HD For Indies

Mike Curtis on Indie Production and Self-Distribution at FreshDV

Matt's write-up:

Recently we had a chance to pick the brain of Mike Curtis (of HD For Indies) on the topics of Independent film production and self distribution. We discuss his take on alternative distribution options, what it takes to reach wide theatrical release, the importance of brand identity, when to aim at the direct to DVD option, DRM and rights management solutions, etc. Mike has some very strong opinions on the subject, and we found the conversation enlightening.

Follow the link at top to download from that page.

-mike

Labels: DIY, DRM, self distribution

I threw a few comments about capturing content via analog from living room to studio (HD-DVD and digital cable) on my AppleTV Hacker blog. In short - the analog hole is alive and well, but does imply a quality loss.

And takes a looooooong time to encode/process. Many many times realtime.

Labels: acquisition, AppleTV, AppleTVHacker, consumer, DRM, Final Cut, hardware, HD-DVD, HDTV, home theater, how done

AppleInsider | Apple courts indies with DRM break: "The iTunes Store is lending an ear to smaller labels, hoping to muster support for its anti-DRM movement by cutting indies treatment similar to that given to EMI."

Schweet.

Progress.

Now, if indies can just get content onto the video side of the store...

-mike

Labels: DRM, iTunes, online content service, online distribution

First, lets start out with the pertinent bits from the press release:

Apple® today announced that EMI Music’s entire digital catalog of music will be available for purchase DRM-free (without digital rights management) from the iTunes® Store (www.itunes.com) worldwide in May. DRM-free tracks from EMI will be offered at higher quality 256 kbps AAC encoding, resulting in audio quality indistinguishable from the original recording, for just $1.29 per song. In addition, iTunes customers will be able to easily upgrade their entire library of all previously purchased EMI content to the higher quality DRM-free versions for just 30 cents a song. iTunes will continue to offer its entire catalog, currently over five million songs, in the same versions as today—128 kbps AAC encoding with DRM—at the same price of 99 cents per song, alongside DRM-free higher quality versions when available.

“We are going to give iTunes customers a choice—the current versions of our songs for the same 99 cent price, or new DRM-free versions of the same songs with even higher audio quality and the security of interoperability for just 30 cents more,” said Steve Jobs, Apple’s CEO. “We think our customers are going to love this, and we expect to offer more than half of the songs on iTunes in DRM-free versions by the end of this year.
.....
“We think our customers are going to love this, and we expect to offer more than half of the songs on iTunes in DRM-free versions by the end of this year.” (Steve Jobs)
.....
iTunes will also offer customers a simple, one-click option to easily upgrade their entire library of all previously purchased EMI content to the higher quality DRM-free format for 30 cents a song. All EMI music videos will also be available in DRM-free format with no change in price.
.....
The iTunes Store features the world’s largest catalog with over five million songs, 350 television shows and over 400 movies. The iTunes Store has sold over two billion songs, 50 million TV shows and over 1.3 million movies, making it the world’s most popular online music, TV and movie store.

Restating the facts: This means in May you'll be able to buy any song from the EMI library with no DRM - so it'll play on non-Apple music players (if they support AAC), nothing stops it from working on your friends' music player, you can burn to CD as many times as you like, etc. - it is totally your music to do with as you please, laws & personal ethics your only limit.

Mike's Commentary

The good news is that Apple is getting serious about ditching DRM - they are the first major (top tier) distributor to offer legit content (AFAIK - Comment away if I'm wrong) from a top tier label without DRM. They are even being kind enough to let folks who've already bought previous EMI tracks upgrade for the price difference - only 30 cents/song.

256kbps VBR (I assume/hope it is VBR not CBR) AAC is plenty high enough quality for all but the most distinguishing ears (and mine aren't included in that list).

Ditching of DRM is the big deal here - the idea being to let people do what they want with their music. The sneaky bit is that Apple chose a high quality encoding option that is publicly availble, but not universally supported by all music players - AAC. (Hey, at least Zune supports it).

This is a big step forward and Apple deserves some praise for this - not only are they willing to go this step, but so is EMI, and pulling off THAT kind of a deal was a major coup.

At $1.29/track (what price albums? Not said), you're paying a 30% premium over the lower quality, DRM protected tracks. You're paying for the convenience of not leaving the house, not having to go to the store, not having to rip your own music, and you get album artwork and all the metadata figured out for you. What you don't get is uncompressed quality (but that argument is less effective now with 256kpbs AAC), a hard copy of the disc, and...a better price. While Apple has clearly found a solution customers are comfortable with up until now, this is a good step forward to more comfortable media handling.

