Digital Media

To: Apple CEO Steve Jobs
From: Greg Sandoval, CNET News
Re: Acquiring DRM-free music

Steve, give us DRM-free songs for Christmas

(Credit: James Martin/CNET Networks)

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."

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.

The masses have spoken.

And Wal-Mart Stores, the nation's largest retailing chain, retreated from a misdirected and unfair policy. Last month, the company informed customers who bought its DRM-wrapped music that it would no longer issue keys to unlock songs. That meant music buyers would no longer be able to move their libraries to new computers or players. On Thursday, the company reversed that decision and said it would continue to issue keys for "the present time," according to Ravi Jariwala, a Walmart.com spokesman.

OK, let's tally these up. By my count this makes the third behemoth company this year to bend its digital rights management strategies to your will. Yes, you the Internet user, consumer, music fan.

I'm not pandering. That's what happened. The pattern was the same in each case. MSN Music was the first to announce that it planned to stop supporting DRM. Then came Yahoo Music, followed by Wal-Mart. Each announced a plan to kill support. Each was criticized. Each caved in.

Customers pointed out the obvious: There was no expiration date on the music they bought.

If nothing else, the lesson here to you--techies and digital music fans--should be that when you go to the barricades, you can make something happen. When you combine voices, the sound is loud enough to force conglomerates to bend their ears. To their credit, Microsoft, Yahoo, and Wal-Mart listened.

Of course, this isn't the end. Microsoft has committed to supporting the DRM keys for three years. What happens in 2011? And when I asked Jariwala how long does "for the present time" mean, he e-mailed this:

"(Walmart.com) will continue to evaluate options and no decisions have been made at this point. In the meantime, we'll continue to offer MP3 downloads through our online music store and will assist with DRM issues for protected Windows Media Audio (WMA) files purchased from Walmart.com."

It's generally recognized as a good thing that Walmart.com switched to MP3s. But as far as the DRM-wrapped music it once sold, the company could still pull the plug on support whenever it wishes.

And what about the services which continue to sell DRM-laden downloads, such as iTunes? Who knows what the future brings, but if Apple ever considers turning off its DRM support, it should make preparations to take care of its customers.

If not, well, then the people will clear their throats once again and make themselves heard.

New reports say Wal-Mart may have reversed its policy on digital rights management, and will keep servers online for the near future.

Wal-Mart had sent an e-mail to consumers last month that, starting October 9, it would no longer assist with digital rights management issues for protected files purchased from Walmart.com.

That means that anyone who had those music files would still be able to access them on the devices or computers they reside on, but wouldn't be able to transfer them to new devices.

Yahoo and Microsoft had announced similar plans when shuttering their DRM programs, but both companies backtracked after sharp criticism.

Now, reports say Wal-Mart has told consumers that it, too, will continue to support the DRM-protected music.

Engadget has posted an e-mail that Wal-Mart reportedly sent to music customers informing them that "we have decided to maintain our digital rights management (DRM) servers for the present time," and that their customer service team "will continue to assist with DRM issues for protected windows media audio (WMA) files purchased from Walmart.com."

A spokesman for Wal-Mart could not immediately be reached for comment.

Wal-Mart's decision to stop supporting the DRM swaddling its music reminds me of this parable: A father and son are herding cows one day. While climbing a narrow mountain road, the herd comes to a place where the path is washed out. In a single file line, each of the cows follows the one ahead of it and plunges to its death.

"Whenever we're herding cows," the father tells the boy, "be sure to remind me that they're just like people."

For some reason, Wal-Mart has decided to stop issuing keys for its digital rights management software. The retailer is doing this though Microsoft and Yahoo already tried to drop DRM support for their shuttered music services this year and retreated in the face of wide criticism. Microsoft agreed to maintain DRM support for three more years and Yahoo issued refunds.

Why does Wal-Mart think it can pull the same stunt and get away with it?

"Wal-Mart will be shutting down our digital rights management system," says a Wal-Mart e-mail to customers published Monday at the blog Boing Boing. "Beginning October 9, we will no longer be able to assist with digital rights management issues for protected (Windows Media) files purchased from Walmart.com."

I asked Wal-Mart very specific questions about the decision and why they would do it after Microsoft and Yahoo abandoned similar strategies. The company's public relations team didn't address those, however. "We are not removing or disabling the DRM-protected WMA files," a spokesman said, pointing out that Wal-Mart's music will continue to play on whatever PCs or mobile devices they reside on after October 9.

Just don't swap computers, or your hard drive had better not go on the blink. Without DRM keys, music purchased by Wal-Mart customers is stranded and can't be transferred to other devices.

One can only wonder about what led Wal-Mart to such a colossal goof and misguided strategy. Perhaps execs there didn't do their homework. Maybe they didn't hear how Microsoft and Yahoo were bashed by customers, the media, and consumer watchdog groups.

Or maybe Wal-Mart thought nobody would notice. After all, few people have paid much attention to its digital music store since launching in 2004. Could the company have believed it's customers, many of whom are working-class Americans, weren't tech savvy enough to understand what they were losing?

Certainly, Wal-Mart isn't giving customers much time to think about it. The deadline before the company drops DRM support is just two weeks away. To their credit, Yahoo and Microsoft gave their customers much more of a heads up.

Despite all this, I think we should give Wal-Mart the benefit of the doubt. You don't become the biggest retailer ever by ignoring your customers. So Wal-Mart, here's what you should do:

Act in good faith and choose one of the solutions that Microsoft and Yahoo have already helped explore. Staying the course will likely lead you to angry customers, ridicule among digital music fans (aren't you trying to make inroads with this group?), and lawsuits.

Remember, the issue is simple. Your customers had the ability to move their songs to different PCs when they bought them from you. After October 9, that ability disappears, and that's not fair. So go ahead, reverse yourself. Yahoo and Microsoft did. You should too.