To: Apple CEO Steve Jobs
From: Greg Sandoval, CNET News
Re: Acquiring DRM-free music
The iTunes music library is looking a little shabby these days. Look around, Steve: iTunes is the last great refuge of DRM-laden downloads. Is this the image you want for Apple?
More than 18 months have passed since you signed your one and only deal to acquire music free of copy-protection software with a major recording company. And that was with EMI, which accounts for less than 9 percent of U.S. album sales and is the smallest of the four top music labels. In the meantime, Apple has continued to wrap the vast majority of major-label music in Fairplay, the company's proprietary digital rights management software, at a time when your major competitors have already signed DRM-free deals with all the big players.
If you cling to this position, iTunes is going to look stodgier than that "PC guy" you're always mocking in your commercials. Zune offers more DRM-free music, signing agreements with EMI, Warner Music Group, and just this week, Universal Music Group, the largest music label. Steve, DRM inspires hatred from all the cybergroovies, many of whom swear loyalty to Apple products. It's time to dump this loser. Even the major labels have recognized this. I'll get back to that.
You now have a golden opportunity to make things right. I've heard about your negotiations with the three largest music labels about acquiring music unburdened by copy-protection software. My sources said that no deals are final but that one top label is closing in on an agreement.
Close them, Steve. Close all of them. I'm going to point out the obvious: striking these agreements would be good for Apple, the recording industry, and certainly for Apple customers.
DRM doesn't fit with Apple image
I realize cutting a deal takes both sides to agree. But you and the music industry have blamed each other for the absence of DRM-free songs on iTunes for more than a year, certainly since you published your now famous open letter of February 2007. That's when you called for the labels to abandon DRM. I'm sure you know music execs always laughed at this and suggested that your argument was a tad disingenuous. They said your DRM fit perfectly with your plans to lock customers into buying music that played only on Apple devices.
I think I can speak for your customers here. They don't care who's responsible. What really matters to them is that it's time to do more than write letters. You must recognize that the time is perfect for you to act. The climate surrounding digital music is vastly changed since you wrote that letter. The labels admit now their DRM strategy has failed.
Check out what Edgar Bronfman, the head of Warner Music Group, said earlier this month: "We're not technology companies...We never came up with a version of DRM that did what we needed it to do."
Listen in as Greg joins Charles Cooper on Thursday's edition of the CNET News Daily Podcast to talk about what has held Apple up in the move to DRM-free music.
Download mp3 (3.68 MB)
Doug Morris, Universal Music's CEO, called you a friend and one the smartest men in music during a recent interview. Sounds to me like these guys are ready to deal. They must know that it's in their best interest for iTunes, the country's largest music retailer online or off, to have everything it needs to move music. Sure, they want iTunes to have some competition. They fear you will grab too much control over digital sales...again.
That's likely why all four major labels have provided music sans copy-protection software to your chief rivals: Amazon.com, MySpace Music, and Wal-Mart Stores. I'm not naive enough to think that's an accident.
But all the signs point to a music industry, at least with regard to digital downloads, that wants copy-protected songs buried.
Take away competitors' advantage
Just consider the benefits to Apple if you acquire DRM-free songs from the three largest labels:
You snatch away the most important competitive advantage that any of your rivals possess. Amazon, MySpace Music, and Napster have been touting their DRM-free libraries. Amazon appears to be the only place where DRM is making much of a difference. The Web's largest retail store doesn't break out numbers, but in April, research company NPD Group reported that Amazon's MP3 service was showing signs of growth based on consumer sampling.
You can give iTunes' tech-savvier customers peace of mind. Sure, they represent a tiny sliver of your customer base, but they're also the most vocal. They're the ones who have been calling for an end to Fairplay for a long time and understand that one day Apple could stop issuing DRM keys and leave their music stranded.
Remember, Steve, DRM schemes were proved to be anti-consumer this year. MSN, Yahoo, and Wal-Mart all made announcements that they planned to stop issuing DRM keys. They all were widely criticized when customers realized that without the keys, songs couldn't be moved to new devices or computers. All three capitulated. Sure, Apple appears to be an immovable force now, but who knows about five years from now? Fairplay is DRM and that means it's vulnerable to this key issue.
Do you really want to follow in this group's footsteps?
Apple also will avoid alienating customers in the case that a company develops a popular music player that people can't play their iTunes libraries on because of compatibility issues. I've always said that in this scenario, Apple could lose a lot of good will.
Apple needs to prove the naysayers wrong and show that the company was never interested in locking customers into buying its music or music players. Apple has to show that it knows the best way to build an empire is to design products people want to play their media on--not players they have to play their media on.