The War Between Steve Jobs And The Labels

This is starting to sound like the Democrats and Republicans on Iraq -- except the topic is digital rights management (DRM).

Apple CEO Steve Jobs takes the unusual step of using his clout and places a letter about the music industry on the Apple website. In it, he outlines a number of scenarios that are possible in the digital downloading era. One option, that he rejects, is to make Apple's security system called Fairplay available to other companies. No sooner than Jobs declares DRM dead, the mouthpiece of the record industry, the RIAA, decides to take him up on making Fairplay available to other manufacturers. Didn't he say Apple wasn't going to do that?

See what I mean about how Jobs and the Labels are like warring Democrats and Republicans? The RIAA reacted by sticking it to Jobs, their nemesis. Both factions have drawn a line in the sand now. Jobs claims that DRM has not been working and probably will not work. The labels argue that they need to protect their rights and the rights of their artists -- that they can't just give music away for free. To borrow another political term -- it seems like gridlock -- nothing can be decided.

It's interesting that Jobs decided to go public when Apple is under pressure in some European countries regarding DRM. Jobs didn't just post a letter because he had a light day Tuesday. He's obviously thought this thing out. There is risk, but most of the risk is on the shoulders of the labels. So far Jobs has bested the labels at their own game. He's a manufacturer who has become an entertainment industry kingpin. But Jobs never forgets where he makes his money -- from selling hardware. The labels are no match for him. They don't seem to know what their business is these days.

Jobs is right. DRM is failing. Label executives know this, but they are holding on to DRM nonetheless. That's what record labels do -- hang on to business models that no longer work. Jobs, of course, is a thorn in their sides, but another irritant is indie labels and they are embracing DRM-free music at -- should I say -- a record pace. The indies have been sticking it to the majors for a while now. The battle is between the labels and Apple and the indies.

Of course consumers don't want Fairplay, they want "FairUse". They don't want restrictions and they don't want limitations. Last time I checked the next generation wants what it wants when it wants it. The marketplace which is the ultimate decider wants DRM-free music.

These are tough times at the big four labels. They see CD sales declining. Album sales declining. Legal downloads declining. What's a label to do? As Dale Carnegie used to say, "cooperate with the inevitable". You don't have to take my word for it. DRM is on the way out. Some music industry people estimate one to three years and it's pretty much all over.

So, Jobs and the labels can parry with each other like the Democrats and Republicans do over political issues such as Iraq. The RIAA can take the news and spin it something like Fox News Channel does. And indie labels are indeed the coalition of the willing -- willing to remove DRM before the big four finally relents. There are so many analogies that are apt.

But the voters -- in this case the music consuming public -- get to vote and the polls show they think the music industry is headed in the wrong direction and they want change. Sound familiar?

Like the war in Iraq, the Labels will eventually have to withdraw and remove DRM. The public wants it -- no demands it. And we'll have to put up with the rhetoric and untruths between now and then. Maybe the labels recent defense of DRM is their one last surge to save the mission and turn things around.

Just as a presidential election is coming in 2008 and the Iraq war will be wound down, smart music execs are smart enough to cooperate with the inevitable and they're already thinking about the future without DRM.