Fast Company

The Wizard of iPod—Jobs' DRM Deal Is Smoke and Mirrors

Pay no attention to that man in the mock turtleneck behind the curtain. Too much fanfare, Apple's Steve Jobs and British music giant EMI Group announced that for an extra $.30 they will sell songs on iTunes without copy protection. But this is all smoke and mirrors--Jobs and EMI are simply selling you the rights they took from you in the first place.

Now you can buy the Rolling Stones' Satisfaction and play it on your iPod or your…wait a minute. What else is there?

Instead of protecting copyrighted music, Digital Rights Management (DRM) has been the device by which Apple has put the strangle hold on the digital download and music player industry. Ask the fools who bought Microsoft's Zune. Until yesterday, DRM dictated that when you downloaded a song on iTunes it could only be played on an iPod. And iTunes has more than 70 percent of the market for music downloads, according to market research firm NPD. So who's really benefiting from DRM? Apple.

This isn't really news to the folks following the work of the Electronic Frontier Foundation. To the dismay of consumer advocates and music fans, the music industry has pushed DRM as the only way of reducing piracy of copyrighted music. But DRM codes have been cracked left and right, providing little satisfaction to artists and record labels trying to make an honest buck.

But it causes one to take the earphones off and wonder: why the change of heart over at Apple?

Jobs' recent rants against DRM are a ploy to distract us from the increasing number of legal challenges to its business practices, especially in Europe. And no sooner had Jobs made his announcement yesterday than European commission officials confirmed that Apple and the record companies that sell songs on iTunes are facing an antitrust inquiry over the pricing of songs on the iTunes service.

"The very fact that you are unable to buy the same tune for the same price or you are unable in some cases to buy the same tune at all is a problem for us," a commission spokesman told Bloomberg.

A song costs 99 euro cents ($1.32) to download from iTunes in a nation that uses the euro, according to the commission. By contrast, in the United Kingdom it costs the equivalent of 1.17 euros and in Denmark 8 kroner, or 1.07 euros, Bloomberg reports.

The commissions' statement of objections does not allege that Apple is in a dominant market position and is not about Apple's use of its proprietary DRM to control usage rights for downloads. Yet DRM provides the curtain behind which Apple is all too happy hide.

"Apple has always wanted to operate a single, pan-European iTunes store accessible by anyone from any member state, but we were advised by the music labels and publishers that there were certain legal limits to the rights they could grant us," Apple said in an e-mailed statement.

So, DRM may soon be a thing of the past--but not until Apple used it to put other music downloading and listening platforms under their thumb.

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18 Comments

  • Mulder

    @DBL

    "Who owns fastcompany.com? Your domain registrar, Network Solutions, says that it can't provide that information because, and I quote, fastcompany.com has "failed to abide by Network Solutions' WHOIS policy"."

    If you do your homework and know how to get WHOIS info, you'd have found this:

    Domain Name: FASTCOMPANY.COM

    Administrative Contact, Technical Contact:
    Mansueto Venturess LLC. domains@mansueto.com
    375 Lexington Avenue
    New York, NY 10017
    US
    1.2123895367

  • Paul

    And people like to say that Apple fans are a cult. Seems like the bias of the Apple haters is much stronger to somehow turn a good thing (removing DRM and giving us twice the quality to boot) into an evil conspiracy that non-sensically is just a plot to strengthen DRM.

    Sounds like a lot of conspiracy theorists these days. Ignore the evidence, go with your emotions, and then twist everything to fit your own twisted point of view.

    Funny how Bill Gates can go around pretending he doesn't like DRM, but what has Microsoft done to remove DRM in the past 10 years, hmmmm?

    That's what I thought.

  • Robert C.

    The post is oddly misinformed.

    The iPod hasn't benefitted significantly from the success of the iTunes Music Store. If anything, it's the other way around.

    But it's the attitude of the post that seems strange. Apple is working to rid us of DRM. They're doing what's right.

    Now, you're correct to think that Apple's not doing this simply out of the kindness of their hearts. But there's an explanation that's much simpler than your wild speculation about Apple trying to distract us.

    The real secret reason: They think they can sell more songs this way.

    Making up an elaborate, harebrained scheme is unnecessary. Unless, of course, you simply enjoy your stories, in which case, God bless.

    Have a nice day.

  • TABP

    Alex,

    I read a number of blogs and have noticed that sometimes all of the comments are positive and supportive of the author, or perhaps if it's controversial, let's say half of them agree. But when all of the comments demonstrate disagreement with the premise you present (some of them with very convincing logic), perhaps you should rethink your position.

    Since you are fluent in the language of the topic, it would seem that you must read what others have been saying about DRM. You know doubt consider yourself a responsible amateur journalist and do your best to research a subject before writing your blogs. Although it is commendable to take a firm stand for a minority opinion, when your point of view becomes extremely narrow, you not only risk being rejected by your audience, but losing all credibility.

