Steve Jobs Open Letter On The State Of DRM

It seems that with legal challenges to Apple’s iTunes DRM flying at him left and right, Steve Jobs just can’t ignore it any longer. He’s penned an open letter addressing the state of DRM, and it contains some interesting news:

The third alternative is to abolish DRMs entirely. Imagine 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.

Oh, really? We imagine the RIAA might have a bit of trouble with that idea, but as time wears on it seems all but inevitable that DRM go away. And it appears that Steve Jobs has just committed Apple, should the recording industry ever wise up:

If the big four music companies would license Apple their music without the requirement that it be protected with a DRM, we would switch to selling only DRM-free music on our iTunes store. Every iPod ever made will play this DRM-free music.

Are you listening music companies? —MEGHANN MARCO

Thoughts On Music [Apple via MacUser] [Photo: Valeria Mellissa]

Comments

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  1. Skeptic says:

    Note Jobs’ false dichotomy. He talks about switching from all DRM to no DRM as if he is somehow unable to offer DRM free songs on iTunes by bands who don’t demand DRM.

    If Jobs was really against DRM he’d start by offering DRM-free songs from band who would allow it. Instead he’s trying to pretend that Apple doesn’t use DRM as a customer lock in and is trying to lay the entire blame at the feet of the music conglomerates. Granted, they are largely to blame, but Apple is a party to the DRM madness as well.

  2. cerulgalactus says:

    But can he program my damn VCR box? Can he ARSE!

  3. bluegus32 says:

    Skeptic: I tend to be less skeptical about this kind of thing. Remember that Steve Jobs was pretty much personally responsible for giving all of us the ability to buy music by the song. Before iTunes, you had to buy entire albums. Jobs’ ability to give us songs individually at $.99 has been a truly monumental effort.

    Point being, don’t doubt Steve Jobs. He is a god.

  4. Mr. Gunn says:

    He may be a god, but god’s DRM-encased phone is kinda a flop, so he must be part mortal too.

    /can I get a holy spirit for the trifecta?

  5. stephen5 says:

    Without DRM the iPod becomes another well made Apple product filling a niche market. Without DRM they will be swamped by cheap mp3 players, just as their superior computer was swamped by cheap IBM PC Clones and their VASTLY superior operating system was swamped by Windblows.

    People who are paying only 99¢ a song instead of buying a whole CD (including me) are cheap by definition.

    Also, I doubt that Jobs started selling music out of the goodness of his heart. He had a player and needed content. Same reason Sony started buying up record labels and catalogs. I tried to pawn a CD player in about 1988, guy laughed at me and said “Those things are the next 8-track.” Well Sony made vinyl into the next 8-track instead. They would like to see DRM do the same thing…

  6. Skeptic said: “Note Jobs’ false dichotomy. He talks about switching from all DRM to no DRM as if he is somehow unable to offer DRM free songs on iTunes by bands who don’t demand DRM.”

    You are aware that virtually all of the music on iTunes is licensed by MUSIC COMPANIES, right? The bands’ wishes have nothing to do with it – in virtually all cases, they don’t even own the music they perform.

    There’s no false dichotomy here. Trust me – Apple would love to be rid of the DRM albatross for all sorts of reasons you can’t begin to imagine. One reason – a big one – is that they’d make more money off of each song without the cost of developing, maintaining, and supporting DRM music – they’ve got a pretty big staff just doing that stuff, and those people could be put to more productive use around the company.

    Apple as a company is no saint – but they’re not happy about the DRM requirement, and they don’t screw people for the hell of it. The story is pretty much like Jobs said – the music companies have been scared of Napster-style trading of unprotected music for almost a decade and require the draconian DRM we’ve gotten used to in order to make songs available through various music services.

  7. TPIRman says:

    The iPod was popular prior to the iTunes Music Store, stephen5, so I don’t really buy your thesis. That and the fact that analysts have been saying for years now that the iPod was doomed to become a “niche” product.

