Record labels thank Jobs for explaining the key to competing with iTunes
Can this really be what Steve Jobs had in mind last February when he urged the major record labels to drop digital rights management restrictions on their music (see “Jobs endorses unchained melodies“)? “Imagine a world where every online store sells DRM-free music encoded in open licensable formats,” Jobs wrote in an open letter. “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.”
Now Jobs looks to be on the verge of getting half his wish, but from Apple’s standpoint, it’s looking like the wrong half. In the months since Jobs’ letter, EMI, the weakest of the four major labels, did indeed sign a deal to put some DRM-free music in Apple’s iTunes Store (see “Price of freedom: Eternal vigilance plus a 30% premium“). Then, over the summer, Universal Music Group announced it would start selling DRM-free music through a variety of retail services — but not iTunes (see “Universal’s risky new lifestyle — playing the field without protection“). The music labels had long chafed at Apple’s contract terms, proprietary format and insistence on ultimate control, and Universal recognized that offering DRM-free music was one chance the labels had to counter Apple’s power. In late December, Warner Music Group came around, but it too left iTunes in the cold and decided to peddle its DRM-free tunes through Amazon’s digital music store, where all the offerings are restriction-free. Now today comes word that Sony BMG, which knows a few things about infuriating consumers with DRM (see “Sony BMG’s new corporate anthem: Benny Hill Theme“), is about to join the other three majors and make at least some of its catalog DRM-free (though beyond its participation in a Pepsi-Amazon promotional giveaway around the Super Bowl, its plans are not clear).
Great news — as Jobs said, DRM measures treated customers like criminals and were always more trouble for legitimate users than bigtime pirates, and the labels are to be congratulated for finally seeing that. But did Jobs really figure his lobbying would help push the record companies and competitors like Amazon into a retail model that could erode Apple’s market power? Sounds like a backfire to me, unless Apple really is a “heartbeat” away from embracing unrestricted music.
Apple makes most of their money from hardware sales (e.g., iPods), not iTunes Store downloads. Sounds like anything but a backfire to me. Without restrictive DRM in the digital music stores, people will choose the mp3 player they like best. It seems to me that there is nothing close to competing with the current family of iPods.
I’m no attorney, so I suspect I am wrong, but this sure smell of collusion on the major labels’ part for the sole purpose to do damage to Apple. Sad because, in my mind at least, Apple saved the bacon of those record companies by providing the first successful digital channel for their product. Those execs should be rewarding Apple and Steve Jobs for developing a digital distribution model that provided income and pulled a great many from piracy. Instead the choose to punish Apple for its success. Petty and short sighted IMHO. There is no reason not extend the same product now being offered through Amazon via the iTunes channel. Let Amazon and Apple compete in the retail space like record stores of old to distinguish themselves and earn customers. Record execs would do themselves, and their shareholders, better service by improving the product instead of attempting to alter the retail landscape.
Apple is a hardware company that makes great software. What part of that sentence states they compose and play music and profit from it? Didn’t think so.
Ditto Chris.
I don’t get your last sentence as you seem to imply Apple doesn’t embrace unrestricted music. Apple has said it is willing and it was the first to sell any major labels music without DRM; it’s clearly the labels that don’t want to sell it through iTunes. And it can’t be a pricing or bundling issue, as Amazon is selling the tracks for less, and unbundled.
In any case, it doesn’t matter to Apple as the MP3 songs play on iPod. After Amazon establishes itself as a major store, if the labels are dumb enough to increase prices to $1.29 or coerce bundling of tracks, the consumer backlash will be enough to finish the labels once and for all.
Apple will laugh last.
1) the off-brand services are likely to fail.
2) DRM ITSELF doesn’t matter to everybody; most people just want convenience and iTunes dekivers that.
3) Apple can shut down any competitor by matching prices.
4) the Govt. can shut down any service that engages in anticompetitive behavior against Apple.
5) No one has decent hardware but Apple, and THAT’s where the money is.
I’m not concerned in the slightest. The landscape is littered with the corpses of dead, incompetent music services, starting with Napster.
We just have to remind ourselves that these guys take a long time to evolve, probably a snail’s pace is better than inaction.
Maybe in another 10 years they’ll figure out that it was only a company with Apple’s clout that took them to where they are today kicking and screaming.
iTunes uses AAC encoding, which is no more proprietary than MP3. MP3 defines the format for the audio layer in MPEG-2. AAC defines the format for the audio layer in MPEG-4. Both have to be licensed from MPEG, which is a broad industry consortium.The major difference? AAC is a much better sounding technology at any given bit rate.
