November 1st, 2005
Apple: Not a DRM monopoly yet, but behavior is monopolistic
In another blog entry that I published earlier today regarding how something as simple as the playback of one track of a music CD can result in the surreptitious installation of a Digital Restrictions Management (DRM) Trojan horse on your system, I also discuss how the DRM technology found on certain CDs is incompatible with Apple’s DRM technology known as FairPlay. The result of this incompatibility is that the music on DRM-protected CDs from Sony music cannot be loaded into iPods. I’m not sure if the same restriction (what the "R" clearly stands for in "DRM") turns up with portable devices that use Microsoft’s DRM technology.
In what has to be one of this industry’s strangest ironies, the company that put the protection in there is responding by offering a workaround that defeats the copy protection. But according to a story on CNN.com, the record label is also "urging people who buy copy-protected titles to write to Apple and demand that the company license its FairPlay DRM for use with secure CDs."
Although no one has officially declared Apple’s FairPlay to be a monopoly, Apple, by not licensing its technology, is using tactics that are brazenly monopolistic. Not only is the practice not in the best interests of the consumer, it is restraining what should be a free market. For example, Sonos, a company whose digital hi-fi gear depends on the wireless distribution of music, is technically a competitor to Apple, who makes a similar technology known as AirTunes. In fact, to the extent that Apple’s gear could serve as a centralized music distribution solution (wireless or not) — a direction that both Apple and Microsoft (with its Media Center) are taking their offerings — Apple is technically in competition with just about all hi-fi companies whose gear does the same thing. According to Sonos executives, Apple has so far refused to license its technology to them. Off the record, I have had other makers of digital gear complain about the same problem. Sony has apparently hit the same roadblock.
By not licensing its technologies to those companies, Apple is disallowing the playback of iTunes purchased music — now the most popular channel for a la carte digital song purchasing — through its competitors’ gear. The practice is a classic monopolistic tactic that can result in restraint of trade and foreclosure in competition. With its sights set squarely on the home entertainment market, Apple — a company that makes more profit on its gear than it does on the sale of 99 cent songs — clearly has the reason and the motive to keep the traditional hi-fi gear vendors at bay while it looks to become a much bigger player in that market than it currently is (particularly with Microsoft going after the same thing, and Intel of course being the big winner since Apple’s future gear will be Intel-based).
Meanwhile, with every Fairplay-protected song or video that gets downloaded from the iTunes Music store, purchasers of digital content are helping Apple to tighten its grip. Stop the madness. Declare inDRMpendence. Just say no to DRM, wherever it rears its ugly head.