The bump to 256 was another good call - if they'd proposed buying DRM free tracks for $1.29 at the same quality level, there would have been a HUGE hue & cry about getting what you should have gotten in the first place for 30% more. Now there's a significant quality bump associated with it, so that makes it much easier to swallow.

Kudos to Steve for putting his money where his mouth is, and getting a traditionally gun-shy partner (EMI) to step up to the plate with them.

This also paves the way for indie content to go DRM free, and I hope in time to see indie high def video content available on the Apple Store with no DRM. But that will take some time - one step at a time, and today was a big move.

So how much longer till indie content can go DRM free?

-mike

UPDATE: Transcript of Jobs talking about all this stuff:

AppleInsider | Jobs talks new iTunes functions, DRM and video, iPod storage [transcript]

ANOTHER UPDATE - no Beatles content at this time either - so not the ENTIRE collection after all

Labels: analysis, DRM, iTunes

Is interoperable DRM inherently less secure? The case of FairPlay versus Windows Media

Dissertation challenging Jobs' assertion that a closed DRM ecosystem is inherently more secure than an open (licensed) one.

Labels: DRM

Top 10 Reasons Why Movie Downloads Suck - Gizmodo

This is bang-on accurate. Go read.

Labels: DRM, online distribution

EMI in talks to sell unprotected MP3s - Yahoo! News

Headline says it all - EMI is looking into the possibility of distributing their library as non-DRM'ed MP3 files. This is an interesting reaction so shortly after Steve Jobs' request to the industry to drop all DRM from music.

The article implies EMI is wondering how much higher sales might be if DRM were removed. My initial gut suspicion was that iPods held so much of the music player market that it wouldn't impact it much - but with music phones gaining in popularity, I may be wrong.

What do you folks think - would open MP3 music sales be overall good or bad for the industry?

-mike

Labels: DRM

UPDATED: SEE BOTTOM - while I've updated the article through the day yesterday, I just added a whole new chunk to the bottom with some "day 2" thoughts

Apple - Thoughts on Music:

Steve Jobs made an unusual move today, defending the proprietary DRM used in iTunes, and in offering alternatives pretty much taking a slap (how hard the slap you decide) to the face of the Big Four music labels. Pardon me for running long on this, it includes the entirely of Steve's screed (his in italics, my commentary in plain text), but for journalistic analysis, and the fact that I can run as long as I want on the blog, Let Us Dissect, tweezers and scalpel in hand:

With the stunning global success of Apple’s iPod music player and iTunes online music store, some have called for Apple to “open” the digital rights management (DRM) system that Apple uses to protect its music against theft, so that music purchased from iTunes can be played on digital devices purchased from other companies, and protected music purchased from other online music stores can play on iPods. Let’s examine the current situation and how we got here, then look at three possible alternatives for the future.

OK, a very interesting opening proposition. I like that Steve is directly addressing an issue....that has been floating around for years. Glad it is finally being addressed in this clear and public method.

To begin, it is useful to remember that all iPods play music that is free of any DRM and encoded in “open” licensable formats such as MP3 and AAC. iPod users can and do acquire their music from many sources, including CDs they own. Music on CDs can be easily imported into the freely-downloadable iTunes jukebox software which runs on both Macs and Windows PCs, and is automatically encoded into the open AAC or MP3 formats without any DRM. This music can be played on iPods or any other music players that play these open formats.

YES. This is often overlooked, and I am oh-so-annoyed whenever iPod opponents say "you can't play other music on the iPod!" Yes. Yes you can. It is called an MP3 file, they play anywhere, you should look into it sometime (and AAC is good too). I believe they aren't too difficult to come by or convert to, those shiny plastic discs the cavepeople still buy seem to be able to automagically be converted. iTunes can even be set to automatically convert, in minutes, any CD inserted to one of those formats as well, without so much as a single keypress.

The rub comes from the music Apple sells on its online iTunes Store. Since Apple does not own or control any music itself, it must license the rights to distribute music from others, primarily the “big four” music companies: Universal, Sony BMG, Warner and EMI. These four companies control the distribution of over 70% of the world’s music. When Apple approached these companies to license their music to distribute legally over the Internet, they were extremely cautious and required Apple to protect their music from being illegally copied. The solution was to create a DRM system, which envelopes each song purchased from the iTunes store in special and secret software so that it cannot be played on unauthorized devices.

