Apple CEO Steve Jobs challenged the music industry Tuesday to allow online stores — such as Apple's iTunes or Napster — to sell digital music files without the so-called digital-rights management (DRM) anti-piracy controls.
The abandonment of such copy protection would allow consumers to download and play music files regardless of the make or format of the player.
Currently, for instance, music downloaded from the iTunes Store is incompatible with Microsoft's (MSFT) Zune player, and vice versa.
After reviewing the current state of online music retailing, and considering several possible options for the future, Jobs decides that the best solution would be to abolish digital-rights management entirely.
"Imagine a world where every online store sells DRM-free music encoded in open licensable formats," he writes. "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."
But first, he notes, he would need the cooperation of the Big Four record companies — Warner Music (WMG), Universal Music Group, Sony BMG and EMI — who, he says, forced Apple to use DRM in the iTunes store in the first place.
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Jobs argues that 90 percent of the music the companies release is unprotected by DRM anyway — it's on CDs, which users can easily "rip, mix and burn," as an old Apple slogan put it, and then pass on to friends or upload (illegally) to the Internet using file-sharing programs.
"[W]hat benefits do [the Big Four record companies] get from selling the remaining small percentage of their music encumbered with a DRM system?" he asks "There appear to be none."
Left unsaid is the fact that eMusic.com, the No. 2 online music retailer after Apple, sells completely unprotected MP3 files — which work on any digital music player — from independent music labels and manages to turn a tidy profit.
Since its debut nearly four years ago, the iTunes Store has sold more than 2 billion songs, mostly for 99 cents apiece. With sales of about 5 million songs per day, Apple (AAPL) now rank ranks behind only Wal-Mart Stores Inc. (WMT), Best Buy Co. (BBY) and Target Inc. (TGT) as a music retailer.
"This is interesting because the greatest beneficiary of DRM-enabled systems is telling an industry you've got to get off this stuff," Gartner (IT) analyst Mike McGuire told Reuters.
Despite those huge iTunes sales, Jobs estimated that less than 3 percent of the music on the 90 million iPods sold consisted of purchased songs, with most of the rest having been ripped from CDs.
Jobs does hint at Apple's legal troubles in Europe, where the governments of France, Germany and Norway have threatened to use antitrust legislation to "force open" iTunes so that it works with non-Apple music players.
"Much of the concern over DRM systems has arisen in European countries," he says. "Perhaps those unhappy with the current situation should redirect their energies towards persuading the music companies to sell their music DRM-free."
He then somewhat cheekily points out that "two and a half" of the Big Four record companies are European — EMI is British, Universal is owned by the French conglomerate Vivendi and Sony BMG is a joint venture between Japan's Sony (SNE) and Germany's Bertelsmann AG.
"I think Steve is finally saying something he has wanted to say for a long time," Forrester Research analyst James McQuivey told the Associated Press. "He is not saying this just to grandstand. He really thinks this could open up the market."
"Apple's alternative is the only way we're going to get complete interoperability," Creative Technologies president Tim Bajarin, a well-known Silicon Valley consultant, said to Reuters.
But people closer to the music industry were more skeptical.
Jobs "could open [iTunes] up tomorrow if he really wanted to," insisted Mike Bebel, chief executive of Ruckus Networks, a Herndon, Va., service that offers more than 2.5 million DRM-protected song titles to college students. "It's great PR [for Jobs] and a nice way to turn the tables, but it's not really working toward a solution."
"How can you be in the digital business of content and say you're not going to protect it?" said one executive, who spoke to Reuters anonymously. "So is the film and TV industry looking at doing this? I can guarantee you they're not."
Nowhere in his manifesto does Jobs suggest that video files, such as the television shows and Disney (DIS) and Paramount movies sold by the iTunes store, also be removed from digital-rights management.
FOXNews.com's Paul Wagenseil contributed to this report.