EMI and Apple Make Some Good Progress… but I’m Still Not Satisfied (as if Steve Jobs needs my support)

As (I think) many of you know, EMI Music and Apple reached an agreement today to sell DRM-free music via iTunes.

EMI Dropping Copy Limits on Online Music

Alright, for those of you who do not know what “DRM”, I am going to give you a little bit of digital music 101:

DRM stand for “digital rights management”, and it is a term that applies to a type of software or technology that prohibits users from sharing files without the permission of the publisher. In the digital music business, services likes iTunes used DRM software to ensure their music could not be shared with others or posted over the Internet via systems like peer-to-peer networks.

I am glad Apple has gotten rid of their DRM restrictions. I am not a big fan of restricting one’s ability to listen to music, as I think it deteriorates the user’s experience with the product and hurts the brand.

This leads me to the actual reason for my post…

Apple is still using their .AAC format for music downloaded from iTunes. What does this mean? It means that when I buy music iTunes, I can only play it on a iPod. On the surface, this makes a lot of sense for Apple, since you have to buy an iPod in order to play the music you have purchased from iTunes. Two revenue streams from one business model.

I don’t like this strategy because song sales on iTunes are predicated on people owning iPods. What happen when the iPod is not the top-selling player on the market? If a restricted song collection, not innovation, is the main driver for people buying an IPod, Apple will not lead the market forever.

I believe this will hurt Apple’s long-term brand equity, since Apple’s progressive, trend-setting customers will not want to be locked into an inferior product. Also, Apple will have trouble acquiring new customers, as they will want the freedom promised by competitors. The only way Apple can avoid this future is to consistently give its customers the best products on the market. I am not convinced Apple will continue to lead the market in 10 years (remember Sony).

I like where the digital music business is going with DRM-free music, but I think Apple may only be a short-term leader…

P.S. – I could writie a whole article on why I don’t like Apple’s product strategy, but I believe blogs should be pithy 🙂

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