Tuesday, February 06, 2007

More Thoughts on Jobs' Thoughts

So, I was trading emails with a very smart music-technologist/friend of mine on the topic of "what happens to Apple in a DRMless world", and he brought up some very interesting points. I'd love to share his whole email, but I'll leave that to him if he wants to post it (here or somewhere else).

To paraphrase, he thinks that by getting Apple to (help) convince the labels to go DRMless, the boys in Cupertino would benefit in a number of ways:
  • it makes the pending European lawsuits around Apple's closed-system a moot point
  • it also deflects much of the bad press that Apple has been getting recently about their closed system onto the labels who inflicted it upon them
  • it shuts the labels up who are complaining that Apple has too much influence
  • it completely undercuts the subscription music business model
  • it could be a death blow to companies like eMusic - Apple could quickly turn on unprotected indie + major content, it may take eMusic longer to do so

I think these are some good points, although I'd argue the point about it killing subscription services. I agree that a move like this would force the subscription guys to re-tool their model slightly. For example, the $15/month "to-go" models would not be sustainable in a world where users can sync and burn any track they get as often as they want. But, it *may* enable some interesting moves around marketplaces that support variable pricing of tracks (for example, Amie Street prices tracks based on their popularity).

Ultimately, what I think it would do is create subscription and/or advertising play-on-demand streaming (only) services. All of a sudden, those services whose content and links are most widely syndicated (Rhapsody and Last.fm come to mind) can flip on a model where for a small fee ($5/month?) anyone that stumbles across one of their playlists, charts, widgets, etc. can stream all songs in their entirety. Obviously, you could go to their destinations as well and listen all day long. If you want to take a song "to-go", then you pay for them and download an unprotected track at $1/pop (or less). While this could also be done with some of the free streaming services like Streampad, Webjay and others, what you lose with those is Quality of Service.... I'm a fan of those services, but the fact that I often hit dead links has me wondering how long before consumers get fed up (like back in the Napster 1.0 days where half the files you downloaded were corrupt, sounded horrible or were not the track they pretended to be).

As with most of my posts, this opinion is a work in progress, but I'd be interested in what others think.


Unknown said...

Hey, that sounds a lot like something I emailed you - weird ;)

I think my exact words re subscription services were "if the music subscription model is a one-legged man at an ass-kicking contest, then purchased downloads with no DRM lop off his good limb above the knee." And his set-backs won't stop there, as fewer and fewer devices support MS-DRM, since all music is available with no DRM at all.

And, for context, the point about emusic taking longer to get major label content was in reference to their graduated, monthly pricing model, which is pretty far away from anything the majors have agreed to in the past. So they lose their primary selling point, which is interoperability, and are just left with the fact that they don't have major label content.

This is all significant, since Jobs was kind enough to name MS Zune and Sony Connect as competitors, but failed to mention the competitors that are doing any kind of significant download volume - Rhapsody, Napster & emusic. Suddenly all of those guys are in jeopardy because of their model. It all adds up to an ironic situation, that by removing the FairPlay closed system, Apple could actually gather *more* marketshare.

I do agree that streaming services are another story, but ultimately those will be ad-supported.

All in all, it should be fun to see if/how the majors respond.


jherskowitz said...

There it is... I love the "one-legged man" reference. :-)

I agree that this would get Apple *more* marketshare. But of devices, not necessarily downloads. If everything moves DRMless, then yeah... I will probably buy an iPhone and dust of my iPod. And, in the end, isn't this what Apple really cares about anyway? As we know, there is no real money to be had at $1/song after the labels take their piece. But the hardware makes them a fortune. And.... everyone that buys an iPhone then gets weened onto OSX, and then potentially makes the PC to Mac switch at home.

As much as I bash Steve Jobs, he (and the people he employs) are brillant.

Steve said...

You inspired me to finally express an idea I have for this issue. I'd LOVE to get your thoughts on the idea.

It's rumbled through my brain for years, but I've never been able to get it out semi-coherently. Lemme know your thoughts when you can.
Thanks, Steve

Anonymous said...

If Steve Jobs is serious about the benefits of a DRM-less marketplace then he's well positioned to lead the way as a publisher of film, television, and music (Disney, ABC, and Hollywood Records).

I'd like to see him lead the way and build the marketplace for all media in open formats using the content from his companies.

If he's right and the market is there all content producers stand to benefit. But at this point it seems a bit disingenuous for him to suggest only music companies care about DRM.

Anonymous said...

What about the economic argument behind it all? In a fixed price market, DRM is *supposed* to be the impediment to piracy (at least that's what they think). What if you were to float the prices like we do? When you have enough information, you can calculate the right price so that it meets demands and optimizes surplus (call it a demand curve if you will, i think its more like a nonlinear population growth equation from ecology). Is the death of DRM a good thing? Absolutely. Would it fix all the problems? Hell no. The model is the problem. The proof is in the numbers. Underprice the cost of piracy, give people access to all kinds of music, and get better returns for artists and labels. When we first talk to labels and artists and try explain the model, they're a little scared. Then when we say you can make more money on Amie Street than the other services, they tend to laugh and call us stupid. But, when you actually do the math for them, they want to put up their entire catalog.

I completely agree on the idea for a new Rhapsody or Last.fm service. I'm trying to get this project for a sidebar widget wrapped up right now actually. Come a cross a widget, get some long samples, if you want to get the full versions and download, signup in ten seconds, if the songs are free, its even faster. Get just about everything the service has to offer just through the widget and never go to the site. Why are most widgets so limited now?

Steve said...

(not sure how else to answer your question on my blog). Yes, DRM, but more around the owner and not the music. The problem I see with today's DRM is it doesn't let the owner control what he/she owns. The music controls them. By encoding the music as mine, then I can do whatever I want to do with it. It's then really mine.