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BusinessWeek on Opening Apple's iTunes DRM
hype7 writes "BusinessWeek is running a very interesting story on Apple's foray into music, with a different bent to everyone else's. BW suggests that, instead of opening the iPod up to the world, Apple should instead license its DRM - 'Fairplay' - to anyone who wants to start up a music store. The upside is obvious: it would mean that Apple's music format, AAC, would become ubiquitous; Apple could quite feasibly make money on licensing fees (say 1 cent per song sold); and, it would just happen to stick it to Microsoft and the Windows Media Format. As the iTunes Music Store isn't running at a profit (or forecast to make a big one), having the Music Store clones eat into Apple's existing market share wouldn't be a problem; all these stores would be doing is building a bigger potential market for the iPod."
While Apple's competitors have embraced WMA, they hardly relish the thought of their business becoming heavily dependent on another standard that Redmond controls.
So they're going to give up one proprietary standard (Microsoft's WMA) for another one (Apple's AAC)?
Correct me if I'm wrong about AAC being proprietary.
True, but they are probably referring to the DRM technology in QuickTime, not AAC itself. That one Apple probably could License.
When in doubt, act determined. Business 101
I agree with this article. Adding WMA to the iPod is ludicrous (as is Rob Glaser's plea to add other support....Real.....get real!). However, licensing the DRM to AAC that Apple uses would nothing but grow the iPod marketshare because no one could complain that the iTMS is the only place to buy music for the iPod.
However,.......based on Steve's stubborness and protectiveness of Apple, I am not going to hold my breath on this one. Having clones to Apple hardware is one thing and I can understand Steve killing that idea but this is so totally different. Steve readily admits that iTMS is not a breadwinner. But Steve is a just a bit too protective still to license FairPlay.
Here's to hoping.....
No trees were harmed in the composition of this; however, numerous electrons were inconvenienced.
Apple's DRM technology is FairPlay, and the files they offer for download on iTunes Music Store are AAC files wrapped in the FairPlay encoding.
True, but I think the point is that AAC is the technology that Apple has adopted, and the DRM they use with it is their DRM technology. So the point stands, that if they license their DRM layer, they stand to get at least as much out of it as they are getting out of the HP iPod rebranding deal.
However, does anyone else think it might be too late in the game for this? Why weren't they licensing their DRM tech to Wal-Mart, Coca-Cola, etc?
Maybe partying will help...
I know apple probbaly wont agree, but looking at the sucess of OSS, doesnt it make sense for them to simply open iPod and release its source code, so anyone with lots of time to spare can write interseting and useless plugins.
These will ultimately result in the iPod becoming more popular
An apple a day keeps MS away
Check his view. Even THE Apple geek loathes Apple for their lock-in and DRM crap, and so should anyone. Just because it'S Apple doesn't mean "their" DRM is fine, while "other's" is bad.
How would licensing FairPlay to other hardware manufacturers sell more iPods? Oh it wouldn't? Oh then I guess that's not gonna happen.
AAC can be the next audio standard, but FairPlay will not be the DRM standard. An industry DRM standard will have to be devised and then every digital music seller and player must support it. Then iTunes and iPod can continue to simply be the best digital music experience around.
That's basically why QuickTime gets installed with iTunes, although most users never notice it until after the fact.
I'm almost tempted to believe that iTunes is a trojan horse for QuickTime, allowing Apple to sneak it onto everyone's computer. Very smart idea.
I think that Jobs has his own plan in mind, though I hope he's included "flexibility".
Option 1: Stay Alone
This basically has the iPod and the iTunes Music Store (iTMS) working only together. So far, this situation has proven to be the case, and it's working pretty well: the iPod is the #1 selling MP3 player out there, it's making Apple a butt load of cash (and when you try to carry money in your butt you'll know what I mean), and iTMS is the #1 online music sales system by far - 50 million songs sold compared to Roxio's 5 million. Even comaring apples to , er, apples, just within the 6 months since Napster has been out Apple has made 5 to 1 sales.
