Stunning analysis. But not in a good way.

Posted February 7, 2007 By The Macalope and has 8 comments.

Fortune’s Deirdre Terry asks some questions about Jobs’ DRM statement that no one’s thought of:

So yes, it would be more convenient for everyone if all digital files could be played by any player or any other digital device. But where’s the customer clamor?

…

Could Jobs’ eloquent plea on behalf of consumers all be a gambit to force Apple’s content suppliers to renegotiate their deals and make it possible to download music and video directly onto the iPhone?

Unfortunately for Terry, the reason no one’s thought of them is probably because they’re so blindingly ignorant.

While customers aren’t exactly in revolt over FairPlay (Doctorow’s not a customer anymore), there is ample outcry for DRM-free music and plenty of evidence that DRM is what’s holding back the online music business.

But it’s her main point that’s so eye-poppingly bizarre. There’s absolutely nothing the Macalope knows of from a licensing perspective that would stop Apple from allowing someone to directly buy and download FairPlay-protected music from iTunes on an iPhone. He certainly wouldn’t want to try it using Cingular’s crappy EDGE data transfer speeds and wouldn’t want to try syncing on a regular basis on anything short of 802.11n [Edited for clarity as the Macalope was thinking "syncing" by not typing it. Damn these hooves!]. That’s probably why the iPhone — right now — seems to require USB docking to iTunes to transfer music.

It’s a rather baffling why Terry seems to think that Apple’s deal with the recording companies prevents FairPlay-protected songs from being transmitted over 802.11. That’s obviously not true as you can share your library over a network and stream it to an Airport base station.

Does Fortune pay for analysis like this? And how much?

Then why not do it?

By The Macalope and has 22 comments.

Cory Doctorow says, OK, you want to offer DRM-free music? Do it. There are numerous artists that would love to sell their music DRM-free on iTunes.

But Apple has been saying for years that DRM on iTunes is all or nothing (see the third comment, and a tip o’ the old antlers to Hack the Planet).

That’s clearly a business decision — there’s no technical reason Apple couldn’t offer both DRM-ed and DRM-free songs. But it could easily be contractual. Apple’s agreement with the big four may say they can’t offer DRM-free music as the recording industry executives might fear that the great communist scourge of uncontrolled music files would eat their lunch and make love to their women better than they can.

Jobs has many reasons for challenging the labels — mostly due to Apple’s legal issues in Europe — but that doesn’t make his statement any less significant and Doctorow’s persnickety response doesn’t give it enough credit.

Right now it really does seem that DRM-free music is coming to a Mac (and a PC) near your some time in the not too distant future. Customers want it, analysts want it, and now technology companies want it.

Real Steve: "Imagine."

Posted February 6, 2007 By The Macalope and has 24 comments.

Steve Jobs provides his Thoughts on Music (tip o’ the antlers to BoingBoing) and specifically DRM.

Here are some key sections:

Apple was able to negotiate landmark usage rights at the time, which include allowing users to play their DRM protected music on up to 5 computers and on an unlimited number of iPods.

…

However, a key provision of our agreements with the music companies is that if our DRM system is compromised and their music becomes playable on unauthorized devices, we have only a small number of weeks to fix the problem or they can withdraw their entire music catalog from our iTunes store.

…

So far we have met our commitments to the music companies to protect their music, and we have given users the most liberal usage rights available in the industry for legally downloaded music.

…

Apple has concluded that if it licenses FairPlay to others, it can no longer guarantee to protect the music it licenses from the big four music companies.

…

Imagine a world where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players. This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat.

…

Why would the big four music companies agree to let Apple and others distribute their music without using DRM systems to protect it? The simplest answer is because DRMs haven’t worked, and may never work, to halt music piracy.

…

Much of the concern over DRM systems has arisen in European countries. Perhaps those unhappy with the current situation should redirect their energies towards persuading the music companies to sell their music DRM-free.

It’s an interesting read. Jobs also says that as only 3% of music on an iPod is FairPlay-protected, Apple doesn’t see it as a scheme to lock users in.

The part of Steve Jobs will be played by Charlton Heston. The part of Mitch Bainwol will be played by Yul Brynner (antler tip to Your Daily Dosage for the correction).

Never too late to look stupid

Posted December 18, 2006 By The Macalope and has 8 comments.

