Apple: Not a DRM monopoly yet, but behavior is monopolistic

Apple: Not a DRM monopoly yet, but behavior is monopolistic

Summary: In another blog entry that I published earlier today regarding how something as simple as the playback of one track of a music CD can result in the surreptitious installation of a Digital Restrictions Management (DRM) Trojan horse on your system, I also discuss how the DRM technology found on certain CDs is incompatible with Apple's DRM technology known as FairPlay.  The result of this incompatibility is that the music on DRM-protected CDs from Sony music cannot be loaded into iPods.

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TOPICS: Apple
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In another blog entry that I published earlier today regarding how something as simple as the playback of one track of a music CD can result in the surreptitious installation of a Digital Restrictions Management (DRM) Trojan horse on your system, I also discuss how the DRM technology found on certain CDs is incompatible with Apple's DRM technology known as FairPlay.  The result of this incompatibility is that the music on DRM-protected CDs from Sony music cannot be loaded into iPods. I'm not sure if the same restriction (what the "R" clearly stands for in "DRM") turns up with portable devices that use Microsoft's DRM technology. 

In what has to be one of this industry's strangest ironies, the company that put the protection in there is responding by offering a workaround that defeats the copy protection.  But according to a story on CNN.com, the record label is also "urging people who buy copy-protected titles to write to Apple and demand that the company license its FairPlay DRM for use with secure CDs."

Although no one has officially declared Apple's FairPlay to be a monopoly, Apple, by not licensing its technology, is using tactics that are brazenly monopolistic. Not only is the practice not in the best interests of the consumer, it is restraining what should be a free market.  For example, Sonos, a company whose digital hi-fi gear depends on the wireless distribution of music, is technically a competitor to Apple, who makes a similar technology known as AirTunes.  In fact, to the extent that Apple's gear could serve as a centralized music distribution solution (wireless or not) -- a direction that both Apple and Microsoft (with its Media Center) are taking their offerings -- Apple is technically in competition with just about all hi-fi companies whose gear does the same thing.  According to Sonos executives, Apple has so far refused to license its technology to them.  Off the record, I have had other makers of digital gear complain about the same problem.  Sony has apparently hit the same roadblock. 

By not licensing its technologies to those companies, Apple is disallowing the playback of iTunes purchased music -- now the most popular channel for a la carte digital song purchasing -- through its competitors' gear.  The practice is a classic monopolistic tactic that can result in restraint of trade and foreclosure in competition.  With its sights set squarely on the home entertainment market, Apple -- a company that makes more profit on its gear than it does on the sale of 99 cent songs -- clearly has the reason and the motive to keep the traditional hi-fi gear vendors at bay while it looks to become a much bigger player in that market than it currently is (particularly with Microsoft going after the same thing, and Intel of course being the big winner since Apple's future gear will be Intel-based). 

Meanwhile, with every Fairplay-protected song or video that gets downloaded from the iTunes Music store, purchasers of digital content are helping Apple to tighten its grip.  Stop the madness.  Declare inDRMpendence.  Just say no to DRM, wherever it rears its ugly head.

Topic: Apple

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6 comments
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  • Not just Sonos

    All of the other wireless music systems (Squeezebox, Soundbridge)
    are also incompatible with Apple's DRM (then again, they're also
    incompatible with Microsoft's WMA DRM as well, so it's not just
    Apple).

    Once I bought a Squeezebox, I stopped purchasing from iTunes. I
    used jHymn to strip out the DRM from all of my previous
    purchases, and until jHymn is compatible with iTunes 6, I won't buy
    any more from Apple.
    tic swayback
  • Apple's Behavior

    What are the criteria for a monopoly? It could be said that if
    Apple had 4% of the music market, no one would be complaining
    about their DRM. They'd be seen as just another losing player
    among many. If they were at 4% Apple would be seen as
    competing vigorously to establish their version of DRM as a
    standard. The fact that they don't presume to license would be
    seen as an effort to go head to head with other viable DRM
    schemes in an attempt to have public choice set the standard.
    Who would want to license a failing DRM scheme anyway? Let's
    be clear then that this is not a complaint about Apple's practices
    which have been largely consistent throught the years. Rather,
    this is a complaint about their strategy relative to their current
    popularity. We have to agree that players in the marketplace are
    constantly attempting to move to a dominant position.
    Monopoly and monopoly maintenance are another issue. Once
    that line has been crossed, the rules change. Licensing broadly
    has in the past been used as the vehicle for monopoly
    maintenance. As witnessed with Microsoft's latest gaff,
    restrictive clauses and legally binding language within a license
    represent a clearer path to total control than does the fight for
    marketshare and mindshare.

