WSJ Editorial: Pardon my Steve Jobs Skepticism, But …

I have an editorial in today’s Wall Street Journal about Steve Jobs’ supposed embrace of life without digital rights management.


  1. I have been a sceptic ever since they hired him for no salary…except a Gulfstream jet.

  2. Wow. Sorry Paul, but you are way off base. Way off.
    First, there are numerous factual errors. (example: Apple does not limit the number of copies you can make.)
    Second, it is clear what your bias is. (example: it’s Apple’s customers being treated like criminals. When the fact is it’s the music companies customers who are being treated this way. Apple did not decide to have DRM, the music companies did. And they mandated it. It is those folks who are pushing for limited use, content flags, etc.)
    Third, your fundamental analysis is just wrong and you are missing the point.
    The brilliance of what Jobs is trying to do has nothing to do with Europe. It has to do with the fact that for jobs to TRULY tap into the 20 billion tracks sold each year, he needs to remove the restrictions on his product.
    Then, and only then, will iTunes store truly explode. Lower prices, flexible product bundling, and instant distribution/gratification. Without DRM, there will be no need to buy the CD. (with the coming quality bump, of course.)
    That’s what Jobs is after. The DRM laced market is by definition limited when there are better products in the market. Remove DRM, and Apple could truly become the world’s largest music store. That’s the ball game.
    That’s the ball game. And you totally missed the point.

  3. Bob —
    Not to respond at length as I’m a little overloaded today, but wrt the “factual errors”, while iTunes permits plenty of copying, it still has DRm-enforced restrictions. Among others, last I checked users were only allowed to make a maximum of seven CD copies of any particular playlist; and users can access copies of their purchased songs on a maximum of five computers. Sounds like copy restrictions to me.

  4. Claims like the following should be backed up with a verifiable reference or presented more clearly as merely a conjecture.
    “Then again, hang on. Mr. Jobs’s statistics are misleading (he is overzealous in the number of iPods in use), and so a much higher proportion of iPod music than he cites is actually copy-protected. Further, if the recording industry could copy-protect CD music, it would. But the industry is prevented from doing so by a massive installed base of CD players that don’t support such technology.”

  5. Franklin Stubbs says:

    What I would love to see is a frank discussion of what value-add the recording industry offers… for the bands themselves, and for me, the music lover.
    Thanks to technology, the cost to make great music is falling rapidly. Thanks to outlets like YouTube, Pandora, music blogs etcetera, the cost of exposure is falling.
    Why, then, must the music business be so bloody expensive? Talk about dead weight. When you compare the cost of making the actual music–four or five musicians with instruments in a studio–to the cost of supporting a hulking, bloated entity that is little more than a PR firm in drag, the skew is ridiculous. Actual cost to make the music: 0.5%. Promotional, legal and miscellanous: 99.5%. WTF?
    That model is so MTV… good bands should borrow a trick from Craigslist in my opinion. Forget the recording industry. Hire a scrappy one-man PR guy, or do it yourself. Build up a following through the distribution of good music at a price so low that most of your fans would feel sheepish not paying–especially with the knowledge that their dollars are going directly to the band, not some bloviating corporate suit. Then leverage the advantage of your reputation through live shows and touring, t-shirt sales, small-scale promotional deals, and so on.
    The model is Craigslist-like because, if embraced, it would shrink the size of the recording industry by at least an order of magnitude.
    But, as with Craigslist, the right people would be making money… the satisfaction / happiness distribution would skyrocket… and great musicians would probably make just as much, in absolute dollar terms, as they were making before. If not more, with the greater potential to grow a fan base far and wide, free of corporate cost-drag and DRM hoo-hah.

  6. Thanks for the clear and succinct vision, Franklin.
    But I am not sure kids would pay. I bought an iPod for my kid, and he tells me he has never bought from iTunes. Jobs says only 22 of 1000 songs on any iPod are paid for. That’s how I read it anyway. I don’t get how eliminating DRM would help the situation. If you get 978 songs for free, why would you pay a buck for each one to iTunes? If anything, you need more DRM.
    I have many students who watch movies on their laptops. They don’t pay for them.
    Where does this stop? Who is going to make songs or movies for people who don’t pay?
    You think “fans would feel sheepish not paying”, but I have real doubts. I don’t see these kids being too sheepish about anything. And this is a generational thing we are talking about.
    I agree with Paul: Jobs is being tactical and diversionary here, not nearly as visionary as you are. You may be right, you may be right.

  7. Franklin Stubbs says:

    Speaking of which, this sounds like a great tactical opportunity for Steve Jobs.
    Partition off a special section of itunes. Call it “freedomtunes,” or something similar, to evoke that nostalgic boomer, sixties free love feeling.
    The hook for freedomtunes: all the songs are one half to one tenth normal cost –say, max fifty cents, minimum five cents– and to get their music in freedomtunes the band has to be confirmed “indy,” i.e. signed with a small label or label free.
    Some bands would choose the higher end of the range (fifty cents) to generate more revenue, while others would choose the lowest end (five cents) and basically break even, or forego profits, in exchange for building name recognition and penetrating iPod playlists everywhere.
    Meanwhile, Steve Jobs wins the hearts of baby boomers and music lovers alike by ‘setting the music free’… while simultaneously poking the recording industry in the eye with a sharp stick, generating huge positive publicity for Apple, and increasing the attractiveness of owning an iPod…
    Geez, maybe I should be in marketing.

