Steve Jobs battles with DRM issues as Europe watches over his shoulders - Image courtesy ZDNet France

DRM isn't stopping pirates, so Steve Jobs urges for what's best for consumers
Apple's leader believes that a DRM-free world would be the best one for consumers

Steve Jobs published an open letter on the Apple Web site Tuesday entitled, “Thoughts on Music,” which surprisingly details his view on the futility and insignificance of DRM, or digital rights management. The Apple leader isn’t the only technology visionary at odds with DRM -- Bill Gates went on record in December to express his disappointment in the overall situation with DRM.

Jobs wrote that the inconveniences posed by DRM are a result of restrictions set in place by the music industry, and that if record companies would be willing to abolish DRM on music, Apple would embrace the decision in a heartbeat. Jobs began his letter by addressing the DRM-supporting iTunes software, which is used to interface with the 90 million iPods worldwide. Users and their governments have complained to Apple that its iTunes software unfairly locks out MP3 players that are not iPods -- further suggesting that Apple is somehow creating a monopoly by selling DRM-protected music that will only work with iPod hardware.

Jobs defended his devices and software by saying Apple does not own or control any of the music sold over iTunes, that that the DRM restrictions are set primarily by the “big four” music companies: Universal, Sony BMG, Warner and EMI. In order for Apple to have permission to legally distribute songs, it must adhere to strict guidelines set by the record companies. If any of those guidelines or security systems are breached, Apple only has a small number of weeks to fix the problem before the record company will withdraw its entire music catalog from the iTunes store.

Apple calls its DRM “FairPlay,” and like any copy protection scheme, hackers are quick in their attempts to circumvent it. “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,” Jobs revealed. “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.”

With that said, the Apple leader is unhappy with DRM and outlines three possible forks in the road where digital music may venture from here. Presently, DRM-protected music purchased at online stores for specific devices will only work for that one device. Apple, Microsoft and Sony all currently split the online music stores market.

Apple, being the undeniable leader in the music player market,  has come under complaint that iPod and iTunes users are forever locked to Apple products—but Steve Jobs presents and argument saying that such complaints aren’t based on real world data.

“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,” Jobs detailed. “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 percent of the music on the average iPod, is purchased from the iTunes store and protected with a DRM.

“The remaining 97 percent of the music is unprotected and playable on any player that can play the open formats. It’s 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,” he argued. “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.”

Despite Jobs’ argument, European consumer groups and governments are pressuring Apple to open up its iTunes service, or at least its FairPlay DRM system, to competing music playing devices. The rally originated mid-2006 in Scandinavia, where Norwegian Consumer Ombudsman ruled that iTunes service breaks consumer protection law. Since then, Sweden, Denmark, France, Germany and the Netherlands have joined the continuing battle to force Apple to open up its DRM.

“We believe consumers have a right to play material purchased online on a portable device of their own choice … We thus urge Apple to make substantial progress towards full interoperability until the end of September 2007,” said the rallying countries in a joint statement. “It is also a signal to other companies that interoperability is an important issue for consumers, and that this is something they must take into consideration when determining their strategies.”

In order for iTunes to be interoperable with other music players, Apple would have to license its FairPlay DRM technology to current and future competitors, to which Steve Jobs commented, “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.”

With its FairPlay technology released to a wider circle, new concerns over security of the technology emerge. Leaks of the DRM’s system would be inevitable, meaning that it could no longer honor the agreements with the music companies.

“The Internet has made such leaks far more damaging, since a single leak can be spread worldwide in less than a minute,” Jobs wrote. “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.”

Apple already faces challenges when trying to patch up security leaks within a closed system, and believes that opening up its FairPlay to other companies would make it “near impossible” to coordinate a quick repair of the damage from a leak. Apple’s FairPlay technology was reverse engineered in October 2006 by Jon Lech Johansen, the same individual who cracked DVD encryption. Instead of releasing his findings on the Internet, Johansen plans to develop software to open interoperability between software and devices, while maintaining the integrity of protected music.

Finally, Jobs examined the third alternative: to abolish DRMs entirely, allowing DRM-free music encoded in open licensable formats to be available at every online stores. “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,” Jobs boldly stated. “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.”

Jobs reasoned that DRM is ineffectual in what it was designed to do—halting piracy. He pointed to the “big four” music companies again, and their requirements for online music to be sold with DRM, and essentially calls them hypocrites. He presented that 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—and those CDs could be ripped and illegally distributed over the Internet.

If those figures are correct, it would mean that 90 percent of the music sold by record companies are free of DRM. Jobs sees that the technical expertise and overhead required to create, operate and update a DRM system that caters to only 10 percent of music sold provides no significant benefits to the industry. In fact, he believes that it may be doing more harm than good. “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,” he said.

The Apple visionary’s lengthy letter is likely spurred pressures from several European countries. The odd thing is that three of the “big four” music companies that Jobs keeps referring to are largely controlled by European corporations. Universal is wholly owned by Vivendi, a French company. EMI is a British company, and Sony BMG is 50 percent owned by Bertelsmann, a German company.

“Perhaps those unhappy with the current situation should redirect their energies towards persuading the music companies to sell their music DRM-free,” Jobs said, referring to consumer groups who have attacked iTunes’ DRM. “Convincing them to license their music to Apple and others DRM-free will create a truly interoperable music marketplace. Apple will embrace this wholeheartedly.”

"I'd be pissed too, but you didn't have to go all Minority Report on his ass!" -- Jon Stewart on police raiding Gizmodo editor Jason Chen's home
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