Curious and circular logic in the DRM debate

My colleague Denis Hancock has a great post on the curious and circular logic of DRM on our Wikinomics blog. Check it out. Abbreviated version below (yes, Denis can be a little long-winded

In February Steve Jobs issued some thoughts on music that were tied mostly to the continued use of DRM. In short, Jobs said Apple would whole heartedly embrace DRM free music, but notes that if they license their current DRM to others, Apple could “no longer guarantee to protect music it licenses from the big four music companies.”

Now this would seem to imply that the big four have a problem with Apple licensing their DRM to others. So lets jump over to the response from Edgar Bronfman Jr., the CEO of Warner music:

“DRM and interoperability are not the same thing. We believe in interoperability… consumers want it and should have it. We at Warner, and I hope the rest of the music and content industry, will make it as easy as possible to achieve interoperability.”

Now lets think about this. Apple’s DRM continues to dominate the legal, digital music market. The easiest way possible to achieve interoperability, in turn, would be having them license that DRM to others. This is what the CEO of Warner says he wants, and he hopes that he speaks for the industry. Many, many other digital music competitors have requested the same thing, and there is extensive precedent for licensing systems working out in the entertainment industry. So what’s the problem Apple is talking about? Couldn’t we solve this within a couple of days if we really wanted to?

Well lets go back to Jobs again, and quote him on why licensing DRM would be difficult:

The most serious problem is that licensing a DRM involves disclosing some of its secrets to many people in many companies, and history tells us that inevitably these secrets will leak. The Internet has made such leaks far more damaging, since a single leak can be spread worldwide in less than a minute. Such leaks can rapidly result in software programs available as free downloads on the Internet which will disable the DRM protection so that formerly protected songs can be played on unauthorized players.

OK- so a single leak could render the DRM useless, which kind of makes sense. But for something to be potentially rendered useless, it must be useful in the first place. So lets see what Jobs says about the effectiveness of DRM (answering a rhetorical question he posed as to why the music labels would agree to DRM free music):

The simplest answer is because DRMs haven’t worked, and may never work, to halt music piracy.

Right – DRM doesn’t work. But Apple’s DRM dominates, and if they share it secrets could leak out and makes DRM useless. Curious logic. He goes on to note that much of this is because CDs remain DRM free. While this has a grain of truth to it, if you do an online search for something like “cracking iTunes DRM”, it’s easy to learn ways to break it. We’re not talking about NASA level of security here – burn a copy to an audio CD and then rip it back nicely sums up the easiest approach. There is a 100% chance Jobs knows such loopholes exist.

At the same time, all the music labels are moving away from DRM on CDs. In January EMI abolished it, and were the last major company to do so. Basically, they’ve given up because it doesn’t work. But they really, really want DRM online. Even though the CDs can be ripped onto any computer DRM free, and put online.

It is so, so infuriating as this “debate” rages on and everyone takes turns contradicting themselves. There are really only two choices for the long term: one common standard for DRM, or no DRM. Even if you believe in the latter, there seems to be no harm in at least trying the former, and it would be remarkably easy to do so.

This is what makes me sometimes think that Apple is the problem right now – if they’d just license their illusory DRM already we could get on with things. But my bigger theory on the industry paralysis issue focuses on the labels.

Whether there is DRM or not, once a single, legal, digital standard is established the conditions are set for a rapid decline in the influence of the large music labels. In turn, the pace at which they can be effectively disintermediated will accelerate. It’s not that there will be no role for them – just a smaller one, with less revenue, profits and control of the industry in the era of mass collaboration.