DRM-free iTunes Store to haunt Apple?
Much has been said about Phil Schiller's keynote address at Macworld on Tuesday, where he announced that Apple has finally struck deals with all the major music labels, making songs sold via the iTunes Store free of digital rights management.
The crowd in attendance cheered joyfully when it heard the news, and millions of people across the globe were excited to finally know that all that crazy Apple copyright protection was finally behind them. Even Apple was excited to announce it, and the new pricing model--$0.69 and $1.29, depending on the song--seems to suit its fancy.
For years, we've been hearing about Apple's desire to make iTunes DRM-free. Steve Jobs even wrote a letter detailing his belief that DRM is bad for all of us--record labels included. And now, after years of waiting, Jobs and his minions have finally achieved their goal of eliminating it.
Does that necessarily mean that it's good for Apple, though? I don't think there's a simple answer.
Isn't it true that one of the main advantages the iPod had over any other device on the market is its link to iTunes? And isn't it true that the link was only made possible with DRM? Now that its DRM advantage is gone, what's stopping you from buying competing products from iRiver, SanDisk, and others?
As far as I can tell, nothing (other than the quality of Apple's products).
But in order to determine if Apple really cares, we first need to figure out if Apple is a hardware company or a music retailer. Some would say both, and it's difficult to argue with that logic. But if Apple really is both, that suggests that it has a vested interest in seeing its hardware do well. It also suggests that its DRM was a key to its success, since it kept people spending money in iTunes and buying iPods to listen to those songs.
Now that link has been removed, and consumers can just as easily buy songs from iTunes and put them on competing devices. And since Steve Jobs has continuously said Apple is a hardware company first and foremost, I don't think that it's a stretch to say Apple may regret its decision to remove DRM from iTunes.
Regardless, it was a necessary step. Amazon.com was making inroads because of its own DRM-free store, and Apple realized that the future of the music retail business requires no copy protection. Because of that, it had to make a judgment call: accept the possibility of losing iPod sales to remove DRM, or keep the DRM and focus on iPod and iPhone sales. Steve Jobs chose the former.
Yet we now find ourselves in an interesting arena. The dominant company in the industry may have committed a serious blunder. In an effort to make up for lost song sales by enticing more people to use its download software, it may see its device competitors gain market share. And that's something we can't forget: Apple could, conceivably, welcome more iTunes customers, now that the store is DRM-free, to offset the potential revenue loss resulting from fewer iPod sales.
I'm sure that Apple did its homework and determined that a DRM-free iTunes would prove more profitable over the long term than the alternative, but I'm still not convinced that this move won't come back to haunt the company.
After all, leading companies commit blunders all the time, and in a matter of months, they're overtaken by more nimble competitors. Sure, it hasn't happened to Apple yet, but that doesn't mean that it can't.
Remember the Walkman?
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Don Reisinger is a technology columnist who has written about everything from HDTVs to computers to Flowbee Haircut Systems. Don is a member of the CNET Blog Network, and posts at The Digital Home. He is not an employee of CNET. Disclosure.
Don, you never cease to (un)impress. Brilliant how you debate/negate your own posit in one parenthetical statement. One has to wonder what was, in fact, your point in brining it up other than, as usual, to make a half-a**ed attempt to shine a negative light on Apple?
How did Apple's iPod overwhelmingly conquer the portable music player market in the first place, albeit even with DRM in place and with devices at MUCH higher price points than their competitors? Because of the quality of the product (duh), the groundbreaking iTunes Store and the considerable amount of content available at a reasonable price.
People who know and can afford quality products will continue to buy iPods. People that cannot afford to buy iPods now have access to the number one purveyor of digital music in the world -- even for their less costly devices.
Maybe you're dehydrated from all of that _thinking_ you feign to have been doing and NEED a sip of the ol' Apple Kool-Aid, eh?
Happy New Year!
An unapologetic Apple enthusiast since 1984
How did Apple's iPod overwhelmingly conquer the portable music player market in the first place, albeit even with DRM in place and with devices at MUCH higher price points than their competitors? Because of the quality of the product (duh), the groundbreaking iTunes Store and the considerable amount of content available at a reasonable price.
