Imagining a world without DRM

Steve Jobs may not be exactly reticent, but neither would I call him randomly demonstrative. Rarely do you see him respond to criticisms of Apple, except in the context of interview sound bites. For him to, say, author an open letter on the state of Digital Rights Management is, if not unprecedented, at least very very rare.

In a response to the recent critiques and legal challenges of iTunes’s DRM system from countries like Norway, Jobs has laid bare his thoughts on DRM and three possible paths for the future of digital music. And, in the words of news broadcasters everywhere, what he says may surprise you:

The third alternative is to abolish DRMs entirely. 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.

Is this just marketing speak? An example of Jobs knowing that since the record labels will never go for DRM-free music, Apple won’t have to put its money where its mouth is? Or an attempt to get Norway and its friends to redirect their legal attentions to the labels? While the possibility exists, Jobs could easily have sat back and done nothing, risk free. By putting this letter out there, as a matter of public record, he knows that if there’s even the slimmest chance that record companies will decide to get rid of DRM, he will be bound to keep his promise.

What would Apple—and indeed, the people who “matter,” the record companies—stand to lose should they switch the online music industry to a DRM-free format? Unprotected MP3s are already sold from a few different vendors: eMusic, for one, has long been in the business, and Yahoo has experimented with DRM-free downloads as well.

Why does the music industry fear DRM-free downloads? They fear file-sharing, of course—piracy. But that’s silly, because piracy is well-established by this point; we’ve had almost a solid decade of high-volume media piracy. The vast majority of the songs that you can find on iTunes and the other services are available through file-sharing networks, if you know where to look. And for every pirate site or technology that’s destroyed by a phalanx of intellectual-property lawyers, two more sprout up in its place.

Steve Jobs had the right idea when he announced the iTunes Store in 2003: Apple was not there to eradicate piracy, but to compete with it. Jobs realized the fundamental truth that some people, enamored of what they could get for free, would never come around to buying music legitimately. But he also realized that this was a minority of the people who consume music and media, and that most people, given a reliable, easy-to-use, and—most of all—legal way to buy music would do the right thing.

So what if all the music you bought online — be it from Apple, Rhapsody, Microsoft, you name it — was in DRM-free formats?

Up to now, music-industry leaders have feared that such freedom will lead directly to digital anarchy, people trading the files they’ve bought with friends and strangers alike. They’re not wrong—but they’re not right either. There may be a slight dip in sales from sheer novelty, and I’d expect a rise in friends trading songs with each other—but that already happens via lending CDs and making mixes for people.

And sharing music can also work to the music companies’ benefit. Word of mouth is one of the most powerful advertising methods around, especially among the kind of key groups are cautious about advertising in general, and dislike being told what and who to listen to or not listen to. Microsoft acknowledged this in the Zune’s Wi-Fi sharing capability, though it refused to take it through to its logical conclusion.

But despite the low-level trading that’s likely to occur, unlocking iTunes doesn’t create or even encourage the kind of wide-scale piracy the music industry fears for two key reasons.

First, that kind of piracy is already going on, and flooding the market with music bought from iTunes is inconsequential, because you don’t need five million copies of Jessica Simpson’s latest single floating around: you only need a few. Quantity, in terms of piracy, doesn’t matter. Critical mass has already been achieved.

Second, unlocking all the DRM on music files doesn’t magically turn people into pirates any more than unlocking every house in a town turns the inhabitants into thieves. Simply because something is available via illicit means doesn’t mean that people will take advantage of it—note that our society is not entirely composed of drug addicts. Some people will steal music, yes, but those are mostly the same people already stealing music. As difficult as it is for businessmen to admit, you must account for some degree of morality, some sense of right and wrong. Money may be the be-all, end-all in the industry, but it’s not for consumers—we’re willing to exchange money for something that we want and value; that’s the whole point of being consumers.

The music industry cannot eradicate piracy any more than law-enforcement agencies can eradicate crime (that’s why it’s called “law enforcement” and not “crime eradication”). For the music industry, realizing that some piracy is always going to exist would free it up to take care of more important business like, say, making better music.

Of course, the other player likely to be affected here is Apple. For years people have argued about how much Apple has benefited from locking people into the iPod/iTunes ecosystem. But as Steve Jobs said today, Apple would dump DRM “in a heartbeat.” Goodbye, lock-in myth.

Even in a DRM-less world, brand loyalty and quality of service is going to keep iTunes popular. Apple seems to have no fear of competing with other online music stores. And it should continue to dominate the music player market as well: The iPod doesn’t have seventy percent of the digital music player market because you can buy tracks from the iTunes store. As Jobs himself points out, the vast majority of the tracks stored on iPods are unencumbered by DRM. Some of them are pirated, but lots of them are ripped directly from CD.

The iPod is a success because of its design and its functionality. Will some sales be lost? Probably, but I’d be surprised if Apple somehow lost its dominant position: people are not going to flock to the Zune just because DRM is unlocked. It will certainly make competition in the MP3 player space fiercer, but for the consumer, that’s all to the good; they’d rather competition was driven by technological innovation than by restrictive lock-in.

What the music industry hasn’t wanted to admit—because it runs counter to their established logic—is that DRM-free music could actually boost sales, by taking away the stigma of second-class citizenship that haunts the download services in the eyes of the digerati. At the moment they’re reacting out of fear of the unknown, and that’s something that doesn’t traditionally help businesses in the long run. Sooner or later, all of their restrictive measures are going to fail, and they’re either going to have to adapt or be destroyed. And trust me on this: consumers aren’t going to be broken-hearted either way.

Jobs’s letter goes a long way to answer questions that consumers and governments have been asking about Apple and DRM practically since the iTunes Store’s debut almost four years ago. The big step still remains for DRM to be actually abolished.

Your move, record labels.

DAN MOREN is the co-editor of MacUser.com and a Macworld contributor. Elements of this piece previously appeared on MacUser.com.

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