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Steve Jobs is Right Again – People Will Pay for Free Music

Steve Jobs is right again. In a post on the Apple web site he reacts to calls for Apple to open their Fairplay DRM system to licensing with an interesting (and insightful) proposal:
"The third alternative is to abolish DRMs entirely. 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."
This has gotten a lot of coverage today, from Business Week to the New York Times. Jobs' post was prompted by a number of European countries examining (and in some cases declaring illegal) the digital rights management (DRM) system that Apple uses with the iTunes music store and the iPod. The system is there to make sure that if you cough up $.99 for a song, you don't spread it around the internet for free. These countries say the effect is to lock customers in to iPods and iTunes so they can't buy another player without forfeiting their music. Jobs' response? He never wanted to have a DRM system in the first place. He would gladly dump the whole thing, and let you buy music anywhere you wanted and use any player you wanted - but it's not up to Apple. Although you might buy your Ben Folds from iTunes, Apple doesn't have any of the rights to that music - the vast majority of the time, the rights are owned by a major record label, with just four labels dominating the market. They require DRM. That said, why wouldn't Apple like the idea of DRM? A naive observer (or record company executive) would say it's good for Apple, too, since it means iPod buyers will use the iTunes store and vice-versa, and it forces people to buy songs instead of pirating them. This is why Steve Jobs has been so successful. He thinks more people will pay for free music than music tied up in the rules and inconvenience of DRM. And he's right. To understand why, you need a little history. Starting in the mid 90s but really picking up around 1997, MP3s started popping up here and there on web sites. At first it seemed like most MP3s were available from fan sites for particular bands or genres, but soon mass-popularity mp3 sites started popping up and getting a lot of traffic. Pretty soon most of them were filled with banner ads and made useless by spam. But no matter, because in 1999 Napster came out, allowing peer-to-peer sharing of music files. Millions of people used Napster to download songs. The record companies, represented by their organization the RIAA, took them to court. Napster, they said, was providing the means for the outright theft of millions of songs, and should be shut down. And it was, in 2001. But here's where Jobs (along with many other commentators who don't have billion-dollar companies behind them) saw something the record companies did not - people were downloading songs without paying, sure, but if you wanted to download music there was no way to pay for it. Clearly there was a demand, and where there is a demand, there is a market, but the labels were not interested in it at all. They said these millions of people were just theives, that no one would ever pay for a download. Nothing useful happened until 2003 when Apple opened the iTunes music store, and Jobs proved them wrong. I don't think it took a singular genius to do so, since a lot of people at the time were all saying the same thing: give us a way to pay for downloads, and we will. But he had the opportunity and the ability to convince record labels to try it out. And it worked. Downloads have not replaced CD sales, but they have been growing very, very quickly considering the labels said they would never work and they still compete with free downloads. Why haven't downloads replaced CD sales? They are different media, and in some ways will always be different - some people like the phsyical object, CDs make a better gift, etc. But a big part of the reason is that downloads are made artificially into an inferior good because of DRM restrictions. Here's an example of how DRM removes value. CDs are generally not restricted, but once in a while a label will try to restrict them in some way. On one of the very rare occasions we were listening to commercial radio, my wife and I heard a song by Kasabian that we liked. We went out and got the CD. The first thing we did after listening to it in the car was put it in my computer to rip the songs to MP3. I spend a lot of time at my desk so I listen to music at my computer more than anywhere else, so I generally rip all my CDs and listen to my large music library. The CD had some copy-protection scheme that caused the tracks to skip and become garbled. Like all DRM, there's a way around it, but the damage was done - I was too lazy to re-rip, and now I don't hear Kasabian tracks when working on projects or surfing the web and they have fallen off my list of bands to look for when buying music. Further, it felt to me personally like an attack on my computer. All my other CDs worked just fine, but this one didn't-taking something that works and making it not work is usually called "breaking it," and it seemed to me that the record label was trying to break my CD and my computer. I've never been one to take pride in having obscure tastes, but this no doubt contributed to my steady loss of interest in buying new mainstream music. Lately I've been sampling (often free) stuff from indies instead. The value of that CD was much, much less to me than others I had purchased because of DRM, and the DRM had the long-term effect of shrinking the music market, if only just a little bit (my personal spending). I spend much of my time as a programmer, and programmers tend to be logical, realistic people. We tend to think things like DRM are ultimately unworkable because we know there is no such thing as a perfectly secure solution. We also get annoyed when it is difficult to move data from one format to another, whether it's because the libraries are buggy or because of purposeful restrictions. We also don't take kindly to the ridiculousness surrounding the enforcement in the legal system - evidence that only works in court because judges don't understand the technology, penalties in the thousands of dollars per song, etc. So maybe I am biased against DRM. But if I could buy songs from iTunes (or wherever) without DRM, and play them on whatever device I want, I would. I don't think I'm the only one. And Jobs has been trying to make this point for a long time. In a Rolling Stone interview from 2003 (thanks to Guillaume Laurent’s tech blog for reminding me of the reference) he explains:
"When we first went to talk to these record companies -- you know, it was a while ago. It took us 18 months. And at first we said: None of this technology that you're talking about's gonna work. We have Ph.D.'s here, that know the stuff cold, and we don't believe it's possible to protect digital content. ... What's new is this amazingly efficient distribution system for stolen property called the Internet -- and no one's gonna shut down the Internet. And it only takes one stolen copy to be on the Internet. And the way we expressed it to them is: Pick one lock -- open every door. It only takes one person to pick a lock. Worst case: Somebody just takes the analog outputs of their CD player and rerecords it -- puts it on the Internet. You'll never stop that. So what you have to do is compete with it."
Some say this is just a ploy to deflect criticism from Apple to the music industry. It seems to me that if Jobs just wanted to deflect critism, he would just start licensing Fairplay. If he wanted to deflect criticism and maintain a competitive advantage, he would license Fairplay at a high engouh cost that, when coupled witht he demands of music publishers, would make competition with iTunes very difficult. He could decide to to it today and have to first licensee up and running in a week. But that's not the point - the point is expanding the market as a whole. And the best way to do that is to make the product more valuable to the consumer, and one very quick, very easy way to increase the value is to dump the DRM.