In a snippet entitled “Apple’s Collapse” (scroll to the bottom), Rob Enderle shows that not only does he have trouble with comprehension — as we’ve long known — he’s also just a very slow reader. While he apparently hasn’t caught up with Thursday’s RSS feeds, he’s not letting that get in the way of stepping into the wrong side of a controversy.

Forrester has to be having a fun week hearing from the Apple fans after it announced that iTunes music sales had “collapsed,” dropping 65 percent.

Enderle then discusses the implications of this without pointing out the sample size or even noticing that it has been directly refuted by comScore and Piper Jaffray.

This would be outrageous if his word counted for anything but, well, it doesn’t.

The Enderle Group: providing last week’s analysis today.

Oops

Posted December 15, 2006 By The Macalope and has 6 comments.

The Macalope was indisposed yesterday so he was unable to post about Gene Munster and comScore’s retort saying that iTunes sales are doing just fine, thank you very much.

Soooooo…

…who’s got egg on their face?

Well, Andrew Orlowski, for starters, as Forrester called the Register out in particular, referring to it as “A UK outfit called The Register”. That’s shorthand for “I’ve never heard of these clowns before and now they’re wearing our research like a party hat and dancing around like Roberto Benigni.”

If you want more amusement, read Orlowski’s response to Forrester’s clarification which should be titled “No takebacks!”

Orlowski’s defense of over-hyping the Forrester numbers? He put “collapse” in quotes.

He then concludes:

It’s a pity today that beseiged by parties who have vested interests, and their own agendas, Forrester wants to downplay the implications of its valuable work – and instead it finds itself doing crisis management on behalf of Apple.

Yes. It’s also a pity that beseiged by the people who actually did the research, someone who jumped to conclusions about it continues to pimp his pet theory.

Orlowski even unironically chides Wall Street “gamblers” for misreading his story. He has yet to respond to Munster and comScore’s report of booming iTunes sales.

Looking for more egg, Nick Carr’s probably kind of wishing he hadn’t jumped on this one so quickly.

The Macalope found his response to a commenter who provided a link to Forrester’s addendum rather amusing.

Thomas,

Forrester has not retracted its study, so I assume it stands by its numbers and analysis, which I believe I reported accurately in this post.

I have to say that I’m really not sure how to interpret the Forrester statement you linked to.

Nick

Well, Nick, allow the Macalope to rephrase what Forrester is saying more succintly:

Stop trying to hump our numbers like a horny lap dog.

None of this is to say Forrester’s analysis isn’t problematic. You can read the blog summary and see if you don’t find what the Macalope did — that all the really good analysis is in the comments.

Looking back over the numbers, the Macalope notes that they represent a small sample size and don’t reflect all the ways you could buy stuff from iTunes. It also focuses on the supposed decline in sales over the first six months of 2006.

You know, this sounds awfully familiar. What was that other thing that had falling sales from January to June and some silly pundits were rushing to declare its demise?

Oh, that’s right. It was the iPod.

What a coincidence.

(That’s sarcasm in case you can’t tell.)

Now, the Macalope is giving Orlowski and Carr a hard time, but it’s important to note that ultimately their point that online sales of DRM-ed music is not a panacea for the music industry may be correct. It’s just that now it seems that their highly touted example is actually an exception.

Also, remember…

…who cares about iTunes sales?

ADDENDUM 12/19: Here’s a good post providing some data to back up the Macalope’s oblique assertion about the connection between iPod sales and iTunes downloads.

From the horse's mouth

Posted December 13, 2006 By The Macalope and has 5 comments.

Forrester Research sez:

iTunes sales not falling. The Register and Bloomberg took our data out of context. It’s not our fault, it’s Apple’s.

Gene Munster sez:

Yer all hopped up on goofballs. iTunes sales surged in the first half of 2006.

And can the Macalope just ask, who are the imbeciles who sold Apple based on the misinterpretation of Forrester’s report? Looking a little foolish now.

Disclaimer: the Macalope holds an insignificant number of Apple shares.

More on iTunes sales

By The Macalope and has 6 comments.

TUAW links to the Macalope’s previous post and says:

Of course, The Macalope asks ‘who cares?’ to all this worry of how the iTS is doing, but Geoff Duncan at Digital Trends reminds us of some interesting potential shifts in the digital distribution model that could depend directly on how well present offerings fair.

