How the portable player tail wags the DRM and operating system dogs

How the portable player tail wags the DRM and operating system dogs

Summary: I often find myself banging my head against the wall when trying to explain how the relationships between portable multimedia devices, online music stores, digital rights management systems, and operating systems are leading us to a world where there a few players and ominously dangerous control points. Dangerous from a market perspective.

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TOPICS: Legal
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I often find myself banging my head against the wall when trying to explain how the relationships between portable multimedia devices, online music stores, digital rights management systems, and operating systems are leading us to a world where there a few players and ominously dangerous control points. Dangerous from a market perspective.  It's hard to articulate in a way that everybody gets it.  But the recent legal activity between Microsoft and the European Union offers a unique way for those needing a slightly different angle to understand the problem to back into an explanation. 

As a part of its antitrust efforts, the EU would very much prefer it if Microsoft would sell a version of Windows that doesn't include Microsoft's Windows Media Player (WMP).  The Associated Press summed it up more eloquently than I could in a story published last Fall:

RealNetworks, whose media players distribute audio and video to devices ranging from computers to smart phones, had been the last big commercial opponent in a European Union antitrust case against Microsoft....In that case, Microsoft was ordered pay 497 million euros and to produce a version of its Windows operating system stripped of its own multimedia player to provide a more level playing field for competitors led by RealNetworks.

Indeed, RealNetwork RealPlayer was a real player.  A force to be reckoned with.  Vestiges of its dominance remain on the Net today.  Here at ZDNet, we only support two streaming formats for our streamed offerings such as our Whiteboard Series: Real and WMP.  Among the many ways that National Public Radio content can be pumped into your PC, Real is by far the most pervasively offered format throughout its programming.  But if what's happening at Real is any evidence of where the market is heading, then the EU might just as well give up on any hope that its antitrust remedy will restore competition to the market (which is what such remedies are supposed to do).  The shift at Real dates back to its settlement with Microsoft, the effects of which are now mirrored in Real's online offerings.  Check out the system requirements link on Real's Rhapsody service Web page.  Listed at the bottom of the minimum system requirement section, it says:

Portable device support requires Windows Media Player 9 or higher

Actually, Real's online offerings would have gone the way they went regardless of its settlement with Microsoft.  That's because music, video, and movie pubishers aren't about to let Rhapsody, Napster-to-Go, or the iTunes Music Store sell their content unless its locked down in such a way that a working copy can be loaded onto a customer's portable device,  but not onto the Internet.  This is what digital rights management (DRM) technology does and in order for it to work correctly, it must be in place from end to end.  It must be embedded with the content at the time of sale and download.  And it must live deep inside the portable playback device in order for the customer to be able to take the locks off and play the content back while on the run.  Songs purchased from the iTunes Music Store are locked with Apple's FairPlay DRM.  iPods have the keys to take those locks off. 

The problem for Real -- perhaps a gross miscalculation on its behalf -- is that it didn't see that requirement coming far enough in advance to build and distribute its own DRM technology.  Or maybe it did.  But unlik with its multimedia authoring and streaming technologies, it didn't move fast enough to get a market advantage.  Apple did.  So did Microsoft.  Apple's DRM is in its iPods.  Microsoft's DRM is all the competitors to those iPods (ie: offerings from Creative and iRiver).  Creative, iRiver, and their peers would need a really compelling reason to pay to put a third or fourth set of keys in their devices so they can unlock a third or fourth DRM offering from Real or some other company.  The path of far less resistance is simply for Real to sell content that's locked with a DRM that the devices in the market already have the keys to.  Since Apple isn't licensing it's DRM (except to Motorola for a couple of phones), there was only one choice: Microsoft. 

Settlement or no settlement, Real's Rhapsody service would have ended up picking Microsoft's DRM anyway. It's a slippery slope from there.  Once you depend on Microsoft's DRM, you also depend on Windows Media Player to manage it.  And once you depend on Windows Media Player, some other options like Linux as your desktop operating system go by the wayside.  The tail wags the dog. 

