Steve Job's DRM Manifesto

Tuesday's release of Steve Job's essay on DRM (digital rights management) and digital music formats/downloading is yet another sign that Apple is running on all cylinders. To read the actual essay, go here.

Of course, it has become the grist of many business media articles. Even this blog.

The Wall Street Journal, a favorite topic and news source of mine, ran an article on Wednesday essentially reprising the situation, the essay, and possible results.

Give Jobs credit for sensing the changing winds, and now allying himself with consumers, against the very music publishing companies whose support enabled him to make Apple the 'first mover' in the digital music downloading and device product/service/market.

Perhaps the European regulators were posing too much of a threat for Apple recently. Certainly, Jobs' call to remove all copy protection can only benefit Apple, with its immense market share, in a freely-competitive market for digital music players and music downloads. With no bar to playing any site's downloads on any player, the battle will go to the better-designed sites, players notwithstanding. Jobs is clearly issuing a challenge, and betting on his own people, that both Apple's digital devices and its iTunes site can each best competition in their own space.

I've personally never seen much in the argument that, by buying an iPod, you could only buy music from iTunes. Or that iTunes songs couldn't play on devices from other companies. You knew that going in. It was part of the value proposition, and millions of people knowingly paid to take that proposition from Apple.

What I found stunning is the previously-unknown data that Jobs cited regarding the provenance of music found on the average iPod, and its status. I have to admit, it pretty much describes my own behavioral patterns. I've bought some music from iTunes, but most of the content on my fully-loaded Shuffle is songs I ripped from my own CDs using iTunes' ripping facility.

Jobs makes two very potent points in his essay. First, that if such a small amount ( just 3%) of each iPod's capacity is filled with iTunes-source music, how can copy protection on such a sliver of the music market matter? Second, that the big four music publishers sell far more unprotected CDs every year, injecting untold amounts of easily pirate-able music into consumers' hands. And, by the way, I have witnessed just this sort of behavior among my daughter and her friends, with their iPods.

Once again, we see why Jobs and Apple are in such a strong market position in their various product/market spaces. That short essay was an incredibly timed and aimed piece of marketing which will now cause uncertainty among competitors, and potentially unlock large new markets for both iPods and iTunes, at a single stroke. All while making the music publishers now the 'bad guys' on which regulators and consumers may vent their anger over digital music copy protection.

My guess is that this most recent competitive move by Jobs will increase the chances that Apple will continue its record of several years of consistently superior total return performance for its owners.