The Macalope did address that issue by noting that the recording industry could come up with something more heinous than DRM. Duncan’s piece is mostly a summary of some pieces done by the Register’s Andrew Orlowski. The Macalope wouldn’t call Orlowski biased, but he’s clearly got his ideas of how this is all gonna go down and — while he eventually may be proved correct — he’s lost some objectivity in his trumpting of Forrester’s research.

Of Forrester’s numbers Orlowski writes:

The figures don’t include gifts redeemed via the iTunes Store. While Apple can argue this does not reflect the volume of transactions taking place, it gives a more accurate picture of what customers are actually prepared to pay for.

Uh, right. That’s like saying anything bought at the Gap as a present shouldn’t count in their sales figures because the person who receives it didn’t make the purchase and may not have wanted it. Note to Orlowski, if a gift card comes from the iTunes Store, it’s something customers are actually prepared to pay for. The gift card purchaser is the customer, not the person who downloads the songs.

Now, no one but Apple knows if gift card sales are enough to make iTunes sales figures all sunshine and puppies, but pretending they somehow don’t count is simply engaging in argumentative assery.

Still, there is substantial evidence that the recording companies have lost that loving feeling for DRM. And if they’ve decided that DRM is a failure — both in keeping people from illegaly copying music and putting them in a position of strength when negotiating with technology companies — they will start seeking other ways to extract their pound of flesh.

One way is a “tax” on the devices and the other is a “tax” on the Internet.

The Macalope supposes just paying for DRM-free music directly is out of the question.

Are iTunes sales dropping?

Posted December 12, 2006 By The Macalope and has 7 comments.

The Macalope has a better question: who cares?

The Apple web is rife with cries of “woe is Apple” and angry denouncements today over Forrester Research’s report claiming that the only people still buying songs from the iTunes Store are a family of shut-ins in Kenosha, Wisconsin.

Forrester’s conclusion is that DRM isn’t working and people are still stealing music as their primary means of acquisition.

That’s not the Macalope’s experience, but for the sake of argument (and because it spares the Macalope from having to do a bunch of math), let’s say Forrester is right and iTunes sales are down 375 million percent or whatever they said.

Let’s look at some things that make this less concerning than you might think:

  1. Apple doesn’t make money on music sales. They’re used to drive iPod sales.
  2. iPod sales are still strong.
  3. iTunes is still by far the most popular online music store.
  4. Falling sales of DRM-ed music mean the recording industry has to consider non-DRM solutions.

The negatives are:

  1. The recording industry could come up with something more heinous than DRM.
  2. Apple will no longer have the “velvet lock” of iTunes DRM that keeps customers in iPods.

But then they’ll just have to keep people buying iPods by keeping them awesome.

So, can we all calm down, please? The Macalope can barely hear his iTunes-purchased Christmas music over all the shouting.

Yay, subscriptions!

Posted November 27, 2006 By The Macalope and has 11 comments.

Hey, kids! You looooooove subscription-based music subscription models, don’t you?!

Sure you do! Everyone does!

Why, Universal Music Group’s Jimmy Iovine loves subscriptions!

“We have to get into more of the revenue stream. The eventual answer may be a flat fee that enables you to listen to all the music you want.”

And he knows Bruce Springsteen!

But it’s not just him! The big brains at Jupiter Research likes subscriptions, too!

So why wouldn’t you love subscriptions?! Why ya gotta own everything? Are you greedy? Is that it? Just thinking about yourself and not struggling music industry executives, their brows moist with perspiration (albeit induced by the elliptical trainer) as they pick which music they’re going to ram down your throats this year?

Or maybe you’re thinking about the so-called “artists”, really nothing more than a collection of un-showered communists, if you ask the Macalope. Thank goodness someone is doing something to put them in their place.

No, no. The sooner you start sending your monthly tithe to the recording industry, the sooner we’ll achieve the perfect musical utopia they have planned for us.

UPDATE: Andy Ihnatko provides some strikingly similar thoughts in his Zune review.

Fun with headlines

Posted October 26, 2006 By The Macalope and has 3 comments.

Could FairPlay Hack Lead to iTunes’ Demise?

Apple Hacking Could Be Good for iTunes