Memo to Apple: "Mr. Jobs: Take down this DRM wall"

Last week, the lower house of the French congress passed a law requiring music player makers and digital music vendors to make their systems interoperable. Denmark appears poised to do the same in 2007. Conventional wisdom is that Apple should shut down its highly successful iTunes Music Store and leave France to stew in its own restrictive laws. After all, its digital rights management is some of the least restrictive in the business, and is a proven winner, having resulted in sales of more than a billion iTunes tracks. Apple would be perfectly within its rights to just pack up its store and go home.

But I believe that if Apple does that, it will be ignoring a multi-billion dollar marketing opportunity to change the music business forever and to cement its leadership in the business. I believe that Apple should remove its Fairplay Digital Rights management system worldwide and sell unprotected AAC/MP4 tracks.

This move would have four immediately valuable results:

1. iTunes tracks would be playable on almost every modern music player. Nearly every player nowadays knows how to play MP4 files. It is the basis of Microsoft's player and is a recognized international standard, since it is a part of the MPEG4 standard.


2. Apple would put competitors on the defensive in Europe. Remember, Microsoft and Real Networks will be bound by this same French law. And the European Union has sued Microsoft for its monopoly tying of its music players and DRM to Windows. With Apple showing that it can live without DRM, suddenly Microsoft and Real would be forced to justify their very proprietary approaches.


3. Apple would expand the digital music market. Suddenly worries about digital music somehow becoming obsolete or only playable on iPods would be laid to rest. Consumers would see digital music as being just a convenient method of distribution -- and they'd buy even more than they do now.


4. Apple would become the poster child for doing the right and legal thing. Pulling out of a market because of a law smacks of taking your ball and going home because you don't like the rules. With this move, Apple would demonstrate that it cares about consumer rights and laws in countries other than the US and is willing to change to satisfy their needs.

Now before everyone rises up and shouts, "What about piracy?", let me be clear about the details of the proposal. While I suggest removing all the protection and encryption from the tracks, I do recommend securely tagging every purchased track with the owner's iTunes account name. This metadata provides accountability to ensure that if Jean Doe pays $0.99 and puts the latest Beyoncé track on the Internet, Apple and governments would know who was violating copyright. The material just wouldn't be encrypted.

While this sounds radical, Fairplay is no real protection for content today. Anyone who wants to create an unprotected digital copy of an iTunes track today need only write it to CD and then re-rip it into digital AIFF or MP3 form. Those who don't want to bother with the CD can download the PlayFair utility that simply removes the DRM. So the reality is that Apple loses no real security, just its claims of protection to the music labels. And with Apple contributing millions of dollars to those music labels for iTunes sales already, it can argue very convincingly to them that expanding this market to more music players and more consumers is good for their business, not bad.

What about iPod sales? Won't interoperability kill them? Not a chance. The value of iPods is not in their ability to play encrypted AAC files; if it were, they wouldn't be loaded with millions of MP3 files today. People buy iPods because they are beautifully designed, are simple to use, and mostly just work. None of that changes because the music isn't encrypted.

We won't know until summer if the upper house of the French congress will ratify this law, but that almost doesn't matter. Removing Fairplay DRM restrictions is a multi-billion dollar opportunity for Apple to expand its digital business and garner an entirely new round of favorable public relations buzz. The only question is whether it will take a revolution inside Apple to do it.

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