The iPod lineup is surprisingly disappointing; the new Nano is having dust problems and my iPod Classic is having issues only a year after I bought it. No, the only reason why the iPod was so successful in the first place is that it was easy. Now, there are much better options for an MP3 player other than the iPod.
I think Don's points are dead on. Some of yours are as well. But just because Apple removes DRM doesn't mean that those who own Microsoft, Creative and other products will abandon the services they use to start using Apple's, lest you forget they weren't intereted in an iPod, or iTunes in the first place.
No, not likely at all. I submit that what you will see is exactly what Don is suggesting, that people recognize that they can listen to songs that come from iTunes, enjoy the price differential on older, less popular songs, on whatever device they choose. In other words, the Apple hardware tax has just been removed!
Yeah, so? People buy iPods because they look great, are easy to use and are a fashion symbol. The vast majority of people don't care about sound quality or FM tuners (if they did the Walkman would still reign supreme). I really don't see how this affects Apple too badly in the long run. People are not going to give up their "pretty" mp3 players now that they can use other devices with iTunes.
You're confusing iTunes with the iPods.
Today, too many "tech analysts are jumping on a point and rambling on with out really thinking.
The Walkman was great, but they never improved it. The iPod just keeps getting better. Software and hardware.
Now, I use other mp3 players at times but keep coming back to my iPods (Touch and first gen nano).
Just a thought.
en
Amazon is a hugely successful B2C site to say at least but still fail to push its digital music market share in 2008, last time I checked it's about 5% while iTMS dominate at above 70%.
I't mp3 without DRM and it's cheaper with all the big labels behind a giant vendor, why people didn't bother to check it out?
The answer is quite obvious, it don't work with iTunes, not without costumers jumping through some hoops (admittedly very easy hoops), but why people don't just ditch the ever so bloated iTunes for smaller greener snappier music management apps like say songbird?
The answer is also obvious, our beloved iPods or iPhones don't work well with these apps, some of them don't work at all.
So before iPod / iPhone lost their statues, iTunes is always necessary hence iTMS will always be more convinient than any vendor out there.
And BTW, you are right on one thing. Steve Jobs want DRM free music. But he absolutely loathe variable prices. Seems he finally blinked before the music industry, maybe he is so thin he just can keep his eyes open. It could be a bad thing for our consumers.
What will the labels do? I'm quite interested. Will them still nurture Amazon to keep iTunes in check or after got what they want (the variable price scheme) in return promise Apple a level playground?
Guess we'll see.
iTunes beats Amazon/Walmart/etc. because the online store is more robust, more convenient, easier to use. iPod is the most seamless way to connect to iTunes. Hence iTunes/iPod wins. DRM or not.
If anything, this will only generate more business for Apple.
The variable pricing thing on the other hand...well, I think that will burn us as consumers in the long run. What do you think the ratio of $1.29 to $.69 songs will be? I'm betting many multiples. The $.69 songs will be songs you don't care about from artists you've never heard of.
I had hoped Apple might be inclinded to sign artists themselves and publish the songs/albums directly on I-Tunes.
That said: iTunes is really not a great product. Amazon until now has been cheaper and Zune is much more friendly and feature rich. Apple needs to be sure they do not rest on their large market and respected brand name while the competition is being innovative.
But it lack a lot of features ie ID3 tag edit or decent unicode support, search functionality also dwarfed by itunes' spotlight like power. Not to metion video content offer is pathetic to say at least.
Zune hardware is pretty good I must admit. But feature wise it only have Wi-Fi & FM radio over traditional iPods. But the market already proved most buyers don't care about radio & Zune's Wi-Fi ability is not quite useful.
But the hottest iPod is not Classic, not nano, definately not shuffle, but iPod touch.
How can Zune or Zen or Walkman or whatever compete with iPod touch on the mass handheld device market is just beyond me.