Touché, Steve, I do so heartily agree with the validity of this statement - it is definitely the studios that are impinging upon you to slap a lock on the files so they can't be bandied about. However, this engenders one other tangential benefit we'll get back to...

Apple was able to negotiate landmark usage rights at the time, which include allowing users to play their DRM protected music on up to 5 computers and on an unlimited number of iPods. Obtaining such rights from the music companies was unprecedented at the time, and even today is unmatched by most other digital music services. However, a key provision of our agreements with the music companies is that if our DRM system is compromised and their music becomes playable on unauthorized devices, we have only a small number of weeks to fix the problem or they can withdraw their entire music catalog from our iTunes store.

Definitely a victory in dealing with the labels. However, another way of saying the first part is: "We have the least sucky deal out there." Also interesting to note the deadline/timeline to fix any leaks out there - the Hymn project breaks Apple's DRM every once in a while, and Apple makes changes to fix it again. The old measure, counter measure, counter counter measure struggle continues ever onward. I hadn't heard this detail before (had anyone else?), so it keeps Apple on their toes, honoring their obligation to keep FairPlay legitimately "tight" and leak free.

To prevent illegal copies, DRM systems must allow only authorized devices to play the protected music. If a copy of a DRM protected song is posted on the Internet, it should not be able to play on a downloader’s computer or portable music device. To achieve this, a DRM system employs secrets. There is no theory of protecting content other than keeping secrets. In other words, even if one uses the most sophisticated cryptographic locks to protect the actual music, one must still “hide” the keys which unlock the music on the user’s computer or portable music player. No one has ever implemented a DRM system that does not depend on such secrets for its operation.

All standard stuff, plus I love how Steve is able to get away using words like "secrets" in otherwise technical discussions. "Automagically" regretably does not make an appearance in this conversation.

The problem, of course, is that there are many smart people in the world, some with a lot of time on their hands, who love to discover such secrets and publish a way for everyone to get free (and stolen) music. They are often successful in doing just that, so any company trying to protect content using a DRM must frequently update it with new and harder to discover secrets. It is a cat-and-mouse game. Apple’s DRM system is called FairPlay. While we have had a few breaches in FairPlay, we have been able to successfully repair them through updating the iTunes store software, the iTunes jukebox software and software in the iPods themselves. So far we have met our commitments to the music companies to protect their music, and we have given users the most liberal usage rights available in the industry for legally downloaded music.

Kudos to Steve for fessing up and being very straightforward about the history of all this.

With this background, let’s now explore three different alternatives for the future.

The first alternative is to continue on the current course, with each manufacturer competing freely with their own “top to bottom” proprietary systems for selling, playing and protecting music. It is a very competitive market, with major global companies making large investments to develop new music players and online music stores. Apple, Microsoft and Sony all compete with proprietary systems. Music purchased from Microsoft’s Zune store will only play on Zune players; music purchased from Sony’s Connect store will only play on Sony’s players; and music purchased from Apple’s iTunes store will only play on iPods. This is the current state of affairs in the industry, and customers are being well served with a continuing stream of innovative products and a wide variety of choices.

"Well served" is a highly subjective statement. This is the first time I'd say we are straying from the clearly and demonstrably provable so far.

Some have argued that once a consumer purchases a body of music from one of the proprietary music stores, they are forever locked into only using music players from that one company. Or, if they buy a specific player, they are locked into buying music only from that company’s music store. Is this true? Let’s look at the data for iPods and the iTunes store – they are the industry’s most popular products and we have accurate data for them. Through the end of 2006, customers purchased a total of 90 million iPods and 2 billion songs from the iTunes store. On average, that’s 22 songs purchased from the iTunes store for each iPod ever sold.

Today’s most popular iPod holds 1000 songs, and research tells us that the average iPod is nearly full. This means that only 22 out of 1000 songs, or under 3% of the music on the average iPod, is purchased from the iTunes store and protected with a DRM. The remaining 97% of the music is unprotected and playable on any player that can play the open formats. Its hard to believe that just 3% of the music on the average iPod is enough to lock users into buying only iPods in the future. And since 97% of the music on the average iPod was not purchased from the iTunes store, iPod users are clearly not locked into the iTunes store to acquire their music.