    So on the one side we have WMA and Microsoft prepared to
    license to everyone. As in the past, the mouth of the funnel is
    broad but narrows drastically to make sure that, if WMA secures
    dominence, a lions share of creative content is channelled into a
    licence held by a company with a long record of betraying
    consumer trust.

    On the other side (the only other side) we have Apple with a
    stellar record of customer satisfaction and a quality product that
    everyone seems to like. As with any consumer transaction, we
    assess the value proposition and make a decision. It's buyer
    beware as always.

    The fact that Apple is currently dominent does't negate the fact
    that they represent the only viable option to WMA for DRM'ed
    content. People get this and they get it viscerally. They have
    been bent over a barrel more than once by Microsoft, they have
    been sold the notion of abundance and sent home a single
    cheap, poorly integrated, poorly supported toy. More power to
    Apple for not licensing. It's the thing that prevents them from
    being a monopoly and encourages competition.

    The checks and balances are in place. If Apple is seen to harm
    competition and betray consumers, here's hoping they get what
    they deserve. In the mean time, buy the song or don't buy the
    song, take your chances, but don't gripe about the vedor's right
    to protect it.
    Harry Bardal
  • A monopoly?

    Apple developed a total package for the Mac and later moved it
    to the Windows environment. Their efforts, including design and
    producing a total package that is simple to use, has been very
    well received by consumers. Their market share is a direct result
    of consumer response, which indicates that they did a pretty
    good job.

    Does Apple stick with a closed system. Sure, they control the
    whole widget, be it computers or the iPod environment. That
    closed system has given them both ups and downs over the
    year, but that is their approach.

    I think it's important to remember when the iPod and iPod mini
    were introduced. All the experts said they would never sell - too
    expensive. The only ones that didn't agree were the consumers.
    They had a lot of choices in the MP3 market and they made their
    choice based on their preference, That's a pure free market -
    not a monopoly. Apple's market share reflects consumer choice
    AND a failure of the competition to come up with something that
    the consumer would prefer over the iPod approach.
    Ken_z
    • Apple Monopoly

      Nice response Ken.
      jmccargar
    • Apple's competition wreaks!

      If you are concrened, go join the Walmart music store and use Sony atrac format while spending the rest of your life worrying about when all of your music is going to delete itself!
      An_Axe_to_Grind
  • Not Monopolistic

    By ANY ACTUAL measure of the ACTUAL CORRECT and appropriate usage of the word as an economic or competitiveness measure.

    Why not? Because Apple does NOT own the rest of the vertical path of digital music.

    Why not? Because that particular track is available in at least one higher fidelity (and comparable priced) format (CD's) (presuming that track is not available as a SACD or DVD-A.

    Why not? Because there are at least 3-5 major competitors offering the same tracks (I believe there are about 200 exclusive tracks of out of 2 million avaialble tracks).

    Why not? Apple does NOT own a music label and unlike Sony is not with-holding tracks (as in Japan and Australia) from its competitors.

    Why not? The ipod accepts 8 digital audio formats natively and itunes will convert at least 3 others to mp3 either natively (Pc version has WMA to mp3) or with free add-ons (Flac/OGG converters). That's up to 11 formats the ipod will accept - you can happily use itunes and/or the ipod without EVERY buying a DRM track.

    Why not? Unlike the analog world you are still used, the digital world allows you to convert EVERY file from EVERY OTHER WMA online store to a format that the ipod can play (AND Vice Versa!). Is it the most convenient process? No. But I also cannot put diesel gasoline in my car - convenience does not apply to everything.

    Why not? It is NOT monopolistic to have exclusive rights to a feature set or even a format. IT would be monopolistic if Apple had exclusive rights both CD and digital rights to millions of songs and you could only buy them as Apple's M4p and not have the right to make a CD or play them on any machine other than a Mac. But that would be the only situation where a monopoly might occur ...

    But ALL of these possibilities point out how open the system currently is. You basically can buy and play music anywhere including from EVERY online store and choose itunes (PC or Mac) with or without an ipod (or another mp3 player) and convert between all the formats either way by highlighting, clicking and sometimes having to burn a CD-R.

    Not exactly a economic or hinderance in any aspect.

    Before you bandy the term 'monopolistic,' you need to actually understand its term legally and economically and not simply apply to any situation that is beyond your comprehension or to your meager satisfaction.
    jbelkin