It may sound like a total and utter daydream, but it’s a legitimate proposition that bears consideration. I was reading Thomas Fitzgerald’s thought-provoking blog post on the subject this morning, and it started me down this long, twisty trail of theorizing.
What would Apple—and indeed, the people who “matter,” the record companies—stand to lose should they switch the online music industry to a DRM-free format? Unprotected MP3s are already sold from a few different vendors: eMusic, for one, has long been in the business, and Yahoo! has continued their experiment as well.
What does the music industry fear from DRM-free downloads? They fear file-sharing, of course—piracy. But that’s silly, because piracy is well-established by this point; we’ve had almost a solid decade of high volume media piracy. I’d say that the vast majority of the songs that you can find on iTunes and the other services are available through file-sharing networks, if you know where to look. Meanwhile, destroying piracy has proved to be emblematic of a phenomenon I like to call the “hydratic equation”—for every service you take out, two more sprout up in its place.
There has always been piracy and there will always be piracy. But a zero-tolerance approach is neither effective nor efficient. To borrow an example from The Wire, one of the more perceptive pieces of entertainment to grace the small screen, consider the case of open container laws. If people are going to drink in public—and they are—police either have the option to arrest everyone they see violating the open container law, thus spending much of their time and energy on that instead of more important things, like robberies and murders, or they look the other way and risk being viewed as impotent and uncaring. Of this dilemma, a compromise was born: the paper bag. Put your bottle of liquor in a paper bag, and while it didn’t remove the underlying problem, it established a reasonable middleground.
Steve Jobs had the right idea when he announced the iTunes Store in 2003: they were not there to eradicate piracy, but to compete with it. He realized the fundamental truth that some people, enamored of what they could get for free, would never come around to buying music legitimately. But he also realized that this was a minority of the people who consume music and media, and that most people, given a reliable, easy-to-use, and—most of all—legal way to buy music would do the right thing (and, of course, it didn’t hurt that the service tied in with the Leviathan that is the iPod).
So, here we are, almost four years after the introduction of the iTunes Store. News abounds that iTunes sales are “collapsing” (an alarmist idea that’s far from true—but that’s a different post). What if tomorrow Apple announced (with the backing of the music industry) that FairPlay would be unlocked across the board? Suddenly, all the music you’ve bought from iTunes over the years is completely unlocked. Now what?
The music industry thinks it will lead directly to digital anarchy, people trading the files they’ve bought with friends and strangers alike. They’re not wrong—but they’re not right either. There may be a slight dip in sales from sheer novelty, and I’d expect a rise in friends trading songs with each other—but that already happens via lending CDs and making mixes for people. And, as a corollary, sharing music can also work to the music companies’ benefit. Word of mouth is one of the most powerful advertising methods around, especially among the kind of key groups are cautious about advertising in general, and dislike being told what and who to listen to or not listen to. Microsoft acknowledged this in the Zune’s Wi-Fi sharing capability, though it refused to take it through to its logical conclusion.
But despite the low-level trading that’s likely to occur, unlocking iTunes doesn’t create or even encourage the kind of wide-scale piracy the music industry fears for two key reasons.
First, that kind of piracy is already going on, and flooding the market with music bought from iTunes is inconsequential, because you don’t need five million copies of Jessica Simpson’s latest single floating around: you only need a few. Quantity, in terms of piracy, doesn’t matter. Critical mass has already been achieved.
Second, unlocking all the DRM on music files doesn’t magically turn people into pirates any more than unlocking every house in a town turns the inhabitants into thieves. Simply because something is available via illicit means doesn’t mean that people will take advantage of it—note that our society is not entirely composed of drug addicts. Some people will steal music, yes, but those are mostly the same people already stealing music. As difficult as it is for businessmen to admit, you must account for some degree of morality, some sense of right and wrong. Money may be the be-all, end-all in the industry, but it’s not for consumers—we’re willing to exchange money for something that we want and value; that’s the whole point of being consumers.
The music industry cannot eradicate piracy any more than law-enforcement can eradicate crime (that’s why it’s called “law-enforcement” and not “crime-eradication”). For the music industry, realizing that some piracy is always going to exist would free them up to take care of more important business like, say, making better music.