...and thus Steve starts to clearly and demonstrably Stray From The Path of Clarity. The KEY issue here is not whether there are OPTIONS to acquire one's music, the point that we looked to see addressed was the fact that music purchased via Apple's iTunes Store is locked to playing on iPods. Thus, The Whinging Begins.

While it is possible to burn a CD from purchased iTunes content and then re-rip that to a non-DRMed format like AAC or MP3, there is a recompression loss. Want to play your purchased content on anything other than an iPod? You have to do some work and degrade the audio quality (and the quality of this purchased content is a whoooole other bag of gripes article).

I feel Steve is sidestepping the core issue here - music purchased from iTunes Store only plays on iPods, not Zunes or Creatives or anything else. Period. The fact that music is acquirable elsewhere is good, nice, and...extraneous to the point that led to this discussion in the first place.

However, this is a good and clear case as to what the reality of the iPod world is like - you buy some content, but you rip (or, ahem, "acquire") MP3s elsewhere for the majority of your content. This "97% from elsewhere" makes for an excellent defense against any accusations of attempted monopoly against Apple.

The unexplored question is this - of that 97%, how much of it was legally obtained, on average? Beyond that, I'd be curious to know, on average, what percentage of that iPod's 97% of remaining content:

1.) Was ripped from iPod owner's own CDs
2.) what percentage of those CDs are still in owner's possession
3.) what percentage came from ripping friends' CDs
4.) what percentage of MP3s/etc. came as digital files from Internet P2P setups, or from friends' hard drives, etc. - Ripping Parties, or "Distributed/Remote Backup Events" aren't exactly uncommon these days

Think about your own music collection - how much of it is either bought from iTunes or ripped from CDs you still presently own? More importantly, how much is NOT from one of those two categories?

The second alternative is for Apple to license its FairPlay DRM technology to current and future competitors with the goal of achieving interoperability between different company’s players and music stores. On the surface, this seems like a good idea since it might offer customers increased choice now and in the future. And Apple might benefit by charging a small licensing fee for its FairPlay DRM. However, when we look a bit deeper, problems begin to emerge. The most serious problem is that licensing a DRM involves disclosing some of its secrets to many people in many companies, and history tells us that inevitably these secrets will leak. The Internet has made such leaks far more damaging, since a single leak can be spread worldwide in less than a minute. Such leaks can rapidly result in software programs available as free downloads on the Internet which will disable the DRM protection so that formerly protected songs can be played on unauthorized players.

An equally serious problem is how to quickly repair the damage caused by such a leak. A successful repair will likely involve enhancing the music store software, the music jukebox software, and the software in the players with new secrets, then transferring this updated software into the tens (or hundreds) of millions of Macs, Windows PCs and players already in use. This must all be done quickly and in a very coordinated way. Such an undertaking is very difficult when just one company controls all of the pieces. It is near impossible if multiple companies control separate pieces of the puzzle, and all of them must quickly act in concert to repair the damage from a leak.

Apple has concluded that if it licenses FairPlay to others, it can no longer guarantee to protect the music it licenses from the big four music companies. Perhaps this same conclusion contributed to Microsoft’s recent decision to switch their emphasis from an “open” model of licensing their DRM to others to a “closed” model of offering a proprietary music store, proprietary jukebox software and proprietary players.

Steve definitely has a valid point that it'd be tough to force downstream sub-licensees to update quickly, and an even stronger point about keeping secrets * . Apple seems to keep secrets better than just about anybody in the high tech and entertainment industries, even though they are paid a vastly disproportionately high level of attention by those industries.

* (Witness the entire DeCSS scenario, all because a single DVD player manufacturer failed to properly encrypt The One Key - cat got out of the bag, never to return)

BUT...Steve does kind of forget to mention one other factor here - that by keeping it a closed economy, it guarantees that the songs you buy on iTunes ONLY work on iPods. And if you look at Apple's fiscal numbers, it is the iPods that are the source of profits, not the iTunes Store. It is a bit like a reverse razors and blades model - Apple wants you to buy pricey iPods (razors) so you can then buy fairly cheap, low margin songs (blades). The two drive each other synergistically, but the bottom line is, the iTunes Store was created to sell more iPods, because that's where the money is.

By omitting this factor, Steve diminishes the credibility of his point. A line about "Yes, I do have to admit this does steer folks towards buying iPods, but we do strongly feel, and the market stats back us up, that we have the most popular and successful music player out there." Something like that would keep him on the Straight and True. Skipping that statement makes my BS-O-Meter needle start to twitch.

