“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?
Oh, for more on my rants, click here. Enjoy.
Why is everybody acting like the only way to get music on an iPod is to download at the iTMS? Doesn’t anyone own a previous collection of CDs?
With record labels in the news and on the web going on public record that they want to raise the price of downloads to $1.25- $2.49 its very possible that iTMS and all the other metoo wannabes are already dead. And if that happens, the iPod will still play AAC, MP3, WAV, Audible formats.
Letting other music services use AAC/Fairplay is a double edged sword. Apple could increase its mind/market share, and gain a majority of users for the AAC format, that would be a good thing. Having other services advertise “we work with the #1 digital music player in the known universe, the Apple iPod” Would be a good thing. If those same services botched up the easy of use in getting files to the iPod (read, a method other than iTunes) all hell would break loose, and the backlash would be against Apple, just like always.
iPod users wouldn’t say “boy, real botched the software that transfers music to the iPod” Enderhurl and Throwup wouldn’t say “Coke and Joe’s Garage Downloads missed a great opportunity with the AAC format by not using iTunes as the transfer program” They all would yell from the rooftops of their web rags that “APPLE HAS SCREWED THE MUSIC UNIVERSE WITH THEIR NON-STANDARD AAC FORMAT”
Any glitch that a service experienced would be credited (discredited?) to Apple, regardless of what reality might be.
Sorry to seem so jaded, but it has happened many times before. When MS wrote code to disable QT player, who took the blame in the press? MS? NO, Apple. “crappy QT won’t work in Windows, Apple QT developers couldn’t code their way out of a wet paper bag” and etc. I can see the same thing happening here.
Current dominance for iPod/iTunes really means nothing in the long run — this market is in it’s infancy. We are all still really ‘early adopters’. Apple needs to add diversity, period.
The digital music experience doesn’t start with the player or the download service — it starts with the ripping/burning/organizing software. The majority of Joe Consumers will start out playing with their existing music collections – experimenting with how ‘cool’ that is. Later, when looking for a full-fledged music player / download service solution they will already have a body of digital music. And the FORMAT of that music will tend to drive their choices, because they want to *use* it. Sure, all of us (techno-geeks and the 16-24 demographic) consider re-ripping all of our stuff if we want to switch to the best player out there… (or we were smart enough not to use WMA in the first place.) But the masses of Joe Consumer coming later will happily build their initial collection of music in WMA using any one of the 50+ applications available in Windows — because that’s what was sitting on their computer desktop. And when they finally buy-in (as this market matures) they’ll take one look at Apple’s proprietary solution and say “THANKS, BUT NO THANKS” to re-ripping and download service ‘lock-in’. (“What? iPod doesn’t play my existing tunes? And iTMS doesn’t sync with any player that does play my [WMA] tunes? And there’s only one place to go to buy music if I buy an iPod? And I have to use iTunes as my music manager for that purchased music and to synch with iPod?”)
Apple needs to:
(a) Create diversity of choice in music stores / music managers for people considering buying iPods. Even if people end up using iTMS, diversity will allay fears of lock-in.
(b) License/Sell iPod OEM hardware for re-branding by other companies, ala HP… again creating diversity and choice.
(c) Encourage other Windows digital audio companies to use [standard] AAC, as Real already does. Collectively promote AAC as THE quality standard for ripping one’s existing music collection (not MP3 or WMA).
This strategy leaves Apple in control of their iPod vision, leaves Apple’s profit source (iPods) intact and primed to continue dominance, creates diversity and choice in Apple’s marketplace (a main criticism of those considering joining), and mitigates future ‘switch-over’ problems. Where’s the significant business downside?
Jim
Thank you Rageous. Very eloquently stated. Its good that Apple shrugged off the ankle-biter Glaser Real player is nowhere near as nice as iTunes and Quicktime, HP has the right direction. Including Apple software and the iPod gives people a chance to use Apple products while still being able to use Windows, pretty good deal for HP and Apple, HP can still make printers and scanners for Apple and in turn Apple gets some mind-share.
“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.”
Actually, I disagree. Jobs has never really been into sharing. Remember the Apple II clones? Apple sued them into submission pretty quick.
Also, Jobs was against the Macintosh II (the so-called “Open Mac”), instead depending on the original Macintosh’s “external bus” (ie, 1Mbit serial ports). So if Jobs had stuck around, you would have never seen Macs with slots.
No, frankly, Jobs needed to go away and grow up a bit.
how many “online digital music stores” do we need? why would we need more than one? how is one store better than another? its not the same as brick-and-mortar stores.
let’s see:
1. global (geographically) access (to consumers and developers)
itms is lacking here, but real doesn’t offer anything more and actually no one else has global access yet. there are US stores, and there are European stores, and there are Japan stores but no one has bridged them all. itms has equal or better chance of being the first, and certainly better than Real.
2. all OS and browser access (to consumers)
itms provides this already. maybe it doesn’t have the best interface on the PC side, but does anyone else have something that is significantly better; that would take apple a long time to catch up? not Real.
