Will Apple License its Fairplay DRM?
As an Apple shareholder, one of the most frustrating things I?ve encountered is Apple?s refusal to license out its Fairplay AAC codec to third party vendors. Not only does this hurt Apple customers who have purchased music from the iTunes Music Store and are unable to play their music on non-Apple hardware, but also hurts Apple itself since competing DRM (digital rights management) protected codecs (namely Microsoft?s Windows Media) can establish strongholds throughout the industry and gradually squeeze out Apple?s Fairplay DRM.
This is among the most shortsighted strategies I have seen from a company. While Apple is currently riding on its iPod?s success, consumers are busily purchasing iPods not so much for their technology, but because of their ?neat? scroll wheel which has made the iPod the current trendy item to have. As iPod?s novelty fades, so will Apple?s iTunes stronghold and its Fairplay DRM. Apple must realise that its current success in the portable media player market is not guaranteed indefinitely for the future, and it must actively seek additional methods to spread the use of Apple technologies while generating profits through licensing. If Apple began licensing out its DRM now, it could capitalise from licensing royalties from third party players, which would not likely hurt iPod sales whatsoever, but allow Apple to push aside Windows Media and establish its Fairplay as the music DRM industry standard. If Apple neglects to license its DRM technology, it will only see a rise in Windows Media use which will inevitably lead to Apple being forced by consumer pressure to add Windows Media playback to the iPod, and see its Fairplay DRM fade away into the shadow of Window Media.
This is among the most shortsighted strategies I have seen from a company. While Apple is currently riding on its iPod?s success, consumers are busily purchasing iPods not so much for their technology, but because of their ?neat? scroll wheel which has made the iPod the current trendy item to have. As iPod?s novelty fades, so will Apple?s iTunes stronghold and its Fairplay DRM. Apple must realise that its current success in the portable media player market is not guaranteed indefinitely for the future, and it must actively seek additional methods to spread the use of Apple technologies while generating profits through licensing. If Apple began licensing out its DRM now, it could capitalise from licensing royalties from third party players, which would not likely hurt iPod sales whatsoever, but allow Apple to push aside Windows Media and establish its Fairplay as the music DRM industry standard. If Apple neglects to license its DRM technology, it will only see a rise in Windows Media use which will inevitably lead to Apple being forced by consumer pressure to add Windows Media playback to the iPod, and see its Fairplay DRM fade away into the shadow of Window Media.
Comments
I don't see Apple licensing FairPlay until that trend reverses.
Apple must realise..
Welcome to AI. Well we know you're not American :P
Here's how "I" see it.
1. Yes Apple is looking to license Fairplay. One only needs to look at the Motorola ROKR phone that was delayed for mysterious reasons. It's obvious that Apple is keen to licensing under certain circumstances.
2. It's still too early. Apple is building the infrastructure and once that is complete they can begin to license Fairplay. I doubt they give licenses to any other portable device maker until they have
A. A Home Unit
B. A Car unit
Note that iTunes 5.0 is taking quite some time to be announced and the stakes here are high. I'm expecting that the strategy for maintaining Digimusic Domination has yet to fully unfold. I wouldn't castigate Apple yet until you see the rest of their hand. Napster has just laid their cards down and is betting on subscriptions. We have to see what Apple has coming.
I think it's important also to realize that rarely does a company lose when they have %70 marketshare. No other digital music player is even close the iPod in sales and won't be for quite some time. Apple has the "luxury" of taking their time and creating a nice cohesive strategy to really push forward.
The licensing will come...when it's time.
Originally posted by guiness
As an Apple shareholder, one of the most frustrating things I?ve encountered is Apple?s refusal to license out its Fairplay AAC codec to third party vendors. Not only does this hurt Apple customers who have purchased music from the iTunes Music Store and are unable to play their music on non-Apple hardware, but also hurts Apple itself since competing DRM (digital rights management) protected codecs (namely Microsoft?s Windows Media) can establish strongholds throughout the industry and gradually squeeze out Apple?s Fairplay DRM.
