Why Apple Doesn’t Need the iTunes Store
Does Apple really need the iTunes Store? That is a question many fans of the company have probably asked themselves at some point in time. I say Apple does not. Why? Because, as always, Apple is making money off the hardware, ie., the iPod. And though music, movies, and TV shows cannot be considered software, it’s the same old story. Apple is first a hardware company, and then a software and content vendor.
After the millennium had passed, and it turned out that Macs weren’t the only computers unaffected by the dreaded Millennium Bug, a feared computer glitch that inspired numerous articles, studies, and even books, Apple secretly bought out a popular Mac OS MP3 player called SoundJam MP. The reasons for this were, at the time, unknown, as was the deal itself. We all know now that it was part of Steve Jobs’ plan to dominate the world create an ecosystem the upcoming iPod music player would become a part of. SoundJam MP went on to become iTunes, the wonderful music organization and playback tool that millions of Windows and Mac users (and even some Linux ones!) utilize on a daily basis.
As we all know, the digital music craze really started with Napster (Macster, on the Mac). Jobs clearly wanted Apple to cash in on the phenomenon, and created two products that would become integral pieces of the puzzle, whether or not the music itself was something the company would be able to profit from. Even today with Napster gone and Grokster, WinMX, and Kazaa either shut down or “converted,” legal music downloads make up only a fraction of the music on the average iPod. Jobs recently stated in his letter titled “Thought on Music” that “only 22 out of 1000 songs, or under 3% of the music on the average iPod, is purchased from the iTunes store and protected with a DRM.” So, it’s a known and widely accepted fact that we all have some amount of music that’s either been “pirated” or imported from CDs.
Apple was smart and from the beginning focused on constantly improving iTunes, its music playback application, and marketing the iPod, its portable media player, and making sure it was always ahead of the game for features, portability, and usability. Both the iPod and iTunes are things that can’t be “pirated,” simply because they don’t need to be. iTunes is a freely downloadable application, and Apple is the only company that makes a portable music player that is remarkably easy to use and sync entire music libraries quickly with. So, that was one less, and very formidable, competitor for Apple: piracy. Having only to strive against large, stagnated corporations is something I am sure the executives at Apple were joyed by.
Why did Apple set up the iTunes Store at all, then? To offer its customers an easy and legal way to acquire music online, of course. And what an amazing job the company has done with it! I bet every one of the five big music companies would have loved to become the number one online music retailer in the United States. If you think about it, that is an impossible task. To achieve that, a company would have to be able to offer music from all five of the record companies, and a number of independent labels. Which one of the music houses would let another sell its artists’ music online, let alone sell music from independent artists? A third party was needed, and Apple was the perfect entity to launch a music store, considering it was about to release a Windows version of iTunes. Until then, Windows users were forced to use MusicMatch Jukebox to sync their music libraries with their iPods. But giving consumers an easy way to purchase music online wasn’t the only reason Apple launched the iTunes Store. It also knew that building in a legal alternative to the many peer-to-peer networks where people got their fix of copyrighted music illegally would potentially save Apple and its customers from the RIAA’s hounds.
Last month, a number of European countries, including France, Germany, and Norway, demanded that Apple open up Fairplay to its competitors, so that songs purchased from the iTunes Store aren’t locked into a single portable media player (iPod). European consumer groups say that people should be able to play their music on a device of their choice. Steve Jobs made it clear in his letter that there was no chance of Apple opening up Fairplay to other vendors, but at the same time urged record companies to give up on DRM altogether. I believe Apple has nothing to lose if it opens up Fairplay. As long as iTunes and the iPod remain the easiest to use and most appealing music application and portable media player, Apple has little to worry about. And though I have my doubts about iTunes 7, I see no alternative. iTunes’ only (possible) competitor is Songbird, an open source application that is still too buggy and complicated to make any self-respecting iPod owner even consider it.
When it comes to Europe, there are two possible scenarios.
The first: Record companies agree to sell their music without any DRM on the iTunes Store, and Apple continues business in Europe and probably sees a surge in revenue; a lot of people don’t want to invest in DRM’d music.
The second: Record companies don’t budge, and Apple gracefully bows out of Europe, but retains its grip on the portable media player market. Europe becomes just another Asia.
Despite the fact that Japan is the only Asian country with an iTunes Store, the iPod is still one of the, if not the most, popular MP3 players in all of Asia, if you exclude mobile phones. So my question is, does Apple really need the iTunes Store? I don’t think so. Apple makes its money off the hardware, in this case, the iPod. It always has. Despite being urged on various occasions to license Mac OS X to computer hardware vendors like Dell, Apple has stuck to selling its software, and content, only to support its own hardware products. Apple does not need the iTunes Store to succeed in Europe; it’s the record companies that do. If there’s a legal alternative that’s actually given piracy some competition, it’s the iTunes Store. Imagine what would happen if content bought from the store was DRM-free. We would undoubtedly see an increase in sales. If Fairplay goes away, Apple has nothing to lose, and consumers have everything to gain, as do content producers.