The combination of AAC and FairPlay DRM is proprietary, but since we’re talking about abolishing DRM the labels are full of it when they say that Apple’s format is proprietary.
@ James Robinson: excellent catch. What I would LOVE to see is an Apple end-run around the labels by announcing a partnership with (drumroll) Amazon. Apple has shown the world that digital music download models can be good business and profited by it. Now they should stop fighting the labels, play to their strengths, and publicly accept other digital content providers as partners.
Here’s how to write a proper and sincere story -
‘The BW story says Sony will make “at least a part” of its catalog available. In other words, we’re throwing you some bones, but don’t think we’re against DRM to the point where we abandon it altogether.
Sony’s music will be available only from is suggested as being available from (surprise!) Amazon.com. No iTunes. Is it a coincidence that Universal, Warner, and perhaps Sony won’t sell on iTunes (you know, the word’s most popular download music store)? How could anyone believe that? I wouldn’t believe it for a minute. It’d be borderline collusion from the three largest labels.
Universal, as far as I know, is also only allowing part of it catalog to be DRM-free. That was the case initially, and I’ve seen no announcement that they’ve opened up everything.
Of the big four labels, only the smallest (EMI) made their DRM-free music available through iTunes. The other labels music on iTunes is still with DRM, while they peddle their DRM-free wares elsewhere.’
Extracted from Small Wave
Whereas yours is a very and pathetic attempt to cast doubts on the integrity of a person’s sincerity.
Jobs says Apple is opposed to DRM.
Presumably DRM exists on iTunes at the music companies’ insistence. The music companies will make their catalog available DRM-free, except through iTunes.
I suppose the music companies can offer their music anywhere they want to, but it does look like at least three of them have decided to try and punish Apple for maneuvering them into doing something in the customer’s interest. How do artists and stockholders even consider signing up with companies run by pre-schoolers? If the shareholders don’t get together and fire these clowns, they’re more stupid than the management.
and what would you all people say to becoming co-producer of your favorites and having possibility to do what owned ITunes Stores let you do in every bookshop, coffee shop and without even the need fopr special HW on books and music ??? [movies will come later tech and right problems are more complex ]
Apple will still make a ton of iPods.
Almost all music is purchased free of DRM - as CDs.
The average owner of an iPod spends very little on the iTunes music store. This is not going to change if music is available free of DRM from Amazon.
Having more places to purchase music - particularly DRM free - won’t stop the sales of iPods. It would make it far easier to sell iPods.
The iPod is not just the Apple hardware. It is a whole ecosystem - with over 3000 accessories. It has the easy to use iTunes to manage music, video, Podcasts, etc. It has the Apple stores - not just other retailers - for sales. The iPod, as a result, has a momentum that the other MP3 players can’t have.
With the Touch iPod and iPhone also - the iPod is moving in a fantastic direction that other MP3 players can’t touch. Soon, there will be a SDK so that third party programs can run on these iPods. Wow!
Please think before you write.
Now that Apple has cornered the music player market, who cares who sells the music? How much did Apple ever make of the content? How much will Amazon make?
And since Amazon can’t lock in the music with any DRM, how likely is it that it will create a music player in competition with Apple?
Aren’t the real losers Microsoft and the gang who wanted much stronger DRM licensing? They lose on every count.
What I’d really love to see is a music marketplace portal where musicians could sell their music directly to the consumers. I suspect that neither Apple or Amazon are likely to host such a site, because they would alienate the record labels to the point that they would probably pull their wares off of those sites. By the time that restraint of trade infringement got resolved in the courts, the market would have shifted elsewhere.
Personally, I use an iPod, and buy music from both iTunes and Amazon…but mostly I rip from my old CD’s. When it comes time to replace my iPod, I’ll get another one…not a Microsoft or Sony imitation.
There’s lots of places that musicians not signed by major labels–can offer their wares online, in any format they wish. Their own websites. MySpace. Amazon. (Amazon will happily sell you CDs, books, and other works that don’t come from major record labels or publishing houses–why would online sales be any different)?
It’s worlds of a) brick-and-mortar retail, and b) broadcast radio and TV, where works not backed by a “major” have difficulty getting distribution.
But anyone can publish music online. And sell it there if they like.