Five reasons why Jobs went anti-DRM now

Five reasons why Jobs went anti-DRM now

Summary: As any witness of a Macworld keynote knows Apple CEO Steve Jobs doesn't do much of anything that isn't well scripted and thought out. That strategy and advance preparation is what makes his open letter to the music industry about digital rights management so interesting.

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TOPICS: Apple
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As any witness of a Macworld keynote knows Apple CEO Steve Jobs doesn't do much of anything that isn't well scripted and thought out.

That strategy and advance preparation is what makes his open letter to the music industry about digital rights management so interesting. Lost amid all the conversation about Jobs' blog one question remains unanswered: Why now?

Jobs' letter comes at a very interesting time. Apple, which has been one of the few companies to make DRM easy enough for consumer adoption, arguably has benefited the most from DRM schemes. It has a critical mass and can dictate pricing to the music industry. So why would Jobs suddenly go anti-DRM?

Here are a few plausible reasons:

1. No DRM means no lawsuits. Apple is increasingly under fire at home and abroad over iTunes' DRM strategy. If DRM goes away so do most if not all of the legal hassles facing Apple, which has to fend off lawsuits in the U.S. and regulators in Europe. The chain of events: DRM disappears. Then regulators in Europe have nothing to complain about. In the U.S. questionable class action suits become moot.

2. If DRM remains Apple owns the standard. Jobs' discussion of licensing Apple's FairPlay DRM technology in his post serves two purposes. It opens up the door to potentially licensing FairPlay while still arguing against DRM. No matter what happens to DRM Apple wins. If FairPlay is licensed Apple gets another revenue stream and the music industry standard just based on the iPod's market share. Meanwhile, Jobs can always point to his open letter and say "look we don't want DRM, but since the music industry still wants it we'll license you our technology." Tom Krazit's report walks through the licensing scenarios with FairPlay and the limitations.

3. Apple's critical mass makes the anti-DRM argument low risk. Jason Calacanis notes that Jobs is back from the dark side and is shooting a shot across the music industry's bow. Richard MacManus calls Jobs' letter propaganda. The reality is in the middle leaning toward MacManus' take: Jobs can boost Apple's image by coming out against DRM without much risk. When Apple didn't have critical mass in music, Jobs played along with the music industry. Now Apple is dominant and Jobs has leverage he can generate marketing and financial upside by prodding the music industry to drop DRM. It's a win, win, win for Apple.

4. The music industry is ready to go without DRM. Jobs wouldn't pen his open letter if the music industry wasn't at least a little receptive. Some folks will scoff at the idea that the music industry will go DRM free. But the music industry has become much more experimental with its business models. However, that's just a small reason the music industry is receptive to dropping DRM. The biggest reason: The music industry needs to erode Jobs' leverage and dropping DRM is one way to do it. Imagine if the Zune's Wi-Fi music sharing capability wasn't shackled? Perhaps the Zune looks better. Perhaps it takes some iPod market share. Right now, Jobs runs the music industry. When labels wanted variable pricing Jobs said no. Ditch DRM and maybe just maybe the music industry can control Jobs a bit.

5. The no-DRM genie is already out of the bottle. Apple can't afford to be with DRM-based when labels are already tinkering with licensing MP3 files without it. On MySpace and Yahoo Music labels are licensing songs sans DRM. Jobs obviously realizes that DRM--and perhaps even its FairPlay technology--will become a handicap and is getting in front of the issue.

Topic: Apple

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  • Mr. Jobs wants DRM, of course.

    Part of maintaining Apple's market share.

    The reasons for making the statement are obvious:

    - Appeal to the anti-DRM crowd

    - Reminder to the Europeans that Apple is not responsible for the existence of DRM

    - Preparation for licensing FairPlay by demand. Which is also a counter to Zune.

    PR and strategic thinking. Not unusual. If half the planning went into producing a cheaper Mac...
    Anton Philidor
    • No he doesn't and neither do we the consumer!

      Good grief Anton, are you nuts? DRM is below bile for value to the consumer. And it's the consumer that Jobs wants, and if giving the consumer what they want (i.e. NO DRM MUSIC for sale!) then that is what he wants to give us!

      I don't have a problem paying a [U]reasonable[/U] price for a song or even a complete album. BUT when I buy that, it's mine and I don't want some corporation telling ME where and when I can listen to what I paid for! DRM does that and there are plenty of examples of it doing so.

      I think you been hit in the noggin dude... ]:)
      Linux User 147560
      • Apple's DRM helps Apple...

        ... in the market. If Apple lost its DRM exclusivity, the commercial consequences would be negative.

        As a confirmation, when governments in Europe started considering laws to weaken DRM, did Mr. Jobs say, Good, pass 'em, we'll be pleased to comply, and about time!

        No, Mr. Jobs began a careful campaign to keep DRM, including a statement that he disapproves of it.

        You're right, but what you're saying about DRM does not help Apple's profits.
        Anton Philidor
        • You 're forgetting the content companies.

