Apple Computer has renewed contracts with the world's four largest music companies to sell songs through its iTunes Music Store, after blocking their attempts to end iTunes' flat-rate pricing scheme, Apple said on Tuesday....in the end Apple had more negotiating power because of the dominance of its intertwined iPod player and iTunes service.
Make no mistake about it. That intertwining and the dominance that goes with it is solely rooted in the non-interoperable (with non-iPod devices) and the non-licensable proprietary digital rights management (DRM) technology that Apple uses. It's called FairPlay, but it should be called UnFairPlay. No one else can participate in the FairPlay ecosystem unless Apple says so. Apple calls the shots. And now, that rule extends to the record labels. The coupe is over. The record labels knuckled under when they should have realized content is king and that without their content, the iTunes Music Service is nothing. If some neutral scheme like Sun's Project DReaM had any chance of breaking Apple's grip before it tightens to the point of no return (thanks to the new contract), now was the time to walk away. Sure, it would have cost the labels dearly. But that cost would have paled in comparison to the cost of long term enslavement to Apple.
The movie industry could learn a lesson from this and act in hopes of not letting history repeat itself (in which case, you might end up needing two incompatible portable devices -- one for music, the other for video). But with Jobs now wielding his influence at Disney, Hollywood could end up caving as well.
News of these renewed contracts is far more significant than most people realize.