iTunes 7 Crashes and Freezes, or How to Ruin the User Experience

Apple gets a lot of credit for putting effort into the user experience. Many attribute the success of the original Mac, iPods, the iTunes Music Store, iBooks, and their other products to ease of use. But building a brand based on user experience can be much harder than, say, a brand based on low prices (like Dell) or ubiquity (like Microsoft). Because it doesn't take too much to go from "it just works" to "it doesn't work," which has been my experience with iTunes 7. The worst problem: it freezes up whenever I don't have an internet connection. For a long time, I used WinAmp as my MP3 player. As a nerdy web developer, I'm stuck at my computer for inordinate amounts of time, so I tend to listen to a lot of music through my SoundBlaster. By long time, I mean 1997 through a few years ago. I didn't have much of my collection ripped, so a static list of the 100-or-so songs I did have converted was fine. After ripping the majority of my CD library, and getting my wife an iPod, I started using iTunes. WinAmp has media library features, but I just liked iTunes better. Fast forward to 2006, when iTunes version 7 appears. It added some cool features, like album covers. It also was pretty buggy. Apple has released a few fixes so far, but now with even the latest version - iTunes 7.0.2 on Windows 2000 - I run into issues whenever my Internet connection goes down, or I have VPN up and running, blocking all traffic. It will start up and play like normal, but then after a few songs, the audio cuts off. Sometimes the track looks like it is continuing to play, others the time stops ticking off as well. Skipping to the next track results in more silence. When I finally close iTunes, it doesn't really close - I have to go into the Task Manager and manually end the process. I've done some Googling to see if there was a solution, but so far no luck. I found a blog post by Don Loper talking about freezing, but disabling automatic checking for podcasts did not resolve my issue. I tried disabling Audioscrobbler, a great plugin that uploads what you've been listening to to, and anything else that looked like it might be trying to send or receive data. Still no dice. Now, this is obviously not a huge problem, but when I'm dialing in to work from home, it would be nice to be able to listen to music. I can always dig up WinAmp, but I don't want to bother importing or recreating playlists. My solution so far has been to listen to NPR on my headphones. The risk that Apple runs with each release of iTunes is that bugs, even if they are fairly uncommon, can put the breaks on the flow of the user experience like Fred Flinstone jamming his feet through the floor of his stony, Neanderthal car. Which is why all the hype (and the 6 month lead time) around the iPhone could still blow up in their faces. My advice: test, test, test, and do it with actual users. Oh, and anyone have any ideas to fix my freezes that I haven't tried yet?

We called it – 8 Apple iPhone predictions that came true

Today Apple finally released details about their new iPhone. There have been rumors and speculation about how Apple could bring it's iPod design skills to the mobile phone world for years now. Lots of web sites have posted predictions, feature wish lists, insider information and supposed leaks, including this one.

Does the iPhone live up to the hype? We'll take a look at it by going down the list of our 10 predictions about the Apple iPhone.Apple iPhone

1. Simple controls. - Apple has struck a blow against the proliferation of buttons by creating a phone with only a few buttons and a large touchscreen. This is a welcome change from smartphones and PDA-phones which have a whole QUERTY keyboard. The keyboard is nice the 5 percent of the time I'm taking notes to texting, but 95 percent of the time they just make it harder to hit the button I do want.

