Apple Needs to License its DRM – Soon

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Date: Friday, July 28th, 2006, 08:10
Category: Opinion

There is a fundamental difference between the record business, the movie industry and book publishing.
When the iTunes Music Store opened, the recording industry was decimated by piracy. Not just file sharing of MP3′s but simple duplication of CDs being passed around between friends. The recording industry was hemorrhaging money when Steve Jobs got his agreement for 99 cent downloads. The distribution of recorded music worked fine when it was just the phonograph and radio.
The 8-track tape was developed for the car, but was short lived. The cassette was used to wholesale copy vinyl music collections by many industrious types and was first and foremost a recording format. The digital CD provided a boost to the industry, but there is no copy protection built in. It is unlikely that manufacturers of CD players will support some sort of revised format and DRM and the industry has tried hacking the CD format to stop copying, by installing spyware on Windows computers and introducing errors that keep CDs from mounting, all to no avail.
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There is a fundamental difference between the record business, the movie industry and book publishing.
When the iTunes Music Store opened, the recording industry was decimated by piracy. Not just file sharing of MP3′s but simple duplication of CDs being passed around between friends. The recording industry was hemorrhaging money when Steve Jobs got his agreement for 99 cent downloads. The distribution of recorded music worked fine when it was just the phonograph and radio.
The 8-track tape was developed for the car, but was short lived. The cassette was used to wholesale copy vinyl music collections by many industrious types and was first and foremost a recording format. The digital CD provided a boost to the industry, but there is no copy protection built in. It is unlikely that manufacturers of CD players will support some sort of revised format and DRM and the industry has tried hacking the CD format to stop copying, by installing spyware on Windows computers and introducing errors that keep CDs from mounting, all to no avail.
The music business has also stuck stubbornly to a pricing model that does not work and there is little sympathy for the current business model that builds mega stars and denies entry to the small players. The music studio is no longer the huge capital investment it once was. iTunes must have seemed like a nice way to test the waters, but it has put Apple squarely in the driver’s seat.
Movies are primarily distributed by theater chains with tight control. Television is used as a secondary distribution method for old stock. The market for recorded movies came much more recently with the VCR and rudimentary copy protection came right along with it. The DVD player has supplanted the VCR for distribution and has a DRM that is strong enough to stop the wholesale piracy that has plagued music distribution for decades. The file sizes are much larger and broadband is not yet broad enough to cause the problems that Napster caused for music. The movie industry is in a position of relative strength when dealing with Steve Jobs.
Making a movie is also a different matter than signing a recording artist. It takes serious syndicated investment to back the making of a motion picture as well as a large chunk of time. Although studios can’t subjugate talent the way they did in the old days of the studio system that held artists to exclusive long running contracts, they do have distribution sewn up. They can see the time coming for digital distribution well before it has changed anything fundamental including the advent of their own digital distribution and projection in theaters.
I do not think there is much chance that Jobs can dictate a US$10 per movie flat rate. It will also require a system with much higher resolution than the iPod can handle, perhaps the next incarnation of the Mac mini. Finally, there may not be a market for renting music, but there certainly is a movie rental business that people buy into.
Rumors of books on a larger screen iPod seem plausible. Electronic publishing of books is a compelling model. It would be easy to do and the only thing in the way is the optical superiority of the the printed word on paper along with the simplicity and portability of a book. News has been effected much more by digital distribution because of timeliness, but books will eventually fall and Apple is in a better position than Sony to make a splash. I do not think an iPod is the device to finally do it. I think a form of electronic paper is needed.
Apple needs to license its DRM and soon. If Apple doesn’t do it, those licensing terms may very well be dictated by government.

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