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Here we'll explore the nexus of legal rulings, Capitol Hill policy-making, technical standards development, and technological innovation that creates -- and will recreate -- the networked world as we know it. Among the topics we'll touch on: intellectual property conflicts, technical architecture and innovation, the evolution of copyright, private vs. public interests in Net policy-making, lobbying and the law, and more.

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October 10, 2005

Dear Recording Industry: You're Being Had

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Tim Lee offers counterintuitive advice for the record labels when they re-up their licensing agreements with Apple for iTunes: they should demand that Apple strip the DRM from the tunes.

How come? Because DRM isn't helping the labels sell music. It's helping a company (Apple) become the music industry's single gateway to the people who want to pay for music online.

Thanks to DRM, a song downloaded at the iTunes Music Store will only play on iTunes or an iPod. That means that if a customer wants to start using different jukebox software or another MP3 player, he'll need to rebuild his music collection from scratch.

As Apple's share of the overall music market grows, it will be more and more difficult for you to walk away from the table during contract negotiations. Jobs will hold all the cards, because his customers--who form an ever-growing share of the music market--will be locked into his products. Like Bill Gates in the PC world, Steve Jobs will become the gatekeeper to tens of millions of music fans, and you will have to pay his price for admission.

How does ditching DRM help? If Apple's songs were distributed without copy protection, your customers would be able to switch to another program at any time. You could threaten to cut a deal with any of the other companies now clamoring for your business--Real, Napster, Sony, Microsoft, etc--and Jobs would know that his customers had the option of leaving his platform.

I know what you're thinking: what about piracy? The reality is that DRM does next to nothing to reduce piracy. Virtually every song ever recorded is already available on peer-to-peer networks. It's easy to "rip" a song from a CD (which has no protection at all), and Apple's DRM scheme has been repeatedly cracked. So people who don't respect the law aren't going to buy songs from the iTunes Music Store in the first place. DRM won't do a thing to stop them!

On the other hand, DRM systems treat your most honest customers like criminals. People who purchase music from the iTunes Music Store know perfectly well that they could get the same song for free via a peer-to-peer network. They choose to purchase from iTunes for one of two reasons: they value convenience or they respect the law. Either way, you don't need DRM to keep them honest. If they were inclined to engage in piracy, they wouldn't have bought the song in the first place.

Comments (3) + TrackBacks (0) | Category: IP Markets and Monopolies


1. Lava on October 10, 2005 3:47 PM writes...

I am in no way endorsing the use of DRM (as a music lover, I hate it, and as an independent musician with distribution, I despise it), but wouldn't you think that the labels represented by the RIAA would want to hold onto DRM? I would think it helps them as much as it helps Apple (and others). Keep the average user locked in, and if he ever wants to change, he'll probably end up buying at least some of the songs again.

Give the average free reign of his files, and he'll be sure never to pay twice for his music.

That's not to say I think people should be locked into DRM'd files, just that I think the labels are doing more screwing than getting it.

For those few of us that believe in fair use (and have the technical ability to exercise those rights) my guess is it won't make much difference either way

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2. Fact Check on October 10, 2005 7:13 PM writes...

Wrong, after downloading a song from ITUNES you are not limited to listening to it on an IPOD or in ITUNES. Anyone can LEGALLY and very easily burn a CD and play it on any CD player or computer.

Please, check your facts before publishing "technical information"!

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3. TomCS on October 10, 2005 8:15 PM writes...

I have said in earlier threads on download DRM that I understand and sympathise with the recording industry's desire to limit rampant amateur copying and redistribution of their product, and to prevent commercial scale counterfeiting. Their product is content plus media. Until recently, the physical and cost of copying limitations imposed by vinyl, casette, and CD posed a technology obstacle to most amateur copyists with which they were broadly content, at least as shown by their limited attempts to do anything about it recently. In different countries they negotiated a levy on blank media, or recording devices, to supplement their income on the model of broadcasting rights, and for many years they were more concerned about recording off air than ripping vinyl to cassette.

Digital downloading raises a new set of technology questions. It will not (and should not) end up DRM free. I happen to think that the Apple DRM model, which poses enough obstacles to make large scale amateur copying a chore, but offers significant fair use, is close to what ought to be an acceptable compromise. The content providers appear to think so too: at present their main objection to Apple is that that model is not more widely available through licensing, which implies that they could live with it as the de facto standard for download DRM. If so, for a variety of reasons, including preferring on balance an Apple lock-in to a Microsoft one, I think that reasonable consumers should be supporting the Apple approach. But it may take another few years for this to work out.

Meanwhile, where does copyfight stand on the parallel effort by the industry to infiltrate DRM into CD-like digital audio? Surely there are issues and potential precedents here which we should be watching and possibly challenging, both for their direct impact on those who prefer to buy content on a solid medium with a neat booklet, and for its possible precedential effects on download DRM.

IANAL, and I'm based in the UK, so not all this may read across, but for example, does the sale of DRM audio discs in the same CD store racks as "compliant" CDs, with or without adequate (please define) labelling to indicate that they will not perform as normal CDs), amount to passing off, or customer fraud?

Surely Californian consumer law would allow a class action against a major record store chain which did not for example place all DRM audio discs in a separately marked section of the store. Or should they have a sticker on them equivalent to say the FDA food labelling requrements, particularly in terms of print size, explaining the limitations and giving advice on how to exercise "fair use" rights. E.g. "This disc is not a "Compact Disc (tm)" and may not load or play normally in a CD player or drive" " It cannot be copied using a CD compliant drive onto an Apple hard drive", or "software on this disc will prevent it from being copied more than three times to other media", or whatever. A sticker like that should end up at least half the size of the jewel case (cf cigarette packets).

Why might this matter? You are the lawyers, but if left unchallenged, does it not open the door in future to one of the things which we rightly fear about digital DRM, since it shows the industry changing the standard surreptitiously to the detriment of customers, without being challenged effectively. If download DRM is to work, then it needs to be as stable as the CD format has been over the last decades. Let's focus a bit more on the current challenge to fair use, rather than on the relatively far future. If you believe that "fair use' is inadequately defined in law, is this not a better ground for a test case (subverting accepted standards) than attempting to get judges to focus on the limitations of Janus?

PS And let's try to find a suitable term for these "non-CDs" which highlights what is going on. they are not DRM-CDs, or crippled CDs, they are simply not CDs. DRM audio discs (DADs) or DRM audio media (DAMs) are two options.

PPS Did I see somewhere that Harriet Miers has represented Microsoft in the past?

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