    When the iTunes Music Store started gaining popularity, the Rob Enderles of the world said that the iPod was doomed because Apple refused to license their DRM, just as they refused to license the Mac operating system back in the day. Now everybody says that the iPod cannot survive WITHOUT the lock-in of iTMS.

    As Steve Jobs freely admitted in his note, songs from the iTMS make up about 2% of the average iPod’s content. Clearly there is more at work here than vendor lock-in. Or, rather, there’s less, because it’s pretty simple. The iPod is a quality product that has been marketed aggressively and intelligently. And iPod ≠ Mac.

    As for Jobs’s essay, there is certainly an element of “hey, it’s not our fault” to it, as Skeptic pointed out, but overall I find it hard to be entirely cynical about it. Here we have the CEO of the digital-music leader saying that the status quo is not ideal for consumers, and a DRM-free marketplace is the best option. That’s a pretty big moment.

    Plus, I tend to give Jobs credit as well because as bluegus32 pointed out, the single-song purchasing was a pretty big concession to win from the music industry a few years ago. It seems like, on the whole, he’s working toward a good end here.

  8. saikofish says:

    Liberal Cajun (hello from California, by the way) – you’re right about the bands not having a say in the DRM issue, but here’s my question. If the Big Four control distribution for 70% of the worlds music (according to Jobs), then there’s 30% of music out there that’s not ruled by them. And if that other 30% of music is run by smaller labels that don’t require DRM, then why won’t Apple start actively promoting non-DRM music from those sources? That sounds like a good idea: get Apple to promote your music, offer it without DRM, bands get more exposure (and hopefully more money, as long as those other labels aren’t corrupt) as a result.

    Unless the Big Four requires Apple to provide DRM on ALL music sold through the iTMS, whether they’re really distributed by them or not, then I think Apple has a huge responsibility to start actively promoting non-DRM music from alternative sources in a way that proves that they mean what they say. Otherwise, it’s just as Skeptic said– it’s Apple’s fault as much as anyone else’s, and Jobs is just shifting blame elsewhere.

  9. Falconfire says:

    Apple’s contract with the RIAA forces them to have DRM on all music main label or indie on the music store. Thats the reason why indie labels have the DRM on them when eMusic doesnt.

  10. Scazza says:

    Anyone else hear about the great advisory Apple released to day telling Ipod customers to NOT upgrade to vista as it has corrupted some Ipods. A patch for Itunes is coming, until then people are being advised not to update. So great, apple have had months to update itunes and out of lazieness people are going to believe their bull. I guess this, and their totally asinine “im a mac” ads, is their only tactic to get people to not switch to windows…

    Apple imo is still dead in the water and without their ipod still reigning supreme (god only knows how, people are stupid i guess), would be a much smaller blip on the radar.

  11. Im in yur internetz, stealin yur tunez

  12. Skeptic says:

    Liberal Cajun (formerly in Cullyforneeya) writes:

    You are aware that virtually all of the music on iTunes is licensed by MUSIC COMPANIES, right? The bands’ wishes have nothing to do with it – in virtually all cases, they don’t even own the music they perform.

    And you are no doubt aware of the fact that there are independent bands who are not beholden to record companies. However, most bands with CDs are represented and yet there are record companies like Nettwerk that will sell DRM free songs. So Jobs is still being disingenuous with his “poor little me” I have to put DRM on all iTunes songs or none of them and there is no in between. That is patently false which casts doubt on his credibility.

  13. stephen5 says:

    johnny-
    From Google answers (so not necessarily correct).

    iPod sales by quarter:
    Q4 2002 – 140,000
    Q1 2003 – 219,000
    Itunes launches in April of 2003
    Q2 2003 – 78,000 (sold out…hence the drop…)
    Q3 2003 – 304,000
    Q4 2003 – 336,000
    Q1 2004 – 730,000

    If true, I would day just from the raw numbers that iTunes may have had an impact on sales.

    Also they just announced that they have sold over 2 billion songs.

    I’m sure they would like to see Amazon or some other provider get a chunk of that market to help ease the load on their servers.