If this continues, then eventually Jobs can force out all of the "for profit" music shops out there, and boil it down to just the "for advertising" places, like Wal-Mart, Coke, and Microsoft (which would really be looking to make Windows Media Audio the default standard).
From this, Apple makes AAC the next MP3, and their DRM becomes the "de facto standard" - even though nobody else can use it. Apple makes all the money, and they like it.
This will only come true, however, if Apple keeps a huge lead. What happens when Microsoft (MS) unveals their own online music store (didn't originally they tell folks like Napster that they wouldn't? Well, nevermind that....), sells songs for $0.50 each, takes a hit on profits, and basically acts like they did with Internet Explorer. (Ignoring any antitrust issues - not that Microsoft ever has had to in the past.)
So that goes to Option 2: License the DRM
I have the feeling that Jobs will release this if and only if iTMS and iPod sales start taking a dive. It's his "ace in the hole" to keep iPod sales alive. All it will take is him going to the other stores, making an offer, and then everybody can use the iPod with any service. Sure, it could hurt iTMS removing the one thing that makes it different from everybody else - but Apple is about the hardware.
But what happens if someone like Dell or Gateway come out with their own MP3 player that starts to make the iPod look like yesterday's bulky cell phone? That's when option 3 kicks in:
Option 3: License WMV for the iPod
This one only happens when things are dire and Apple feels they finally have to put in their chips.
The question is, how likely is either option to be? I can see Option 2 and 3 as "someday, maybe" futures. But as of right now, iTMS and the iPod rules the roost, and as long as Apple keeps that up for another 12-24 months, everybody else just in it to "make money selling music" will be so marginalized it won't matter. We're more likely to see Pepsi style promotions than anything else - though Apple had already keep an eye on possible cracks in their popularity: McDonald's may have dumped a iTMS deal in favor of a Sony Online Music one already, though of course nothing is official yet.
2 years I think the dust will be settled. Until then, I'll keep saving up to buy my wife an iPod mini. Hey, if nothing else, they're cute. And she still buys lots of CD's.
52 Weeks, 52 Religions with John Hummel
It's a pain in the ass, let's the RIAA and it's member dictate what you can and can't do on a per song basis. Fairplay gives every song the same Rights. Metallica doesn't want their latest album burnable to cd, no probelm MS will stop you cold. Fairplay is Fairplay for theend users. MS doesn't know what fairplay means.
i thought once I was found, but it was only a dream.
Anyone with some cash and negotiating skills can create an online music store - and many companies have. There's no techological lock-in, exclusivity or leverage that Apple has that they can exploit, and most of the music they offer is also offered by others.
Microsoft, on the other hand, *can*, "*has* and likely *will continue to* leverage their OS monopoly to exclude others for playing in the media space. We'll see what happens when they open their music store.
I hope Apple doesn't do this, because it will make it much harder for them to drop DRM in the future. Instead of doing as they should by pressuring the RIAA members to allow DRM-free downloads, Apple would implicitly support DRM to protect their new revenue stream. The RIAA needs to realize that DRM doesn't work, and that those who purchase the music generally don't infringe anyway.
Dude what?! Yeah Apple was like haha lets stick it to these punks by adding DRM for no reason. And lets charge high prices for the tracks even though we could charge a lot less. Do you not realize that both the DRM and the price were dictated by the greedy record labels as a condition for coming on board with the iTunes Music Store? Do you have any clue at all?
And so you also think that if people get used to buying music online, they are no longer going to download free music from small bands? I would think that most people were not used to getting legitimate music online, but now that they are being introduced to it, they will be MORE likely to seek out music on the web. Especially FREE music!
And on that note what about the idea of smaller bands suddenly being able to distribute their music through iTunes? You know bands that can't get their CDs into huge record stores? They work hard and now they COULD get paid! Did you think of that? Then more people will go see them live. You won't be the only one at the show! WOW!
Apple has sold about 30 million songs through the iTunes music store. All told, if they had licensed their FairPlay technology and let someone else open a store and sell those 30 million songs, they would have raked in a cool $300,000 dollars at a penny per song.