The third alternative is to abolish DRMs entirely. Imagine a world where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat. If the big four music companies would license Apple their music without the requirement that it be protected with a DRM, we would switch to selling only DRM-free music on our iTunes store. Every iPod ever made will play this DRM-free music.

Hmm. Sounds interesting. And it makes sense - just use non-DRMed AAC, or even MP3s (which aren't as efficient, but open standards never are, sigh....)

Do go on...

Why would the big four music companies agree to let Apple and others distribute their music without using DRM systems to protect it? The simplest answer is because DRMs haven’t worked, and may never work, to halt music piracy. Though the big four music companies require that all their music sold online be protected with DRMs, these same music companies continue to sell billions of CDs a year which contain completely unprotected music. That’s right! No DRM system was ever developed for the CD, so all the music distributed on CDs can be easily uploaded to the Internet, then (illegally) downloaded and played on any computer or player.

While technically accurate, this argument isn't quite fair. To stop casual consumer piracy, you only need to make it obnoxious enough that most folks won't bother with it. To stop P2P piracy is...virtually impossible. CDs were invented at a time when 650 MB seemed an enormous amount of data, vastly beyond what any consumer would ever dream of working with. I recall working for a large international industrial design/interactive design shop, with 20+ people in our office, and only at ONE station was there a big enough hard drive to routinely burn CD images for client projects. My first hard drive was 600MB (smaller than a CD) and cost $1500. The labels had no idea how quickly storage would get big and cheap, and got burned, and HARD, by a cousin of Moore's Law. The studios saw that happen and decided to put DRM on their 5 inch plastic media discs, DVDs. And that didn't last long, as DeCSS hit the scene and it became cake to pick the DRM locks - because there was only one key in the universe, and once it was out, it was OUT. Prepping for the next round of discs, HD-DVD and Blu-ray, even more stringent DRM was applied...and it too was promptly broken.

So:

1.) DRM will always, Always, ALWAYS be broken.

2.) If no DRM, casual copying will be pretty rampant - witness CDs, either straight out duped, or ripped and the files shared.

3.) If stringent DRM, casual copying will be limited (with varying degrees of success), but P2P copying, it is safe to say, will never be curtailed - DRM is trying to keep you from getting at content you are going to, that they want you to, that you paid to, see - so it HAS to be decoded at some point, and therein lies the hole to be breached or exploited. It only takes one kid in Norway (or Kansas, or wherever) to get around DRM on ONE copy of the work in question, and if he has broadband and P2P, the world will have it within hours. Such Is Life.

In any case, the unfair part is this: labels HAVE to sell CDs - it is the ubiquitous, wide installed base, industry standard format for distribution. Consumers haven't taken to the proposed next generation audio formats for higher quality audio - DVD-A and whatsitcalled (see? If I can't think of it offhand, what are the chances it'll be successful?).

So the labels sell CDs because frankly, they have no other choice. They HOPE, they'd LOVE, to migrate to a more secure distribution format such as DRMed digital downloads, but it takes time to shift, and frankly, consumers need to see a benefit. The convenience of "gimme now" is working, with over 2B iTunes tracks sold, although there are the hassles of backups, incompatibilities, etc.

Another way of saying it? The studios are trapped selling CDs, which get copied rampantly, and they hate it, and want out of that game - so DRM it is for ANY new form of distribution.

In 2006, under 2 billion DRM-protected songs were sold worldwide by online stores, while over 20 billion songs were sold completely DRM-free and unprotected on CDs by the music companies themselves. The music companies sell the vast majority of their music DRM-free, and show no signs of changing this behavior, since the overwhelming majority of their revenues depend on selling CDs which must play in CD players that support no DRM system.

...backing up my point just made about no choice but to sell CDs...

So if the music companies are selling over 90 percent of their music DRM-free, what benefits do they get from selling the remaining small percentage of their music encumbered with a DRM system?

It makes them feel better? A little bit less robbed? Knowing that stuff they sell has a lower chance of being ripped off, stolen, having benefit derived for which they receive no recompense?

There appear to be none.

Uhh..see above.

If anything, the technical expertise and overhead required to create, operate and update a DRM system has limited the number of participants selling DRM protected music.

