“In 1985, Bill Gates wrote a memo to Apple Computer, saying it should license its Macintosh operating system. Gates offered to help Apple find hardware partners with the aim of making Mac OS a standard. This would, of course, have created a much larger market for Mac applications, of which Microsoft was the leading supplier,” Jack Schofield writes for The Guardian.
“Recently, Rob Glaser, the founder of RealNetworks, has been sounding a similar warning about the digital music business, where Apple is the current market leader. He also wrote privately to Apple’s boss, Steve Jobs, suggesting an alliance against Microsoft – a letter that Apple somehow leaked to the New York Times,” Schofield writes.
“Both Apple and Real run music download services, and both use the standard, patented AAC (Advance Audio Coding) file format, but they use different copy-protection or DRM (digital rights management) systems. Thus, iPod users can only play licensed music if it is downloaded from Apple’s own music store: they cannot play music downloaded from Real’s music store. According to the New York Times, Real wanted to license Apple’s Fairplay DRM in exchange for making the iPod its preferred portable player,” Schofield writes.
“It’s not clear why Apple rejected this idea. It would provide iPod users with another large source of music downloads, increase Fairplay’s market share, and encourage sales of iPods. Real’s Rhapsody service would obviously compete with Apple’s iTunes Music Store, but Apple makes little, if any, profit from 99c (55p) music downloads. Its strategy is based on selling iPods, and Real’s proposal would surely help with that,’ Schofield writes. “Either way, rejecting the proposal makes Apple look proprietary and anti-competitive, and leaking the letter makes Apple look untrustworthy. Both of these are bad for Apple.”
Full article here.
MacDailyNews Take: Schofield just doesn’t get it. Again, we will repeat: If iPod holds a significant share of the market, there is no reason to let anyone into the party, as long as Apple’s iTunes Music Store offers similar content to the other stores. And iPod does hold quite a significant share of the market.
This is not a matter of developers having to choose which platforms to support. The developers in this case are the musicians (in most cases unfortunately shackled to the music labels). Encoding a song into AAC/Fairplay is just as easy as encoding in WMA. Musicians don’t have to rewrite each song for AAC or WMA. iPods demand AAC/Fairplay from an online music store (they also play MP3, MP3 VBR, Audible, AIFF and WAV formats). And consumers seem to be demanding iPods. Sorry, Real.
Also, Microsoft has a big problem here if they want to do the “music thang.” iPods don’t do WMA. Apple is currently selling iPods at the rate of more than one every nine seconds. Microsoft’s desktop monopoly cannot help them here. Do not be afraid, Jobs knows what he is doing; and this has nothing whatsoever to do with 1980’s OS wars.
An interesting side note: If Apple holds approximately 2% market share for personal computers based upon last quarter’s Macintosh sales, think about this: Apple sold slightly more iPods than Macs last quarter. What is the iPod? It is a platform itself. It contains an OS, a hard drive, input devices, a display screen, input and output ports, etc. iPod is a computer. So, in reality, Apple’s “computers” (Mac and iPod) now hold over 4% of the personal computer market. And Apple’s iPod controls over 50% of the MP3 player market (source). “Developers” will want to make damn sure their wares play on iPods, won’t they?
And I suppose we need to remind everyone yet once again that Steve Jobs wasn’t around after 1985. If he had been, I don’t think there is any question that things would have turned out differently. Funny how nobody in the Wintel media world has noticed the true significance of the iPod, especially when Jobs blatantly sounded off with the re-release of “1984” at this year’s MacWorld Expo. His subtle hint when showing the revised commercial: Remember how significant the Mac was in 1985 and how it changed the world? Well here we go again, and this time, I’m here to see it though.
MDN wrote, “Musicians don’t have to rewrite each song for AAC or WMA… And Apple’s iPod controls over 50% of the MP3 player market.” And that’s why MDN is correct about this. Apple is about to own the whole ball of wax.
Who cares if you can buy songs from iTunes Music Store and most people have an iPod? With most people having an iPod, they have NO NEED FOR WMA! This has got to be killing Bill Gates. Your time has passed, you lying, cheating, Kermit The Frog-sounding, nebbish scumbag!