PS. you say that iTunes is not a great product .... cause someone else is cheaper. Mixed comments. Maybe you should search for someone to share your Zune experience. I hear that there are hundreds and hundreds of people out there with them. LOL
Just a thought.
en
As for the debate about MP3 players - is there really that much difference? Aren't we basically splitting hairs? The iPod is successful due to a number of things - combined. But taken individually, or even collectively, the differences are relatively insignificant. Buy what you think looks best... I own 3 iPods, and like them a lot, but I don't necessarily think they're A Divine Gift to Mankind. I'm sure Zunes work well, too.
The music companies have been trying to force Apple into price and other consessions by allowing Amazon and others to have DRM free music but not Apple. Now that the playing field is level, it will be interesting to see how Apple does against Amazon, etc.
Just a thought.
en
Yes, Amazon has software which inserts your purcahse into iTunes, but really, i cant see that being a good enough reason to not use iTunes, even if there is a 10c or 20c difference in price/
Oh, and add that to the fact that the iTunes store is crawling itsway onto the ipods/iphones - and Genuis etc etc. The list of measures Apple has put in place before removing the DRM to counter act this isnt negligible.
If that was true and it was fairly well data backed then how is this bad? The iPod IS on the way out as THE pmp. Apple though is the one to make it's main killer. iPhone and iTouch.
Guess what. As part of the deal Apple secured one click to buy on the iPhone, making it the simplest And cheapest mobile music download device (cheap from my observation of carrier music prices). The iPhone is still building momentum and Apple hasn't yet introduced it's cheaper brothers (as it did with iPod).
So, now all the pmp market (which will get killed as a category by mobiles, so we are told and seems fair) will claim compatibility with iTunes sending all the last customers to Apple. Those customers then sniff in the appstore see all this stuff they are missing out on.. and next purchase?
Of course that may take a couple of years which is sweet for Apple cause it gives it time to milk big iPhone and release cheap iPhone for the masses.
Apple is a hardware company and this is a hardware strategy. Planning your own obselesence (sp)
Last time I checked the only software app that works with iTMS is iTunes.
You should be able to figure out the path most traveled as defined by this logic.
While losing the DRM makes it easier for the one or two guys like me who AREN'T tied to Apple's apron strings to place iTMS music content on my Zune, Zen or Walkman, I don't see any weakening of the Apple eco-system by this action. People who want the full, integrated package aren't going to jump over to another manufacturer's DAP or PMP. iTunes works seamlessly as the go-between for iPods and iTMS; eliminating DRM doesn't change that interface model. If anything, this act's main impact is that it allows owners of non-Apple AAC-compatible devices more choice in where they can buy their music from. iTunes may be considerably more bloated and obtuse than what it used to be, but it's still the only one with the whole game for iTMS and iPods.
I guess you have not checked into stuff very well. LOL I use several mp3 players with music on iTunes. Its more of a hassle than my first gen iPod nano but it works well and the music plays fine.
And the key reason people have a problem with iTunes and third party mp3 players is DRM software. Apple uses Fairplay and that only works on iPods. But if you clean DRM off, any music works just fine. I have even taken videos and added music and converted into iTunes videos and placed on my Touch. Works fine. Its a pain to do but works well.
Just a thought.
en
follow-up thought. Microsoft has hitched its star to DRM. Not that its fading fast, I wonder how Microsoft will advertise the required DRM features in its Zunes. Sharing music, you are stuck with DRM and limited times.
Its not open source but their is alot of support for it. AAC is generally in the file type mp4. I have never owned an mp3 player that does not do aac. My wii can play aac files, windows and linux can play aac files, the zune plays aac files most sansa players, even a chinease knock-off ipod nano from china plays aac. look at wikipedia they have an even bigger list.
If you are, I just thought it might be fun to point out that you're wrong on that one.
"Sure, it hasn't happened to Apple yet, "....WRONG!
Back in the days before Windows when the only Microsoft product was MS-DOS, you know "PC-DOS for clones". Apple had a huge advantage with the Mac, but insisted on micro-managing everything Macintosh. Outright refused to license it the third parties. In the end it almost destroyed the company.
Apple was the master of DRM before DRM was part of common techno-jargon. And it burned them bad then.