Clearly, and this entire argument is even moreso the case in the downloadable video market right now (more on that shortly). Witness the failure, or limited success, of many of the other music download stores out there. Apple, to their credit, does an excellent job of understanding the importance of ease-of-use, good interfaces, and as the owner of the entire soup-to-nuts process, can craft an integrated, well functioning whole...which has largely NOT been the case for other online music stores as far as I can tell. If you don't buy your music from iTunes, you're buying it from, uh...the fact that I have to pause more than a second typing to think of viable alternatives kind of proves my own point (at least to me, Apple fan that I am).

If such requirements were removed, the music industry might experience an influx of new companies willing to invest in innovative new stores and players. This can only be seen as a positive by the music companies.

OK, I'd put that on the map as a possibility.

Note the equation of his sentence is conditional on this, emphasis mine: "the music industry might experience an influx of new companies willing to invest in innovative new stores and players. This can only be seen as a positive by the music companies."

That is a bit like saying

"If A might be equal to B and we know B=C, then A could only be as good as C!"

If that doesn't make sense or make my point strongly enough, how about this:

"If a frog had wings, it wouldn't bump its ass a-hoppin'."

Steve plants a big "might be", then if you assume that is true, THEN makes a huge "can only be" leap. Shady math.

The math probably doesn't work for non-DRMed content right now anyway since downloads are such a tiny fraction of current incomes, CDs still sell well (if not as well as they used to), and it would be a tremendous hit for the industry to try to swing the majority of purchasers to online, plus the chaos to their distribution partners and the political chaos that would engender. Blah blah blah, you (hopefully) see where I'm going with that. The labels want to shift to a more secure format - DVD-A and CD-whatsit didn't take with the buying public, so downloads are the next attempt to shift to a secure format.

Much of the concern over DRM systems has arisen in European countries.

YES. Diverging politically for a moment, the countries that don't tolerate invasions of privacy to the level that the US does (atrociously) have a low tolerance for this kind of bull. They see BS, they call it BS and tend to not say "That BS is industry standard, so step in it and don't complain." Kudos to my overseas brothas and sistahs. Keep the faith.

Perhaps those unhappy with the current situation should redirect their energies towards persuading the music companies to sell their music DRM-free. For Europeans, two and a half of the big four music companies are located right in their backyard. The largest, Universal, is 100% owned by Vivendi, a French company. EMI is a British company, and Sony BMG is 50% owned by Bertelsmann, a German company. Convincing them to license their music to Apple and others DRM-free will create a truly interoperable music marketplace. Apple will embrace this wholeheartedly.

Nice job of saying "Please aim your weapons at those guys not me, I only work with them." But he DOES have a point.

It is a bit disingenuous to suggest that the labels go non-DRM with their content. Apple, as I stated, makes their money off the iPods, not the music. Yeah, they do make some profit margin off the music, but it ain't much, and it certainly is not (presently) their primary source of income. Note you see iTunes+iPod commercials, not just iTunes commercials.

This is a bit like Ford asking Shell to give discounts gasoline, stating "It'd be good for the economy." * yeah, well, Ford makes out like a bandit from this, but Shell carries all the burden and risks. It is entirely valid to make this request, but it isn't as "Hey buddy buddy!" and "It's all good, brother!" as it might appear on the surface.

(* - Robogeek points out in the comments that this isn't a truly valid analogy, because unlike Apple, Ford doesn't sell cars AND gas. But imagine if Ford sold SOME gas, this'd be closer to the situation...maybe if they sold "for Ford only" gas debit cards....or something or other...mumble mumble...)

It IS good PR for Apple to make this request - it makes them look like they're on Our Side (and I think they are on this issue). However, note they've waited until now to go public with the issue - if Apple's market share for digital music players were not as strong, I don't think we'd have seen these statements made. Apple is now firmly entrenched enough as a market leader that it poses little risk for them to suggest getting rid of DRM. If they get it, they'll still sell plenty of iPods, it isn't as if there are major competitors to them. iTunes, even ignoring the whole Store end of it, is the best music organizer/player I'm aware of on the market. And it is free to boot - so Apple's position there is pretty safe. But I think the major labels are unlikely to do as Steve suggests, so even that risk is ameliorated - not much skin off their back in the unlikely event the labels do acquiesce, so a win/win to suggest this plan of action.

