Monday, January 08, 2007

DRM and Music Players

First some ancient history.

When the Apple II was introduced in the 1970s, it was a totally open system. Everything about it was documented. This is one of the things that made it popular (along with Visicalc, the first spreadsheet program). While this openness helped sell a lot of Apples, it also meant that there was a big market for hardware that Apple did not make and did not profit from.

Steve Jobs saw this as a problem, When the Macintosh was released, t was the opposite. It was a totally closed system. Just attaching a non-Apple printer to it violated the warranty. Also, in order to make money from developers, Apple required them to buy a $10,000 LISA computer to compile on. (Later they also allowed developers to get by with two Macs.)

The results were predictable. The open IBM PC became the standard but IBM lost control of it. Apple's market share dropped into the single digits.

All of this might happen again in digital music. There are several formats in common usage The most common, MP3, is proprietary but easily licensed and carries no Digital Rights Management (DRM). Windows has its own format which, currently, can compress files better than MP3 and supports DRM. Microsoft licenses their format but there have been problems with the DRM.

Apple and ITunes use their own format and DRM. This cannot be licensed. If you want to buy music from ITunes, you have to play it through your PC or buy an IPod. (There are ways to get around the DRM but they are beyond many people and can result in loss of fidelity.)

One reason that Apple and Microsoft support DRM is because the music labels insist on it. They are sure that open tradig of MP3s hurt their business. This is known as the Napster Effect. Outsiders point out that there are other factors that hurt music sales besides Napster and other follow-up MP3-trading sites. These include major competition for the entertainment dollar such as the introduction of DVDs and several new game consoles. In addition, the decline in sales happened right after the music labels stopped selling the CD singles and raised the average price of CDs to $20. They also cut back on the number of CDs produced annually and, according to most critics, the quality of the music itself went down. The music labels are in a state of denial about any of this.

So, the music labels want to keep any music they sell locked down at tight as possible, What they would really like is to be able to charge you on a per-play basis. What they settled for is selling timed rights. You can listen to their entire library as long as you pay a monthly fee. Once you stop paying, you cannot listen any longer.

Apple talked them into going with ITunes which doesn't tie down the music as much as they would like but still limits it more than a CD does. In exchange, Apple is handing over nearly all of the profits from ITunes. Apple makes their money by selling IPods which you need if you are going to use ITunes.

Personally, I don't like any of this so I avoid it as much as possible. My Sansa does support Microsoft DRM but I'm not using their format. I want as much freedom as legally possible when listening to my music. I want to be able to listen to it on any device I own at any time without having to transfer licenses. I suspect that most people feel the same way.

My personal feeling is that the music labels should sell MP3s for a low enough price that people do not feel the need to pirate them. Apple's price is around $1 which is comparable to CD prices. This is too high. If I buy a CD, I actually have a piece of plastic in my hand. The manufacture and distribution of this is a significant part of the cost. If I am buying a digital version, there is very little manufacturing cost so I should see a corresponding reduction in the digital price. I think that it should be no higher than $0.75. I can see very popular songs being more but older and more obscure music should be a lot less. Basic economics says that they will make a lot more money this way but it is such as change from their normal way of thinking that they have always rejected the idea.

The music companies might finally be coming around to this thinking. According to Wired, they are thinking of giving up on DRM and going with a very low price,

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