Music Execs Say Apple's DRM Hurting Industry

EMB Numbers writes "C-Net says last year saw a 131 percent jump in digital sales, but overall the industry still saw about a 4 percent decline in revenue. Some executives at this week's Digital Music Forum East conference lashed out at Jobs, blaming Apple and its CEO for their troubles. The impression at the conference was that Jobs' call three weeks ago for DRM-free music was anything but sincere. As the article puts it, 'Apple has maintained a stranglehold on the digital music industry by locking up iTunes music with DRM ... and "it's causing everybody else who is participating in the marketplace — the other service providers, the labels, the users — a lot of pain. If they could simply open it up, everybody would love them.""

Comments

Bullshit

[daveschroeder]

DRM is what's hurting the (online) music industry. It needs to be eliminated, not "opened up".[1] Looks like the industry is a little irked at Jobs' statement.

Apple has already laid down its cards. "Open" DRM (can there be such a thing?[2]) is just as bad as any other DRM. It does not serve the customer.

The labels are hurting the industry with DRM. Apple is willing to ditch it wholesale (i.e., isn't interested in iTunes/iPod "lock-in").

The ball's in the music industry's court, not Apple's.

[1] Arguments about whether or not there would have been an iTunes store in the first place aside. There is one now, and online music has made a good showing. It's up to the industry to decide how to proceed, not Apple. Simply changing the face of DRM isn't a "step in the right direction."

[2] Yes, I know what they mean by "open" DRM. But who's it open to? Only other competitive music stores? So we can have one universal DRM "standard"? Aside from the massive technical hurdles to coalescing DRM with all the disparate formats and stores, is that really the right step to take?

Re:Bullshit

[daveschroeder]

Could you further explain that?

Sure.

Jobs said it would get rid of DRM in a heartbeat on all media on the iTunes Music Store. I believe that to be true.

Further, I think Apple believes that it would actually be in a better position without DRM than with in terms of sales volume and customer satisfaction.

Long before the iTunes Store existed, the iPod was already the best selling music player. That's because it didn't suck, not because people were "locked in" to iTunes. In another way, you could argue that even before the store, you still got the most benefit from iPod by using it in conjunction with iTunes.

So in some respects I agree that Apple definitely encourages people to use its products and the "ecosystems" that go along with them (iLife, iTunes Store, and so on), but Jobs doesn't feel that DRM is good for the industry as a whole, and indeed only hurts and confuses honest consumers, in addition to never stopping piracy, since it will always be able to be defeated.

So, to expand on this a bit, would Apple be happy if it lost customers? No. But I believe Apple thinks the iTunes/iPod combo is so compelling to most ordinary consumers that they'd get even more customers without DRM. Apple doesn't need DRM to keep people on iTunes and iPod.

Re:Bullshit

[daveschroeder]

This post of mine will answer your questions:

http://slashdot.org/comments.pl?sid=222358&cid=180 14768

In short, I think the conspiracy theories that Jobs only said he was against DRM for PR reasons and to look good are utter bullshit. Jobs' statement on DRM is the single biggest shot across the bow of DRM that anyone anywhere near this industry has taken, ever. From the CEO of the company with the largest online music store, no less. From a board member of a major motion picture house, no less.

This isn't just lip service. This is huge, and that's why all the DRM and music industry types have been reacting to it so vocally and aversely since it was made. Apple doesn't need DRM to keep people on iTunes and iPod. People get iPods because they don't utterly suck. Jobs also (likely correctly) feels that the entire online music industry - of which iTunes is a huge part - would be MUCH better off without DRM.

In fact, if it's true that online sales would explode if you could actually get lossless, no-DRM versions of music and media online, as so many staunch anti-DRM advocates argue, then it's true that Apple's business would significantly grow, as the existing market leader in this area. I know that people want to think that Jobs was just lying for PR's sake and really secretly wants to hold onto DRM as tightly as it can, but that simply doesn't stand up to logical scrutiny, considering the scope and impact of this statement. Further, iPods - which is where Apple makes its money - were already the market leader by far before the iTunes store even existed.

Re:Bullshit

[daveschroeder]

The solution isn't standardized DRM. It's no DRM. The music industry wants you to believe the only practical solution is the former. The real solution is the latter, for all the reasons Jobs outlined, not the least of which is that DRM will NEVER stop piracy and ALWAYS be able to be defeated.

Re:Bullshit

[k2enemy]

in other words...

with DRM: apple gets a big share of the pie
without DRM: apple gets a slightly smaller share (debatable) of a much bigger pie

apple has huge market share because their products are better than everyone else's, not because consumers are locked into itunes. i don't think ditching DRM would hurt apple at all.

Re:Bullshit

[Yvan256]

You only have to watch the keynote where he introduces the iTunes Music Store. He says something along the lines of "and we've added DRM to keep the music labels happy".

It's not bullshit or a PR stunt. Besides, now that he posted his comments, he can't back down. How is that bullshit?

It's like a Far Side Cartoon

[thrillseeker]

No matter what the customers say, all the music execs understand is one word ... "blah blah blah blah DRM blah blah"

Apple not at fault

[Silentknyght]

Cohen told the audience that if Jobs was really sincere about doing away with DRM, he would soon release movies from Disney--the studio Jobs holds a major stake in--without any software protection. An Apple representative declined to comment on Tuesday on remarks made by the panel.

As I understand it, Apple is the technological source of this DRM in question, but not the muscle that pushes for its incorporation into the files. If Disney wants DRM on its digital downloadable movies as a provision for Apple to sell them, then it's Disney that is failing to "open up." If Apple refuses to put DRM on their products, then I'd guess they wouldn't have those products to sell.

iTunes is not the problem, but the result.