And if the Big Four DID sell un-DRM'd downloads, they'd be even easier to distribute and share - the already marginal barriers to entry (difficulty/effort) to file sharing, be it P2P or person to person, would be lifted - "Hey, I got this file, let me email it to you!" or even easier, imagine being on iChat/Yahoo/Messenger: "Hey man, got the new David Byrne music, here it comes, click on "Accept file" and its yours." If your friend asked, would you NOT hand it over?

So while I'm no fan of the Big Four, and they do utterly hoserate a lot of their clients, not to mention the buying public in myriad ways, I can't say I entirely defend Steve's memo here.

It isn't that Steve's comments are inaccurate, just incomplete.

In the end, if the Big Four did open wide and let it all go out unDRMed, I think the net result would be a slight increase in people's willingness to buy music if they could use it freely, but a LOT more sharing would go on. And in the end, Apple wouldn't care too much about that, becuase it would probably mean more iPods to be sold.

And in the end, that is what Apple really cares about.

-mike

OH - all that being said, proprietary, device limiting DRM needs to go away in our future digital world - witness the craziness of the Blu-ray/HD-DVD fiasco that (among other reasons) is holding back high def DVD's future. Proprietary solutions are always how things start in technologically difficult fields, but over time, either one proprietary solution is picked as a standard, or everyone gets fed up enough that the industry gets it together enough to come up with a standard (witness CDs, DVDs, and if they'd just stuck with ONE high def DVD solution!)

PS - OK, now Part 2: Movies

Now apply this whole bolus of thought to movies and it gets worse - since music is something you can appreciate on the go, it is a different animal that video - you can listen to music while you walk/talk/jog/work/ride the bus, but good luck doing any of those with video. Audio is an augmentative experience onto reality, video tends to be an immersive/dominating one - it is tough to do anything else while watching video. Plus audio is technically easier than video - portable audio is cake and cheap, portable video is not.

With audio content, getting it onto an iPod to tote around and plug into better presentation devices isn't difficult. While the video iPod is the first step in that direction, it has a long way to go in terms of storage, battery life, and most especially presentation quality.

DVDs are a half-inch away from being non-DRMed - how to strip the thin veneer of CSS was mastered and shared long ago, and anyone with 20 free minutes and Google can figure out how to rip a DVD - I have more a few acquaintances that use Netflix as a "Rent, Rip, & Return" service, ending up with a high quality H.264 file living on their hard drives (or iPods). This definitely impacts the number of DVDs they buy.

DVDs are defacto barely or non-DRMed - I'd be very curious to know the percentage of average consumers that know how to get around it. The good thing about DVDs is that playback is largely ubiquitous (sorry Linux guys) - the vast majority of us have access to a simple/low cost way to play them back.

How much does CSS keep people from copying/ripping DVDs? I'd guess not much - between the largish file size * and once-only viewing habits, I'd say the majority of folks wouldn't copy DVDs if it were one button easy - takes too long, too much effort, just rent it for $4 anyway.

* public perception of storage costs lags waaaaaaaay behind reality - saw 500GB drives for $140 online this week, that's at LEAST 55 ripped DVDs right there

There is definitely a crucial bit of economic math relating the value of a digital product, the price, the ease of copying it, and the likelihood of it getting copied. Anybody got an equation on that documented? I'd love to see it.

In that equation, music is clearly a likelier target for copying than video. But as video gets easier to copy, the likelihood increases.

OK, that's enough for now, time to go eat, I just wrote most of this in one long rambling screed * after getting back from a run.

Thanks to the half a dozen folks who emailed me the link today - I saw, I saw! Just took some time to read, digest, and get time to comment on it.

-mike, finally done

* - apparently, "screed" is my Word Of The Day

DISCLAIMER:

YES I like Apple toys, AND I have an AppleTV on order, AND I have bought 3 or 4 iPods for myself and family, AND I own some Apple stock, AND I have 6 Macs in my house, AND I could do more analysis/research on the music downloading scene, AND I want to see Apple come out on top because I like them and their toys, AND I've been in a cynical/curmudgeonly mood of late. All that said, I think this is a fair analysis/interpretation of the situation. But of course, as Dennis Miller says, I Could Be Wrong. Think so? Please Comment away using the link below.

UPDATE WEDNESDAY:

After some more thought, Option 2 (licensing FairPlay to others) actually makes more sense - SOME DRM is necessary to protect rampant illegal file sharing. But any industry wide DRM standard is going to require some DRM. And it WILL get broken - witness, hmm, let's see...oh! Every DRM ever implemented. If there is going to be interoperability, it will require some DRM. Maybe even supporting multiple DRMs under an umbrella - could be iTunes or Zune or whoever else joins the consortium. But that opens whole other cans of worms.

