Steve Jobs' brilliant strategic move: kill DRM

[Josh] Couldn't resist weighing in on this one.

Steve Jobs proposed to eliminate DRM on music files. Wow. This is a typical Jobsian move, a radical shift to get ahead of the market. James McQuivey's piece on this will appear at Forrester's site soon, but in the meantime, here are my thoughts on why it's smart:

• It deflects the European lawsuits. To the government entities in Europe claiming Apple's Fairplay amounts to an illegal monopoly, Jobs says, basically, "Don't blame us, blame the labels. We'll end DRM if they let us."

• DRM on music is silly. Every song on a CD is easily pirated. Why protect music online? If you choose to, you can even burn iTunes songs to a CD and rip them into unprotected format.

• More stores means more iPod sales. Apple makes its money from iPods far more than iTunes. Killing DRM will open up any store to sell music for iPods. Stores will pop up selling ad-supported music like Spiral Frog, subscription music like Napster, and who knows what other variants. Every single one will make the iPod worth more. Apple will make more from increased iPod sales. And iTunes sales will probably go up anyway, since those held back by fears about protected music will make purchases. iTunes sales aren't plummeting, but 22 iTunes songs per iPod sold is nothing to write home about.

• This would make Zune obsolete. Microsoft just finished painstakingly duplicating Apple's device-plus-store system. Now Apple says DRM is obsolete. If the labels agree, a Zune is just a brown iPod with a bigger, fuzzier screen and a music sharing feature with DRM built into it. Tough to compete with Apple that way.

Technorati tags: Bernoff, Forrester, Apple, DRM, iTunes

Comments

[Glenn]

I assume the drive to kill DRM is for a la carte downloads. SpiralFrog, Rhapsody, Napster and other subscription services need DRM for their models, correct?

Jobs is obviously looking to the labels to bail him out of his European problems rather than allow for interoperability. If labels go through with it -- and I'd be surprised -- there will be some concessions to go along with it. Who knows? Variable pricing could become the norm as a result.

[Josh Bernoff]

Whether DRM gets dropped in subscription services is not Jobs' problem. In fact, if they get stuck with DRM and he doesn't, that just makes his service more attractive.

In theory you don't need DRM for a subscription service. For example, eMusic is a subscription service with no DRM. But it's not a coincidence that it lacks music from the major labels.