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The end of DRM for online music?

Over at Wired, Leander Kahney comments on this week’s deal between Apple and EMI to sell EMI’s catalogue free of digital rights management (DRM):

How Steve Jobs Calls the Tunes

Steve Jobs’ new partnership with EMI to sell music without copy protection is a lesson in how to wield power in the digital age.

Carefully and strategically, Jobs set up the pieces to create a new business model for online music — one without copy protection — and now we’re starting to see the dominos fall.

The first to topple is EMI, the smallest and weakest of the big four record labels. With EMI on board, the other record labels must act. Either they join the DRM-free party, or hold out like dinosaurs from a bygone, locked-down age.

A key move that brought them to the table was his February open letter critiquing DRM copy-protection systems — the first time to my knowledge that Jobs has expressed his thinking in such detail.

At the time, Jobs’ letter seemed to be in response to several European governments that were making threats to break the lock between iTunes and the iPod. Now the open letter looks like a lever to weaken the position of the record labels at the negotiating table.

Jobs wrote:

“Imagine a world where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat. If the big four music companies would license Apple their music without the requirement that it be protected with a DRM, we would switch to selling only DRM-free music on our iTunes store.”

With the letter, Jobs planted the idea that DRM is the wrong way to run an online music business. Since its publication two months ago, the letter has created a broad consensus that the current copy-protected system isn’t working, and puts considerable pressure on the labels to drop DRM. When Jobs published the letter, he likely already had EMI in his back pocket, and now the other labels are on the defensive.

The open letter also allowed Jobs to take a leadership position on the copy protection issue. Thanks to the letter, Monday’s deal looks like it was his idea, not EMI’s. If Jobs’ hadn’t published the letter, or published it now after the fact, people would assume EMI came to Apple with idea — now it appears the other way around.

Only Jobs has the power and the cojones to make such a move.

Only Jobs could so boldly rip down the system he had previously built — the iTunes music store, which is the most-successful online store (perhaps the only one), which was built on copy-protected music, and force the music industry to follow suit. He’s tearing down the old system for something much more modern — high-fidelity tracks that can be played on any device. Oddly for a business leader with a reputation for tight control and lock in, Jobs is ceding control of a locked-down format in favor of a much bigger, open market.

The move is sure to remake the online music business. The old DRM system is going to be swept aside in favor of a much more open approach. Jobs is already confident his power plays will work. In a statement on Monday, Jobs said he expects half of the songs on iTunes will be sold DRM-free by the end of the year.

It will also have ramifications for other digital media further down the line — maybe movies, Jobs’ other business.

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