2. Consistent controls - This is a little bit harder to judge without having an iPhone in hand to play with, but from the demos and the fact that the iPhone runs OSX it seems likely you won't have to learn totally different ways to navigate your voicemail, songs, and photos any more. At the very least Apple has solved the mystery of the Green “dial� button and the OK button.

3. Innovative controls with obvious affordances - The iPhone's control scheme definitely falls into the innovative category, but is it's use obvious? Although I missed my guess about hanging up the phone, some of the features are automated responses to actions people are already very used to performing. The touch screen turns off when you put it close to your face, and the display shifts to landscape when you turn it. The learnability and obviousness of the individual applications which use the touch screen are a little harder to judge just yet (especially for old codgers), but it is nice to see the use of large, simple icons like the Palm or Blackberry rather that a Windows-style Start Menu, which just plain sucks on small devices.

4. Streamlined interaction design. - Apple has chosen to put Phone, Mail, Web and iPod icons along the bottom of the screen for ease of access. Presumably they expect other features, like the Calendar and Maps, to be used less often and so they are represented by icons filling the top of the screen. Assuming they are right about which tasks are most commonly used, this is a smart move. Calling and iPod functionality are obviously the biggies and are located appropriately at the corners in compliance with Fitt's Law. Will email and web browsing be as important? Millions of blackberry users say yes to the former, and built-in wifi make the latter possible.

5. No more disgusting face grease on your screen. - Unless the touchscreen is coated with some miracle material, maybe not. But wait - it looks like the solution comes in the form of the included hands-free headphones and optional bluetooth headset. I'm still a little surprised that the horror of gobs of face grease all over his beautiful device didn't push Steve Jobs over the edge. Apparently he can console himself with the thought that most people will use the headphones to listen to music and all the cool kids have headsets.

6. No more lock in - Not so fast. The iPhone is a Cingular exclusive, at least in the U.S., at least for now. It works on GSM, which is a widely used standard, and I am pretty amazed that Cingular is allowing a device with built-in wifi, but I will take this one as a failed prediction.

7. It will look really, really nice - This is, of course, completely subjective, but I have a feeling a lot of people will be lusting over iPhones when they hit stores this summer.

8. Integrated voicemail, chat, SMS and email - Hit the nail on the head with this one. This is the first device I've seen which takes the obvious step of allowing you to manage your voicemail the same way you do email. No more listening to 4 messages to get to the one you actually want to delete.

9. No camera - I was completely wrong on this one. The iPhone has a 2 megapixel camera built-in. I still think cameras on phones are really only used by drunk people and people with new phones. Maybe I have to add a new category, people who will soon be famous on YouTube.

10. Connectivity - The iPhone has bluetooth, Wifi, and EDGE meaning lots of potential for connectivity. Since it runs OSX, I'm guess that means the sky's the limit on how you connect and transfer files around. This is a very smart move – get your customers used to using the Internet often enough with Wifi, and they'll start wanting to use it all the time with EDGE (and an expensive data plan).

So that's that - our record was 8 out of ten. Not bad for a site with no insider information.

What did we miss? Let us know in the comments below.