    Others of your colleages in this type of forum have already been branded as unethical, the worst label for a journalist. On the other hand, if blogging is not for you a means of communicating legitimate information, but rather using technology as a means to an end, in this case, gain advertising revenue, than perhaps integrity is not an issue with you, and I wish you the best.

  • John Moltz

    @Jason

    Because if Jobs hadn't been making Apple into a profitable company on the back of DRM, this move would have happened 5 years ago.

    What a crock.

    What planet were you on 5 years ago? It certainly wasn't Earth, where the recording industry was hell-bent on making DRM stronger not weaker to destroy those evil P2P sites. If what you're saying would have been possible, then why didn't someone do it?

    When fixing a codependent relationship, you need to fix both halves - the enabler and the deviant.

    You analogy is flawed. If we were to go with the deviant/enabler analogy, the enabler in this instance was the customers who bought DRM-ed music, not Apple. They could have chosen to buy CDs but didn't.

    The reason I personally like Apple to beat me so horribly these past five years [/sarcasm] was for convenience, the ability to buy one track and the knowledge that I could convert them to a non-DRMed format by burning and re-ripping them. Next month I'm totally upgrading every song I can to the higher bit rate without DRM. And, like most people, it's not going to cost me much because 95% of my library is ripped from CDs, not from iTunes.

  • John Whiteside

    A final note: "Instead of protecting copyrighted music, Digital Rights Management (DRM) has been the device by which Apple has put the strangle hold on the digital download and music player industry."

    Actually, the market was puttering along like a car running out of gas before Apple got into it. They didn't grab control of a burgeoning market - they took a small market and introduced a product that made it grow like crazy. Had they not done so, I suspect that the digital music player market would be a lot smaller today.

  • John Whiteside

    Given that downloading is not the only, or even the dominant, way that people buy music, this entire rant is kind of stupid. DRM has probably retarded the growth of downloaded music sales... but mostly because it makes people decide to just buy a CD instead.

    As others have pointed out, most iPods are filled with music that was ripped from CDs (the owner's, or somebody else's). But we are supposed to believe that it's protected downloads from the iTunes store that is responsible for Apple's success in this market?

    As for Apple selling you rights that you already had - well, no, you didn't have them. If you bought from the iTunes store, you were explicitly agreeing to buy music that's lower quality than a CD with restrictions on how you could use it.

  • Darryl

    This article reads like the writings of a person that just wants to grind an axe. I'm reminded of arguments with my ex-wife where reasoning just didn't exist. This article, clearly written by someone who opposes DRM, is exposed to the first effort to have exactly what he wants, but refuses to believe that he gotten his way. And so is therefore attempting to convince everyone that were all being taken for a ride. Trying to makes all believe that the big bad Apple is just ripping us off.
    Really does remind of an argument with my ex-wife.

    Look, this is certainly a step in the right direction. I've listen to people complain about DRMs for the past few years when in reality, the only people that really care that much are those of us that take the time to write a blog about it, and those that respond. Don't believe that? Do a little survey and randomly ask 10 average iPod users their opinion about DRMs. I'd be willing to bet that 5 out of 10 won't know what you're talking about. 3 might be vaguely familiar, and 2 might have a little something to say.
    The general public, for the most part could care less, which is why the iPod\iTunes growth to market dominance has been what it has.
    You might consider why you are carrying so much anger. You've gotten exactly what you wanted.

  • JTfA

    When you are number one at anything people take shots at you. Alex.. different cost in different countries is a non issue because Apple wants single Euro Itunes anyway...but seriously, lets take the cost of a BMW in Germany and cry why we can't get the same price here in America....AND why will BMW void my warranty if I use another car repair service or third party parts. Why must I pay through the nose for their parts or repair.I want my warranty and still be able to use anyone and any part. puleeze!!!.... Apple makes a superior product. Period. They did it the best and they did it first. Period. There are so many other places to get music anyway. Apple does not own the rights to the music so they can't just do what they want to please all. Itunes and the ipod have made the ease to get music available to the masses like no one else. We are just in the process of figuring out how to have DRM free music, and make it fair to everyone. It has been developing for a while and it will work its self out. OMG! Look who's leading the way!!!...again!

    Hey Alex! you could always get a Zune.. yeah!..a nice brown one. I love the faux click wheel....now if you could just figure out the UI or file restrictions on that piece of brown stuff..LMAO, JTFA

  • DBL

    Not once in this article is it mentioned that the new DRM-free tracks are also twice the quality. TWICE THE QUALITY! Why are you telling people that all they are getting is no DRM? In fact, you say this explicitly -- that is an out and out lie. Have you no shame?

    With a 256K tune, you can play it on your Hi-Fi and it will sound beautiful or you can downconvert it to 128K and put it on your iPod. It's a multipurpose track. But you can't upconvert, so the older tracks are single purpose.

    This is obviously a much bigger deal in day-to-day usage than no DRM, which only affects you when you switch players or platforms. Out of that 30%, how much would you honestly (if you are capable of thinking honestly) apportion to TWICE the quality versus no DRM? Audiophiles would probably pay the 30% just for the quality alone.

