Steve Jobs has posted an open letter entitled "Thoughts on Music" on the Apple website and, in doing so, joins Yahoo! Music in calling upon the major record labels to abandon DRM for online music sales. He rightly points out that while 90% of music sales are on CD's without DRM, the growth of online music sales is inhibited by the saddling of electronically distributes music with consumer unfriendly DRM. In his open letter Steve discusses the status quo, the problems associated with licensing its "FairPlay" DRM system and, ultimately, concludes that DRM-free music sales is the best way forward.
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. 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.
Why would the big four music companies agree to let Apple and others distribute their music without using DRM systems to protect it? The simplest answer is because DRMs haven’t worked, and may never work, to halt music piracy. Though the big four music companies require that all their music sold online be protected with DRMs, these same music companies continue to sell billions of CDs a year which contain completely unprotected music. That’s right! No DRM system was ever developed for the CD, so all the music distributed on CDs can be easily uploaded to the Internet, then (illegally) downloaded and played on any computer or player.
In 2006, under 2 billion DRM-protected songs were sold worldwide by online stores, while over 20 billion songs were sold completely DRM-free and unprotected on CDs by the music companies themselves. The music companies sell the vast majority of their music DRM-free, and show no signs of changing this behavior, since the overwhelming majority of their revenues depend on selling CDs which must play in CD players that support no DRM system.
So if the music companies are selling over 90 percent of their music DRM-free, what benefits do they get from selling the remaining small percentage of their music encumbered with a DRM system? There appear to be none. If anything, the technical expertise and overhead required to create, operate and update a DRM system has limited the number of participants selling DRM protected music. If such requirements were removed, the music industry might experience an influx of new companies willing to invest in innovative new stores and players. This can only be seen as a positive by the music companies.
Apple is facing pressure from some European countries, most notably Norway, whose consumer ombudsman recently ruled that Apple's DRM is illegal in Norway and that Apple must open its iTunes system up by October 1, 2007 or face legal action.
Sources: Steve Jobs: Thoughts on Music | New York Times | Times Online | EFF Deep Links| San Francisco Chronicle | MTV | Chicago Tribune (AP) | ZDNet | Guardian Unlimited | Boston Globe | Hollywood Reporter | Business Week | Red Herring | PC World | MSNBC | ABC News | Washington Post | Reuters
Yahoo Music Speaks!: I also highly recommend you listen to Michael Arrington's January 10, 2007 TalkCrunch interview with Yahoo Music GM David Goldberg and Yahoo Music VP of Product Development Ian Rogers discussing the desirability and probability of music labels abandoning the use of DRM with online music sales.
Click here to access the TalkCrunch Yahoo! Music podcast (Click on "Listen Now" at the bottom of the blog entry).
- Steve Jobs Calls for the End of DRM for Online Music Sales (February 7, 2007)
- Wired Article: Signs Music Industry May be Abandoning DRM (January 8, 2007)
- EMusic Sells 100 Millionth Song without DRM (December 15, 2006)
- EMI's Blue Note & Yahoo! Music Sell a Few More Songs DRM Free (December 6, 2006)
- ifpi Board Member Quoted as Saying Major Labels About to Abandon DRM (November 27, 2006)
- First a Song, Now a DRM-Free Album – Yahoo! (September 19, 2006)
- Weird Al Yankovic's New Single: Don't Download this Song (August 23, 2006)
- Yahoo! Offers DRM-Free Jessica Simpson Song (July 20, 2006)
- Yahoo! Exec Says Labels Should Sell Music Without DRM (February 24, 2006)