More interestingly, these are dogs that have not learned new tricks.  Longer term, I suspect we'll see a repeat of Macs vs. PCs.  Imagine for example if Apple licensed its FairPlay DRM to all of the companies that Microsoft is now licensing its DRM to.  Microsoft would have been put a huge disadvantage and FairPlay might have ended up as the defacto worldwide DRM standard with Apple earning gazillions in royalties on both ends.  Not only would it collect on every song sold through the iTunes Music Store, all the device manufacturers would be paying the company a few pennies to put the FairPlay keys in their devices.  It would have been quite an unfortunate circumstance; giving Apple CEO Steve Jobs more power to control content distribution than he already has (and he has enough). 

As a another set of keys to install into portable devices, Sun's Project DReaM may be a compelling option because it will be free.  But, that may not be enough.  There will have to be a sufficient amount of content in the market that's locked with DReaM in order for device manufacturers to want to unlock it. 

Much the same way Real turned to Microsoft, so too will others and to the exclusion of DReaM if it falters.  Apple may have a billion FairPlay-locked songs and a gazillion iPods in the market, but Microsoft is on the march with more of everything else (partners, channels, etc.).  The tipping point will come.

Topic: Legal

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8 comments
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  • Apple sees itself as a hardware company

    It seems to me that Apple is not interested in licensing out its Fairplay technology, any more than it is interested in licensing its Mac?s OS X. I guess it sees itself as a hardware company, and it doesn?t want to help its competitors compete with it. MS on the other hand is applying its ?separate the OS from the hardware? PC formula to everything ? including portable music players. MS has prevailed in most everywhere it has done this so far ? including Pocket PCs and Smartphones. However I doubt it, or any other company, is going to prevail here.

    I think there are a lot of people who are like rats in an experiment. They recognize well that DRM is bait that leads to a prison, and they have no intention of taking the bait. Newbies, and other ?unawares? have taken the bait, and have so far been fooled by its accompanying conveniences. However, everyone will have to start running for cover when they start banging on their walls, and complaining to Congress.

    As for Real, and that charade they call an antitrust affair in Europe: it is such a bad joke. You have a bunch of American companies who are laughing their heads off at how they have effectively sicked the EC on MS. Anyone with a fair amount of perception knows that Real did itself in by annoying its customers, and by providing inferior overall technology. Also, IBM and others must be having belly laughs over how they are able continually reject MS? overtures of compliance with providing server protocol information to make competitors? products work with Windows server ? which incidentally does not have a monopoly. Well ? that?s life for you folks.
    P. Douglas
  • Chutzpa

    The victim search goes on. Are we to believe the hapless
    consumer without the ability to resist Madonna's latest is to be
    trapped in this cycle of abuse? The article paints a picture of
    dueling monopolists bent on trapping us with our own,
    apparently insatiable, need for entertainment. It paints a picture
    of possible futures but comes to the wrong conclusions.

    Microsoft is in trouble with the EU because it licensed to all
    comers. They gained their monopoly status and the associated
    short leash through coersive licenses and erecting barriers to
    entry. Apple doesn't license. It doesn't presume to be all things
    to all people, and it's success springs from the merits of it's
    products. Not licensing, ecourages other DRMs. It encourages
    innovation where innovation counts, in the technology and in the
    deal offered to consumers. It's fair for content owners to ask for
    protection for their product, It's fair for consumers to ask for a
    deal and reject any value proposition they think isn't worth
    while. Free competition gives consumers power. Competition in
    DRM is no different.

    Who here is competing on merit and who is up to their old
    tricks? To the extent that Apple has had control over music
    distribution, it has gotten markedly better than what we had.
    Single song choice. Consistant pricing, and a decent mp3 player.
    These are advantages and we get them because Apple is fighting
    for them. Don't like it? Buy a CD or steal something from Kazaa.
    May those 14 versions of VMWare all get a virus because of it. I
    for one, hope that the only company with the brains and chutzpa
    to take on MS, continues to.
    Harry Bardal
    • Artists are not helpless either

      Seems to me the key point of this scenario is the RIAA/MPAA companies. Take them out of the equation and there's no longer anyone demanding DRM, no one selling DRM, no one getting their use crippled by DRM. The RIAA is already on the way out, the MPAA will take a little longer, given the larger nature of making a movie versus recording an album.

