Apple is music industry’s Public Enemy No. 1

Honestly, given the amount I write about Digital Rights Management, you’d think that I’d rather the industry kept using it, just so I’d continue to have fodder for writing and writing—and occasionally talking—about it.

As I was looking into the trajectory of DRM in this past year for my latest look at DRM, a pattern began to emerge. We’ve seen the prevalence of DRM-free music skyrocket over the last twelve months, with vendors like iTunes, Amazon, and Napster all joining the legions of the undamned. In fact, it’s practically gotten to the point where it’s news when a company launches a store that does have a DRM scheme.

By embracing DRM-free music, the record labels have finally admitted the truth to themselves: not just that the cat’s out of the bag, but that he’s high-tailed it halfway across the country. The levels of piracy were already immense before the recent DRM-free push, so the music companies clutching onto rights management was like polishing the brass on the Titanic.

Instead, the labels have redefined their enemy: sure, they’re still concerned about the shadowy legions of faceless file-sharers casually trading MP3s, but shadows are by nature intangible and hard to pin down. It’s much easier to fight an enemy that you can see, one that doesn’t bother trying to hide from you.

Like, say, Apple.

That’s right: Apple is now officially the labels’ number one enemy—with a bullet. As the largest purveyor of music in the U.S., Apple holds tremendous sway over the music-buying population. And that understandably worries the record companies. The labels are used to being the ones controlling the distribution of their product, raking in the profit on every song sold, but more and more, that power is being consolidated into Apple’s hands, thanks to the overwhelming market share of the iPod and iTunes.

So the record companies are going to fight back anyway they can—even if it means conceding the war on piracy. And make no mistake: that war has been conceded. By selling DRM-free music, the record labels are tacitly giving that music away. Since digital files can be copied with no loss of quality, it takes only one copy of a song in the wild to make that song freely available to anyone.

The labels’ machinations put Apple in an interesting position. The record companies believe it’s in their best interest to foist DRM onto Apple; they hope that the additional burden will level the playing field and give the other download sites a chance to compete by providing DRM-free tracks that work just as well on the iPod. But it’s a pyrrhic strategy: yes, the record companies can try and undercut iTunes by flooding the Internet with cheap, freely-tradeable songs, but they’ll wind up diluting the value of their product even more than they already have—if such a thing is even possible.

Plus, there’s no guarantee such a plan will even work. The potential to backfire is high, too: because iTunes’s market share is so large, the record companies’ continued refusals to let Apple sell more DRM-free music is actually encouraging the very same lock-in that got them into this mess in the first place.

And so far it hasn’t worked: regardless of the state of their DRM, iTunes remains far and away the leading source of music downloads. So far, the vast majority of music-buying consumers have shown no sign of abandoning iTunes because of its DRM, showing that Apple has the momentum, design skills, and marketing savvy to convince people to continue to buy from their store, even when the same product is available with fewer restrictions elsewhere.

The labels’ insistence on using DRM was the beginning of the end for their business model. If they’d adapted to the direction the market was going seven or eight years ago, they might have had a chance at holding onto the reins. But now there’s only really one question left: will Apple manage to destroy the record labels before the record labels manage to destroy themselves?

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