  8. Nick Turdle says:

    I am inspired by your vision, but I wonder how realistic it is. At the end of the day, at its best the music industry finds and nurtures real talent. Sure, we get The Spice Girls and Britney which are obviously money machines, but they also find and nurish real artists such as Jones, Morrissette, etc.
    Overall, I agree with Bob’s sentiment. I am certainly no Jobs fan, although I do prefer Apple’s computers.
    But I think the article was flawed–Paul, if you are going to be writing in the WSJ and not some blog you need to understand the difference between copy protection and rights/use management. The difference is material and important.
    Further, this article clearly has an anti-Apple bend when the real ire should be at the record companies. Make no mistake about, this is their doing, and any other company, MSFT, REAL, etc., would be using this to their advantage.
    The only difference is a company like Microsoft would never see Bill Gates with the monopoly position asking to open formats. (See Office formats, network protocals, WIN API’s etc., if you have any doubt here.)
    Overall, it reads like Paul is jumping on the bandwagon and taking the obvious–and mostly flawed–shots at Apple and Jobs. Not real insight.
    You have served the music company’s interests well. I wonder if they are an M&A target of one of your companies?

  9. Franklin Stubbs says:

    — At the end of the day, at its best the music industry finds and nurtures real talent.
    Okay, I can see that. But couldn’t talent-nurturing still be a vibrant business in itself, excised from all the dead weight of the traditional recording industry?
    Why couldn’t the guy with the golden ear become a sort of music venture capitalist? Find some investors, listen to zillions of demo tapes, and then agree to work with, and work the channels for, the musicians out there with talent. Maybe it’s a smaller-scale type business, where the deals are varied and quirky… but then again there is almost no overhead, once you shoot the lawyers. I mean what, a rolodex and a nice pair of headphones?
    It still seems too that talent nuturing is a tiny piece of the pie… and that the music pie itself could be much bigger, once you cut out all the artificial bloat. As Courtney Love observed in a great speech a few years ago: “In a society of over 300 million people, only 30 new artists a year sell a million records. By any measure, that’s a huge failure.” Surely we can do better…
    At the end of the day, I guess the prosaic observation is that the recording industry is like a 350 pound couch potato — in need of a serious butt kicking. Kind of like Madison Avenue, all fat and sassy on TV commercials… before the web came along.
    If I were a VC guy, which I’m not, I’d definitely be looking at ways to bring out the razors and leverage the post-bloat music revolution…

  10. I’ve been reading about this more, and I now think Jobs is also looking beyond the EU legal issue to a larger market share, etc. It looks like a poker hand being played in very slow motion with these boys.

  11. I was surprised when I read (in Steve Jobs’ own words) that “under 3% of the music on the average iPod, is purchased from iTunes.” I was sure iTunes was much, much more popular. I’m used to reading phrases like “wildly successful iTunes.” I would have thought “wildly successful” was more than a single digit market penetration. (Wildly cool works but success has some boundaries.)
    Now I did see later that you said Steve’s estimate was off, (“he is overzealous in the number of iPods in use”). But how far is he off? Is that three percent six? Still that hardly seems like it’s “wildly” successful.
    On another tangent I wonder if there’s a model for all this that’s worth exploring by doing the sums on ASCAP/BMI.

  12. I have to agree with Franklin and repeat the comment I’ve been making on Paul’s previous posts about this: digital music is now essentially a marketing cost for concerts. Right now, I can distribute a million singles electronically for $350 (5 MB/mp3, $.07/GB, also this is assuming I have to distribute everything myself and that there is no p2p sharing by fans which only increases my reach). Add in the price of studio time and it can all be done fairly cheaply. These low costs and the fact that music is already widely shared on p2p networks mean it is impossible to continue the old model, better to move to the new razor and blade model: free digital music with paid concerts. I think there are two big reasons it hasn’t happened yet.
    1. The independent music people aren’t very technically savvy and don’t understand what technology now allows.
    2. Once a ton of bands flood in, you need an efficient mechanism to match people to the music, meaning a website that does a good job of finding bands that you will like. I don’t think a website that does this well, either by finding good bands to host or doing a good job of matching them with listeners, has been set up yet.

  13. How about a Digital Copyright Exchange that works for music, books, videos, games etc. Once you buy the media, you can submit your media to the exchange and then access the media digitally over the web. . . in whatevever format you want! In fact, they can sell their media, legally!
    Who in the hell needs DRM anyway? It’s a losing paradigm because security can not ever be guaranteed, and no company – like Apple- can provide security guarantees that can’t be insured and represent huge contingent liability.
    There are far simpler solutions that are better for consumers, publishers and distributors.
    Steve Jobs should just go all the way and tell us the real solution. Someone needs to build a Digital Copyright Exchange.
    But I guess techheads can only take things in small doses.

  14. A good tear-down of Paul’s article can be found here:
    (Also, I recommend the site “Daring Fireball” in general. At times funny. Always insightful and very well written.)