This is among the most shortsighted strategies I have seen from a company. While Apple is currently riding on its iPod?s success, consumers are busily purchasing iPods not so much for their technology, but because of their ?neat? scroll wheel which has made the iPod the current trendy item to have. As iPod?s novelty fades, so will Apple?s iTunes stronghold and its Fairplay DRM. Apple must realise that its current success in the portable media player market is not guaranteed indefinitely for the future, and it must actively seek additional methods to spread the use of Apple technologies while generating profits through licensing. If Apple began licensing out its DRM now, it could capitalise from licensing royalties from third party players, which would not likely hurt iPod sales whatsoever, but allow Apple to push aside Windows Media and establish its Fairplay as the music DRM industry standard. If Apple neglects to license its DRM technology, it will only see a rise in Windows Media use which will inevitably lead to Apple being forced by consumer pressure to add Windows Media playback to the iPod, and see its Fairplay DRM fade away into the shadow of Window Media.
as an ex-apple shareholder, it's stuff like this that convinced me to sell.
I honestly don't know it's brilliant or ultimately self-destructive. It's definitely risky -- he's betting that Apple can continue its iPod success for some time to come. If it can, Apple has a shot at owning in both the device market *and* (as only the geeks seem to really "get" the proprietary nature of DRM, for the moment) the underlying technology.
The danger is that if the iPod begins to lose its allure, the equation changes completely, and it may very well be too late to turn around and turn FairPlay into an MS-style "open" (read as: controlled) standard. But is that kind of company Apple is, anyway? To collect royalties on every song sold, at the possible expense of the iPod's dominance, and ability to make sure that the iPod/ITMS experience is seamless and excellent? Does Apple care about making money, at the expense of user experience -- and selling Apple products?
And can anyone other than possibly Sony -- who seems to be very slowly waking up -- compete with Apple in excellence in marketing and hardware and software design (and how the two work together)? A: not yet, and Apple design is simply extraordinary, and for the first time perhaps ever, affordable. If they keep the iPod moving forward in smart and interesting ways, why won't it continue to dominate market- and mindshare? How will it lose its luster?
Anyway, whether Apple's gamble works or not, it's far from clueless, it's pretty bold. John Gruber sums it up extremely well here.
Originally posted by ipodandimac
as an ex-apple shareholder, it's stuff like this that convinced me to sell.
Under Jobs' direction the Apple stock has broken records for gains. Somehow I think Steve and staff know a bit more about what needs to be done with licensing than you or guiness. No offense but the talent they have on staff has so much more experience than both of you combined. I'm not going to fault Apple until they actually start losing some appreciable marketshare.
Until we see iTunes 5.0 and get hints of further direction of Apple's strategy for Digital Music post like this are rather silly. Unless you have insider info you don't know a damn thing about Apple's plans beyond anyone else on this site.
Too news-like - implying Apple *is* licensing its Fairplay DRM.
Bound to piss off Google users too, searching for Fairplay news, since your other identical threads show prominently in the results...
http://forums.afterdawn.com/thread_view.cfm/177594
http://forums.ipodlounge.com/archive/topic/89040-1.html
Edited.
Even if Apple did license out Fairplay, I don't think iTMS sales would be greatly impacted - competing stores are just too weak right now.
hey Guiness, why are you going around to all these forums posting this message?
LOL read this
Apple used this strategy with the Mac: keep it as closed and propriety as possible. How much of the market does Macs have? 10%. How much of the market does the open non-proprietary IBM PC have? 90%. Apple has not yet learned their lesson for their closed strategy.
Apple just celebrated their 26th anniversary year in business. I doubt this person writing this is even 26 yrs old. The Mac never had commanding marketshare and people seem to confuse ubiquity with "open". Try to license Windows and see how "open" it is. Try to license Intels chipsets and see how "open" it is. That's called a duopoly folks. There ain't much open about it. You're paying two sources at the top who happen to be amongst the richest companies in the world.
Licensing will happen when it's ready. Just because you bought some Apple stock doesn't mean you know shit about what is going to happen or what needs to happen. Truth hurts.
1. Apple's actions with iPod, iTunes and iTMS have actually been uncharacteristically (compared to their past anyway) open and willing to partner (Motorola, HP, etc.) This is a very good sign.
2. The current market share numbers speak for themselves. At this point, there probably isn't a need.
3. Part of the "trigger" to license FP (and first to hardware makers)...will be when margins on their own hardware squeezes down to the point where they could make the same amount (per unit) by licensing FP. Keep in mind, