Steve Jobs Tests the DRM

Writing this piece on his thoughts on Music, Steve Jobs presents a very clever and valid argument for reviewing the system of Digital rights Management that the most dominant music corporations have imposed on Apple and in turn on buyers of digital music. He argues that the average iPod contains about 3% of music that is encoded with DRM, with the rest being music that is ripped from CDs which are not subjected to that stringent protection requirement. Running a corporation that sells the premier digital music player and has sold 90 million units, he presents really clear data that customers have bought about 22 songs for every iPod sold and yet most of these iPods carry about 1,000 songs each.

The burden of maintaining the FairPlay DRM that Apple developed to protect illegal copying of the music sold through the Itunes site appears to be largely in vain. The rational business case in Steve Jobs’ view (and I agree) is that the Music majors ought to consider a review of the placement of DRM systems on all songs sold online. Again, from the selected data that Steve Jobs presents, this conclusion is altogether irrefutable. Whether the four music majors will be amenable to this is altogether a different matter but the situation suggests that the imposition of DRM at present is a mere technological stunt that does not result in increase sales of music but merely displaces piracy and genuine sales to CDs. It is easy to understand the basic economics behind this behavior. Music buyers appear to prefer by a ratio of ten to one, the format that allows them maximum flexibility in transferring music. Because CDs presently allow for this, DRMs only serve to deflect purchases towards CDs and it may well be the reason why hackers have not tried enough to crack the FairPlay DRM system that Apple has put together at what I surmise is considerable cost.

With such elaborate data and much more at his disposal, why did it take Steve Jobs’ this much time to figure this out? Is it perhaps because it appears now that the iPods market dominance is momentarily unassailable? Cynicism aside, the economics of the case has been argued fairly cogently and the four majors must review the data and move towards making the expensive technological stunt that is DRM redundant.

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