IP Democracy: Jobs: We'd Drop DRM in a Heartbeat

In an unusual open letter, Apple CEO Steve Jobs makes an appeal to the music industry to drop its demands that music be sold online only if songs are embedded with digital rights management technology. Perhaps picking up on the latest statistics which show a slow-down in the growth of digital music sales, and certainly defending Apple against the growing ranks of critics who contend Apple is trying to “lock” music buyers into the iPod with its proprietary technology, Jobs explains that the only reason Apple embeds DRM technology into the music it sells is that the record companies demanded it in the first place.

When Apple approached these companies to license their music to distribute legally over the Internet, they were extremely cautious and required Apple to protect their music from being illegally copied. The solution was to create a DRM system, which envelopes each song purchased from the iTunes store in special and secret software so that it cannot be played on unauthorized devices.

If Apple’s DRM, called FairPlay, is cracked, a possibility made more likely if Apple licenses it to third parties (as many European groups have demanded), it loses the right to sell much of the music it offers. But, piracy is still rampant despite the multiple DRM technologies out there (Microsoft and Sony each have their own proprietary DRM systems). CDs aren’t encrypted and consumers transfer music from CDs to the Internet and their portable music devices all the time. Jobs says that 97% of the digital music out there isn’t encrypted.

So, what to do? As Jobs sees it, one alternative is to continue on the current path, which, as everybody knows, hasn’t worked. The second alternative is for Apple to license its DRM technology but that will only lead to more hackers developing more tools for unlocking protected music.

The third and final option is for the record companies to give it up and release all music in unprotected MP3 format. This is the alternative Jobs recommends.

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. 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.

Even though music companies have held onto DRM as a talisman against theft, it hasn’t worked. “DRMs haven’t worked, and may never work, to halt music piracy,” Jobs writes. If anything, DRM may be working to actually lower the sales of music by placing technological burdens on web-based sellers, which lowers competition.

So if the music companies are selling over 90 percent of their music DRM-free, what benefits do they get from selling the remaining small percentage of their music encumbered with a DRM system? There appear to be none. If anything, the technical expertise and overhead required to create, operate and update a DRM system has limited the number of participants selling DRM protected music.

Wise words, but they could fall on deaf ears. Since the earliest days of Napster, the record companies have dug in their heels in a myopic kind of way, failing to grab onto opportunities that might help them not only survive but also thrive in the digital era. But, if anyone could appeal to the smarter instincts that record company executives surely must possess, it’s Steve Jobs.

Posted by Cynthia Brumfield on February 6, 2007 4:34 PM to IP Democracy