Wednesday, February 7, 2007

Apple to RIAA: Solve Our Regulation Headaches

I wondered how Apple was going to solve its problem with European regulators, who don’t like that Apple’s DRM-protected iTunes downloads can’t be played (directly) on third party players. Tuesday Steve Jobs gave us his answer: do away with DRM entirely.

Steve is a smart guy, but the term “reality distortion field” was coined more than 25 years ago to explain his abilities to influence the thinking of others. However this time his logic is unassailable:

The second alternative is for Apple to license its FairPlay DRM technology to current and future competitors with the goal of achieving interoperability between different company’s players and music stores. … However, when we look a bit deeper, problems begin to emerge. The most serious problem is that licensing a DRM involves disclosing some of its secrets to many people in many companies, and history tells us that inevitably these secrets will leak.
Even if it’s not the real reason, given all the efforts to crack the CSS encryption of DVDs — and (as Jobs said) the power of the Internet to rapidly disseminate them — a shared DRM scheme is one dike that would not hold for long.

Al Gore aside, my assumption was that it would be a cold day in hell before the record companies willingly embrace such a plan. They didn’t disappoint: their initial response is to instead seek a “combination of interoperability and DRM.” Perhaps recognizing that lack of cooperation, the speech did nothing to reduce pressure in Norway.

At its root, DRM is a record label issue, not an Apple issue. For years in the classroom, I’ve been been using the case of the Big Six (now Big Four’s) as an example of too little, too late response to an inevitable technological change.

Ultimately the labels will have no choice. Despite Apple’s attempt to create a legal download market, it’s really only worked with a subset of responsible middle age adults (and the kids they subsidize) in a few developed countries. The rest of the world is stealing music as they have since Napster first appeared in 1999. Pink Floyd’s ex-manager Peter Jenner argued (in more colorful language) that the record labels are toast because they realize DRM is a failure.

By the time my daughter is in college a decade from now, the music industry will have a new revenue model. Will it be concerts, like 300 100 years ago? Or a hardware tax, as in Canada or Germany? As with any technological change, it is likely to create new opportunities for some and be an unpleasant reality for others. The Rolling Stones will manage just fine, but new chart-toppers (and the next generation of record executives) must think about some other way to pay for their limos.

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Jeff said...

So, what do you make of Magnatunes in this context?

You'll have a chance to try it out, as I'm sending one of the 3 copies I'm allowed to give away of an album I bought today :) Unfortunately, you'll have to wait until I'm out from behind the firewall.

Joel West said...

Artists shut out by the current record label oligopoly are using various methods to get their music out there. They see online distribution as an opportunity, not a threat.

MySpace music distribution fits this category, and Magnatune seems to fit as well. However, I don’t know the company well enough to know if John Buckman is a Don Henley or more of a Bob Parsons.