He starts off by explaining why music download services (including Apple's own iTunes Store) apply digital rights management (DRM) data to downloaded music. As you are probably aware, this isn't because Apple wants to be mean, but because the record companies (that hold the copyrights on the music) demand it. He says that Apple's contract requires strong DRM, and that if the DRM is broke, Apple must quickly fix it or the record labels can withdraw their entire catalog from the store.
This was news to me. I know the record labels require strong DRM, but it hadn't occurred to me that Apple's store can be completely shut down if a third party breaks the DRM in a way that Apple can't fix. I wonder if other music stores (like Microsoft's Zune store, or the numerous WMA-download stores) have similar terms on their licenses.
Jobs then proceeds to explain three possible futures for DRM content.
The first possible future, is to leave everything as it is. While many critics claim that this is a "lock-in", forcing iTunes Store customers to buy iPods, and forcing iPod customers to buy from the iTunes Store, Jobs points out several facts that contradict this:
- iPods can play several non-protected formats, including MP3 and AAC.
- The overwhelming majority of music on iPods is not purchased from the iTunes store. (Most is ripped from legally-purchased CDs.) It's hardly a lock-in if the majority of music on iPods is not restricted, and only a small percentage is restricted.
The second possible future Jobs describes is an open-DRM standard. Specifically, he addresses those critics that want Apple's "FairPlay" DRM to become an open standard. So multiple stores can sell FairPlay tracks, and so non-Apple music players can play those tracks.
Jobs points out that Apple has a difficult time right now, meeting their contractual obligations to the record companies. FairPlay DRM has been broken a few times. Apple has repaired the damage by simultaneously updating the iTunes Store, the iTunes client software, and the iPod firmware. This coordinated effort is not easy to get right. It would be virtually impossible to coordinate this across dozens of music stores and dozens of music player manufacturers.
On top of all this, DRM systems all use secrets (encryption algorithms, encryption keys, etc.) When these secrets are shared among dozens of corporations, leaks to the outside world will be inevitable, undermining the entire concept.
Either of these scenarios (undermining DRM, or failure to quickly distribute updates) would result in the record labels shutting down music stores, which definitely would not be in the public interest. (Jobs also points out how even Microsoft is moving from an open DRM standard, "plays for sure" to a closed one on the Zune.)
Finally, Jobs proposes the third solution - eliminate DRM altogether. I am a proponent of this, and I know a lot of other people who are too. I was, however, shocked and awed that the CEO of Apple proposed it as a serious alternative.
He points out several facts that are well known, but seem to be ignored by the record labels that demand DRM from on-line services:
- 90% of music purchased is on CD, which has no DRM. Putting DRM on the 10% that is downloaded does nothing to prevent piracy, because the pirates can simply buy CDs.
- DRM is expensive and difficult to develop, implement, and maintain.
- DRM restricts consumer freedom
- DRM makes it hard for new players to enter the music-player and music-reseller markets.
Jobs then points out that most of the clamor for Apple to open up FairPlay is coming from Europe. Most of the record industry (the ones demanding DRM) are European (Universal/Vivendi is French, EMI is British, Sony/BMG is 50% German). Jobs suggests that European governments direct their pressure at the record labels, to eliminate DRM requirements altogether.
Finally, Jobs states that if the record companies will support DRM-free music downloads, "Apple will embrace this wholeheartedly." This still amazes me.
I don't know if the record companies will ever wise up and realize that DRM is a waste of time and money (the way the software industry briefly understood the same about copy protection), but if anybody can convince them, it is Steve Jobs. Let's hope he can pull it off.