    The “big 4″ have all gone on record as deploring the need for DRM too.

    When they were buying up labels and catalogs, Sony said that they were committed to maintaining cassette and vinyl production…

  14. Skeptic says:

    Falconfire writes:

    Apple’s contract with the RIAA forces them to have DRM on all music main label or indie on the music store. Thats the reason why indie labels have the DRM on them when eMusic doesnt.

    Citation please. My quick look at Job’s comments didn’t find anything about a prohibition on DRM-free songs for indies. If this is true then Jobs should be bitching about the lame contract he signed with the labels and indies should be suing for collusion.

  15. brooklynbs says:

    Funny that Steve Jobs didn’t bother to respond to RealNetworks’ Rob Glaser two years ago when Glaser asked Jobs to unlock iTunes. Two years is a long time to come up with an excuse.

    Buy yourself a Sandisk Sansa and subscribe to Rhapsody-To-Go. It’s cheaper than buying songs or albums on iTunes, and I think the Sansa is a better product than the iPod Nano.

    Alright, start the Apple/iPod worshipping… now!

  16. stephen5 says:

    From the wonderful wacky wikipedia:

    Many music devices are not compatible with the AAC format, and only the iPod itself can play FairPlay-encoded files. Apple also reserves the right to alter its DRM restrictions on the music a user has downloaded at any time. For example, Apple recently decided to restrict the number of times a user can copy a playlist from ten to seven. Songs can be played on only five computers at a time, and users cannot edit or sample the songs they purchased (though copies can be used and edited in Apple’s iMovie). Despite these restrictions, the iTS DRM is often seen as lenient.

    An intentional limitation of Fairplay is that it prevents iTunes customers from using the purchased music on any portable digital music player other than the Apple iPod. On January 3, 2005, an iTunes online music store customer filed a lawsuit against Apple Computer, alleging the company broke antitrust laws by utilizing FairPlay with iTunes so that purchased music will work only with its own music player, the iPod, freezing out competitors (iTunes Lawsuit).

    On June 28, 2004, VirginMega filed a complaint with the French Competition Council against Apple regarding its refusal to license Fairplay to VirginMega for use in their own online music commerce store.

    (Virgin lost.)

    So as you can see Mr. Jobs is working as hard as he can to end DRM.

  17. br549 says:

    I don’t think anyone here knows if iTunes is free to offer DRM-free content on the store. Do you know the state of Apple’s contracts? It’s very possible that as Jobs has alluded to before, the record labels all have the same deal.

    If they didn’t all have exactly the same deal, he surely couldn’t hold the $0.99 price across the board. I know I wouldn’t want to negotiate different deals with all the labels. They’ll eat you alive over time nibbling at you and in legal fees.

    Mr. Gunn: where do you get that iPhone is a flop? It isn’t offered for sale yet. For all any of us know, it’ll sell 100 million the first day.

    brooklynbs:
    Rob Glaser didn’t ask Jobs to unlock iTunes. He asked to be able to sell DRM content to iPods. This is different from selling non-DRM content. The major differences are outlined in the article you’re responding to right now. He may not have responded in public back then, but I’m sure reading this article you can tell now why Jobs wouldn’t acede to it then (that and the money, I’m sure).

  18. Will Clarke says:

    I think if Apple started letting the labels who upload music choose if it must be DRM’d or not, he’d find that many of the independent labels would choose the latter. Then, when sales of independent labels’ music skyrockets, the big four would realize they are being jackasses and follow the trend.

    A lot of people here seem to think that if Apple sold DRM-free files it would cannibalize their iPod sales. This is insane. The iPod is the number one music player because it is an awesome product, not because it plays music bought through the iTunes Store. I know lots of people that have purchased NO music through the iTunes Store and have iPods. Steve mentions in his article that only about 3% of music on iPods has DRM. I seriously doubt this is keeping people from switching players. What’s keeping them from switching players is the fact that they all are pretty crappy.