Apple is already losing money through the store, and while outsourcing it would have staved off costs, they'd still be very much in the red. Imagine if they now started operating their money-losing store in competition with another money-losing store. Gee, lots of winners there, aren't there?
What it comes down to is they need every penny they can from their own store, and competing with someone else for a crowd they now have a monopoly on won't work -- even if it does sell more iPods, it's going to chip away at their image of being a simple, single source. One application, one portable player, one store, one sign-on, etc. etc.
Perhaps the issue isnt' with control, but with teh fact that Microsoft has shown time and again they will use that control to make your life hell. Apple has not.
T Money
World Domination with a plastic spoon since 1984
What does Apple really win by making iTMS clones ubiquitous? Right now, they control the entire experience and dynamics of one of the most popular (non-p2p) music systems available. People buy iPods in order to use iTMS. What do open iTMS clones do but dilute the brand, experience, and goodwill they've already built?
I guess this is why AAC was just recently chosen by the DVD consortium to be the standard for audio in the ROM portion of DVD-Audio disks. (That's been one of my major gripes with DVD-Audio -- you can't rip the songs to your computer currently, because there's no software out there designed to do this.)
Yeah, right, AAC is dead. Never mind that the latest iTunes rips into AAC by default. (You have to go into preferences to switch audio import to use MP3 instead.) Never mind that the iTunes Music Store outperforms all other legitimate digital music distribution methods, and their format of choice is AAC with FairPlay.
I guess that's why Quicktime is doing just fine? Seriously, talk about a reality distortion field -- yours seems to be worse than Steve Jobs'. Xvid and DiVX are still the purview of the 133t, although there are more DVD players on the market now that will play videos encoded in these formats. So they are gaining traction and mainstream acceptance; but most players that support these formats are cheapies from China, where video piracy is rampant, and the build quality leaves something to be desired.
Incidentally, AAC and Quicktime are linked inextricably with MPEG4, which is a current and future video standard. DiVX/Xvid leverage the MPEG4 standard.
Quicktime is not just a niche format. It's everywhere. Most sites that serve up movie trailers do so in Quicktime format. Quicktime is almost always offered as an option for sites that support multiple video formats. And AAC wasn't "created" by Apple -- it's an open standard that they adopted.
So what you're saying is that your entire post is really just an excuse to slam Jobs and Apple, and has nothing to do with anything else. Obviously. Since real facts don't bear your arguments out.
Funny, you sound like the Troll in this case. Pity I used up my moderator points a couple days ago.
Although there are several difference between the model and consequences, this sounds like when Apple tried to allow Mac Clones. It turned out to hurt them, so they stopped licensing that. Apple likes to provide the whole experience--they don't want someone buying a really cool iPod to just be frustrated with a sub-par online music store. By having control over all aspects of the iPod experience, they can ensure Apple quality standards, which are admittedly high.
-- n
Apple owns neither AAC or fairplay. They license both. Don't people actually look for the facts any more?
Also, from the article: "There isn't a single type of electronic device that hasn't suffered from shockingly rapid price devaluations."
Except of course for Apple's hardware.
So the slashdot summary is just plain wrong, and the article is yet another "How Apple should really be run." Same old garbage. Move along, nothing to see here.
They've left a tantalizing hint - if you look inside the iTunes application bundle, you'll see an icon for ogg files. It looks like they were at least considering supporting it enough to provide artwork. It's possible it supported it internally, but the feature might have been removed before shipping for some reason.
Exactly. That's why "licensing FairPlay" is a stupid idea. Expanding market share for AAC doesn't do much for Apple. It doesn't even do much for Dolby Labs (who invented it), since it's an open standard. Also, FairPlay DRM is a solution that a small team of programmers could easilly duplicate. Why would anybody pay much for it?
Information wants to be anthropomorphized.
Let's see...Apple puts only what you call an ineffective lock on the music you download, yet this is the reason you haven't signed up for iTunes?