    And by the way, if you buy a complete 256K DRM-free album, there is NO 30% increase -- it's the same $9.99 it's always been. So it's CD quality cheaper than most CDs.

    Not pointing out ANY of the actual value offered in this change is an enormous disservice to your readers and the consumer in general. Perhaps you'd prefer to kill the prospects of DRM-free music for some reason by telling lies to depress the market?

    Who owns fastcompany.com? Your domain registrar, Network Solutions, says that it can't provide that information because, and I quote, fastcompany.com has "failed to abide by Network Solutions' WHOIS policy". Why aren't you abiding by your own domain's registrar's policies? Is it the same reason you're telling us lies in this article?

  • Jason

    Why shoot at the pianist?

    Because if Jobs hadn't been making Apple into a profitable company on the back of DRM, this move would have happened 5 years ago.

    When fixing a codependent relationship, you need to fix both halves - the enabler and the deviant.

    The RIAA is deviant from market demands. Jobs enables them. Both need repair.

    And are we all really naive enough to believe that Jobs' comment about DRM did NOT come on the heels of this agreement? The timing is obvious - it's just Mr. Marketing spinning another one for Apple.

  • matt

    iTunes DRM was never much of a restriction on anything. Burn a CD with the song you bought on iTunes, supposedly restricted, then rip the song back into iTunes and viola! You have a DRM-free, unlocked track. Use Sound Converter to change it into an MP3 so it can be played on a Zune or other pathetic players of that ilk. I just don't understand all the whining about iTunes DRM. Are people so damned lazy that burning a CD is just too hard?

  • ken

    The EU should be busy getting those media companies to do away with region encoding for all DVDs. Find a real target.

  • Gits

    Alex Pasquariello got it all wrong!

    Steve Jobs is the man who convinced the music industry to get into legal downloads and popularized the concept. To convince the music industry, he had to agree to a deal where the music was protected by DRM, despite that CD has always (and still is) sold without any DRM and with higher quality (approx 1400kbps vs 128kbps data rate) files. It is not DRM that ties the music downloaded to iTunes with the iPod, but rather it is the smooth user experience with the integration of iTunes and iPod that ties the two together. So Steve Jobs knows very well that even if DRM disappears, the integration between iTunes and iPod stays.

    It is entirely possible for anyone to remove DRM from any music file on PC or MAC. The only hitch is that it is ever so slightly troublesome, and besides "nerds" people are not going to take the trouble. It is also entirely possible to use other music players with MAC or PC than the iPod, but the software and user interfaces are more troublesome. iTunes and iPod combination wins hands down, even if dozens (and more) alternatives are availlable.

    Steve Jobs knows that DRM is undesireable, and he has again become the man who stood up (at the right time) to the music industry to suggest it is gotten rid of. He backed up his bold words in february 2007 with action in April 2007. He has said that pending other music industry companies actions, he hopes that 50% of all music sold on iTunes can become DRM free by the end of 2007.

    So why shoot at the pianist?

  • william

    No, they are not selling you rights they took away from you in the first place. What you got is what you paid for. The terms and conditions of the original sale dictate what you are getting in exchange for what you are giving. Unless, of course, Apple somehow deceived you into buying a DRMed tune that you believed was not. But then everyone seems to be pretty aware of this DRM thing. DRM might have benefited Apple, but nobody forced you to buy.

  • rockr

    Holy fiscal frenzy! You mean the same product costs different amounts of money in different countries. Shocker!

    I especially love the comparison to the price in England... they don't even use the Euro there.

    You know, I used to live in Germany back in the 80's. Due to the strong dollar, a can of Coke cost me only about $0.17. When Reagan devalued the dollar, the price in German Marks remained constant, but my out-of-pocket tripled to something like $0.51.

    Here's an idea. If the Europeans don't like the iPod and iTunes, let 'em buy something else. Or invent their own friggin' iPod.

    Jobs took a bad thing (DRM) and spun gold out of it for Apple. Removing DRM won't level the playing field as Apple's lead is based on more than pricing (it ain't the cheapest after all). It's about the user experience. And folks are willing to pay more for a good one.

  • Ben

    Given that the majority of music played on iPods are taken from CD collections or (illegally) from file sharing communities, how real has DRM been in preventing the success of other devices and/or digital retail outlets?

    If this were true, wouldn't total legal digital sales (from iTunes) and the % of purchased music on iTunes be greater?

    I share the view that a DRM-less environment is a big win for Apple. DRM-free music removes the barriers for those consumers who want an iPod but don't want to be tied to iTunes. It also allows non iPod owners to purchase from iTunes.

    However, saying that DRM has given unfair advantage to Apple is a bit of a stretch.

    Apple has been successful because they provide a seamless experience (and a sexy device) that consumers want. Irrespective of whether it is the best device, it is what consumers have wanted.