I think it's more a case they learned their lesson. Barriers to enter can be an important tool to new developing product ideas, but can be the dragger that stabs you in the back once the product matures.
Just a thought.
en
As far as Apple losing market share to Windows, that was the result of putting out substandard products to keep the profit margins artificially high.
No - nonsense - nyet. What is so hard to understand about the iPod, iTunes, iTunes Store troika? It has nothing to do with DRM and everything to do with ease of use. I launch iTunes, browse the store for music, buy it, download it, and transfer it to the iPod all in one easy to use program.
Hunting for music is simple. Looking for new stuff, old stuff, something similar to my favorite stuff is all easy in iTunes. The program isn't fancy but it does the jobs I need done well. That is the iTunes advantage.
The DRM advantage that Apple enjoyed had nothing to do with keeping customers tied to Apple. Use your brain for heaven's sake. I was never forced to use the iTunes store. iTunes makes it just as easy for me to buy the CD and rip it. No, the advantage is an easy of use that no one else offers.
Now I happen to be strongly anti-DRM and once Amazon opened I started buying my music there. Lots of us did. But the Amazon experience is low rent compared to iTunes. Worse than low rent - it is slum-tastic. If I know what I want, great. If I'm looking for something new and different though, not so great. WalMart? Don't make me laugh. Napster? I'm choking on my own vomit. Microsoft? Um, they haven't done a bad job but the store lacks a certain something the iTunes store has...cross platform compatibility.
Apple isn't going to be haunted by this move. Now that we can all get our tunes DRM free from the iTunes store Apple is going to trounce everyone. Haunted? Apple? No. But look for the labels to start yowling about Apple taking over the music business all over again.
It means that I will put them on my PC and not use iTunes to have to listen to them. iTunes is the reason I avoided buying an iPod for so long, not the DRM music. In fact, I put my non DRM's on my iPod rather than my Zen because it is a better device. I hate having to use iTunes on my PC to listen to music I purchased. I am not a Mac user and I am not a big Apple fan. But I realize that the iPod's are a great piece of equipment for portable music. Now that Apple is selling non-DRM music just means I will buy more songs from them to put on my iPod and listen to on my computer.
Check again. Once upon a time, Creative MuVo players were compatible with iTunes, and unless a future iTunes update comes to actually remove that capability, my money says they'll still be compatible. That may not sound like much, but it proves that deals can be struck with third-party hardware vendors with regards to iTunes.
"The DRM-free songs on the iTunes store are still in AAC format - just without the DRM. Until AAC becomes playable on ALL portable music players, Apple still has that 'lock-in.'"
Right-click->Convert selection to MP3. Bing, bang, boom, universal format.
I do envision this being shaky to iPod sales, but that's a GOOD thing. Remember what we learned about competition in the Arms Race? It gives birth to innovation.
DRM will be forgotten about really quickly. It was a mistake all around, on the labels part and on the iPod part. The removal of DRM on iTunes won't even make a blip in the wrong direction. DRM was a restriction simply made out of fear.
This weeks announcement was just a long overdue response to action that should have been taken a long time ago.
Well, think about that. You're saying that right now people are buying iPods because they have a large Apple-DRM library and can't use it with any other device. Yeah, sure, Apple can tie customers to themselves that way, but it's probably not good if your customers hate you in that way.
Although the sales figures still look good, iPod is really already dead: at this point, there is little reason for most people to carry an MP3 player in addition to a phone, and even no-name Chinese players are good alternatives to iPod. And iPhone isn't going to become the only music phone in the world. Finally, people have a lot more choices where to get music, and there was nothing to stop people from buying their music elsewhere even if they still like their iPod.
Apple didn't have a choice in the matter. In fact, they might do well to open up further and allow the use of iTunes with other MP3 players, and open the iPod syncing protocols because otherwise people are going to go elsewhere.
The way the iPod Touch is tied to iTunes really sucks, and I'm not going to buy one until that's fixed.
But nah, not gonna happen. People can't stand the bundle are already elsewhere, people with iPod/iPhone are pretty much fine with it, or not so happy but love the device enough to stay.
