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A lock on the market

To the music industry's chagrin, Steve Jobs wants labels to allow the copying of downloaded songs.

February 08, 2007

APPLE CHIEF EXECUTIVE Steve Jobs may be the music industry's most important new ally, but he's also its biggest pain in the neck. Having breathed life into the online music business, this week he tried to snuff out the industry's favorite defense against online piracy.

In April 2003, Jobs launched the iTunes Music Store, whose elegant simplicity, flashy marketing and seamless integration with Apple's popular iPod caused downloadable music sales to take off like a rocket. The market for 99-cent songs has grown so much that it nearly offset last year's drop in U.S. CD sales. But the company's refusal to do the record labels' bidding -- for example, by charging more for new tracks and less for old ones -- has caused executives to howl in frustration.

Now Jobs is at it again. In an essay posted on Apple's website Tuesday, he called for the four major record companies to stop putting electronic locks on their downloadable songs. That way, consumers could move songs seamlessly across a variety of computers, portable music players and other devices. To Jobs, this is the best way to solve a growing problem for labels and music fans alike: lack of compatibility. The competing proprietary "digital rights management" systems used by Apple, Sony, RealNetworks and Microsoft can prevent consumers from transferring tracks bought at company X's store directly onto company Y's MP3 player. That kind of headache could stunt the growth of the downloadable music business, which is not only a key source of growth but also an important alternative to illegal downloading.

Many record executives view electronic locks as a critical defense against online piracy, which they blame for the prolonged decline in CD sales. Instead of giving up on locks, they want Apple to address the inter-operability problem by licensing its FairPlay DRM system to its competitors.

Jobs dismissed that option on grounds that it would weaken security. It also would sever the exclusive connection between Apple's music store and its popular iPods. That's exactly what European regulators are pressuring Apple to do, arguing that the FairPlay system forces consumers to remain loyal to Apple's products. Persuading the labels to drop their demands for locks would answer these complaints without requiring Apple to share its software with anybody, which Jobs has been famously loath to do.

Whatever his motives, Jobs makes an important point. Locks on 99-cent downloads are not the way to deter piracy, given that the vast majority of music is still sold on unlocked CDs. Bootlegged copies of recorded music show up online as soon as they come out on CD, if not before; locking up the downloadable version is akin to padlocking the barn after the cows have run for the hills.

DRM systems hurt the people who actually pay for music by making the tracks they download harder to use. The record labels (and the Hollywood studios too) should stop trying to use DRM to give people less than what they're used to getting when they buy songs and concentrate instead on developing compelling new ways to discover and enjoy music.

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