          Like the European countries, you're attacking the wrong thing. If Jobs HAD said, "Good, pass 'em, we'll be pleased to comply, and about time!", the companies he gets his music from would say, "Whoa, Stevie, we told you it's DRM or nothing". And the iTunes Store ends up with nothing to sell as the content providers pull out.

          If these European companies are really serious about ending DRM (instead of just currying favor with the unwashed masses by going up against a Big, Bad company from the Big, Bad USA), they should be threatening to sue the content providers instead of the reseller (who is just following the best terms he could get from the providers).

          But, as Jobs correctly pointed out, the big 4 music companies are largely controlled by European conglomorates, so of course European govts won't go after them. The loser is the consumer these silly laws are supposed to protect.
          cseanor
    • Does the iPod really need the lock-in?

      ---Part of maintaining Apple's market share---

      Here's the obvious question--we all talk about Apple's insidious lock-in technique here. But a lot of that talk is about potential and possibilities. What I'm curious, is how much does the iPod really benefit from the lock-in? Given that only a tiny percentage of music sales are from iTunes, and that only a tiny, tiny percentage of music on iPods comes from the iTunes store (the vast majority is "stolen", at least according to Steve Ballmer), then how much of a factor is this really? The iPod is a wildly popular product. How many people are really being locked in?
      tic swayback
      • Impression of exclusivity

        Like DRM itself, Apple's lock-in doesn't have to be fully effective to have a useful effect.

        The iPod (like the Zune) is a very expensive mp3 player that's popular because of its design and, far more important, brilliant management of the brand.

        As an example of a bad job of brand management, consider Chrysler's Cruiser. Surpassed in sales of other ugly little cars before it had to be. Steve Jobs has avoided making the mistakes that hurt Chrysler.


        The content companies have been trying to prevent internet distribution by excessive licensing costs, among all the other methods to avoid the huge profits they'd receive without effective competition.

        So Apple can't be making much from iTunes.

        But iTunes is by far the most popular download site.

        The success of iTunes is both a reflection of how many iPods have been sold and another social success to identify the product.

        iTunes is advertising for iPods for nothing.
        Anton Philidor
        • Doesn't really answer my question

          ---The iPod (like the Zune) is a very expensive mp3 player that's popular because of its design and, far more important, brilliant management of the brand.---

          I'd reverse that equation, and put the majority of the credit for success on the device itself. People like it. I don't think one can really claim any sort of "exclusivity" for the brand anymore. They're far too common for anyone to think of them as a status symbol. You can buy an iPod for under $100. They are a commodity, yet they continue to outsell all competing commodities.

          Besides, if Apple was really that good with marketing and brands, wouldn't they have a larger share of the computing market by now?

          ---So Apple can't be making much from iTunes.---

          I believe Apple keeps 30 to 35 cents per download. Not sure how much of that goes to overhead. But no, it's not a huge profit center.

          ---The success of iTunes is both a reflection of how many iPods have been sold and another social success to identify the product.---

          I think there's more to it than that. The store is simple to use, which was a lesson most other competitors had to learn. Other stores had (still have) multiple prices for different products, multiple sets of rights (can you burn to a cd or no?). Even the new Zune store has different sets of rights, some songs can be squirted, others are forbidden. This is also a major factor in why the iTunes store is ahead of the pack, despite offering a poorer quality product than many other stores.

          ---iTunes is advertising for iPods for nothing.---

          Agreed here.

          But none of that speaks to the question of lock-in, and whether it's really forcing huge numbers of buyers to remain in the iPod camp.
          tic swayback
          • Technical vs strategic

            The DRM technical lock-in isn't meaningful, except as an image, a separation from competitors. It's part of the reason Apple can produce an iPod costing less than $100 and still make a claim to exclusivity, not being a commodity.

            Strategies are significant, maybe more than the product, and certainly more than any code.


            You wrote:

            "Besides, if Apple was really that good with marketing and brands, wouldn't they have a larger share of the computing market by now?"

            The company has 100% of the Apple market, which is what the company has always wanted, especially when led by Steve Jobs.

            If the company wanted more sales of Apple-approved hardware, it would authorize clones, because the prices would consequently be lower.

            If the company wanted more sales of Apple software, it would cease to restrict use of the software to Apple's hardware.

            You're not defining success as Apple is. Technical (as in total sales) rather than strategic.


            You also wrote:

            "The store is simple to use, which was a lesson most other competitors had to learn. Other stores had (still have) multiple prices for different products, multiple sets of rights (can you burn to a cd or no?)."

            Strategy, branding...



            I'm complimenting Apple for what it does well. Which is fulfilling what Steve Jobs wants.

            And strategic was well defined for me by a chessplayer who observed, "Strategy is what you do when there's nothing to do."

            That which isn't demanded by the market. Discretion.
            Anton Philidor
          • Better answer

            Thanks, good thoughts on my question.

            ---The DRM technical lock-in isn't meaningful, except as an image, a separation from competitors.---

            So what I think you're saying, and I agree with, is that although Apples iTunes/iPod lock-in is distasteful, and potentially harmful for consumers, as of now it's much ado about nothing. It's not having any huge effect on the market. I don't think people specifically buy iPods because of the lock-in. I don't think it's a huge factor in iPod sales. If you took away the DRM lock-in, I don't think iPod sales would drop.

