Reading Between the Lines of Steve Jobs’s ‘Thoughts on Music’

Steve Jobs’s “Thoughts on Music” essay is really quite a good piece of writing, and an intriguing and aggressive strategic move on the part of Apple.

Is it a challenge to the major record labels? An answer to the increasingly hostile European governments (Norway, France, Germany) that are pressuring Apple to “open up” the iTunes Store? A message to the press to clarify Apple’s stance on DRM? A big fuck-you to Microsoft?

It is all of these things.

The Music Companies

For the music labels, yes, it is a challenge. Jobs wrote:

If the big four music companies would license Apple their music without the requirement that it be protected with a DRM, we would switch to selling only DRM-free music on our iTunes store. Every iPod ever made will play this DRM-free music.

It’s hard to construe this as anything other than an unequivocal commitment to non-DRM music at the iTunes Store. If it’s a bluff, all it will take to call them on it is a simple two-character statement from just one of the four major labels: “OK”.1

It is the case, though, that there already exist music labels that wish to put music on the iTunes Store without DRM protection — some of the independent labels have already bought into exactly what Jobs is arguing: that DRM does not combat piracy and that interoperability can only happen with DRM-free licensable file formats.

Jon Lech Johansen points to this piece by Randall Stross in The New York Times from last month, which mentions Nettwerk Music Group, the label that represents Avril Lavigne, Sarah McLachlan, and Barenaked Ladies. They sell their music on eMusic DRM-free; they want to do the same on iTunes, but Apple has, to date, refused. As Johansen writes, “Actions speak louder than words”. If Apple were to allow the independent labels to start selling DRM-free music through iTunes, it would eliminate any doubt as to Apple’s sincerity.2

Regarding the Calls for an ‘Open DRM’ System

Take Norwegian ombudsman Bjoern Erik Thon. Please. Quoting from a Reuters story two weeks ago:

“They must make iTunes music compatible with other players than the iPod by the end of September, or we will take them to court,” the ombudsman, Bjoern Erik Thon, told Reuters. “iTunes is imposing unreasonable and unbalanced restrictions that are not in accordance with Norwegian law.” He said the courts could impose fines on iTunes until songs downloaded through iTunes could be played on rival devices to the popular iPod.

Thon certainly isn’t the only one calling for Apple to “open up” FairPlay. But, as I’ve written before, DRM and interoperability are mutually exclusive. Interoperability is a good idea. It is simply fair that you should be able to play the music you’ve downloaded and paid for on any brand of music player. “Open up FairPlay” sounds nice, but, as Jobs makes clear, makes little practical sense. If you really want interoperability, then what you want is no DRM, not “open” DRM.

Jobs boils the industry’s choices down to three options:

Keep going as things are now. Apple licenses FairPlay to other companies. Sell music online without DRM.

As for why #2 wouldn’t work, or at the very least would be a bad idea, Jobs writes about what happens when FairPlay is cracked:

An equally serious problem is how to quickly repair the damage caused by such a leak. A successful repair will likely involve enhancing the music store software, the music jukebox software, and the software in the players with new secrets, then transferring this updated software into the tens (or hundreds) of millions of Macs, Windows PCs and players already in use. This must all be done quickly and in a very coordinated way. Such an undertaking is very difficult when just one company controls all of the pieces. It is near impossible if multiple companies control separate pieces of the puzzle, and all of them must quickly act in concert to repair the damage from a leak.

Now, you might ask why, if Jobs is arguing against DRM, would Apple care if an “open” FairPlay licensing model made it harder for Apple to fix any potential cracks? The problem is that, as Jobs mentions earlier in the essay, Apple’s deal with the major labels requires Apple to quickly close any FairPlay cracks, “or [the music companies] can withdraw their entire music catalog from our iTunes store.” How could Apple assume responsibility for firmware updates for devices made by other companies?

Jobs continues:

Apple has concluded that if it licenses FairPlay to others, it can no longer guarantee to protect the music it licenses from the big four music companies.

Translation: We are not going to license FairPlay to anyone else. The only options that are actually on the table are the status quo and dropping DRM.

Perhaps this same conclusion contributed to Microsoft’s recent decision to switch their emphasis from an “open” model of licensing their DRM to others to a “closed” model of offering a proprietary music store, proprietary jukebox software and proprietary players.

Translation: PlaysForSure sucks.