  19. helio9000 says:

    >Are you listening music companies?

    It is far more likely that he is listening to the record companies who have been making noise about getting out from under Apple by going DRM free. Gates said the same thing months ago. I don’t believe either of them.

    The ceo of Nettwork Records carried on both Emusic and iTunes has openly questioned why there is DRM on his music on iTunes when in fact, he doesn’t require it since he feels it only benefits apple.

    >>>>

    “But when the same tracks are sold by the iTunes Music Store, Apple insists on attaching FairPlay copy protection that limits their use to only one portable player, the iPod. Terry McBride, Nettwerk’s chief executive, said that the artists initially required Apple to use copy protection, but that this was no longer the case. At this point, he said, copy protection serves only Apple’s interests.”

    http://nanocrew.net/category/drm/

    >>>

    You’d think if DRM was so painful for Jobs he would start there. This is called pass the buck.

    Also, hilariously, he is using the same 22 songs/per iPod figure that so outraged apple in the Forrester report about sales collapsing. Then it was pointed out that this number is dviding the number of songs sold by total # players sold when in fact a lot of those players are out of commission. They went on to say that the iTunes store is a huge hit and sell a track every 58 seconds. Now, that it suits him, the Forrester numbers are suddenly valid? Truly amazing what passes for logic when people want to believe.

    Also, OS X has some of the most effective DRM in software. If Jobs doesn’t like DRM then maybe he should show the labels how it is done and let people buy and run OS X wherever they would like.

  20. “It is far more likely that he is listening to the record companies who have been making noise about getting out from under Apple by going DRM free.”

    Getting out from _Apple_? Apple doesn’t own the music and isn’t a big enough force to dictate licensing terms. Are you serious?

    How could a rational person possibly believe this?

    What purpose…other than the questionable profit from each song sold on iTunes does Apple have to keep FairPlay in place? From all acounts, iTMS is pretty much self-supporting; it doesn’t make any appreciable amount of money for Apple. It would be far simpler for Apple to offer a DRM-free store than to maintain the staff needed to update and close holes in FairPlay for the benefit of the record companies.

    You know – the record companies. The people who sue over pirated/downloaded music. The same recod companies who dictate the terms of Apple’s DRM in exchange for licenses to sell music.. You really have to be smoking some good shit to think Apple has the record companies under its thumb.

    A few thousand Macs equal the profit from the iTMS in a given year. Do you really think that’s sufficient motivation for Apple to keep DRM enforced despite what you seem to think is the the music companies’ altruistic and unspoken wishes to make all music DRM-free?


    If Jobs said publicly that the record companies were the only thing keeping iTunes DRM in place, do you really think he’d risk the exposure by lying in an open letter to the community?

    Some people will do and say anything to think Apple is somehow more evil than every other corporation.

  21. TPIRman says:

    Stephen5: “If true, I would [say] just from the raw numbers that iTunes may have had an impact on sales.”

    Obviously it had some impact. That’s not what you said before, though. To refresh, you said: “Without DRM the iPod becomes another well made Apple product filling a niche market. Without DRM they will be swamped by cheap mp3 players…”

    My point is that the iPod was doing quite well before FairPlay DRM, which your numbers demonstrate. Judging by those data, the rate of iPod sales growth pre-iTMS and post-iTMS, discounting supply shortages, is very roughly similar. But what about that huge blip in Q4 2004? That’s when the new iPod mini line was introduced. Hence my argument that the success of the iPod is based more on the quality/appeal of the hardware and marketing savvy than it is on draconian DRM.

    Nobody is denying that iTMS is a factor in sales of the iPods, but to claim it is the goose laying the golden eggs is pretty wacky.

    As for the Virgin suit, that was about licensing the FairPlay DRM to other companies — as the quote you include clearly explains — rather than getting rid of it altogether. Jobs specifically discussed his problems with licensing FairPlay in his note. (It was his second “alternative.”)

    You can certainly disagree with his viewpoint, but at least understand the difference between licensing and “ending” DRM. You’re arguing at cross-purposes here.