            ---The company has 100% of the Apple market, which is what the company has always wanted, especially when led by Steve Jobs.---

            Couldn't what you're saying here be rephrased to refer to the iPod market? Why does one work and the other not as far as garnering marketshare? To wit:


            "The company has 100% of the iPod market, which is what the company has always wanted, especially when led by Steve Jobs.

            If the company wanted more sales of Apple-approved music players, it would authorize iPod clones, because the prices would consequently be lower.

            If the company wanted more sales of iTunes songs, it would cease to restrict use of the software to Apple's hardware."

            ---Strategy, branding...----

            No, it's more than that. It's design, something I think you're too dismissive of. One huge reason why the iPod is so successful is because it's so simple. There are tons of other players with tons more advanced features than the iPod on the market. The key to the iPod is not what was included, but what was removed. The simplicity of the design makes it highly useable. And the same goes for the store--it's the easiest to use, and every other online store seems to have copied themselves after it to some degree. Just calling this "strategy" doesn't get to the heart of the matter. Apple spends huge sums on design, more than most competitors, and clearly (at least in this market), it makes a difference.

            ---I'm complimenting Apple for what it does well.---

            Which is confusing to me--if it's all about branding and marketing, why does it only work for one product and not all of the others that Apple makes, if they do it so well? I think it goes well beyond one factor. Marketing is a part of it, to be sure, but design and the nature of the market and the competition certainly play as large, if not larger roles.
            tic swayback
    • Sorry, Anton . . .

      Appeal to the Anti-DRM crowd? Possible . . .

      Reminder to the Europeans? I'm sure that's part of it . . .

      The Zune? THE ZUNE??? iPod sales went UP during the introduction period of the Zune . . . I seriously don't think that Apple is overly worried about MS's attempt to dethrone them . . .

      I agree with you about producing a cheaper Mac, though. Heck, I'd like it if they released the OS so I could install it on my current equipment, but we're not likely to see THAT happen, either . . .
      jlhenry62
      • The Zune's DRM, not the Zune itself.

        Microsoft has different DRM on the Zune from that available elsewhere.

        If Apple were to license its DRM, that would assure that Zune DRM could not become the standard.

        Sorry, missing word.
        Anton Philidor
        • Apple and License?

          Apple is not interested I don't think in licensing Fairplay (as Jobs pointed out). If that were the case, it would have been done a while back. Besides it's not in the company's genes to license their tech, save that for MS.

          I do agree, if they would license Fairplay, you could say goodnight officially to PlaysForSure and Martketplace DRM.
          dave95.
        • Ah . . .

          That explains it. Thank you for the correction.
          jlhenry62
  • Reason #6......Steve gets to POSTURE...

    ....and POSE, acting like he's the consumers' pal. It's a sign of a sociopathic nature, to offer something they obviously can't produce, but hey pals...HE'S THINKING OF YOU!
    Feldwebel Wolfenstool
    • Spot On!

      If you believe this guys line of bull I have some swamp ground you're just going to love...
      No_Ax_to_Grind
      • The only way...

        to know for sure, is if the music industry calls his bluff.
        dwsmith
      • Would you be so mad at Gates...

        If he made the same statement?

        Oh, and nice one Biff. Swamp ground's about as funny as a screen door on a
        battleship. (Yes, I know what I just said, it was for the humor value)


        --------------------------------------------
        "Fish do fly, people should do research before saying crazy things!"
        IAHawkeye
    • Message has been deleted.

      IAHawkeye
      • WELL, DUDE...

        ...the story in comment IS about STEVE JOBS isn't it? Did I see Bill Gates mentioned anywhere? And don't insult MORONS by comparing them to me. Ever heard of PROJECTION (PSYCHOLOGY-DEFINITION)?
        Feldwebel Wolfenstool
        • Well, I would not want to...

          post when having a bad day anymore. They just get deleted and make me look
          bad.

          Meat of my issue: Jobs is doing what any other sane person would do. Trying to
          put Apple in the best possible position. I mention Gates because most opinions
          are that because M$ recieves so much criticism so should everyone else, or
          alternatively if Gates makes a comment like this it's laughed off or ignored. I
          guess as a loyal Mac user I feel compelled to respond to something so bunk.

          Why am I so compelled to respond to this (your post), even though it amounts to
          fighting juvenile conclusions by stooping down a level or two? To be honest I
          really don't know. Maybe I just needed something to do. I do know...

          Apple has been nothing but good to me, and to it's consumers. The record labels
          would love to strap you and everyone else down to only playing media when and
          how they want. Apple fought for greater consumer freedoms with it's DRM, and
          won.

          So why would Steve Jobs do this simply for creating the impression Apple cares, I
          think he has better things to do than waste time on that himself. That's a job for
          marketing.

          And last but not least, I am sorry about my previous rambling. One should never
          post during a very bad day.
          IAHawkeye