03 April 2007

British press reaction to EMI/Apple

I've stuck by my pledge to steer clear of British newspapers' technology sections. And a slight decrease in blood pressure has ensued.

However, I couldn't help come across the Guardian Editorial's curmudgeonly and ignorant commentary on the EMI/Apple announcement I covered yesterday.

Who gains from this deal? Well, the public does — a bit (my emphasis).

The public is the LARGEST beneficiary of this deal, although perhaps that is only strictly true if it is repeated by most/all of the other labels. The significance of this deal to the public is HUGE. The whole DRM edifice has had a key structural pillar removed and it will surely crumble. The key beneficiary from this has to be the law-abiding, music-lover. The secondary beneficiaries are those who innovate to make the most of this development. Apple and EMI may be two of those companies, and the bricks and mortar retailers may be the losers. But those outcomes are far from certain.

Until now, what are called digital-rights management (DRM) restrictions meant that you could buy an EMI track from Apple's music store — but you didn't really own it.

You owned it then as much as you owned it now. You could in theory (and legally) do the same with it then as you can now. Just now, it will be easier and potentially with a higher quality.

Some will not be happy at paying a premium for the privilege, especially as many smaller labels and online shops already sell music free of copy protection — and cheaper, too.

You have a choice. And if you buy an album, you pay no premium. If you buy a single you have both flexibility AND better quality. And you can move from lower quality to higher quality/noDRM by paying the difference (no additional penalty), just as you can move from buying one or two tracks to buying the whole album at no penalty (due to recent "Complete my album" feature). I am over the moon that both the restrictions are removed AND the quality is improved (the latter I did not expect).

Mr Jobs has only recently joined the chorus calling for DRM-free tracks, but this deal makes him look like a consumer champion.

Of course, Jobs' actions for Apple should be in Apple's interests as a business entity. But please name me someone/anyone in the entrenched music industry who has made this issue clearer? Do you ignore his claims that this is the way Apple wanted to do it from the start? The apparent DRM lock-in to iPod came only because of the runaway success of the iTunes/iPod phenomenon. Plenty of other companies could have made this happen then. And of course, it is not a lock-in. Jobs pointed out the futility of operating 2 business models - physical and download - in which the physical is unencumbered and the download has been loaded with restrictions.

Jobs IS a consumer champion in that he has done more for the music-loving public than any other CEO involved in the business. He has been rewarded for that by the public who have overwhelmingly chosen his products. He has been pilloried by a select group of press (concentrated somewhat in UK and Europe) who somehow resent this success. Please score Jobs next to Gates, Bronfman (Warner), Vivendi/Universal, Sony (home of Rootkit), etc. Please suggest an industry figure who should be added to that list ahead of Jobs?

Apple probably will lose some sales from iTunes, but its iPods are the real money-spinner.

I guarantee that Apple will increase its sales from iTunes as a result of this arrangement. This announcement is about levelling the playing field between physical and download. Apple's marketshare of downloads MAY decrease, but it's share of the overall music market will undoubtedly rise as barriers to buying download vs digital (or pirated of course) have been significantly changed. This one statement proves how little the Guardian understands the business it's writing about.

Furthermore, the move does NOTHING directly to help iPod sales. In fact, if anything it gives people a freedom to move away from iPod if they have (in rare cases) a substantial investment in music downloaded via iTunes. It will help iPod sales ONLY if the public perceive that the extra freedoms justify more iPod purchases either absolutely or at the expense of other players. Jobs is brave enough to see that anything that benefits the consumer CAN benefit his company if they can react well. Compare that to our Redmond-friends who take the view that the more they benefit the established oligopolies, the more they will benefit.

And, as Jupiter Research has pointed out, the format the unprotected tracks will be sold in is not supported by many digital-music players. Mr Jobs was very keen yesterday to point out that DRM-free music can be played on non-Apple machines. But that requires other manufacturers to license the technology first. So the iPod, which has already sold 90m worldwide, keeps its chokehold on the music industry for now.

Again this is just bollocks. Here is what the premier Jupiter analyst Michael Garten berg had to say. My interpretation of Michael's views are far closer to what I've written here, than the Guardian have interpreted (and I see no mention of what they quote in Michael's post).Perhaps the Guardian were the "media outlet" referred to in Michael's later post - When reporters set agendas which is truly hilarious (if not frightening)? Michael of course was a (brief) Microsoft employee, and is considered the leading Jupiter analyst in this area.