3. all developer access
i don’t think it costs a lot more to encode in AAC/Fairplay and put it in itms. apple provides the encoding and pays the AAC license fee. so are there musicians who have access to another store, like real, but not to itms? i don’t think so (other than the geographic legal restrictions issue dealt with in item 1 above). and as a developer, wouldn’t you want your song in the store that has access to the largest player market?
4. other kinds of music sales (like subscriptions)
if there was a market for this, apple would do it. but there really isn’t.
any other reasons?
(1) “Recently, Rob Glaser… wrote *privately* to Apple’s boss, Steve Jobs, suggesting an alliance against Microsoft – a letter that Apple somehow leaked to the New York Times”
Since when is unencrypted email a secure, private form of communication, Mr. Schofield?
(2) Schofield calls Apple’s generous Fairplay AAC DRM “closed”. But he ignores M$’s true nature of the WMA DRM — OPPRESSIVELY SUPPRESSIVE !!
(3) Has any of these pundits actually *read* the contracts Apple signed with the 5 major recording labels regarding Fairplay’s DRM? Does anyone know for sure if Steve Jobs is even *allowed* to license the FairPlay DRM to any other online service/hardware manufacturer without violating those contracts?
(4) Schofield’s article has an interesting link to Bill Gate’s 1985 memo to John Scully. The memo contains a statement by Gates that is almost prophetic:
“AT&T … their 68000 UNIX PC is not selling. They need a way to make Mac software run on their box. They will confuse things by trying to involve UNIX in the discussion. The mac interface should be viewed as a separate application interface that they can put on top of UNIX if they want.”
Hmmmm… I wonder if this memo got “leaked” somehow to Steve Jobs, who was “out of the picture” by then, at least, for the time being.
I
I’m sure that somewhere in the fine print of the deal Glaser wanted to get Steve to sign off on was allowing RealPlayer to use Apples DRM. If Steve had made the deal it would have opened the door to compeeting players. Bad move.
On the other hand – I could see Apple building pluggins for iTMS which would allow users to download music from other stores for use on the iPod. There’s nothing keeping Apple from doing that if it looks like a particular store is becoming more popular than iTMS.
The key is making sure that the iPod stays on top regardless of who’s got the biggest store.
“how many “online digital music stores” do we need? why would we need more than one? how is one store better than another? its not the same as brick-and-mortar stores.”
I, for one, do not want any one corporation to be in control of what music is available for purchase online. Do you? And what are you going to do when the one music store raises its prices? It’s called a monopoly.
<<I, for one, do not want any one corporation to be in control of what music is available for purchase online. Do you? And what are you going to do when the one music store raises its prices? It’s called a monopoly.>>
Ever heard of the RIAA??? They’re the ones that control all of the online music. Not Apple or anyone else. And I’m afraid we’re going to see the evidence of that here very soon with increasing prices of online songs. It’s not Apple or any technology company that you should be afraid of getting a monopoly here. The RIAA already has a monopoly on the market.
I have a suspicion that Gates told Jobs that he wants WMA to be the dominate audio format or no more Microsoft apps for the Mac.
Otherwise, I don’t see a downside to licensing Fairplay to as many music services as possible. The more services that offer Fairplay, the more iPods you’re going to sell.
“Ever heard of the RIAA??? They’re the ones that control all of the online music. “
Jim, You know not what you are talking about. Why is it that people have absolutely no idea what the RIAA is? Labels and artists decide what price to sell product. Not the RIAA. All deals that Apple has mde are with the labels/artists. Not with the RIAA. You see, the artist and labels have contracts that specify how much they get paid. The RIAA does not control anything. They are an organization funded by the recording industry to protect label and artist rights. For example: They make sure nobody steals or bootlegs albums by going after the miscreants who do this. They certify the sales reported by labels so that million sellers, gold, platinum and double platinum sales are real and not the figment of some record execs or artists imagination. Artists spend their lives making music and expect to be paid for doing so. Labels spend tens of millions of dollars promoting those artsts – and paying them handsomely, for selling product to consumers (at least those that pay for the product). Go to the RIAA site and read what their mandate is. Education is a wonderful thing. Go educate yourself on the facts.
Grossman,
I think you’re definitely right, Apple would sell more iPods, but it’s the whole iTunes/ITMS/iPod experience that Apple is really selling.
Has anyone tried the MusicMatch software? I’ve heard nothing but problems. Imagine having 2nd rate outfits such as Real, Napster, MusicMatch, and oh forbid, Wal-Mart, all trying to sync with the iPod? Eeeeewwwww, I shutter to think about all the headaches people will come across.
Then perhaps people will think that it’s the iPods fault, which will be so far from the truth. So, I’m not too sure about licensing Fairplay and opening up the iPod.
My view is the Real are nothing in the emerging music DL maket. They are nowhere. If Apple gave them iPod support for their store they would be catapulted into the big game with the big boys – where, frankly, they do not deserve to be.
