Misguided NYT article on France’s anti-FairPlay efforts

A couple of days ago, this disturbing pro-DRM piece in the New York Times: Austan Goolsbee comments on the French government’s moves to make Apple open up its proprietary FairPlay DRM. N.B.: in the meantime, there is nothing left of the original proposal — from BoingBoing: “[the proposal] has been hijacked by entertainment companies and DRM vendors, and now promises to be one of the worst DRM laws in the world.” But let’s go back to the NYT article:

In their fervor to free listeners from the shackles of their iPods, French politicians have abandoned one of the guiding principles of antitrust economics: penalize companies that harm consumers, not the ones that succeed by building better products.

Well, I think disabling one’s legally purchased files because they’re un-DRMed, taking away consumers’ paid-for rights to stream, and including a clause that allows Apple to change the license agreements for music you’ve purchased is pretty harmful stuff. Not to talk about all the iTunes compatible third-party music players we will never see…

If the French gave away the codes, Apple would lose much of its rationale for improving iTunes. Right now, after the royalty payment to the label (around 65 cents) and the processing fee to the credit card company (as high as 23 cents), not to mention other costs, Apple’s margin on 99-cent music is thin. Yet it continues to add free features to iTunes because it helps sell iPods.

Opening the codes threatens that link. Apple would need to pay for iTunes features with profits from iTunes itself. Prices would rise. Innovation would slow.

I don’t understand the author’s reasoning at all. Over the last year, Apple has indeed been adding features to iTunes that make it easy to put free, user-generated content on your iPod, Podcasts and a video conversion tool being the most important two. These free features however, aren’t added because the iTMS songs are DRM-protected — quite the contrary: Apple sees that it is a good idea to jump on the Long Tail bandwagon and make it easy for people to enjoy user-generated content on-the-go. Advantages? More people buy iPods and Apple has more bargaining power in its talks with record labels. (*)

In addition, imagine Apple would invest the money it now spends for DRM and for lawyers tracking down circumvention/compatibility efforts in R&D instead — I bet we’d see even a better iPod product.

Even worse, sharing the codes could make it easier for hackers to unravel Apple’s FairPlay software. Without strong copy protection, labels would not supply as much new music.

Welcome to 2004: hymn has been around since August of that year.

(*) Update 2006-05-02: the Financial Times writes that Apple has renewed contracts with the four largest music labels to continue selling songs for 0.99$ per download, instead of going for a variable pricing system, as is currently the case in Japan. A related must-read: Joel Spolsky’s “Price as Signal”.

Comments on “Misguided NYT article on France’s anti-FairPlay efforts” (feed)

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  1. (ignorant iPod non-owner): I always thought the reason people buy iPods was for the iPod itself, I’ve never heard someone say “I just got this so I can buy songs I bought on iTunes”

    Doesn’t Apple have enough confidence in its product design and UI to let the iPod stand on its own merit?

    » Chris on May 2nd, 2006 at 13:13

  2. someone?

    » twizalo on July 18th, 2009 at 20:59