Steve Jobs On DRM

February 6th, 2007

In an unusual move, Steve Jobs has taken the text podium on the Apple web site, writing about his Thoughts On Music, though it might be more aptly titled “Thoughts on DRM” (Digital Rights Management).

“Imagine a world where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat.” — Steve Jobs

There’s been a lot of speculation over the years that Apple either would or wouldn’t support DRM if the music industry didn’t force them to. I find it interesting to at least hear lip service from Jobs to the idea that DRM is bad for consumers.

But this kind of public “for the record” stance seems highly unusual. In the wake of the Apple vs. Beatles settlement, I can’t help but wonder if Apple is setting the stage for some kind of DRM-defying move. If they could sell the Beatles exclusively and DRM-free, what kind of precedent would that set for the rest of the industry?

As the article wraps up, it becomes clear that the probable purpose of the highly visible stance is to defend Apple against claims by some European countries that iTunes is against their consumer protection laws. I think Jobs (or his researchers) makes an excellent point in drawing attention to the significant European ownership of the media companies who are apparently responsible for demanding DRM protection. It will be interesting to see if this sparks a public debate between Apple and the music companies.

4 Responses to “Steve Jobs On DRM”

  1. Step Says:

    I think you mean “an unusual move” in the first sentence.

    Another point that you got close to, is that with the Beatles agreement behind them Apple may now free to basically act as a record label – bet the major labels don’t want them to get any ideas there. I’m sure CD Baby, eMusic, and others might be worried about potential implications there too.

    All in all, an interesting and unusual move for Steve.

  2. Drew Thaler Says:

    I think you hit the nail on the head — it’s a public statement aimed at defusing the European lawsuits. Pretty fascinating to see him come out and say that DRM is a losing battle and that the cost involved far outweighs the benefits. I do think he’s said most of this before, in various interviews, but just not all in one place and not quite so officially. Openly encouraging people to campaign for DRM-free music? Whoa.

    And I have to say I’m tickled to see that Jobs gets to use as his personal blog. Hey, why the hell not. ;-)

  3. Frank 'viperteq' Young Says:

    I’m so glad to read Step’s comment up above. I have been calling for record labels to go all digital for the past two years. Of course, that falls on deaf ears. But the way that I see it is this: The recording industry as we know it is crumbling at the seams. We’ve all read stories about how artists never make money on record sales anyway as most of the money ends up in the pockets of the major labels that “distribute” said music. This is why this rally cry around DRM had me so perplexed: Why are artists like Dr. Dre and Aerosmith fighting so hard FOR DRM when it isn’t helping their bottom line which is selling music and making money.

    The way that I see it, some small, but enterprising record label is going to have to be the organization to get the ball rolling on an entirely new business model: Giving music away completely free. Think about it? Artist royalties usually come in between $0.07 to $0.12 per record sold. If you’re an A-list star, you might be pulling in close to $0.50 per record sold, but no one on a major label is getting $1.00+; With record sales slipping more and more each year (mainly due to bad quality, the economy and an upswing in digital sales) artists are basically getting peanuts in terms of record royalties. Where they really make the bulk of their money is from concert tours, merchandizing and advertisements. If the smallest amount of money that they make comes from the record label, then they should cut that portion out.

    So how does an artist make money if they/the label are giving the music away for free? Well, first some independent service would need to create a web app (possibly in Rails) that can reliably and securely track downloads. Then you make downloads the barometer of how popular an artist is at any given time. If an artist is routinely pulling 5 to 20 million downloads per project release, then they can turn around and take the services’ data and use it to negotiate better fees with concert promoters and companies wanting to work out endorsement deals with the artist/groups. Working the system this way also makes the playing field more level in terms of new/alternative acts that are trying to break in. The artist also will make money from merchandizing which can include anything from T-Shirts to Behind-The-Scenes DVD’s.

    And what happens to the major record labels who have gotten fat from the old way of doing things? Well, they crumble into dust. It’s either adapt to the new system or die. See, the major labels won’t be needed anymore because, there’s no phyiscal manufacturing taking place anymore. In addition to that, you won’t need the majors to finance music videos anymore since videos can now be made for pennies on the dollar and uploaded to services like YouTube, Daily Motion and Brightcove. In terms of services like MTV and BET that have built themselves up on bringing music videos to television, well, they better come up with better Internet strategies if they hope to compete with the Google-YouTube juggernaught.

    Is this something that could happen overnight? Of course not. But if artist don’t wake up and smell the roses, labels like Sony BMG and Universal as well as the RIAA could keep on controlling the recording industry for another century.


  4. Bill Says:

    Just want to note that it is unlikely Jobs needed researchers to break down the ownership of the major record labels for him. I feel confident that falls squarely into the “things you need to know before the meeting” category; and the meeting in question took place in the distant past.

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