  22. TPIRman says:

    Small correction: I meant to write “that huge blip in Q1 2004,” not Q4. The point remains the same, obviously. The iPod mini was introduced January 2004.

  23. jitter says:

    The thing that is lost in this is the fact that the Ipod is the dominant player for other reasons than the ITMS. The interface, its usability, and the fact that it has the software that allows easy use.

    Removal of DRM will not change any of these facts. Ipods will still rule the universe, most users will use Itunes to update, and they will buy from Itunes BECAUSE IT IS EASY! I am willing to bet that the average consumer doesn’t care about DRM, and would not even notice a difference. All they know is that the want the new Shins Album, and they will most likely take the path of least resistance, ITMS. My guess is that is what Steve is betting on as well. He wouldn’t take this stand without the market domination.

    Plus, he gets to be the ubergeek hero a little while longer.

  24. stephen5 says:

    Johnny -
    First 2 quarters 359,000 units (skipping q2 of 03, was the dock strike at that time?) next 2 quarters 640,000 units. 281,000 more units sold. A sales jump of 56%.

    Regardless, they have sold 2 billion songs to what amounts to a private market. When Virgin wanted to join the DRM party Apple said no.

    Jobs second alternative is self serving nonsense.

    His position that sharing DRM among other providers would somehow make it easier to crack, and violate the trust that the big four have in Apple is ridiculous given the fact that FairPlay is easy to crack and has already been cracked without being shared. Jobs further stating that he must be right, because Micro$oft is following suit is just as bad. M$ sees Apple selling 2 billion songs at 99¢ each and they want a piece of that money for themselves.

    Here is a nice quote from Credit Suisse analyst Robert Semple:
    http://www.appleinsider.com/article.php?id=1770

    “For comparison, it took Sony over 10 years to sell 50 million Walkmans, while Apple reached the same milestone in half the time despite lower market share and stiffer competition,” analyst Robert Semple wrote. “Incidentally, Apple’s ability to pull-through additional revenue from accessories and music downloads has enabled it to effectively expand its opportunity.”

    The analyst says Apple’s shipments are currently tracking at approximately twice Sony’s comparative pace, despite the iPod having lower overall market share. He said, “the biggest difference between the two products remains the use of open standards, with Sony effectively delivering an industry standard product while Apple remains proprietary.”

    While history has shown that closed systems like the iPod are rarely prosperous for prolonged periods, Semple believes Apple to be an exception. Because consumer electronics are not expected to become as large of a commodity as personal computers, he sees Apple’s competitive position as sustainable for the foreseeable future.

    “We do not believe Apple can be unseated from its leadership position by attacks on the individual segments of its music business, be it iPod or iTunes,” Semple said. “Rather, we believe there will need to be a complete solution offering seamless integration between the hardware and software.”

  25. helio9000 says:

    If you don’t think Apple has any say with the record companies you are the one smoking something – companies have tried for years to get Apple to go with different pricing schemes and he has been able to hold the line because of the iTunes store’s power. Sorry, perceived power, I guess it has none even though during the keynote we heard how awesome its performance was.

    We know the companies are greedy why couldn’t they get better pricing out of Apple if they held all the power? Anyway what I think about it doesn’t matter because it is the record companies themselves who believe they have to find alternative distribution:

    http://www.techcrunch.com/2007/01/10/the-inevitable-death-


    >iTunes DRM in place, do you really think he’d risk the exposure by lying in an open letter to the community?

    What’s he got to lose? Everyone hates the record companies and loves apple. It is also curious that he is among the last DRM purveyors to make this claim. The yahoo music chief did it a year ago, gates a few months ago.

    I hardly think Apple is more evil than any other company – I do however, think they are just as self serving as any company but I know people like to think different and will apologize for them no matter what they do. I also think they would do great in a DRM free environment.

