Monday, January 17, 2011

The Steve Jobs Media Playbook

Information wants to be free. Steve Jobs is not usually associated with setting information free, however he set music free and may well be on the way to set more media free. Here is the playbook that he used to set music free, and an examination of whether he can set other media free.

Back at the turn of the millennium digital music was starting to make waves and Apple introduced their first iPod in 2001. At the beginning, it was not a great seller. Next year the second generation iPod that worked with Microsoft Windows came out and sales started to take off. The next problem with promoting sales of the iPod was to let people buy music directly. In those days, to buy music you had to buy a CD, rip it onto a computer and then sync the music onto the iPod.

The record companies did not like digital music. It was in the process of destroying their business model of selling physical goods, that is CDs, which had been plenty profitable until the internet and file sharing had come along. Thus the record companies knew that if they were going to allow anyone to sell digital music, the music content had to be protected by a strong Digital Rights Management (DRM) system. Basically DRM encrypts digital content so that it can only be accessed by a legitimate user on a accredited device.

Now there is one important thing about any encryption, it depends upon a secret key to unlock the content. If too many people know a secret, it is no longer a secret. So it made perfect sense for Apple to have their own DRM system and be responsible for keeping their secret safe. The only problem was that Apple effectively controlled the music distribution channel because of the DRM system and its secret. By providing exactly what the music business had asked for, Apple managed to wrest control of the distribution channel from them.

In the past I have joked about the music business controlling the industry by controlling the means of production. In fact they controlled the business by controlling the distribution channel between the artists and the record stores who sold the music. When the iTunes store became the prime music distribution channel it was game over for the recording industry. They had to climb down and offer their music without DRM to escape from its deadly embrace. DRM free music has not stopped iTunes but it does open up other sales channels.

The remaining question is what will happen with other media? Apple will not dominate the tablet market as it has the music player market so it will not be able to exert the same influence. On the other hand, other media is not a collectible as music. We collect music because we want to listen to it over and over again. With most other media, we are happy to consume it once and then move on. Thus we do not feel the need to own the media in the same way. I have some more thoughts that will have to wait for another time.

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