10 Reasons You Will Want the Apple iPhone

Since the dawn of time, man has wondered: will Apple come out with a iPhone, and will it match the success of the iPod? This is the Internet, of course, so by the dawn of time I mean three or four years ago, well before the Motorolla Rokr came out. Despite whipping the rumor mill into a frenzy, the Rokr ended up being not much of an Apple iPhone and was immediately overshadowed by the iPod Nano. Now, it seems Apple may be actually coming out with an iPhone in early 2007. And you are going to want it. Here's why. (A quick disclaimer: I don't have any inside info about Apple or the iPhone. This list is an educated guess. I like to think of it as "analysis" rather than "idle speculation.") 1. Simple controls. My very first cell phone, a Kyocera 2135, had a keypad, a directional pad, a total of four buttons and a couple of menus. Since then, as I have gotten new phones and new plans, the number of buttons and menus has increased at an exponential rate. It looks like amazing progress, a Moore's Law of mobiles, except most of the time, I'm just trying to make a stupid phone call. The evolution of the iPod has been a study in simplification, to the point where all you have now is the clickwheel, unless you have a Shuffle, in which case you have even less. 2. Consistent controls. When you get a new phone, how long does it take for you to get used to it? Forget any new features for now -- what about just using the "dial", "hangup", "OK", and other common buttons in different contexts? Earlier cell phones were often better current phones in this regard, probably because they had less functionality. When a phone has both a dial and an enter button (like the Treo), you're not always sure which is appropriate in which situation. I can almost guarantee the iPhone will embrace the "it just works" attitude Apple is known for. I know my contact list is getting way too long to navigate with up/down arrows, and even jumping by letter is becoming tedious. Look for the contact list to work the same way a playlist works, and expect to spend a lot less time figuring it out and more time just using it. 3. Innovative controls with obvious affordances. Big words, but all I'm saying is that the interface will be different from what's out there, but won't require much explanation. Affordnaces are surfaces and shapes that imply use - for example, a handle on a door implies "pull" while a horizontal bar implies "push". My guess? A haptic interface for common, atomic actions. Instead of needing to find and press a little button to hang up, maybe you can just shake the phone--think erasing an Etch-a-Sketch. 4. Streamlined interaction design. Current phones include a lot of functionality - calling, text messaging, taking photos, shooting video, sending email, surfing the web, etc. The current solution is a burrito-like seven layers of menus and icons. If Apple is smart, the iPhone will make sure the most common tasks will be the most visible and easiest to get to. Think of the actions you perform the most with your current phone - making a call, finding a contact, hanging up, etc. The main difficulty for Apple will be effectively combining music player and phone functionality without adding a whole layer of menus or icons. Something like Front Row might be a step in the right direction. Listening to music is a more passive activity that calling, and you don't want to add a "switch to phone mode" step when the phone rings, so It's not exactly the right metaphor. 5. No more disgusting face grease on your screen. This is, in my opinion, the holy grail of cell phone design. There have been a few phones that tried to address this issue, but the vast majority of phones are shaped such that you must press the screen to your face to make a call. I know what you're thinking. "But my face isn't oily and gross." Yes it is. Take out your phone and really look. Perform this experiment: clean the screen and buttons, eat a couple slices of pizza, and call your grandma (you really should call more). Now look at the screen. I cannot imagine Steve Jobs allowing skin oil and other human excretions on his beautiful devices, let alone requiring it just to make a call. I have seen the press conferences, this is a man who exfoliates. I'm not sure how exactly they will get around this one, but is it possible they might make a phone... actually shaped like a phone? I have never had this issue with a landline phone. 6. No more lock in. I'm not talking about the elimination of Apple's one major lock-in scheme, requiring iTunes for purchased, DRM-ed music. But notice that with the iPod there are no limits on loading up your own MP3s, photos, etc. My guess is the iPhone will be similar. This is actually revolutionary for a cell phone. There is a good amount of hardware and functionality built in to the phone in your pocket that you don't have access to. It's because the carriers will block anything they would compete with any service they offer (or think they might offer some day in the future). They also like to lock you in to a contract when you purchase the phone. Apple, debuting a shiny new must-have cell phone, just might have the leverage needed to just say no. 7. It will look really, really nice. This is subjective, and I'm sure there are a few people out there not impressed by the iPod. It's clear, though, that Apple knows how to fashion artifacts that a large number of people drool over. And this mass of drooling people seems to include geeks, hipsters, famous people, and all the popular kids at school. 8. Integrated voicemail, chat, SMS and email. This isn't a new idea, and there are plenty of carriers and startup companies promising to do this really soon now. As far as I know, there really isn't a solution that makes the different forms of messaging work together that has been adopted by the general public. It would require integration with the service providers (difficult) or a chip beefy enough to encode audio, but imagine if you could store and manage voicemail and SMS as easily as you do email, through a simple visual or audio interface. There is plenty of hard drive space on an iPod, so why not apply the Gmail concept of effectively infinite storage to voicemail? 9. No camera. I'll say up front that I'm not nearly as confident about numbers 9 and 10, but I have a feeling the iPhone will not have a camera. Why not? It is a little-known fact that people only use their cell phone cameras in two situations: the first week after purchase, and when drunk. The cameras themselves are not very good, the shots are low resolution, and the carriers have made it their mission to make getting the photo to your computer or printing it at Walgreens difficult and expensive. So why not leave it out? That's one less thing to squeeze into the form factor, one less item in the menu, less clutter. 10. Connectivity. At the very least, expect to be able to connect to anything an iPod can connect to now. The iPod does not have wireless features like the Zune, but it seems like the Zune was crippled for DRM purposes. Cell phones are inherently wireless, so it will be interesting to see what Apple does here. Is it possible they might make bluetooth actually live up to its promise? Specifically, it would be really nice if it was easy to beam contact info, photos, etc. to others. This is 2006, there's no excuse for making us strain to hear someone's number in a loud club or try to manually enter names and numbers while being jostled by a crowd. And every phone I've ever played with that can store or take photos makes it a major chore to ever get them off the damned phone. I'm not too sure this will happen, because getting the bluetooth turned on with my wifes iBook was a chore, and getting it to actually connect to my Treo was a pain too. Of course, there's no guarantee the iPhone will have any of the above.  It's possible that Motorolla or Nokia's next phone will cover enough of the items above to become the next must-have gadget.  But they've had plenty of chances.  I'm guessing it will take a company with a new perspective to make a really great phone, and Apple just might be that company.