Ms. Delightful (?). Your implied negative comments about Kermie are un-called for.
No, no, no. It is absolutely in Apple’s best interest to see AAC/Fairplay become the real standard for digital music delivery. They want to be in a situation where *everybody* uses AAC/Fairplay. Then, they are really in the driver’s seat, for the following reason: they are in no danger of somebody switching away from their file format, and therefore not being able to switch back.
In this world, they can let their real competitive advantage really shine, and that is in the design and delivery of their products, namely iPod and iTunes.
However, if there are multiple standards, then those users who are using a different standard are not likely to switch to Apple’s standard, because they will no be able to play any of their current music!!! Just look at how hard it is to get people to switch to the Mac from the PC!!! People don’t want to re-buy all of their applications!!! Why would anybody want to re-buy all of their music? And Microsoft in this world has a *huge* advantage, because of their install base.
Making AAC/Fairplay *the* standard would allow Apple to dominate the market long-term, not just for the next 18-24 months.
What does Apple stand to lose by allowing Real to license the technology? License it to the iTunes Music Store competitors but not the iPod competitors I say.
If you remember the story, Real didn’t make a proposal to Apple–they threatened them. See <http://zdnet.com.com/2100-1107-5193027.html>. Apple may be willing to do a deal with some other company that doesn’t give them an “or else.” I know I wouldn’t make a big business decision based on a threat.
What do they have to lose? They take the risk of Real turning out a buggy interface with the ipod…making the ipod experience less desirable than it is now. A smart move.
The better question is, what does Apple stand to gain by allowing Real to license the technology? Would it help sell even one additional iPod? I highly doubt it. They need to stick with deals that funnel everything toward Apple (both iPod & iTMS) such as what they’ve done with HP, AOL and Pepsi.
This story is getting more writeups than it deserves.
What exactly is the “real” reason Rob Glaser wants the keys to Fairplay anyway? If they want iPod to be able to play songs embedded with their own DRM technology, they can!
Why doesn’t Real write a player for their DRM for the iPod? Everyone else is writing apps for the iPod. Everything from news readers, to games are available on the web that can be downloaded and installed on the iPod. Why can’t real?
I suspect they wanted something else.
The Shadow Knows.
“If Apple holds approximately 2% market share for personal computers based upon last quarter’s Macintosh sales, think about this: Apple sold slightly more iPods than Macs last quarter. [edit] iPod is a computer. So, in reality, Apple’s “computers” (Mac and iPod) now hold over 4% of the personal computer market.”
Uh, no. This is just stupid. If you’re going to call the iPod a copmuter, then you also have to throw in every other mp3 player, Pocket PCs, Palm devices, Blackberries, digital cameras, etc., etc., etc. If anything, you would then *lower* Apple’s marketshare.
What do they have to lose? They take the risk of Real turning out a buggy interface with the ipod…making the ipod experience less desirable than it is now. A smart move.
I’ll tell you what Glaser wants.
Glaser knows that the recent European Commission decision against Microsoft means they will need to allow OEMs to bundle other Media Player software with their machines. Right now, Real Player supports almost every format the average user could want. What’s missing? iTunes Music Store/iPod support. If they have that, RealPlayer is probably the most attractive choice for a non-Microsoft media player. (As opposed to iTunes)
Giving Real the iPod will give them a big chunk of the European market – bigger than they’d have without it.
I partly agree with themaninplaid. Isn’t the iPod open enough with both AAC and MP3 support. All these music stores have to do is figure out a way to distribute their songs in AAC and/or MP3 form. Is it that difficult?
Poker Game:
Apple: Royal Flush
Microsoft: Pair of 9s
Real: Pair of 7s
Sony: Piar of 2’s
The dealer want’s tp know “what ‘cha gonna do?”
Real wants to license a multi-purpose player software that includes all the competing standards. Their music delivery site will never make much money. If Real had the rights to FairPlay they could include it in the player software and sell it to other hardware competitors to the iPod. You’re right, the author didn’t have a clue as to why Real wanted FairPlay rights.
NoPCZone
nah
Real is holding Aces and 8’s-the dead man’s hand.
