The Jobs' DRM fallout is mixed
The reaction to Apple CEO Steve Jobs' open letter to the music industry about digital rights management has been relatively swift. But the scorecard is mixed when it comes to the music labels.
That development makes it Jobs 1, music industry 0.
But other music labels are questioning Jobs' motives and note his open letter is ill conceived. Warner Music Group chief Edgar Bronfman Jr. didn't mince words about Jobs' take on DRM.
On an earnings conference call, Bronfman said:
"Let me be clear: we advocate the continued use of DRM in the protection of our and of our artists’ intellectual property. The notion that music does not deserve the same protections as software, television, film, video games or other intellectual property simply because there is an unprotected legacy product available in the physical world is completely without logic or merit. But let’s not lose sight of the core issue. By far the larger issue for consumers in the music industry is interoperability. As a content company, we of course want consumers to seamlessly access our music and to use the music they have purchased on any platform and with any service, physical or digital. The issue is obscured by asserting that DRM and interoperability is the same thing. They are not. To suggest that they cannot co-exist is simply incorrect. At Warner Music, we continue to seek a balance between appropriate protections for our intellectual property and a robust and satisfying music experience for consumers. Interoperability sure would enhance that balance, while eliminating DRM would do just the opposite. We will not abandon DRM, nor will we disadvantage services that are successfully implementing DRM for both content and consumers."
Jobs 1, music industry 1.
The bright side: DRM dialogue has started, but don't think it's going to be easy. The music industry will reluctant to enter an anti-DRM world. For instance, the Recording Industry Association of America seems to advocate Apple opening up its DRM technology. You can argue that the RIAA is misreading Jobs' letter but the reaction is what it is. Meanwhile, there are security problems to ponder and a host of other issues to consider should DRM be standardized.
Regardless of the work ahead, Bronfman isn't exactly indicating a pleasant discussion. Check out the following from the Warner Music Q&A:
Analyst to Bronfman: One thing that struck me as Mr. Jobs announced his willingness to drop music DRM is that negotiating leverage has begun to shift. I felt initially Apple had the upper hand in negotiations with music labels, given the impact on your business from piracy and the promise of digital growth he could provide, but now the sale of iPods and revenue from iTunes and soon his iPhone are beginning to dominate results for Apple, and perhaps now music has become as important or more important to his stock price than it is for yours. Do you have any thoughts on that?
Bronfman: "I do not think it is helpful to talk about whom has more leverage in a negotiation. What I feel is that the more that the music industry and Apple can work together, it seems sensible to do so for both industries. I think more dialog between the industry and Apple could only be a positive thing and frankly, manifestos in advance of those discussions I think are counter-productive."
Translation: The DRM fun is just beginning.