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Comments
Possibly I should just try and state my position 100% clearly, though I’m now well-versed enough in Beeblebroxery to know precisely the answer I’ll get.
Selling songs with DRM that locks them into one brand of player is unethical. But I haven’t seen good evidence yet to suggest that this is inflicting actual harm, let alone complete paralysis, on the rest of the industry.
Now when I’ve said this before, Beeblebrox has always said something to this effect: Of course you haven’t seen enough evidence, you’re brainwashed by Steve Jobs to think whatever he wants you to think. This puts me in a bit of a sticky situation because whatever I do, I always receive this reply which is not exactly constructive to say the least. Then he continues: I’ve given perfectly enough reasons for you to realise that iTunes’s DRM actively and severely harms consumers and the competition, which serves as further evidence that you are a brainwashed MacTard. Note the circular argument: You are a MacTard, therefore your position is based on brainwashing. Your position is based on brainwashing, therefore you are a MacTard.
More importantly though, I have absolutely not been convinced by Beeblebrox that his opinions are valid. Possibly this is just because they aren’t, or more likely it is because he comes across as such a total lunatic that it makes it impossible for me actually to understand his argument. In fact, I think it’s a mixture of the two, with the emphasis on the latter.
This is a challenge, Beeblebrox, a laying down of the gauntlet if you will. Set out on this site once and for all in rational English the reasons why you think Apple’s position is harmful, who it is harmful to, and why, what you think Jobs’s real position is on DRM and why, what the state of DRM is in general compared what it should be.
Then why don’t we compare notes.
To be sure, there is one thing that is not helpful, and that is repeatedly stating that the opposition is brainwashed:
One’s entire argument’s validity may not be taken as a premise for that argument.
To not disbelieve what Steve Jobs says on interoperability is proof of being a MacTard. The only possibility remaining, for not being a MacTard, is to disbelieve what Jobs says.
Hence, Steve Jobs is a liar.
A liar however can only lie if he says <not what he believes to be true>, and therefore needs to disbelieve what he himself is saying. (If he does not disbelieve what he is saying it is not a lie!)
Therefore Steve Jobs is not a MacTard.
If however Jobs is not a liar, he spoke the truth, so believing him would be correct with the believer being a MacTard. So MacTards would be correct to believe him. The People being afraid to be called MacTard, must therefore disbelief what Steve said on interoperability, even when they know it is true.
This is not meant to proof wether Jobs is sincere or not.
It is the logical consequence of the propositions of Beebles fanatical circular thinking. He must feel bewildered by the answer I gave him in the «Will Apple Finally Become the Innovator the Masses Want?» - article because I haven’t had a response for a week on it.
I have absolutely not been convinced by Beeblebrox that his opinions are valid.
Too bad I’m not Steve Jobs. Otherwise you would be totally without doubt and utterly convinced that everything I say is totally true. To wit: “There is little doubt in my mind that Steve Jobs meant every word of his recent advocation for interoperability.”
I’m jealous. And surely you have demanded of Steve Jobs absolute and convincing evidence as such, right? Because one wouldn’t want the impression that you hold him to a completely different standard than the rest of humanity - you not being brainwashed or anything.
I will get to the question of the unethical and harmful nature of DRM in a separate post, but first a couple of things.
Note the circular argument: You are a MacTard, therefore your position is based on brainwashing.
Lacking as you do a rational argument because Steve Jobs hasn’t given it to you yet, allow me to retort that calling you a brainwashed Mactard is not circular. You are not a Mactard because you are brainwashed. You are a Mactard because you derive your own opinions entirely from Steve Jobs and Apple. Whatever they say is what you regurgitate.
So is Steve Jobs sincere about wanting to be rid of DRM and that he only applies it because the lables force him to?
This bit of nonsense is easily refuted and I have already done so in previous posts (which apparently you couldn’t read because, well, you know, that brainwashing thing).
And the evidence is this, Apple wraps ALL songs purchased in the iTunes store in DRM, even if the labels or artists don’t want them to or haven’t asked them to.
Comprende? Apple does this. Not the labels. And that bit of DRM makes the song non-interoperable with another mp3 player DESPITE the wishes of the copyright holder.
I’ve heard a few apologist arguments for this contradiction, and no doubt you have one as well because, you know, that whole brainwashing thing.
So if Steve Jobs is full of shit on that score, then doesn’t it undermine his credibility on the others? Well let’s take a look at what else he claims. He says that the reason why is because sharing DRM technology will increase the chances of piracy. But Fairplay has already been cracked, and so has PFS, and more importantly, neither breach had anything whatever to do with interoperability.
