iTunes, Fairplay & The Long Game of Steve Jobs

February 9, 2007

In the wake of Steve Jobs’ Thoughts on Music, there has been a lot of speculation as to what it means that Jobs — who fathered the most extensively used Digital Rights Management system in the world (Fairplay) – is calling for the end of DRM.

Wired’s Cult of Mac sums up some of more intriguing thoughts here, speculating that just as the iTunes Music Store “One contract fits all” approach managed to build the world’s largest digital music store, with DRM on all music (whether requested by the owners or not), the same leverage could now be applied to force all of the participants to leave DRM behind, or lose access to their only growth market.

Is it really possible that this has been Jobs’ “Long Game” all this time? That Apple embraced DRM only to get it to hold still long enough to drive a stake through its heart?

It’s an intriguing thought. Apple just might be in a position to pull it off, too; sales of CDs are declining, while online music sales are accelerating — even with DRM.

Getting rid of Fairplay would undoubtedly bring more people into the market (it would certainly get me to shop at iTMS) — maybe even enough to save the rapidly sinking ship of the record labels.

Plus, after all (as Jobs points out) the majority of the music they sell (and indeed, before iTMS, all of the music they sold) is unprotected, on CDs that can easily be ripped and added to the digital music player of your choice.

Last but not least, it would sink the subscription services (which are utterly dependent on DRM) that compete with iTMS.

This just might work, and be a good deal for consumers, Apple and the record labels alike — if they can be shaken from their terminal lemming-like rush to their own irrelevance.

It still leaves open the question as to whether this was Jobs’ plan all along — or whether it was just an ideal confluence of events that Apple is of a mind to take advantage of, and in a position to do so.

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2 Responses to “iTunes, Fairplay & The Long Game of Steve Jobs”

  1. richard on February 9th, 2007 3:38 pm

    Actually, Jobs has been forced to this point by the Zune launch…

    What is the only real difference between zune and itunes? Subscription…

    So, competitive positioning says zune will win long term due to the additional functionality and significant cost saving versus itunes.

    How to respond to the Zune launch? Let’s see.

    Option 1– ignore. Result: declining hardware sales, and corresponding itunes sales.

    Option 2 — match. Result: Late to market (“follow me”) positioning undercuts Apple’s image. Worse, it validates zune model, and puts the 2 toe to toe to fight out marketshare in subscriptions. History says Microsoft always wins the marketshare battle.

    Option 3 — embrace. You know, go all crazy like a fox; art of warlike, etc… in interesting times….. In other words, ABANDON your current position and render your opponent’s position unviable. Burn down the DRM’ed closed store and by extension your competitor’s store. Why? Because it’s to maximize hardware sales and profit. (By eliminating the store-related subsidy.)

    Underlying Problem: Must…Not…Let…Subscriptions…become…viable.

    Once people choose unlimited music for a subscription fee, it will be impossible to perpetuate $1 tracks sales (regardless of DRM). In other words, for many, many people, DRM’ed subscription music is perfectly acceptable as a value proposition.

    This Apple must prevent from gaining more traction.

    After all, a full year of unlimited access to subscription music costs $180. That’s 180 songs–or just 12-15 CDs worth of Apple’s $1 track music. Assuming I stayed subscribed for 10 YEARS, it would only cost $1,800. Listening to millions of tracks for 10 years VERSUS owning 1,800 tracks of Apple-sold music. I see a problem.

    And the problem is that as device storage get bigger, you need access to larger libraries to fill them. How does Apple explain they are going to accomplish this for their purchasers? Removing DRM from tracks so that they will be somehow magically encouraged to purchase vastly larger amounts of tracks them they ever have?

    Apple is trying to make money for the music industry by explaining to THEM how DRM will destroy the $1 track by making subscriptions VIABLE. If iPod owners were any good at math and the time value of money, they would have already sold their iPod collections and purchased a subscription-based player….

  2. Chuck Lawson on March 1st, 2007 5:21 pm

    The big problem with subscription-based players is that my taste in music is a lot more diverse than the subscription libraries (or ITMS, for that matter).

    I’ll probably be a diehard rip & load my own kind of guy for the most part, even if DRM does go the way of the dinosaur.

    Unfortunately, the whole DRM thing is a slippery slope, and the more acceptable it becomes on music, the more we’ll see it everywhere else (take Vista, for instance).

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