Friday, February 09, 2007

Apple's open letter not quite convincing for music companies

Apple - Thoughts on Music

By now, the world has had some time to chew the fat on this letter, which seems much of a surprise to people. In summary, he says:
  • Apple can sell music, but only if DRM'd according to license
  • DRM requires secrets, and they can be broken by smart people
  • Alternative 1: do as we've been doing
  • Alternative 2: license FairPlay DRM
  • Alternative 3: abolish DRMs
He certainly wins consumers over with this letter. And I agree with him in principle, but I don't think his arguments will convince the music companies, who are the ones that need the most convincing.

All the arguments he gives about DRM-free music makes things easier for Apple not for the Music Monguls. Primarily, Apples doesn't have to use up resources to keep working on DRM. Secondly, if this were to happen, he would make commoditize his complement. A music store's complement is music. And if there were nothing to differentiate the music (one can play music from any store on any device), that's an advantage for Apple. It was the same strategy employed by Netscape: since browsers and servers are complements of each other, we'll give away the browsers (make it a commodity), and sell servers.

One last thing is that the argument at the end doesn't quite hold up. Even if music companies are currently selling over 90 percent of their music DRM-free on CDs, CDs aren't where the future revenues will be coming from, and CD revenue will certainly be declining. So of course music companies will be all hot and bothered by no DRM.

I think DRM-free is the way to go, and music companies will have to accept that the world is changing. In addition, they'll have have to lower their costs in publishing music, as well as finding artists. No more of this, pick a handful, throw it on the wall and see what sticks--and hope that the hit artist will make up for losses with everyone else.

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