A Posteriori

The European Union (EU) is holding hearings with the goal of trying to force Apple to “open” its iTunes Digital Rights Management (DRM) scheme to multiple vendors. This would mean that, among other things, songs purchased from the iTunes Music Store (iTMS) would work with competing MP3 players like Microsoft’s Zune, and the iPod would support music downloaded from Microsoft’s Zune music store. Sounds good, right?

http://arstechnica.com/news.ars/post/20070311-eu-com…

Except that the EU’s hypocrisy in the whole Apple DRM affair is staggering. Were I a European citizen, I’d be more than a little irate that my tax dollars were going to fund what is essentially the RIAA’s guerilla warfare against Apple’s media business.

Allow me to explain.

First of all, Apple’s position as the #1 online music retailer with around 80% of the market gives it an enviable position in negotiations with the RIAA. More specifically, it allows Apple to demand licensing terms for downloaded music that are more consumer-friendly. Among these terms are the 99 cents (U.S.) per song pricing, the ability to authorize the content for playing across 5 computers, and the ability to burn analogue music CD’s. The RIAA has had to swallow hard to make these concessions, and the unfavourable negotiations have no doubt left a very bitter taste in their mouths. The RIAA would like nothing better than to jack up music download prices for more popular songs conceivably as high as 2 dollars.

On the other hand, Microsoft’s various “open” and “interoperable” DRM schemes, which effectively force a self-destructing music rental scheme, have failed to resonate with customers. The reason is that the WMA music “rental” scheme amounts to nothing more than a legalized racket that forces consumers to pay a monthly “protection fee” to prevent their music collection from dissappearing. Consumers have not fallen for the scam, and Microsoft’s overt and one-sided complicity with the RIAA has led to its music download business becoming a massive money pit for the company. Microsoft, in a vain attempt to replicate Apple’s iTunes-iPod business model, has yanked the rug out from its former PlaysForSure partners and architected its own DRM/music player lock-in framework with Windows Media Player and the Zune.

This Ars Technica user hit the nail on the head:

http://episteme.arstechnica.com/eve/forums/a/tpc/f/174…

It could be argued that Apple’s dominant position has kept music download prices low. That’s because Apple’s music download business is merely an avenue to more purchases of iPods. iTMS merely breaks even. This means that Apple doesn’t make money off an increase in the download price. However, it stands to lose a lot of customers not willing to pay more than 99 cents a song. This means that it would lose iPod sales.

With the RIAA’s original plan of multiple competing Microsoft-backed WMA DRM download services failing to result in a competitive marketplace, and thus a prime target for negotiations over price and terms, the RIAA has had to rethink its strategy. Apple’s dominant position in the music download and MP3 player business threatens to compromise their control over the music business. Enter the European Union hearings.

The EU consumer affairs department/bureau/office likes to wave the banner of “consumer protection”. This rhetoric serves as a very thin smokescreen for the EU’s true agenda of fortifying the RIAA’s negotiating position against Apple for music distribution.

Steve Jobs, knowing this, called for the RIAA to abolish DRM:

http://www.apple.com/hotnews/thoughtsonmusic/

And my previous blog asserted that Apple was sincere about eliminating DRM:

http://wordwarrior.blogsome.com/2007/02/16/apple-is-against-drm

With the above as a backdrop, there are three big reasons why the EU’s “consumer protection” rhetoric is not to be believed:

1) Two and a half of the four RIAA labels are based in Europe. Apple is an American company whose presence in Europe is much smaller.
2) After Steve Jobs’ letter the EU commissioners did not mention eliminating DRM, and continued to engage in baseless platitudes about Apple “making excuses” and “deflecting the blame”.
3) The EU wants to support the notion of a “cooling off” period, where consumers could “return” music purchases. This is not possible with MP3 downloads. This is only possible with DRM.

Don’t believe the European Union. They’re merely pawns of the RIAA, whose agenda is to squeeze honest music customers out of every last cent, maintain control of the industry, and control how their product is “consumed” well after the sale and effectively destroy the concepts of fair use and the right of first sale.