Of course, the other player likely to be affected here is Apple. There’s a lot of dispute as to how much lock-in helps Apple’s iPod + iTunes system, and the answer is probably somewhere in the middle. Assuming that other services unlocked their own DRM as a response to iTunes unlocking its own, that would mean that iPod users would have a choice of where to get their music. Some users would probably jump ship and choose to get their music from elsewhere, but brand loyalty—especially to Apple—is going to keep many of them in place, as is the ease of the iTunes-iPod integration. Far more likely is that users will find themselves in an à-la-carte situation where they might pop over to Yahoo! or Rhapsody to buy tracks not available on iTunes, but stick to iTunes for the majority of their purchases. That would be terrible, because it would be just like buying your music from multiple record stor—heyyyyy.
The second potential issue, that iTunes sales might stop driving iPod sales, also seems fairly unlikely. The iPod doesn’t have seventy percent of the digital music player market because you can buy tracks from the iTunes store—despite the fact that I dispute the “iTunes sales collapse” theory, I’ll admit that the majority of people are probably still buying CDs instead of—or at least in addition to—purchasing downloaded music. The iPod is a success because of its design and its functionality—it was a success long before the iTunes store arrived on the scene. Will some sales be lost? Probably, but I’d be surprised if Apple somehow lost its dominant position: people are not going to flock to the Zune just because DRM is unlocked. It will certainly make competition in the MP3 player space fiercer, but for the consumer, that’s all to the good; they’d rather competition was driven by technological innovation than by restrictive lock-in.
All this said, I certainly don’t expect Apple or the music industry to suddenly see the light and throw away the keys to the kingdom. The recording companies, for certain, will have to be dragged kicking and screaming into this brave new world. I would suspect that Apple is at least prepared for such a contingency. What the music industry doesn’t want to admit—because it runs counter to their established logic—is that DRM-free music could actually boost sales, by taking away the stigma of second-class citizenship that haunts the download services in the eyes of the digerati. At the moment they’re reacting out of fear of the unknown, and that’s something that doesn’t traditionally help businesses in the long run. Sooner or later, all of their restrictive measures are going to fail, and they’re either going to have to adapt or be destroyed. And trust me on this: consumers aren’t going to be broken-hearted either way.
Good point. I would emphasize the point at the end, removing DRM would boost legitimate downloads. If you could legally download songs and stream them to your TiVo or SliMP3, the value of the songs increases.
Also, consider the Matthew Himler piece you trashed a couple days ago. Not the part that everyone is stealing, but the part about how few iPod users are purchasing so few songs from the iTunes Store. If you had all the freedom of ripped CDs with the convenience of iTunes downloads, I have to believe that sales would pick up in a hurry.
An additional benefit of removing DRM would be removing the "it's okay to steal because I refuse to buy DRM-laden content" rationalizarion expoused by many.
Be good to see them put up or shut up.
Removing DRM would definitely boost sales to me!
The simple reason is that my home computer has not been upgraded in ages, so I can only load music onto my iPod from my work computer. There's no way that I'm going to build an iTunes collection on a system I do not own/control.
I'm sure there are more of us out there who purchase and rip all our music so as to avoid DRM difficulties that have nothing to do with stealing music.
You bring up a number of analogies to illustrate your point about unlocking music, but I feel they cut against your argument and not for it. You say that unlocking music won't magically turn people into pirates and that the industry cannot eradicate piracy. Agreed. However, it need not facilitate piracy and I tend to believe that every measure that facilitates piracy will tend to boost the degree of piracy that occurs. Unlocking every house in the neighborhood may not turn every resident into a thief, but it will certainly make them more vulnerable to theft, and, I suspect, this increased vulnerability would lead thieves to, ahem, capitalize. Certainly, we accept the logic that more people code viruses for Windows than Macs because it's easier to do so. I also agree that you have to account for morality, and in a perfect world, that would be a perfectly adequate constraint. Sadly, it isn't so. I choose to purchase my music either via CD or iTunes. I would do so even if there were not legal and technical impediments to the acquisition of my music. But there are many who would choose a more (cough) cost-effective approach. Maybe you're making the point that that percentage of people is irrelevantly small. I don't know that I can agree. But even if I could agree that Apple going DRM free would cause only a small portion of people to switch from getting their music legally to illegally, I don't see that as being an adequate reason to facilitate those people's choice. That is especially true in light of the fact that I don't see the current DRM scheme as being overly onerous to the consumer.