What are you saying? That people who own iPods can now ditch it for an iRiver & then still use iTunes?
OK - but why on earth would they do that? Are they unhappy with their iPod? If so, then previously they would ditch the iPod, get an iRiver & shop at amazon - now they can shop at iTunes, so how is that a detriment to apple?
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by theblueworld
January 8, 2009 3:20 PM PST
- I have been involved in the Apple "eco-system' in higher education for a number of years and have had a chance to meet, chat (and drink) with senior people in Apple (one or two definitely 'inner circle'). What 'kind' of company Apple is is a question that has come up a few times. While I don't think there is a single answer for any public company of Apple's size, there are a few definitive characteristics. And these haven't changed so much over the years....
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by eldernorm
January 9, 2009 9:06 AM PST
- To steal a phrase...... WOW.... just WOW and nothing to do with Microsoft. LOL
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Showing 1 of 4 pages (96 Comments)1: Apple is a technology company. This is not as disingenuous as it sounds. Questions about whether they use software to sell hardware are moot. Despite it's 'cool' persona Apple is one of the geekiest companies in existence. It's the geeky heart of Apple that meant it could (twice) change the processor architecture of its primary product line without a hitch. It's also what allowed it to move it's customer base and product lines over to an entirely new operating system back in 2000. This is a differentiating factor, no other company has done this, and Apple did it with one hand. At Apple it isn't the marketing department that 'rules', it's the programmer and the engineer. (Aside: of all the people I have known who have worked for Apple - I never have - everyone has said it's 'brutal' except the engineers, who always say it was 'fun' or 'a blast'. ) Apple have always had some remarkable (and often unnoticed) flagship technologies in their stable: Think QuickTime in the 80's or WebObjects back in 99, data detectors, Xgrid, etc.
2: Apple innovate. We all know this. What isn't always remembered though is that Apple innovate across the board, in hardware, in software, but also in marketing and business models. A new way of selling is just as much what Apple is about as a new way of pointing at things on the desktop (NB: 3D desktop interface patented by Apple recently.)
3: Apple is a quality oriented and focused company. As one senior exec said to me, Apple will never extend their product line to the point where they have to compromise on the quality of any product. Apple will never have 30 different PCs or 12 iPods. The almost affected modern-sparseness of Apple retail stores is not an accident. Nor is the way Apple control it iPhone app-store. Don;t forget the lesson Apple learned with earlier experiments licensing its operating systems to Apple 'clone' manufacturers. The poor quality of some of those systems 'tarnished' Apple's reputation with its customers. Don't compromise quality. Features aren't quality, choice isn't quality. Those things are good, but not at the expense of quality. (An ethos that has taken a very long time to find it's way into Apple's customer service and supply management practices.)
3a A rider to the quality attribute. For Apple the first indicator of 'quality' isn't good looks but effortlessness. We can talk about ergonomics, ease-of-use, interfaces, simplicity, etc: Apple's idea of quality encompasses all of these things. But Apple understand technology is stuff with 'features'. Technology is stuff people USE to DO THINGS. Whatever the technology does, the more effortless it is the better its quality. Always has been. Who has had the opportunity to set up both a 1st generation AppleTalk network and a PC Token ring network. I have.
4: Apple's monopoly is you! It isn't simple that Apple's business strategy is vertical integration - which it is in spades. Rather Apple is focused on the individual. Not always the same individual - they are obviously courting the high-income quality oriented digital savvy consumer, but they are also interested in the research scientist and the high-school teacher. Their 'market' segment is the individual. Apple wants to monopolise as much as Microsoft. But where the latter wants to monopolise a market or an industry, Apple wants to monopolise you. It is more importantto Apple that it be the sole-supplier of all your digital life requirements than convert your zune-loving neighbour. Those innovative adds are really about reaffirming your choice.
So Apple is a technology company with an ethos of innovation, focus, and quality whose primary objective is to create for each individual customer it has (or acquires) a pervasive world of technological 'stuff' that does effortlessly everything those customers want it to do.
That was a great comment and every bit of it makes sense. If you do not know what you are talking about, then you do a really great fake..... :-)
Just a thought.
en