If they managed to make an offer sound like a threat, can you imagine what sort of “partner” they would be when times got bad?
Real make crap software and are a crap company – Apple is about pushing the envelope on the best computing experience. . NO deal.
If Apple licensed the DRM then surely part of that could be a quality control clause – or an iTunes online store model … If Jobs is worried about the end-user experience, then he should safeguard that by making it possible for other online stores to conform to the standards set by Apple … Apple could license the DRM and the store model – then they make money on both … I thought the goal was to sell iPods and make AAC with Apple’s DRM the standard – this would seem like a way to do it.
All we need is MP3. iPod and iTunes run on Mac and Windows. DRM means good karma, yeah whatever. All anyone needs is iPod and iTunes and everything else is just a waste of time. Like anyone really cares about ACC, WMA or Real. Lossy, shmossy. I used to listen to tapes for years with all of their degradation and worbly sounds, records with scratches, now all collecting dust. My MP3’s sound better and than any tape or record and have done so consistently and will for much longer than any record or tape I ever owned. Like I really give a rats ass about how WMA has some .0003 better 7587 decibel range or whatever. Don’t forget kids, someday the sun is going to expand and envelop the earth. My MP3’s will most likely sound great until then and I’ll happily go out in a ball of fire.
There are choices here for music listeners… aren’t there?
There’s nothing stopping anyone from owning more than one iPodlike
device. If you don’t feel comfortable buying all of your music
from the iTunes store for any reason whatsoever, then buy a second player
for a different system/store. You might need a third, even a forth.
The music industry is the beneficiary of all downloads (minus Apples modest
cut). Right now the iPod is HOT and Apple plans to keep it that way for as
long as possible. The only way to do it is to protect yourself. Apple is
doing just that and finding qualified partners to increase sales volume (i.e. HP et al)
All threats aside…Apple, Mr. Jobs, and the record labels have too many positives
to think twice about there direction.
I have a whistle that I use occasionally and ain’t nobody gonna
crack my decoding software…it’s a given. Apple has Fairplay,
I hear it’s works well, they’ll keep it to themselves.
:: PSYCH :: Don’t you think?
CT
CT
I keep hearing the argument that Apple not opening up fairplay to everyone is just like the OS decisions of the 80’s. Nonsense, the iPod is CROSS PLATFORM. That changes the whole equation. The iTunes Music store is CROSS PLATFORM. None of these online music stores offer a better user experience. None of these music stores offer anyting different or better in the way of media. Just because Apple licenses Fairplay to certain partners will not change the fact that MS will not support AAC & Fairplay. This will not change the fact that MS will have partners that they can prop up with all of their buying power. Soon HP will be selling iPods & putting iTunes on all their consumer boxes. How many desktops will that account for? At this point & time Apple is doing the right thing. None of us know Apple’s strategy for the future. I don’t see HP cutting there own throats by not fully supporting the iTunes music store & the iPod. They have a vested interest in both.
the last paragraph interestes me more than anything. iPod is a platform and it is the platform that will propel Apple back into the mainstream. I believe the iPod has the potential to takeover the iMac (consumer) level…connect the iPod to a keyboard and a monitor and you have a mac – sure this needs masses of development.
So, doogle, the iPod is really that headless Mac so many people have wanted?
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> MacDailyNews Take: Schofield just doesn’t get it.
Not surprisingly, I think I “get it” a lot better than you do. But just in passing, you appear to be unable to distinguish between what a journalist *reports* (in this case, Rob Glaser’s views) and what he *thinks*.
> 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.
Sure. That’s what they said about the Apple ][ and the Mac as well.
> 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).
Unfortunately, MacDailyNews “just doesn’t get it”. The developers in this case are the people who develop music players and music download services. They are currently developing players and download services that don’t work with Apple technology because Apple won’t let them.
(Music isn’t software: it’s data.)
> iPods don’t do WMA.
No, but dozens of manufacturers of music hardware and software *do*. (For the record, I don’t use or support WMA: I’m just stating a fact.) But doesn’t that remind you just the tiniest bit of dozens then hundreds then thousands of companies making PCs and only one company making Macs?
> If Apple holds approximately 2% market share for
> …
> 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.
As someone has already pointed out, this argument is just silly.
> “Developers” will want to make damn sure their wares
> play on iPods, won’t they?
Ah, you mean a “developer” like Rob Glaser will want to sell downloads that play on the iPod and will therefore want to use Apple’s DRM? And will want to make the iPod his preferred portable player? Yes, you could be right….
And the response from Apple is, in effect, “buzz off”.
Now, Rob Glaser is suggesting that that could ultimately lead to the decline of Apple’s share of the music download market. For the benefit of people who have difficulty reading, this is ROB GLASER’S VIEW. He might be right, he might be wrong. Either way, it’s not my responsibility.
Apple wants independant labels to give them exlucivity. This will never happen. I know I am in the buisness.