Apple Openly Supports Death of DRM

Steve Jobs has stepped up to the plate and written an open letter to the music industry in the fight against DRM. We wrote our thoughts on the eventual demise of DRM just last month. Bill Gates gave his own thoughts on DRM back in December.

Despite Apple’s near monopoly on legal digital music sales, he discusses how they got to where they are now with DRM and options moving forward. The record labels then and today demanded protection of their songs — and thus Apple created their internal DRM called FairPlay.

Jobs speaks about how DRM is an ongoing fight — there are a lot of smart people in this world that have spare time on their hands, and like to discover the “secrets” that keep the songs protected. As soon as the DRM is hacked, Apple works to update the DRM by updating the iTunes software, as well as the software found in their hardware devices (iPod). He says that if their DRM is compromised, they have only a few weeks to fix it, or the labels are able to exit their agreement with Apple entirely. Rolling out these security updates is a difficult task with just one company, but if they were to license out their DRM to multiple software and hardware vendors, it’d be a nightmare — this is not an option that Apple will consider.

Another option is continuing the same course — software/hardware vendors writing their own DRM and consumers purchasing songs that only work in certain software/hardware. He brings up that Microsoft decided to ditch their own ‘PlaysForSure’ DRM technology and create a brand new (proprietary) one for their Zune.

The third option that comes as a bit of a shocker is Jobs promoting DRM-free music. He discusses how 90 million iPods have been purchased and 2 billion songs — equating to an average of 22 songs per person on iPods that hold 1000 songs. Internal research at Apple shows that the average iPod is full — meaning that only 3% of songs on an iPod are DRM-protected, with the remaining 97% unprotected (ripped audio CDs; illegally downloaded tracks).

Jobs discusses how 90% of record label sales revenue comes from the billions of CDs sold — CDs that are not DRM-protected (consumers can go home and rip their CDs). In 2006, 2 billion songs were sold DRM-protected, while 20 billion were sold unprotected (as audio CDs).

He makes a good point — and he likely feels Apple could sell more digital music than the mere 3% that occupy iPods, by selling unprotected songs. The question on everyone’s minds is whether the music industry would sell more than the 20 billion total songs in a year if they opened the DRM-free floodgates online. Emusic has been the poster-child for the DRM-free sales of straight MP3s by the Indie labels. Amie Street is another model we like.

Editor”s Note: This post was written by guest contributor Steve Poland, whose blog Techquila Shots brainstorms web start-up ideas.