[snowraver1]

iTunes is not the problem, but the insane rules that govern the content that is distributed through it. Recently Apple said that they would drop DRM if the industry allowed. NOW the industry is crying that the DRM that THEY mandated to be inplace are actually hurting sales!?!

Re:iTunes is not the problem, but the result.

[Panaflex]

Ohh, it's much worse than that.

Now iTunes/Apple is a monopoly - the music companies can only get their product distributed profitably through a single channel online. They're seeing the writing on the wall - and the choice is open up or get squeezed by the monopoly.

Hell, they can't even sell their OWN music on their on website because... it's not compatible with iPod!!! And even if they could - the marketplace is Apple iTunes, pure and simple. The purported 4 cent per-song "Apple tax" is so low, that they couldn't even compete fairly with their own distributor because the scale of operations would be money-loosing.

I don't think anybody saw this reaming coming...

So who wants it then?

[bokmann]

So the customers don't want it, the music execs don't want it, the vendors don't want it, and I don't think he musicians are clamoring for it either... Why do we have DRM again?

I say someone needs to call the bluff.

Re:So who wants it then?

[EasyT]

If you pay attention to what the music execs are actually saying, they're not saying they don't want DRM, they're saying they want Jobs to open Apple's DRM up (make it accessable to other companies that sell DRM music or digital music players). Which they know Apple can't do, as Apple would be subjected to a much greater risk of the DRM being cracked in a way they couldn't quickly fix (which contractually could cost Apple access to their entire music library).

If the music execs were serious about wanting Apple to open up Apple's DRM, they could renegotiate to reduce Apple's risk. But since there appears to be no actual effort on that front, it sounds more like diversionary finger-pointing by the music labels.

iPod is open for others!

[fluch]

What is the porblem?!? I don't get it, the iPods are open for others. They happily support MP3's. Or don't they?! You just need to sell MP3's and the customer can play them. Ah, you do not want to sell MP3's?! Not my porblem, I am happy with it... :-)

Correction

[Overzeetop]

You spelled "MONEY" incorrectly

Re:Correction

[CelticWhisper]

So then what's the control all about? Yep, you guessed it: money. Money in the long run, money in the short run, it's still all about money in the end.

Re:It's like an episode of 24

[Tackhead]

> "We're running out of time," Ted Cohen, managing director of music consulting firm TAG Strategic, told the roughly 200 attendees. "We need to get money flowing from consumers and get them used to paying for music again."

Cohen then proceeded to shackle his brother to a chair and ordered a subordinate to inject 8 units of pain serum, all the while screaming "WE DON'T WANT TO DO THIS. JUST TELL US WHERE THE MONEY IS."

Captain subtext translates

[91degrees]

Music Industry: We want DRM.
Steve Jobs: You got it. Hey, it only works with iPods as well. Isn't product tying great!
Music Industry: Can we have more control over our product?
Steve Jobs: Nope.
Music Industry: Oh. Uhm... We'll leave
Steve Jobs: No you won't.
Music Industry: Oh. Ummm can you open up Fairplay. This will mean there's some competition and we can afford to ditch you.
Steve Jobs:: Nope. Why would I ever do that?
Music Industry: We'll make you look like the bad guy.
Steve Jobs: You can try. I made downloadable music viable, produce the gadget all the cool kids want and I don't sue children and old ladies. Not only that, but I can plausibly blame all your troubles on you.

Re:Nice.

[EasyT]

Don't believe the crap around here that "open drm" isn't possible. Thats exactly what MS has done, and exactly what the labels want out of apple.

Only that's not what MS has done. You'll note that MicroSoft didn't use their own "open" PlaysForSure DRM once they had their own Zune music player and music store. Instead they set up their own proprietary DRM that was incompatible with PlaysForSure.

Chances are they ended up in a contract that would hold them responsible if DRMed music sold for the Zune got cracked and pirated. If their contract is anything like Apple's, they could lose access to their entire music library if they can't plug the hole fast. And they can't ensure they can do that if other companies are involved with the maintenance of the same DRM.

MS only has only proven Apple's point. Anyone with a real stake in this game can't risk using an open DRM. (MS can license PlaysForSure to other companies because MS has no significant risk if PlaysForSure gets cracked.)

WHY apple DRM is GOOD for you and BAD for industry

[goombah99]

Counterintuitively, apple DRM being exclusive to apple's store is good for the consumer while being bad for the music industry companies. here me out.

Imagine apple opened up it's DRM to other stores. Now Sony goes to store B, C and D, which are rivals, and says we'll let the first one of you agree to our new rules have exclusive access toour top artists. Namely we want you will charge $7.99 and bundle them in sets of 5. No more singles and no more $1 songs.

Well duh, one of them will Kowtow. And it won't be apple which will sputter along trying to enforce the $1-single song rule.

Thus the only thing keeping the status quo which we all like ($1 songs and ability to buy singles) is apple's exclusive control of it's DRM. The moment that vanishes the Music INdustry has us in its claws.

So pray that apple does not open it's DRM to other stores.

Now on the flip side if all music is sold without DRM, well then there's another enformcement mechanism. If the music industry charges too much and forces song bubdling too much then Gnapster like trading services make a comeback, made all the easier by the lack of DRM on a much large song base.

So Jobs I think was right, but for different reasons than he stated. The most consumer freindly situation is that DRM be apple only or not at all. Apple is a good watch dog in this case because they profit from keeping song prices and tersm consumer freindly since that favors iPod sales as long as there is DRM. Second, they make a good watchdog because they are not threatened if DRM entirely vanishes. THe only thing threatening them is if the Music industry starts dictating higher prices and bundling songs because that will move sales off to crappy user unfreindly sites and diminsh the appeal of the ipod.