And the idea that he even cares if the DRM is removed when removal of DRM is what he says he wants in the first place is something that only the brainwashed could believe anyway.
So there we have a rational and factual argument for why there is not only reason to doubt his sincerity but why his position is basically bullshit.
Feel free to ignore as always.
Selling songs with DRM that locks them into one brand of player is unethical. But I haven’t seen good evidence yet to suggest that this is inflicting actual harm, let alone complete paralysis, on the rest of the industry.
So let me see if I have this straight. DRM is unethical. But totally harmless and easily defensible.
And you think MY posts are funny? You’re like your own Abbot and Costello rolled into one.
So DRM is unethical because it locks a person into one brand of player. Why you find this unethical and YET perfectly okay and harmless to consumers is simply mind-boggling. What exactly does “unethical” mean to you? What is the point of ethics at all if it serves no practical purpose?
Since you concede that Apple locks users into the iPod, is that in and of itself harmful? Keep in mind that we are not talking about a format difference (Mactards invariably want to compare this to the X-box and PS). We’re talking about an arbitrary and totally artificial crippling of an otherwise interoperable format.
Imagine if DVDs were locked not just to one kind of player, but to one USER the way iTMS songs are. You buy a DVD from the store and it is automatically shrouded in DRM so that you can only play it on your home player. You can’t back it up, you can’t take it to your friend’s house, you can’t sell it.
Is consumer choice harmed? Absolutely. Now imagine that one company controlled 75% of this market. Let’s say that company is MS (Apple will only cloud your thinking here). Would it be a monopoly? Yes. Would it keep other manufacturers from competing? Not only does it lock them out of the most popular player, it locks them out of the most popular store.
And while consumers can manage (they do have to have their movies and music), it is exceedingly difficult to argue that no harm has occured to competition, consumer choice, or consumer ease-of-use.
It also harms consumers by raising the cost of switching to another brand of player by $1 for every song purchased either in a music store. This is true for both the iPod and any competing music player. Should you have to buy all new CDs or DVDs simply for switching BRANDS of player? Isn’t that a harm to consumers?
So in Ben’s brainwashed brain, DRM is unethical but not in the least bit harmful. And so convinced are you that such a nonsensical position is utterly bulletproof that you’ve thrown down the gauntlet to get me to prove otherwise.
The problem of course is that in your brainwashed brain, anything short of Steve Jobs himself telling you that what I’m saying is factual and rational, you’re just going to go on whistling dixie like none of this ever happened.
Ahem. Would someone persuade me that there is actually a valid reason for the average iTunes customer to be in the least bit inconvenienced by Fairplay?
I hear all the noise - but I suspect that, apart from a desire to cheat the copyright holders of their rightful due, Apple’s implementation is invisible to Joe Blow.
And, my dear friend Beeblebrox, who started off so rationally - I see you are up to your old tricks matey… “n your brainwashed brain” indeed. What sort of language is that?
@WAWA
Brilliant… I think… Or mad… Well, one or the other…
@Ben Hall
“selling songs with DRM that locks them into one brand of player is unethical”
Hey Ben. Have to disagree with you matey. There are lots ofg download sites - hell you can even buy music from WalMart. If you don’t have an Apple iPod, don’t buy your music from Apple. And, hey, you can always buy a CD.
Apple iTunes supports the iPod: Remember that Apple have a client base of 80% of US mp3 players that they need to support. iTunes does that job superbly well. And no-one else was doing it very well… In order to provide downloads Apple had to commit to DRM. The rest is in Steve’s letter…
Apple is not obliged to support people who dont use iPods. Why should they? Those people can use another download site or buy a CD.
It surely is a case of there being the old ELEPHANT IN THE ROOM. The people who complain the loudest are the ones with the most dishonest motives.
@Beeblebrox
“Apple wraps ALL songs purchased in the iTunes store in DRM, even if the labels or artists don’t want them to or haven’t asked them to.”
Really? I would like to see examples of this with appropriate links for verification.
@Beeblebrox
“It also harms consumers by raising the cost of switching to another brand of player by $1 for every song purchased either in a music store.”
Just exactly how many users have switched from iPod to, well, what else is there exactly???
And what percentage of these users had more than 1 CD load of purchased tracks?
And why couldn’t these users just burn their playlists to CD and upload them to their Zune or whatever?
It is always the same - the arguments are always specious.
Really Beeblebrox. I haven’t been here for a while and I had really hoped you would have grown up in my absence…
“I believe Apple has nothing to lose if it opens up Fairplay.”