Also, licensing implies payment; presumably, if Apple were to license FairPlay to other electronics companies, what would stop them from setting the price so high that no one would accept it? Or, what if, say, only Sony were willing and able to pay Apple’s licensing fee? (Microsoft, surely, could pay any price, but just as surely would refuse to.) How exactly would that solve these complaints regarding interoperability?

And if your answer is that these countries could legally force Apple to license FairPlay cheaply or even freely, Apple would just take their iTunes Stores away.

Video

Andrew Shebanow calls video the “elephant in the room”:

Why didn’t Jobs make the same courageous stand against DRM on video? Unfortunately, the answer isn’t very pretty: Apple doesn’t have anywhere near the same clout in the movie and TV business that it has in music, and has only signed film deals with two of the major studios as a result.

That’s true, and it’s certainly why the essay was titled “Thoughts on Music” even though it was really all about DRM. But there’s another difference other than Apple’s relative clout in music vs. film/TV. Jobs makes the point in his essay that 90 percent of all music is sold DRM-free on CDs; DVDs, on the other hand, are copy-protected.

Long-term, I think the movie industry’s position is untenable. The tighter they squeeze, the more people will bootleg. But they are at least somewhat more consistent in this regard than the music industry — the movies guys are screwing all of their customers with copy-protection.

This debate is coming for video, but today is not the day.

Killing DRM Would Kill Subscription Models

It’s worth noting that without DRM, subscription-based music stores would not exist. The whole point of a subscription service is that while you’re paying, you can download all the music you want, but when you stop paying, all the music you’ve already downloaded stops working. That requires DRM.

Oh, Google, how I love thee.

Apple Is Not Afraid of Competition

I’ve seen a lot of speculation over the last few years that it’s really Apple, not the music (and movie) companies, that insists upon the use of DRM for the iTunes Store, so as to use the lock-in effect to competitive advantage. Cory Doctorow has been banging this drum for years. As far as I can tell, the only source for this is one statement in 2004 from an unnamed Apple lawyer to Fred von Lohmann of the EFF.

That lock-in provides a competitive advantage is undeniable. And if no one were complaining, I doubt we’d have seen this essay from Jobs. But as Jobs points out, with an average of just 22 iTunes Store songs sold per iPod, DRM-protected songs amount to a small percentage of the total music stored on most iPods. Jobs is saying that Apple doesn’t need it. Apple is not Microsoft; the only competitive advantage Apple needs is the quality of its products.

The Reaction

John Markoff has a story in today’s New York Times with reactions from music industry executives. Unsurprisingly, they’re not exactly singing hallelujahs:

A senior executive at one company, who requested anonymity to avoid straining relations with Apple, said that while labels might experiment with other forms of copy-protection software, “we’re not going to broadly license our content for unprotected digital distribution.”

News flash, Mr. Anonymous: CDs are digital, unprotected, and higher-quality than the compressed format on iTunes.

Markoff’s story continues:

The global music trade group, the International Federation for the Phonographic Industry, based in London, has long pushed for “interoperability,” saying Apple should license its digital management system so that iTunes music plays on devices other than the iPod. But the industry has also stuck with the idea of some kind of digital control to prevent wholesale copying of musical tracks.

In other words, the music industry wants a magical DRM format that gives them — not Apple, not Microsoft — complete control over all digital music. And a unicorn and a rainbow.

Officially, the industry chose to respond Tuesday by seizing on one idea that Mr. Jobs raised — licensing Apple’s own copy-protection system — even though he went on to reject it. “Apple’s offer to license FairPlay to other technology companies is a welcome breakthrough and would be a real victory for fans, artists and labels,” the Recording Industry Association of America said.

You honestly have to wonder whether the people running the RIAA are retarded.

But the sharpest response to Jobs’s essay goes to Microsoft:

Jason Reindorp, marketing director for Zune at Microsoft, said Mr. Jobs’s call for unrestricted music sales was “irresponsible, or at the very least naïve,” adding, “It’s like he’s on top of the mountain making pronouncements, while we’re here on the ground working with the industry to make it happen.” “He’s certainly a master of the obvious,” Mr. Reindorp said, adding that “the stars were already aligning” to loosen the restrictions.

The way Reindorp whiplashes right from calling Jobs “irresponsible, or at the very least naïve” to calling him a bandwagon-jumper two sentences later — that actually makes total sense to me. He pretty much goes through all five stages of grief — denial, anger, bargaining, depression, acceptance — in just two paragraphs.

The only thing the Zune team is doing “on the ground with the industry” is squirting each other.