  26. HawkWolf says:

    Steve Jobs is really good at saying what’s important, even if it’s against what he said before. When he said DRM was necessary, he was right. When he said DRM was wrong, he was right. He didn’t say the two things at the same time, and things have changed since he said the first one, which makes the second one fit more with the ‘progressive’ position in the industry.

  27. r3m0t says:

    Skeptic: “If Jobs was really against DRM he’d start by offering DRM-free songs from band who would allow it.”

    The recording companies have contracts with Apple that basically say that they have the “best deal” out of every contract between Apple Inc and a recording label.

    That means that if Apple buys songs at a high price from independent labels, they have to buy songs at a high price from major labels. Also, Apple mustn’t sell independent labels’ songs to customers at a lower price than they sell the big labels’ music. Also, Apple mustn’t sell /any/ DRM-free music because that would be a better deal to the consumer and people would buy more independent songs.

    Notice that Jobs subtly says /all/ music labels must ditch DRM before Apple does? That’s the “no undercutting” clause at work.

    Now, Apple probably doesn’t have the power to negotiate away that clause, but they can introduce their own clause (probably). It says that Apple must have the “best deal” out of every contract between the major recording labels and other music stores.

    That means that nobody can buy wholesale songs cheaper than Apple. Nobody can get DRM-free songs unless Apple does too.

    They probably have a similar clause with Microsoft.

    Now, imagine Microsoft doesn’t want to sell DRM-free music (for platform lock-in purposes). Microsoft’s strategy, after all, is (eventually) to get a micropayment every time somebody uses DRM-protected music. Microsoft must also get one of the best deals, so the recording labels can’t sell Apple DRM-free songs. (Even if they wanted to, which they clearly don’t.)

    Hum hum.

  28. r3m0t says:

    helio: “It is also curious that he is among the last DRM purveyors to make this claim. The yahoo music chief did it a year ago, gates a few months ago.”

    I don’t see that Bill Gates said that. I found a few articles on “digital locks too complex”, but he didn’t actually say that Microsoft was willing to sell DRM-free music as soon as the record companies allowed it.

    stephen5: I don’t think Fairplay DRM has been cracked. The best you can get is a program which watches the memory of iTunes while it is playing a protected song. That takes just as much time as playing the song.


    That said, I certainly don’t buy that licensing the DRM will make it easier to crack. I don’t think many (if any) of the cracks of music DRM used insider information. It also isn’t difficult to update third-party software – just look at FairPlay.

    helio: “Also, OS X has some of the most effective DRM in software. If Jobs doesn’t like DRM then maybe he should show the labels how it is done and let people buy and run OS X wherever they would like.”

    He didn’t say that he doesn’t like DRM (or even that DRM is bad for consumers). He said DRM /on music/ is bad for consumers. He also wasn’t trumpeting “consumer power”. He said that it is bad for consumers, /and also fails to effectively protect/ the product (music). OS X is not music, nor does it fail to effectively protect the product.

  29. stephen5 says:

    r3m0t: FairPlay was cracked almost immediately, it’s still cracked despite Apples patches. You can dump your iPod to Linux or a Winblows system and play FairPlay protected music, but is illegal. Redirecting the output stream is one method of copying, but you are right it’s not really a crack.

    Check out Jon Lech Johansen’s blog, he is a “pioneer” in the reverse engineering of iTunes and the world of DRM.
    http://nanocrew.net/

  30. pdxguy says:

    tabby catz listenin’ to tabby tunez

  31. crayonshinobi says:

    Just wanted to give my two cents, as I’m sure I’m not alone in this.

    I’ve been using iTunes for a couple years now and not once have I purchased something from the iTunes Store. In fact, that was the first thing I disabled after install. I will not pay for crippled data/music.

    However, if iTunes started selling DRM free music, then I’d start buying it. Funny how that works in exactly the opposite way that the RIAA expects.

  32. gundark says:

    Whether or not Jobs means it isnt an issue. Whether or not you believe him or think he has other motivation doesn’t matter either. He drew a line in the sand, asking if the RIAA will cross it. I think all of us can agree that we hope they do rather then trying to find things we disagree about.