The Guardian has also written in such a way that it implies Apple is the one that grants that license or (at the very least) that there are restrictive issues involved in getting that license. It confuses the issues of the format of the tracks, the restrictions involved and the technology of the players. From a player perspective, there are many players that support the MPEG-4 Advanced Audio Codec standard (note lack of word Apple there), that Apple has CHOSEN to support and LICENSED to offer. I do not know what the licensing terms are for AAC and how they compare for instance to either MP3 or WMA. But AFAIK, anyone can license AAC should they wish to. My last 2 Nokia phones do that, so does much Sony and Sony Ericsson equipment. Even the Microsoft Zune will play AAC! Companies that have chosen not to, have made that decision deliberately and they are the fools.

If Apple had chosen to use MP3, it would have been dropping the quality of material or increasing file size even further by using 16 year old technology. AAC is the logical and approved heir to MP3. It would be like Apple bringing back the 5 1/4" floppy drive to support the laggards.

If Apple had chosen to use WMA, it would have been choosing a proprietary (though licensable) format locking people into the business practices of that well-known and convicted monopolist that is Microsoft. WMA has also been shown in numerous tests to be inferior to MPEG-4 AAC (indeed only WMA Pro which is not used by most players comes close to AAC in quality). You can find links to this on Wikipedia as easily as I did and make your own mind up. Apple has successfully taken on the proprietary WMA standard and defeated it to our long term benefit. Not by imposing it's own proprietary standard but by choosing an open standard. Try to imagine the parallel universe that is WMA-dominated (Microsoft rights, viruses, incompatibilities, etc) and you will surely see this significance. Apple was ALONE in this fight. The competition authorities should be turning on the companies that insist on licensing a proprietary standard. Any music sold in WMA format for instance should be pounced on as anti-consumer whether DRM'd or not.

In 5 years time, people will all be using the open MPEG-4 AAC with just legacy use of MP3 and maybe WMA. We will all have benefitted from that. It will be because of Apple's choices that this is the result. No other company has done more to push that better, open standard than they have (watch the same happening for MPEG-4/AVC/H.264 video).

With this move (and assuming others follow), Apple has broken the tight linkage between the selling of music online and the iPod. They had earned that linkage through doing a great job, and they have not abused that position (yet). The opportunity is out there now for other companies to innovate and offer great download services. Or, for others to innovate and offer great players that allow people to use everything they'd already bought on iTunes or used on their iPod. Or for others to provide an even better service than iTunes/iPod. There are now far less restrictions at least as far as iPod/iTunes goes. I will be able to buy my music from anyone who supports MP3 or MPEG-4 AAC and use it on my iPod or other device that supports either MPEG-4 or MP3 (you should be easily able to downconvert from AAC to MP3 with imperceptible quality loss from a 256kbps AAC file, compared with from CD). I will also be able to enjoy my purchased music from anyone who provides a player which supports these (open) standards. Sorry about the WMA-retards. You got what you deserved.

Apple has offered others the opportunity to get into the iPod world. Sure you could do that through eMusic and a few others. But they were limited by the major labels insisting on DRM. Without DRM, anyone is free to offer iTunes OR iPod users material if the licensee agrees. And this is what it has always been about - the licensee. Apple has opened the download market to anyone and there are no restrictions for those people entering the market - at least any that are governed by Apple (contrast this with Microsoft/WMA). It has done that because it has its sights set on the music market as a whole. As I said in the previous post, this is about having 30% of the music market rather than 70% of the music download market which itself is only 10% of the overall music market.

It is up to the consumer to vote with their wallets. They can support EMI's choice - either with Apple or without, and send a message to the other major labels. If enough consumers withhold support from the other labels by refusing to purchase that material (remember to boycott the CD's too if you really want change!), then perhaps the others will get that message. I, for one, will support EMI's move by choosing some of their material to buy online (it's a pity that it's so difficult with this label's rather poor roster of artists!).

I applaud Jobs and Nicoli for their actions. Sure they are self-serving. But they are self-serving because they embrace change and innovation, not because they preserve the status quo. One (Apple) is done from strength, the other (EMI) from weakness, perhaps. But they are still bold moves. WE are the main beneficiaries. Let's seize that. And, to the Guardian, perhaps if you can't comment gracefully or accurately on news you seem to have no grasp of you should perhaps just keep quiet?

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Unknown said...

"Perhaps the Guardian were the "media outlet" referred to in Michael's later post - When reporters set agendas which is truly hilarious (if not frightening)?"

If you think about it, an organisation that only wants someone with a particular point of view is going to be one which sets the two sides against each other publicly. That is, a radio or TV outlet. I'd bet you 10 to 1 that that "media outlet" was TV - and I'd bet strongly it was a 24-hour rolling news type one.

Seriously, though, you need to get past your ire at The Guardian.

And also - which other papers have technology sections for you to avoid? One needs to know what is considered competition.

Anonymous said...

By way of cold comfort, it is not just technology: I find that mass media coverage of ANY topic I have a decent level of knowledge about it misinformed and misleading.

Presumably their coverage of things I do not know much about is equally bad, it is just not as evident to me.