What, are you waiting for a store to come out with *effective* protection which gives you even less of what you want? "Federal take-it-up-the-@$$" protection?
Apple has to put some kind of protection on their downloads to reassure the labels. You claim that it is only a token effort. Isn't that the best you can hope for? Sounds like Apple is slying doing you a favor, as opposed to the draconian measures they could be taking.
Oh puh-leeze. Remind me to stay the hell away from any business you start: "The customer was using the product incorrectly! It's his fault! Who told you to use the music-sharing feature we provided! It was meant to be for demonstration purposes only!"
If Apple wants to succeed in the market, it has to provide the products its customers want. None of Apple's customers want a system that breaks after they replace a CPU three times. I have files generated on my first Apple computer (an Apple ][+, bought in 1979) that execute and are readable on my G4, which is approximately my millionth Apple computer. I have owned and discarded literally over a million dollars' worth of Apple equipment, if you count the machines I signed purchase orders when I was a sysadmin). The very idea that I should have to take a special step -- beyond *actually preserving my data* -- to preserve my data offends reason.
The fact is, one of Apple's best customers, a risk-taker willing to buy the 1.0 of everything they shipped, was burned by Apple's decision to include "features" that added cost (in engineering dollars) and removed functionality, at the behest of a trust of price-fixing record execs whom the FTC busted for being an illegal cartel.
Who does Apple need to please to sell hardware: Record executives or its customers?
Talk about fallacious reasoning.
You aren't bursting anyone's bubble. Veridisk's Fairplay is very much related. They do appear to let their domain name expire though.
http://64.244.235.240/info_about.asp
Well, since Steve has been in charge,Apple has:
Of all the things I think are likely to happen, I think opening up the DRM they use on AAC to allow other music stores to come online and sell songs for use with an iPod sounds like a great idea. After all... Apple claims they make money from iPods, not from selling the music. If that's truly the case, what's the harm in letting someone else incur the costs of selling the songs for those wonderfully expensive iPods?
Because if you create your own DRM technology it won't play on iPod?
Saying Java is nice because it works on all OS's is like saying that anal sex is nice because it works on all genders.
Even if licensing out the iTMS format to other online music stores would theoretically drive more people to buy iPods, there's one factor that everyone's forgetting: user experience.
Apple doesn't want just any joe schmoe with a smelly t-shirt selling songs for the iPod because Apple wants to maintain a level of quality with the entire user experience, from the purchase of songs on iTMS to the browsing of their songs on iTunes to the uploading and management to the seamless integration between the store and iTunes.
If Apple wants to succeed in the market, it has to provide the products its customers want.
Wrong.
If Apple wants to succeed in this market, they have to provide a reasonable compromise between the consumers and the content providers.
What do I want as a consumer? Free music downloads, no DRM, unlimited duplication and unrestricted usage rights.
What do content providers want? $15 for 10 songs on a CD, most of which are filler, with limited use and no duplication rights.
iTMS is groundbreaking because it was the first service to broker an acceptible compromise between consumers and content providers. Yes, there will always be the Coreys of the world whose needs are the exception rather than the rule. The only way to adress that is to offer an unrestricted agreement, which does not benefit the content providers at all.
RIAA has not sued a single person just for downloading.
That doesn't mean that they cannot. It just means that they haven't yet. A few years ago you could've said that the RIAA hasn't sued individual users, just P2P companies.
They can sue downloaders if they want. It's not as practical -- right now they're concentrating resources more on the head of the snake -- but it is entirely possible.
They have rights to distribution.
Well, RIAA members do, anyway, yeah. In fact they have a multitude of rights. The major ones are listed in 17 USC 106. They are: The right to reproduce, the right to distribute, the right to make derivatives, the right to perform publicly, the right to display publicly, and the right to digitally broadcast.
Downloading from allofmp3.com or others is not distributing so we're not commiting copyright infringement.
I'm sorry, but you are simply wrong. Distributing is ONE FORM of infringement. Reproduction is another. When you download, you are creating a new copy on your computer.