I wish the music guys would learn from lesson industries that have already been through this...like software. Software has varying levels of DRM depending on how badly they want to protect their content, usually the higher priced the software the tighter the DRM. Freeware? No restrictions, copy it around. Simple "keep honest folks honest" serial numbers work pretty well. For high value software, the industry tried hardware dongles - little pieces of hardware that you needed one of for each high end app (I still have a half a dozen rolling around in a drawer, unused) - the software wouldn't run without it attached. Well guess what? The software often wouldn't run, or would stop running, even with it attached. The bigger the company involved, the more rapidly they abandoned this approach, since it was more trouble than it was worth. Many legit software owners would run the illegal cracked versions...because they ran more stably (ElectricImage, anyone?). Adobe used to use hardware dongles on After Effects Pro, they gave up. Now the industry tends to use software that locks to a given user account or a given machine - and that has troubles, witness Microsoft's validation woes. And these for for individual applications or operating systems costing hundreds or thousands of dollars. Think of the hassle and difficulty involved in supporting that. Now apply that to a song you want to buy for a dollar or two. Youd better have a 99.99999% accurate and easy metholodogy for dealing with that. And there's no such thing.

CSS was a group consensus effort to use DRM for DVDs. It MOSTLY has worked - MOST consumers don't consider it worth the trouble to dupe or distribute DVDs. Some do. Blu-ray and HD-DVD have much more restrictive and advanced DRM, it has already been broken, but we'll still have to deal with all the hassles sure to follow from it.

Where does this leave us? If there is to be interoperability, either somebody licenses their industry leading standard to everyone else (and here's looking at you, Apple), or the industry comes up with a new standard they can all agree on (that'll take 3 years right there).

And if DRM is used, and the standards do go that way, then we'd likely still be stuck with some of the original snafus - can I sell my copy to someone else as I would a DVD? What if I want to play my movie I bought at my girlfriend's house? Or my buddy with the big badass home theater setup with our friends on a Saturday night? Etc.

DRM still sucks. Does and will suck.

Do I sound like I'm flip flopping? We need it, it sucks and we should get rid of it? Yes, I am. How does the industry get some/reasonable protection from rampant file sharing (sneakernet, friendnet, P2P, whatever), yet give consumers the kind of freedom they get with their physical media to move it around etc.?

A billion dollars to the company that solves (and manages to hold onto the rights) to that one...

More....

John Gruber chimes in with his as usual excellent observations:

Daring Fireball: Reading Between the Lines of Steve Jobs's 'Thoughts on Music', leading off with:

Is it a challenge to the major record labels? An answer to the increasingly hostile European governments (Norway, France, Germany) that are pressuring Apple to “open up” the iTunes Store? A message to the press to clarify Apple’s stance on DRM? A big fuck-you to Microsoft?

It is all of these things.

...and nails it more concisely than I do. Andrew Shebanow calls video "the elephant in the room"

He also has a titled called "Killing DRM would kill subscription services" and I didn't even think of that angle. He also has a great reaction to the industry wanting control over the DRM others use:

In other words, the music industry wants a magical DRM format that gives them — not Apple, not Microsoft — complete control over all digital music. And a unicorn and a rainbow.

AppleInsider's coverage gives me some numbers to use as ammo to defend my razors/blades statement: "'The reason for this is that iPods are significantly more profitable to Apple than iTunes; iPod (35 percent of sales) gross margins are in the 30 percent range while iTunes (5 percent of sales) gross margins are in the 5 percent-10 percent range,' he wrote." - so yeah, Apple cares MUCH more about iPod sales than iTunes Store sales.

NYTimes chimes in - Jobs Calls for End to Music Copy Protection - New York Times

So sue me � Blog Archive
� Steve%u2019s misleading statistics: "if you%u2019ve bought 100 songs ($99), 10 TV-shows ($19.90) and 5 movies ($49.95), you%u2019ll think twice about upgrading to a non-Apple portable player or set-top box. In effect, it%u2019s the customers who would be the most valuable to an Apple competitor that get locked in. The kind of customers who would spend $300 on a set-top box."

....and if DRM goes away, no subscription models could survive...and Apple doesn't do a subscription model - a bit of a "Sucks to be you" to the subscription based services

-mike

Labels: Apple, DRM, iTunes, original, think