My thoughts on Steve Jobs' proposal

In case you didn't hear, Steve Jobs, the CEO of Apple, posted an essay on Apple's website. That essay can be found here . In it, he advocates the elimination of digital rights management (DRM) which is used to protect the music industry from theft. This system has inspired a lot of controversy and Steve Jobs taking this open position has made some news in the business world. I have just now ahd the time to read his essay in full so I thought I'd post how I feel about it.

The problem comes that with DRM, music purchased through one store is only compatible with that company's player. Songs bought from Microsoft can only be played on a Zune, from Apple an iPod and so on. This system was put in place mainly because the music industry was leery and completely oblivious to how the music market was changing. To allow Apple and other companies to use their song catalogs they took solace that the companies would use DRM and make sure it was not breached or else they could pull the entire catalog. Steve Jobs sees this problem and talks about three possible solutions for the future. Continue on the current course, license Apple's DRM technology to others, or abolish DRM entirely. I've already spoiled it so you can guess what Mr. Jobs prefers. And I believe he is correct.

Let me be clear. Steve Jobs is not being a humanitarian for this stance. He should not be awarded the Nobel Peace Prize. Apple stands to gain a great deal in profits if DRM is eliminated which would eliminate the barriers from porting songs from one device to another. Technically, it would benefit the best store and best player but we all know who currently dominates the market. But I think this is the correct stance for several reasons. Competition will be opened up. Consumers won't have to worry about paying for music at iTunes that won't play on a Zune and therefore won't have to worry about high switching costs if they decide they like another company's store or device better.

But the most important reason is that DRM is a waste of time and effort. If Mr. Jobs' numbers are correct, about 3% of the music in iPods has DRM protection. So if nearly all of music downloads have the protection why is only 3% in iPods carrying the protection? Answer: CDs. The music industry has not protected them en mass like they have digital downloads. So consumers can still buy CDs and upload, rip, burn, and port to different devices to their hearts' content.

So the music companies are forcing companies like Apple to use DRM to protect, when they themselves do not? Why? Because they're ignorant. I'm not a huge fan of Apple. I think Steve Jobs is treated like a deity and frankly Mac people frighten me. That's one of the main reasons I'm leery about buying an MacBook (although I still might). But Steve Jobs is right on the money. Inefficiencies would be eliminated, competition would increase, and perhaps it may increase profits for all involved. Although make no mistake about it, Apple will be getting the lion's share.