Digital Rights Management Takes Center Stage

A third event provided the capstone to this series of events that drive home DRM’s impact on the average consumer. Apple posted an open letter from Steve Jobs, whose company has been under intense pressure from competitors and—more recently—several European nations’ legislative bodies to either allow the iPod to play proprietary content from its competitors or open up its FairPlay DRM scheme to these same competitors.

Jobs used the open letter to educate the average consumer—and lawmaker—to the upsides and downsides of DRM schemes. He points out that the secret to a good DRM is the ability to keep a secret.

"A DRM system employs secrets," writes Jobs. "There is no theory of protecting content other than keeping secrets. In other words, even if one uses the most sophisticated cryptographic locks to protect the actual music, one must still ‘hide’ the keys which unlock the music on the user’s computer or portable music player.

"Licensing a DRM involves disclosing some of its secrets to many people in many companies, and history tells us that inevitably these secrets will leak," continues Jobs, alluding offhandedly to the Achilles heel of the Vista componen- level DRM, whose schemes are shared with numerous hardware component manufacturers. "Such leaks can rapidly result in software programs available as free downloads on the Internet which will disable the DRM protection so that formerly protected songs can be played on unauthorized players."

Jobs goes on to lay out several models that allow users to play content on competitors’ players, with the biggest part of his argument pointed back at the very companies that require companies such as Apple to maintain DRM solutions in the event of a hack: the "Big Four" music labels that control approximately 70% of all commercially available music.

"A key provision of our agreements with the music companies is that if our DRM system is compromised and their music becomes playable on unauthorized devices," writes Jobs, "we only have a small number of weeks to fix the problem or they can withdraw their entire music catalog from our iTunes store."

Jobs further points out that the Big Four sell almost ten times the amount of non-DRM-protected content per year than DRM-protected content (20 billion songs sold, according to Jobs, on CDs, compared to 2 billion DRM-protected songs sold on sites such as iTunes). The open letter uses a startling statistic to drive home the point that the iPod is used, far and away, mostly to play back unprotected music: on the average iPod—which can hold close to 1000 songs—the number of DRM-protected songs averages 22 songs or approximately 3% of the total music content on the average iPod.

"Its hard to believe that just 3% of the music on the average iPod is enough to lock users into buying only iPods in the future," says Jobs, clearly aware that the European legislative push is based on the assumption that a significant amount of content is locked to Apple’s iPod. "Since 97% of the music on the average iPod was not purchased from the iTunes store, iPod users are clearly not locked into the iTunes store to acquire their music."

Finally, Jobs points out that Apple would embrace the sale of non-DRM protected music "in a heartbeat" and that its his opinion that DRM is actually holding the digital music market back.

"Why would the big four music companies agree to let Apple and others distribute their music without using DRM systems to protect it?" asks Jobs. "The simplest answer is because DRMs (sic) haven’t worked, and may never work, to halt music piracy . . . Perhaps those unhappy with the current situation should redirect their energies towards persuading the music companies to sell their music DRM-free. For Europeans, two and a half of the big four music companies are located right in their backyard. The largest, Universal, is 100% owned by Vivendi, a French company. EMI is a British company, and Sony BMG is 50% owned by Bertelsmann, a German company. Convincing them to license their music to Apple and others DRM-free will create a truly interoperable music marketplace. Apple will embrace this wholeheartedly."