Finally, as to the boosting of legitimate downloads. I don't know enough to speak one way or the other on it, and perhaps this response is a cop-out, but surely the industry pundits have studied the pros and cons (economically) of a DRM-free paradigm. I would think that if it were economically advantageous, these professionals would know it. I know I don't have enough information to draw a conclusion on that even if I were to accept the premise that unlocked music would be so much more attractive or the value so much more increased, that sales (read: profits) would go up despite the increased piracy.
You make good points, Daniel. I do find it hard, however, to argue that unlocking the DRM facilitates piracy-it doesn't make it any easier than it is right now, as you can still go out and buy a CD, rip it, and distribute the tracks over the Net with no problem. Removing the need for physical media might make it easier, but it doesn't make it cheaper: the music still has to be bought somewhere. As I said above, critical mass has already been reached, or, to put it another way, the cat's out of the bag.
As far as purchasing habits go, you say that you'd continue to buy music from iTunes or on CD despite the technological limitations or lack thereof. And while I'll concede that some people will choose the quick-and-easy path of piracy (the dark side, if you will :), I believe that most people, like you, are well-intentioned, and would choose to take the high road.
Let's throw in a couple more facts here. While CD sales did indeed drop in 2005 by 8%, if you factor in other sources, including music downloads, total music sales (PDF link) were up by 35% (though profits were down a fraction of a percentage point) with the industry shipping more units than they had in at least 10 years, and possibly ever.
Factor in that the RIAA recently proposed reducing royalty rates for artists so that "record companies can continue to create the sound recordings that drive revenues for music publishers" and I find myself hard-pressed to sympathize with the industry's plight.
Finally, I think that it would be difficult to argue that the iTunes store has succeeded because of its DRM. They've filled a niche for people who want to buy music online, not a niche for people who want to buy encryption. The key is the music, not how it's protected. If the publishing industry started selling books with non-photocopyable pages, I think that would likely hurt sales rather than help them by cutting down on photocopying piracy.
Either way, I'm quite interested to see what the industry's figures from 2006 bring.
Personally, I do think DRM will eventually disappear because the market will want it to.
I'm an old-timer. Anybody remember "Copy Protection" from the 1980s? Essentially, most software sold in the 1980s was copy-protected so you couldn't just copy it. Of course, the copy protection systems had just as many cracks, so all it really did was annoy people.
The solution was to not use copy-protection. Software that was not copy-protected sold better than software that was, as consumers voted with their wallets. By the late 80s or early 90s, most software was sold without copy protection.
I think it will be the same here. Some adventurous companies are already removing DRM restrictions as a "promotional gimmick" and I think they'll see it sells just as well.
I would like to make a tiny observation, regarding the iTunes Store.
It seems to me that one of the main reasons that the iTunes Store has been such as success, is convenience.
I don't believe the fact that it's a legal avenue to obtain your music has so much to do with it's popularity.
It is simply an easy and reliable way to get the music that you want onto your iPod.
I have experimented with peer-to-peer downloading services, and found them lacking.
My main complaint has been that you can never be sure of what you're downloading.
In addition to that, you can never be sure that the download will succeed.
With the iTunes Store, a consumer can be reasonably confident that they will get the music they want, with a good quality encoding and that it will be easy to transfer it to their iPods.
No peer-to-peer download service has that level of convenience, and people do like things to be convenient.
'll throw another vote on the pile: the single biggest reason I wouldn't buy music from the iTunes store is DRM. The whole beauty of MP3's is their flexibility, and so I'm not interested in MP3's whose flexibility is severely limited.
As someone else said, an MP3's value goes up when DRM is not an issue. And yes, part of this value is that I can conveniently share it with my friends. But I've been doing that since the days of cassette tapes. I don't know how many albums I now own because someone put a track on a mix tape for me. This is a significant part of what makes it fun to be a music consumer.
Actually, I would argue that removing DRM may actually increase digitals through competition. Currently, if you have an iPod you almost must purchase your mainstream music from iTunes. If DRM was removed you could choose among many different vendors and those vendors would out of necessity try different things to see how they affect sales.
Among those things, price is the most obvious of course, but bit rate is a close second. Including artwork other than the cover is another something missing from iTunes.
I purchased a few tracks from iTunes a couple of years ago but quickly stopped. I want the artwork... I want something at least close to CD quality. That is why I went back to buying cd's. Although price is always important, quality is even more so for me.
If MP3s became the norm, then I think Apple would go with the flow.
The DRM thing is the music industries requirement, not Apple's.