I suggest you look at the Napster decision. Napster didn't _directly_ do anything wrong. Rather they were found liable for, among other things, contributing to the direct infringements committed by their users. Uploaders infringed by distributing. Downloaders infringed by reproducing. Because Napster knew about this and helped materially what with their network under their control at all times, they were liable for the wrongs of their users.
I think you really ought to read the decision, and read 17 USC 106. I don't mean to insult you, but you don't know much about copyright law at all, and it shows.
Those companies also have rights to distribute so it's not like you're aiding a criminal or shady company.
The thing is, they do not have the right to distribute those works. If they have any rights, they're limited solely to Russia. They don't have the right to distribute to people in other countries, such as the US. That's a seperate right, and one that I bet they don't have.
Since there are no laws regulating such online purchases, it's not illegal.
Of course this is not true. US laws apply to persons located within the US. Copyright doesn't particularly distinguish between the online and offline worlds. These online purchases are pretty certainly violating US copyright law. That's bad if you're in the US. I doubt the Russians care particularly, but that's no comfort to the rest of us.
RIAA and others tried to make it illegal
It may indeed be illegal. Importation of copyrighted works is generally illegal unless it's authorized by the US rightsholder. This avoids US law being undercut, i.e. if Canada didn't have copyright laws, they could ship stuff here and authors with US copyrights would be screwed.
Some exceptions are made for copies brought in by individuals, travellers, etc. but are still subject to some limits.
But downloading is probably not the same as importing. When you import, the copy already exists in the foreign country and is merely brought here. When you download a brand new copy is created here. These are different things, and the exceptions in the import statute won't cover downloading at all.
The question of morality (how much are you actually supporting the artists?) is another issue entirely
I could care less about morality. Copyright law is amoral and utilitarian, favoring the public. Artists are of no particular importance, save as a means for the public to get what we want.
-- This and all my posts are in the public domain. I am a lawyer. I am not your lawyer, and this is not legal advice.
"the whole setup basically a fig leaf so that the industry can *feel* protected while raking in the bucks."
More to the point, DRM is like a "club" for your car's steering wheel, or copy protection on PC software. It won't stop the people who are really determined to pirate music or software, or steal your car, but it stops the casual folks. If it can reduce much of the piracy, but not all of it, it's still worthwhile. The music industry's lawsuits have the same aim: if they can scare the masses away from piracy, they're better off even though the Slashdot crowd is simply moving to transfer mediums that are off the RIAA's radar or otherwise untouchable.
As an aside, I think Apple's DRM is fine. I can burn extra CDs for my friends and move tracks from PC to PC. It would not let me simply copy the tracks to my Kazaa share directory, which is fine, as that would be illegal anyway. The "artists have too many rights" crowd who see any sort of DRM as an affront to everything that is good and true and right in the world should check themselves.
Sitting in my day care, the art is decopainted.
the whole setup basically a fig leaf so that the industry can *feel* protected while raking in the bucks.
No.
A deadbolt protects your house by making it physically difficult for the bad guys to break in. That's true.
But a "beware of dog" sign also protects your house. How? By deterring those who would otherwise walk right in and take your stuff. It doesn't do anything to stop a determined thief... but how many determined thieves are there out there, compared to the number of "thieves of opportunity?"
Fairplay protects music because it deters "thieves of opportunity." Because it's inconvenient to pirate Fairplay-protected music, paired with the fact that it's so darned easy to get it legally, Fairplay effectively protects music.
It's not a fig leaf. It's real.
Thier going to "flex their muscle"? Give me a break. The percentage of music sold online vs. CDs is tiny. Apple has maybe 60% marketshare in a very immature market. There's not enough muscle there.
Also, I think your split of the proceeds is fantasy land. Currently the split is more like 90% label, 8% Apple (to partially cover costs), 1% performer, 1%writier. Apple isn't going to help the writers and performers out.
If they can hang on and be the market leader 3-5 years from now, then they will have enough muscle to start making money.
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