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Apple's Jobs Calls For DRM-Free Music


Rather than buy music and a player from one vendor, people could buy music anywhere on the Web for any player.



Steve Jobs posted a letter on Apple's Web site on Tuesday supporting the online sale of music without copyright protection software, saying DRM systems have failed to halt music piracy.

In the letter entitled "Thoughts On Music," the Apple chief executive blamed major record labels for the proliferation of digital rights management systems. Without offering them DRM protection, an online music store wouldn't be able to get a license to distribute tunes from the likes of Universal, Sony BMG, Warner, and EMI, which together distribute more than 70 % of the world's music, Jobs said.

By throwing Apple's support behind DRM critics, Jobs is adding the weight of the owner of the largest online music store on the Web, and the leader in the digital music player market. The Apple iPod accounts for more than three quarters of the players sold worldwide.

Jobs said the industry had three choices. It could choose to continue with the current system where each of the major online storeowners and manufacturers of players -- Sony, Microsoft, and Apple -- have their own DRM that tie their music to their hardware. Or, the companies could license their copyright protection systems to each other. The third would be to "abolish DRMs entirely."

"This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat," Jobs said. "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."

Of course, rival players would theoretically also be able to play iTunes music, and vice versa, which would bring dramatic changes to the online market. Rather than buy music and a player from one vendor, people could buy music anywhere on the Web for any player.

DRM systems accomplish little, except to make music downloads less attractive to consumers, Jobs said. "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," Jobs said.

While Jobs' support for dropping DRM is unlikely to sway record labels by itself, his opinion is sure to spark debate. "It won't change their thinking overnight, but it will lead to some interesting conversations within the labels," said Joe Laszlo, analyst for JupiterResearch.

Record companies have had mixed feelings toward Apple, because its success in the music industry has made it a force in an industry once ruled solely by the labels. Dropping DRM in favor of an open format could make the Apple iPod less dominant, Laszlo said.

In addition, record companies over the last several months have begun talking about releasing DRM-free music, which is available through many small independent music companies. Spurring the record companies on is the lack of growth in the music industry.

While download sales are expected to increase to 22% of the market in 2011 from 6% in 2005, total sales are expected to decline to $11.5 billion from $12.6 billion, respectively, according to JupiterResearch. CD sales during the same timeframe are expected to fall to 66% of the market from 86% in 2005. Ring tones make up the remainder.

Put it all together, and record companies are left with a market that needs something to spur growth. The flexibility given to the consumer through DRM-free music could help drive the market higher.

"I don't think it's the cure all," Laszlo said. "But you might be able to spur better market growth, if you open things up a bit."


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