I think this is all wishful thinking regarding the future prevalence of the ipod. Think beta vs. vhs.I belive that Apple is about to make the same mistake it did with the orginal mac. By not opening up it will eventual will be swamped by Microsoft and it’s Janus technology which will give consumers more choice. Especially connsidering the way priceing issue of songs.
I think Apple’s influence in the music arena goes even further. Remember that many (not all) music creators use Apple tools to do their work. Quicktime and its related technologies are involved all the way up and down the food chain. and now, Apple is trying to spread the music creation tools to the masses with GarageBand. Quite compelling.
The really interesting thing will be how Apple extends this paradigm to video. Apple is a major player in video content creation with FCP and related software. Like music, it has also pushed video creation down to the masses with iMovie. The only piece missing is a standalone video player (which would be based on mp4 of course). Quicktime is making its way onto portable phones. Who knows, maybe an Apple-branded video device is on the way..
Interesting times.
If Apple ever does decide to open up the licensing of Fairplay, which companies should they offer the license to? Should they go with Sony, who has the software Apple wants (i.e. Columbia Records et al.) but also plans to make hardware that would compete with the iPod? Would they be able to convince Ballmer and Gates to go with a real audio codec standard, and if so at the expense of which part of Apple? Microsoft and Sony are the only two current competitiors that would bring anything worthwhile to the table (IMO), and while I think it makes sense in the long run to license Fairplay, none of the current batch of internet music stores seem like a good fit.
I’d hate to see the iPod slip in it’s dominance, and I like to think that Jobs has the best interests of the company in mind all waking hours of the day, but eventually Fairplay WILL have to be licensed, and I would rather it happen when other companies are asking Apple for it, rather than when Apple has to beg people to bail them out (see Glaser’s entreaty to Apple).
IF the goal is to sell ipods and not songs, then opening up the ipod makes sense. Now if they are making more off songs then we are lead to believe that is why the won’t open up the ipod.
Remember way back when when apple owned the personal computer market. THE VERY beginning. They refused to open it up. HMMMM, seems just like now. I guess old dogs can’t learn new tricks.
Open it up apple and sell more ipods. after all you’re not making anything from songs right.
They’ll open the iPod up to other services and license Fairplay, but when it’s the right time. With all the momentum behind the ITMS and iPod, don’t forget that iPod mini, I don’t see ANY reason why they would at this point.
Me personally, I’d like Microsoft to open their store and on the same day, Apple license Fairplay/AAC to everyone and see what happens. We all know what will happen and it would feel great to stick it to Microsoft and tell them to take a hike. Concentrate on *moo*
What this is about is CHOICE and APPEARANCES. What is wrong with people having the choice of using Reals Service or Apples? Even if Reals sucks, they can still us e Apples. Apple has always had a big reputation for taking peoples choices away, and people (sometimes rightfully so) resent that. So what this is is a big AffirmatioN to those people. They are syaing to themselves “I KNEW Apple was that kind of company! Man am I glad I never got one of those machines!”. Apple should have let Real in as a message to all those WIndoze people, and really, I don’t see much harm otherwise.
MacDailyNews Take: Schofield just doesn’t get it. Again, we will repeat: If iPod holds a significant share of the market, there is no reason to let anyone into the party, as long as Apple’s iTunes Music Store offers similar content to the other stores. And iPod does hold quite a significant share of the market.
No MDN, that’s an incorrect assessment. If it were simply about not letting other in, Apple would never have teamed with HP. What Apple doesn’t want to do is support competitors in the online music business, particularly ones that offer a lesser experience than the iPod/iTunes duo. It’s no coincidence that HP is selling iPods PLUS bundling iTunes. Had they refused to include iTunes, there would be no HPod deal at all.
Apple is willing to let others into the iPod party, but under their terms. Not under the terms of some second rate competitor that threatens them in e-mails.
None of this will matter when the record companies for iTunes et al to charge $2.49 per song download. They are the ones ultimately in control. If price increases happen, like I am sure they will, the iTMS will sadly sink.
I don’t understand why record companies are so obsessively fixated on profits and control. They will be the reason for their own demise. I just wished artists could represent themselves so that they could keep their own money. It is sad and pathetic.