Yesterday, C|Net News ran a story I initially didn't pay much attention to about Microsoft potentially jumping into a subscription music service (Microsoft Planning Music Subscription Service). Yawn. Who isn't?
So, I didn't even read the story. Luckily for me, Good Morning Silicon Valley did (Psst, Kid, You Really Gotta Try Some of This WMA. First Taste is Free.).
News.com reports that Microsoft, long envious of Apple's iTunes storefront and its grip on the digital music market, is planning an iTunes exchange, a service that would enable us to download a Microsoft-formatted version of any song we've purchased from the iTunes Store.
Well, that would be quite a trick. This is where the DRM really hits the road.
Look at it from Microsoft's point of view. Every song you purchase from iTunes with Apple's proprietary, DMCA-protected DRM is one more bit of lock-in to Apple. When you've got a hundred or two hundred or more of your favorite (let's face it, you buy your favorites first) songs in iTunes format, you've got some significant lock-in in the form of very high switching costs. Just the way Steve Jobs likes it.
And that lock-in is growing at a rate of millions of songs every month.
What is a would-be player in the digital music distribution world to do? One option, of course, is to do what Microsoft apparently plans to do, which is pay an unknown sum (but likely rather substantial ) to let people download (again) music they've already purchased from Apple. There is the mechanical license, of course. And you don't think the artists and recording companies are going to let the music publishing companies make money and they don't, do you? This is going to be expensive. Microsoft can probably afford it, now, before digital downloading really takes off. Can you say "barrier to entry"? I knew you could.
Of course, it remains to be seen whether Apple will make it easy for Microsoft to pull such a switch or not. I imagine that, if they did, they would expect require Microsoft to do the same. Although Apple probably will cooperate with Microsoft as much as they did with Real (Apple Gets Real Serious About Harmony).
In any case, how many times do you think this game of downloading again, and again, and again can go on? We're going to see some consolidation pretty darn quick. At least for now, as the players try to capture market share at all costs, consumers will probably be okay. If one of the music services goes out of business, their customers will almost certainly be picked up with a generous transfer by one of the other services (most likely Microsoft, since they'll most likely be the ones behind the DRM).
One of the scary things is, of course, that we will no longer have the current oligopoly of the music industry, but a duopoly of DRM camps. And once you've settled into lock-in with one DRM provider for music, are you going to choose another for movies, or television? Ultimately, we are probably looking at a duopoly for all mass-produced multimedia content.
And this is supposed to be good for artists, right?
Ernest Miller pursues research and writing on cyberlaw, intellectual property, and First Amendment issues. Mr. Miller attended the U.S. Naval Academy before attending Yale Law School, where he was president and co-founder of the Law and Technology Society, and founded the technology law and policy news site LawMeme. He is a fellow of the Information Society Project at Yale Law School.
Ernest Miller's blog postings can also be found @
1. Larry Rosenstein on June 10, 2005 07:19 PM writes...
"Of course, it remains to be seen whether Apple will make it easy for Microsoft to pull such a switch or not"
I don't know that Microsoft needs cooperation from Apple. MS doesn't need to unlock the DRM on the music; all they need to know is what the track is and verify that the track did come from the iTunes Music Store. That info is probably easy to parse from the header of each file.
Permalink to Comment2. Ernest Miller on June 10, 2005 07:28 PM writes...
Apple's DRM scheme is pretty well known. How difficult will it be for people to fake ownership in order to trick Microsoft? Verifying that the track did come from the iTunes store will be the trick.
Permalink to Comment3. Crosbie Fitch on June 11, 2005 12:47 AM writes...
Eh? Hacking DRM to spoof DRMed files that then obtain legitimate DRMed files from Microsoft?
These are seriously deranged hackers.
File laundering - Who'd a thunk it eh?
Permalink to Comment4. Will Parker on June 11, 2005 12:14 PM writes...
Show me the iTunes user whose music library consists primarily of music purchased from the iTunes Music Store, and I'll show you someone who hasn't been buying music for very long.
Restricting the discussion to just those who get their music from some online music store or another is at best short-sighted. For the bulk of digital music users who obtain their music through legal means, the primary source of music is their existing CD collection. Will Microsoft replace the 30+ gigs of high bit-rate AAC files I've ripped since iTunes 1.0 shipped? Didn't think so.
Next, there's the issue of player platform. Microsoft wants us all to switch to WMA, which isn't going to be usable on the portable music platform that owns around 80% of the market right now. Is Microsoft going to force it's way onto the iPod, so I can listen to their music while away from my computer? Didn't think so.