Except the integrity of Fairplay. Lets face it, it wouldn’t really make any difference to what people will buy. The iPod will still be the best seller it has been for years. But Apple will have a lot more difficulty maintaining the integrity of Fairplay.
On at least one occasion, Apple had to do some fancy footwork to alter Fairplay when it was reverse-engineered. Easy to do if you control the whole kaboodle - much harder to do if you have to get 50 partners to re=engineer and then force download a firmware update to change the encryption algorithms.
And why should they?
Does the integrity of Fairplay even matter if Apple is forced to open it up? As soon as other Windows-based content stores start licensing it, it will be broken and stay broken no matter what the content industry tries to do. Just look at what’s happened with hi-def DVDs. They’ve been cracked.
As Jobs clearly pointed out, opening up Fairplay will put Apple’s contract with the recording industry in jeopardy as it’ll be increasingly difficult for Apple to keep Fairplay secure. The main point of Jobs’ letter was that DRM doesn’t work. Apple’s own profits won’t be affected if Fairplay is opened up, at the most it’ll force them to offer higher quality songs.
I remember the days when cd’s conquered the scene, musicians were heavely debating on wether you lost ‘something’ in that ‘translation’. Was an LP warmer, did a cd really give you all of the frequencies? Some guys pruduced graphs to show sounds got clipped.
@ sidneystephen.Thank you. The question you formulated remains unsolved even for my closest relatives. Sometimes they swing in one direction then they hesitate… This metaphore is a special for you only.
I am supprised as how all this consumer-councils our worried about a crippled product. You buy a delivery pizza, not the real thing. If you want that delivered pizza to have any credibility you should put in the oven and add some real cheese and fresh olives. Suddenly this is a discrimination of the people who have no oven and pizza delivery services are forced to provide ovens to those who haven’t got them.
I think the format of downloads is of greater importance than the drm. Yes, the cd is possibly not available at your local shop. But that’s the same in a good restaurant. You just can’t order whatever jumps to your mind. You have to choose amongst the things they have. Well that is drm-like.
Consumer choice does not mean you can dictate every aspect of it, it means if you want a serious pizza you should look for the restaurant that makes real pizza. You want it delivered at home, as fast as possible, don’t complain.
Beeblebrox, your posts above corroborate my viewpoint as you merely posit the retardedness of the opposition, and have constructed your whole argument here on things you’ve apparently “already wrote”.
So let me see if I have this straight. DRM is unethical. But totally harmless and easily defensible.
And you think MY posts are funny?
Well yes, I do. Because, like just here you deform people’s opinions until they do not actually represent their opinions any more. In effect, arguing with you is like arguing with a retarded version of oneself. So, more than funny, I find them utterly exasperating.
One of the main ways above that you twist what I have written is by saying that I’ve said that DRM is unethical, and yet has no detrimental effect on consumers.
I have not said that Fairplay has no detrimental effect on consumers. I have completely avoided saying so, because that is not what I think. You however have leapt on the gap - on what I haven’t said, and what is not equated with my opinion - to attack the opinions I have stated. What I, and many intelligent commentators, believe is that the detrimental effect of songs locked to one player is quite simply that those songs are sold under a hyper-restrictive liscence. What you time and time again fail to persuade anybody of is that this constitutes significant lock-in from the consumer’s point-of-view, and, as you have said above and as is inherent in your opinion regarding the so-called “monopoly”, that this lock-in almost completely vitiates all other market players of the potential to create a rival brand.
Your writings above take everything for granted in the attempt to prove themselves. It is pitiful to observe.
I have not said that Fairplay has no detrimental effect on consumers.
Excuse me, Ben, but…
I haven’t seen good evidence yet to suggest that this is inflicting actual harm,
This is a bit like Bush’s “I never said the Iraq threat was ‘imminent’” or “We’ve never been about ‘Stay the course.’” But at least he didn’t say one thing and then deny saying it in the same breath (or thread, as the case may be).
Your writings above take everything for granted in the attempt to prove themselves.
Name one thing in my post that is factually incorrect (aside from your denial about what you think you didn’t say despite the fact that you said it).
Really? I would like to see examples of this with appropriate links for verification.
Seriously? Do you actually deny that it this is the case?
Sydney, your utter and steadfast detachment from reality in regards to Apple is so deep and entrenched that there’s literally nothing I could provide you that could persuade you otherwise. Like Ben, you have a Creationist mindset about Apple, in that facts and figures and reality are TOTALLY irrelevant.
The fact is that Apple wraps all song and movie purchases in Fairplay. Rather than buy every single song to show you the DRM, the simplest thing to do, if what I say is false, is for you to show me an example of a negative that disproves my assertion.
As just one example, the Bare Naked Ladies sell their music DRM-free on emusic.com and want to sell their music DRM-free on iTunes, but iTunes won’t let them.