NO FLASH FOR YOU! – Apple’s Ongoing Bid to Rule the Content World - (1 Comment)

no-flash-soupIn a 2003 interview with Rolling Stone, Apple's Steve Jobs disclosed what the best minds at his company think about technical copy protection: "We have Ph.D.'s here, that know the stuff cold, and we don't believe it's possible to protect digital content." During the same interview, Jobs also said that music executives are "not technology people," which makes them "vulnerable to people telling them technical solutions will work, when they won't." Not one to miss an opportunity, Jobs went on to brilliantly exploit that vulnerability by using Apple's Digital Rights Management (DRM) technology, called FairPlay, to help wrest control of the music download market away from the very executives whose business model it was supposed to protect. We all know how that worked out for the music executives. Now Apple is using the same playbook for video, digital books and software.

Full-disclosure: This situation is good for my company, EZTakes. Since Apple appears determined to make iTunes the exclusive source of DRMed movies on the iPad, and we don't use DRM, we'll be able to sell thousands of films as MP4 downloads that will run on the iPad. Other on-line movie sites can't because they're contractually-bound to use DRM. Because we don't impose technical restrictions on our customers, we'll arguably have a better offering for the iPad than iTunes for the thousands of films in our catalog.

In the first few years after Apple launched iTunes, the major record labels consistently required that any download store use DRM. Since Apple refused to license FairPlay, and would not let any other DRM on the iPod, consumers could only legally buy music downloads for the iPod from iTunes, at least if they wanted songs from U2, Bruce Springsteen, or any other artists signed with a major record label. And because the more FairPlay-encrypted music someone purchased, the harder it became to use a different music player, the DRM requirement also helped Apple create switching costs for iPod users. Governments  pitched in to help protect Apple's monopoly, too. Because laws, such as the Digital Millennium Copyright Act (DMCA), make it illegal to circumvent copy protection, you can't legally make a product that would let iTunes customers easily move their encrypted purchases to a player Apple doesn't control. So, by giving music executives the DRM security blanket they demanded, which in 2003 Jobs already knew wouldn't help them, he was able to make iTunes the de facto exclusive download channel for major label content on the iPod.

By February 2007, Jobs probably saw the writing on the wall, which was that irresistible market pressure would make all the major record labels abandon DRM, and in doing so, put iTunes on a more level playing field with other download stores. So, less than two months before EMI announced it would start selling unprotected music downloads, Jobs pre-empted the situation by publishing an open letter to the music industry urging them to ditch DRM. In that way, Jobs was not only able to make the EMI announcement look like something that was good for Apple, he was able to make it look like it was his idea and that he was being a champion of consumer interests. By that time, however, it didn't much matter since Apple was already the undisputed market leader. Not surprisingly, Jobs' open letter said nothing about dropping copy-protection for video. I wonder if he's already prepared open letters for the film and book publishing industries, or if he just plans to update the one he wrote for music.

Apple's explanation for not supporting Flash on the iPad (or any iPxx device), is that it's buggy, slow and not secure. At the moment, there may be some grains of truth to those complaints, but it explains neither how users are better off without any Flash support, nor why Apple appears to be refusing to even work with Adobe to overcome any issues. My company, for example, has created thousands of MP4 files that we produced by using the H.264 video and AAC audio codecs. Every single one of these files plays just fine on my iPod Touch, my Motorola Droid, and these same files will stream perfectly well to Adobe Flash players on Windows, OS X and Linux. Clearly, it's not H.264 video that Apple has a problem with; Apple doesn't want premium content playing in an application that Apple doesn't control. As long as big media insists on DRM for premium content, Apple can maintain a high degree of control of that content by making sure there's only one viable DRM option for the iPxx platform. Because Flash has a DRM option, and even a non-DRM Flash implementation includes some content obscuring features (sometimes called "lite DRM"), Flash on the iPxx platform is a non-starter for Apple. Incidentally, Apple is so far apparently also not allowing Microsoft's Flash-like offering, Silverlight, which also has a DRM feature (and is used by Netflix), on any iPxx device. I looked, but couldn't find the objections Apple may have conjured up to justify that.

Although the music industry has abandoned DRM for downloaded content, many film and TV executives are susceptible to the same notions that the major record labels fell prey to, which is that technical solutions can protect digital content. Consequently, if you want to license movies for download from just about any large media organization, you need DRM. On the iPad, which looks to be a great video platform, iTunes has the only DRM guaranteed to function. The lack of support for third party DRM is probably the sole reason Netflix doesn't offer its "Watch Now" feature for the iPhone; they can't do it without studio-approved content protection. Apple clearly wants to keep it that way, and make sure that you buy your iPad downloads, pay-per-views, and perhaps eventually your subscriptions, from Apple. And they're not limiting it to videos. In order to get copy-protected e-books (or iBooks) that you can read on an iPad, you'll have to buy those books from Apple. Whether or not this is good for rights holders is irrelevant to Apple; it's good for Apple. By exploiting the lack of technological sophistication of music executives, Apple was able to take a good deal of industry control away from them. Why not try again for videos and books?

Because it's in Apple's interests, I expect Apple to exert every effort to keep FairPlay locked-up. As we saw when RealNetworks reverse engineered FairPlay, Apple will use anti-circumvention laws to at least intimidate competitors. The fact that these laws were meant to thwart pirates, not competitors, didn't seem to discourage Apple one bit. Although Apple has every right, and an obligation to its shareholders, to look out for its own interests, I don't think the company should bother suggesting that FairPlay principally benefits anyone but Apple.

In the near future, EZTakes plans to release our titles as MP4 downloads that will run on just about anything, including iPads (we haven't been able to test it yet, but Apple would have to break a lot of QuickTime videos to break our downloads).  Because we've tried to find more unique content, there's a lot of stuff on EZTakes that won't be on iTunes. But even if you find a title that you want in both places, you'd be much better off getting it from us. You can use your EZTakes downloads for any legal purpose. You can only use the videos you buy from iTunes when, where and how Apple sees fit.

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by Jim Flynn
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