Finally, what's the attraction in purchasing from Microsoft instead of Apple? Do they produce or sell better music? Does their DRM weigh less heavily on the consumer? Have they produced innovations in digital music that have in any way that benefited the consumer? Frankly, the answer to each of these questions must be 'no'.
This offer is a sign that the Windows Media group has nothing fresh to attract customers to their platform. 'Look, it won't even hurt much.'
Give me a better way to listen to music, and you won't have to resort to lame offers to replace my current music library.
By the way, can we all just agree that subscription music services are a transparent attempt to pad Microsoft's bottom line without requiring them to innovate in any way? That will speed up any discussions about the worth of DRM in the future. Thanks.
Permalink to Comment5. fustian on June 11, 2005 02:50 PM writes...
Apple was early in realizing that computing and entertainment are essentially the same thing.
Microsoft fell for the Jobs gambit "all the money is in the iPod" and gave the Apple iTunes store what may be an insurmountable lead. Like everyone else, Gates knew that when cellphones come equipped with harddrives, the iPod is history.
Microsoft's original plan was to supply the technology that would let a thousand Mom and Pop music stores bloom and take back the market from Apple, but this turns out to have been a stupid idea. The music business has pretty low margins, and the only way to win is to have significant market share. Microsoft is coming late to this fight.
But this is just a proxy war. The real battle is over a whole new model of computing, called "wherever you go, well, there you are" computing. The idea here is that most people do not require their own computer. They use the computer to surf the web, send some emails, and for entertainment. All of these can be done as well or better by a thin client hooked to the internet.
Why would you want to lug around a heavy laptop with it's power brick, a few cords, some cd's and all the rest of it, if all you want to do is surf the net at the end of the day in your hotel room? Or at a coffee house. Or on a plane.
Microsoft recognizes that iTunes is a beachhead to the new world containing back end server, computing, and portable device components. They will spend what it takes to fight Apple in music.
Interestingly, at the same time that Microsoft recognizes they are losing in music, they now face another battle at their rear as Apple is moving to Intel. No one is quite sure what will happen when you'll be able to buy as single machine that can run Mac and PC software at native speeds. What will happen when the cost to go Apple for the average PC customer drops to almost nothing?
It will be an intriguing couple of years in technology.
Permalink to Comment6. Alfredo Octavio on June 12, 2005 10:49 AM writes...
iTunes has very little lock-in compared to subscription services. Because once you subscribe you have to keep paying in order to keep your music, you can still keep your iTunes Music even if you don't buy a single tune again. Furthermore, the other stores preclude you from switching OS. Once you subscribe to one of the WMS-DRMed music services you have to stay on Windows or lose your Music. With iTunes there is nothing of the sort. Even if you feel like deleting iTunes (the program) you can easily burn your music in CDs (something you should do as a back up anyway). You can't do that in the subscription stores... (not without paying extra).
Permalink to Comment7. Robert Sharl on June 12, 2005 02:40 PM writes...
Lock in might be greater on subscription, but churn is a bigger threat too. If I choose to buy from a different download store because they have something I want cheap, that doesn't mean I'll cease to frequent iTMS. I'm free to buy from as many as I choose (DRM issues aside). If I decide to move on subscription then the move is total and instantaneous. I move from any tune I want to hear on Napster to any tune I want to hear on Yahoo. There's zero chance of me buying both. This alone makes the subscription stores incredibly vulnerable to customer churn.
Permalink to Comment8. David on June 12, 2005 03:45 PM writes...
If Microsoft does indeed intend to play this game, I hope everyone who owns music from iTunes goes to the Microsoft site and 'exchanges' their music. I certainly will - and then I'll send an email to Microsoft telling them I have no intention using the files - but I enjoyed wasting some of their cash.
Permalink to Comment9. BOB on June 15, 2005 11:39 PM writes...
THis sucks, I Hate DRM, MS, APPLE and everbody that keeps music from being shared for free. Free Willy and Free the Music!!!!
Permalink to Comment10. jeff on June 16, 2005 03:58 PM writes...
Um, as I recall, there's nothing in the agreement you have with the iTMS that says you are allowed to just hand your music files over to anyone.
In fact, Apple have a DRM scheme in place to stop you doing it.
In short, Microsoft are actively inciting millions of Apple customers to piracy.
Thats litigable.
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