      But make no mistake, they're both fading out of the picture.
      tic swayback
      • Efficiencies

        We have to be prepared to lose our music collections to realize
        the efficiencies of this new model. Let's agree that late stage
        restrictions to rights and usages can be considered a betrayal.
        Unreasonable price increases as well. I can't help but think
        however that the reason we a timid dogs around DRM is because
        of the Microsoft beatings. We are quick to presume Apple will do
        the same thing. To the extent that Apple has had control, things
        have gotten better. To support Apple's honest model is to give
        them leverage against the RIAA. They have shown a
        preparedness to fight on consumers behalf and keep pricing
        consistant for example.

        The efficiencies of digital music distribution should be realized.
        These efficiencies should allow prices to drop, not escalate.
        More money should be returned to artists as the RIAA
        middleman is increasingly cut out of the picture. Apple will likely
        keep DRM because it's fair to protect any product from theft, but
        the usage rights may be even more liberal than they are now.
        Either way, it's a deal one either accepts or rejects. In a
        competitive environment, it is the consumers prerogative.

        This is about trust. The Microsoft paradigm have left few with
        that willingness. As they once again embrace and extend Real,
        another player channels creative content through a Microsoft
        license and gives them an endorsement to use consumers as a
        doormat, just as they have in the past. From my point of view, 6
        Versions of Windows running in VMW, effectively disqualifies
        David from speaking about the plight of the consumer. He has
        to get his own house in order.

        We have to give Apple a chance and allow these new business
        models to flourish. This is about more than music. This is about
        every single bit of creative content that can be made digital and
        the exponential energy efficiencies that will be recovered from
        that. Apple has to break the Microsoft model to allow the
        encroachment of other players into additional vertically
        integrated services. Apple keeping FairPlay to themselves is the
        only way to do this. FairPlay should win on these terms or die
        trying. If it does, I would mourn the failure of the digital conduit
        because I would no sooner buy Music from Microsoft than I
        would buy speakers from the back of a truck.
        Harry Bardal
  • OK..., iTunes came on my new iMacIntel

    I haven't bought any songs off the system but I have been reading through the instructions. Backing up your music to standard audio CD is an option. I'm sure there is some conversion loss between formats but I can't imagine it's much. What am I missing? What's the catch? If you're paranoid that the option will be turned off at some time in the future, make your back ups now and stop buying if they're silly enough to change the system.
    palmwarrior
    • Conversion loss

      Going from an AAC file to a CD (AIFF or WAV) results in no loss in sound quality. Going from that CD back to an AAC or MP3 does result in a loss in sound quality.
      tic swayback
  • Real Rhapsody - Non MS OSes

    David if you browse to Real's site with a Linux OS you get a very different page;


    [i]Rhapsody
    Over 1.5 million songs
    on Linux - for FREE

    * Play music right from your browser
    * Access 25 full-length songs per
    month
    * Listen to 25 premium ad-free
    radio stations
    * Share music with your friends[/i]

    It indded does work with Linux, I've tried it out, but there is a price.

    [i]
    We're sorry but the combination of your operating system and Firefox 1.5 is not currently supported.[/i]

    The Firefox extension only works with the Firefox 1.0 series and not the 1.5 series. This means you have to keep an old version of Firefox handy to use it. The old versions of Firefox have security flaws in them- so you would want 2 versions of Firefox on your machine (Not a real issue if you know what you are doing) to only access Real's offering - in otherwords it's not really worth the hoops to jump through.

    Also if you browse to real's site with MAC you get a page for MAC. The page detects your OS and then redirects you automatically depending on your OS.
    Edward Meyers
  • Bad deal for Apple

    Think about your scenario here:

    ---Imagine for example if Apple licensed its FairPlay DRM to all of the companies that Microsoft is now licensing its DRM to...all the device manufacturers would be paying the company a few pennies to put the FairPlay keys in their devices.---

    Two factors make this a bad deal for Apple, at least at the moment. 1) licensing FairPlay puts every other music store on the same level playing ground as the iTunes store. This means a drop in sales for iTunes as other stores could now sell songs playable on an iPod.

    2) The iPod makes up what, 80% of the players sold worldwide? How much licensing money is Apple really going to gain from selling FairPlay to such a tiny segment of the market? Enough to offset the drop in iTunes song sales? I doubt it.

    At some point when the iPod itself tails off and no longer owns the whole market, and the iTunes store is established as the place to buy music, Apple will license FairPlay, as the balance above will have shifted in the right direction for them.
    tic swayback