be played on the iPod—all thanks to DRM.

Another option outlined by Jobs is for Apple to license its own flavor of DRM, a technology known as FairPlay, which limits the number of computers on which songs purchased from iTunes can play and keeps iTunes music from being played on rival players. The problem, Jobs explains, is that since FairPlay is based on secrets, and licensing requires that those secrets be revealed to others, the risk of those secrets being compromised is higher.

Ditching DRM

Then there's the third option that got all the headlines and sent shockwaves throughout the music industry: Dump DRM entirely. If the record companies stopped requiring DRM, Apple would sell only unprotected music on iTunes. Using DRM doesn't stop piracy, he says. And he's right. In fact nothing will stop piracy, and regardless of the best laid plans, anyone thinking realistically about all this should just assume that it will continue more or less unchanged for the foreseeable future—that is, until copyright infringement becomes a capital crime.

The music industry hasn't issued any formal response to the Apple music manifesto, but in the likely event it doesn't fully side with Jobs, I'd like to throw out a few scenarios Jobs left off the list.

The first concerns FairPlay. If in fact this is the best DRM there is at the moment, and if it's one that the record labels like best, then the best thing that should happen to it is that it become an industry standard. And the way that could happen would be for Apple to forgo any financial interest in licensing it.