Apple, DRM and Digital Distribution

A few European countries, including Norway, Germany, and France, are considering requiring Apple, Inc. to make the songs sold on the iTunes store playable on music players from other manufacturers. ARS Technica reports: iTunes DRM called out by France and Germany: “Apple is being challenged once again to open up its DRM by consumer groups in Europe. This time, Germany and France have joined the slowly-growing number of countries who are asking Apple to allow the protected songs purchased from the iTunes Store to be played on other music players besides the iPod. Norwegian Consumer Ombudsman Bjoern Erik Thon told the Associated Press that France’s consumer lobby group, UFC-Que Choisir, and Germany’s Verbraucherzentrale are now part of the European effort to push Apple into an open DRM system, with more countries considering joining the group”
Steve Jobs responds in an essay on Apple’s web site, noting that use of DRM is at the requirement of the copyright owners who license music to the iTunes store. Apple would be happy to sell unprotected songs: Thoughts on Music:

To begin, it is useful to remember that all iPods play music that is free of any DRM and encoded in ‘open’ licensable formats such as MP3 and AAC. iPod users can and do acquire their music from many sources, including CDs they own. Music on CDs can be easily imported into the freely-downloadable iTunes jukebox software which runs on both Macs and Windows PCs, and is automatically encoded into the open AAC or MP3 formats without any DRM. This music can be played on iPods or any other music players that play these open formats.
The rub comes from the music Apple sells on its online iTunes Store. Since Apple does not own or control any music itself, it must license the rights to distribute music from others, primarily the ‘big four’ music companies: Universal, Sony BMG, Warner and EMI. These four companies control the distribution of over 70% of the world’s music. When Apple approached these companies to license their music to distribute legally over the Internet, they were extremely cautious and required Apple to protect their music from being illegally copied. The solution was to create a DRM system, which envelopes each song purchased from the iTunes store in special and secret software so that it cannot be played on unauthorized devices.

Jobs goes on to explain that Apple has refused to license its Fairplay DRM system because doing so would make the scheme less secure. Because licensees would need to know how to decrypt the protected files, allowing third-parties access to the Fairplay code would make the scheme much more likely to be cracked. Apple would be happy to sell music without DRM, if only the Big Four would be willing to let Apple sell unprotected files.
The major labels seem to be getting closer to attempting large scale use of digital distribution without DRM. From MIDEM, Victoria Shannon reports in The NY Times: Record Labels Contemplate Unrestricted Digital Music: “As even digital music revenue growth falters because of rampant file-sharing by consumers, the major record labels are moving closer to releasing music on the Internet with no copying restrictions — a step they once vowed never to take.”
Independent labels are already selling unprotected MP3 files through eMusic. Other Music, here in New York City, is set to launch a digital download store selling indie music in high-bitrate, unprotected MP3 format. Eliot Van Buskirk, Wired News interviews: A Real Music Store Sprouts Online: “Other Music [will take] its handpicked approach to music sales online with the launch of its own digital music store. Located at digital.othermusic.com, the site will stock high-quality MP3s from Pitchfork-friendly bands, without using digital rights management of any kind.”
Yesterday, Apple, Inc. and Apple Corp. entered into a new agreement concerning the Apple trademark. In this new Agreement, the Jobs-helmed Apple, Inc. will own the Apple mark and license it to the Beatles’ Apple Corp. Terms of the deal were not disclosed.