As a number of bloggers have correctly pointed out in recent months, the basic purpose of DRM is to create artificial scarcity for what's essentially an unlimited resource. In other words, the cost for anyone to copy a CD, DVD, or other media, is so trivial as to be considered free. Since anyone can do it as many times as they want for this same price, in market terms it means there's an unlimited free supply of whatever is being copied. The problem the labels have right now is they're trying to equate the value of these infinite free plastic discs with the cost of creating new works. In fact the two are unrelated, and consumers don't really care how much it cost you to make. They see free discs so that's what they're worth. In order to put their house in order financially the labels need to find a new business model for making money, rather than relying on the artificial scarcity created through DRM.

With all the sound and fury over various DRM issues, from the CSS and ACSS encryption used for DVD, HD DVD, and Blu-ray to Microsoft's PlaysForSure, one place the finger is almost never pointed is at Apple. Why should it you ask? Simply put, Apple's FairPlay DRM is arguably the biggest stumbling block to sorting out the music industry shakeup created by the internet. While it's fashionable (and not inaccurate I might add) to point the finger at music labels for refusing to do their share to build a new business model for a product available in infinite quantities for free, it's important not to let Apple off the hook for their role in the music industry - and yes they are part of the music industry in the same way that the dominant brick and mortar music chains were when I was a kid.

Apple Is Not Your Friend

Perhaps the biggest reason for Apple's lack of accountability for DRM is the perception that any company playing David to some industry's Goliath is a good guy. From AMD to Apple, people root for the underdog. Especially since that underdog often has to give you more for less to establish themselves as serious competitors. And I'm including myself here. I like to see a small company "stickin' it to the man " as much as almost anyone.  

But that doesn't make them your friends. Regardless of whether you consider Apple to be a "better " company (whatever that might mean) than Microsoft or Universal Music Group, they're all in business for the same thing. They want your money. If you go on a drunken buying spree and spend every nickel you have at the iTunes store, Steve Jobs will not call you up to make sure that's not going to stop you from making a house payment this month. Like any other company, Apple wants as much of your money as they can convince you to part with. Period. You forget that fact at your own peril.

Don't get me wrong, I'm not criticizing Apple for being in business to make money. I just say you need to always remember it as a difference between what's best for Apple and what's best for consumers, or even the markets Apple competes in. While capitalist markets thrive on competition, market leaders generally benefit more (at least in the short term) from eliminating competitors rather than trying to make money while dealing with innovative competition.

FairPlay Isn't

When I was first studying European geography as a kid, we learned that the easiest way to distinguish a Soviet-style communist dictatorship was to look at the name. The more references a country's name contained to democracy, a republic, or the people, the less likely it was to be the least bit democratic. With the demise of the Soviet Union, this practice all but disappeared until resourceful DRM developers discovered it in the first part of this millennium and got right to work putting it to good use. Instead of the relatively straight forward and honest Content Scrambling System (CSS on DVDs) we got Microsoft's PlaysForSure and Apple's FairPlay.

 Although PlaysForSure, now moved into the Vista Certified program, has had some big problems, to their credit Microsoft has made some attempt to make the system work for as many vendors of hardware and online services as possible. By using two different certifications with nearly the same name (one for subscription services and another for purchased sons) they've tried their best to shoot themselves in the foot, but their technology is used in places like the free SpiralFrog MP3 download service and Netflix's Watch Instantly streaming video service.

 Unlike Microsoft, Apple isn't interested in being a DRM vendor. Instead they began using their FairPlay DRM as the carrot to bring music labels to the negotiating table when they wanted to build a serious music download business in iTunes. Ironically it's since changed to a stick, forcing content providers to deal with iTunes if they want to distribute DRM-protected content to play on iPods. It's also become a point of contention among some iPod owners, who feel Apple is illegally denying them the ability to move content off of iPods. There's perhaps even more irony in the resulting backlash from Universal Music Group, who have been testing DRM-free downloads (which are compatible with iPods) through several online music outlets, but not iTunes.

When approached about licensing FairPlay by a number of different organizations, Apple has repeatedly said no. They've even been sued over it in France, but were able to successfully argue that the small size of the downloaded music market was small enough as to be inconsequential, and therefore not an essential service for the music business. For that reason alone they were allowed to refuse any company that wished to license their DRM. I suspect the result would be different were the trial to take place today, and I wouldn't be surprised to see it come up again in the not too distant future. But for now we're stuck with Apple's decision.

Last year, a new online music service called SpiralFrog appeared. They offered free (ad-supported) music with PlaysForSure DRM, making it compatible with not only computers running Windows, but also an assortment of portable players. Of course since iPods don't support the DRM, you can't load SpiralFrog's songs on one.

Another service using the Microsoft DRM, called Qtrax, was supposed to be launching a few hours ago. They've claimed to be working on a hack for the iPod to use the DRM, however since they don't even appear to have managed to make it to their own launch on time I'm skeptical that there's going to be any progress made there. And of course Apple could just upgrade the firmware to "fix " whatever their hack relied on, so most iPod owners are still at Apple's mercy.

Why Apple Wants DRM

Despite Steve Jobs' impassioned pleas in the past for labels to drop DRM, it's really Apple that benefits the most from keeping it. By keeping a monopoly on iPod DRM they effectively force any company wishing to distribute content with DRM to iPod owners to go through them (and iTunes). It also forces consumers to replace their current iPod with a new iPod, rather than picking something from a competitor and losing the ability to play a good deal of their iTunes music library.

By basing so much of their business model on using DRM to control the market, Apple has succeeded themselves into a corner. Either content owners will ditch DRM and they'll end up with legions of iPod owners who can play their files purchased from iTunes on any player they want - including the competition's, or some judge will decide they have to make it possible to move FairPlay protected media to other devices. Many people would have laughed at either idea a couple of years ago, but the labels want to teach Apple a lesson and many consumers are unhappy enough to have filed lawsuits already.

Ironically, both groups (labels and consumers) include individuals who feel Apple's iPod success is due to them, and don't feel Apple is treating them fairly. The labels feel Apple succeeded on the merit of their songs, while consumers feel it's their support of the hardware. In both cases they're demanding that Apple relinquish their iron grip over their own technology, something the company isn't very good at.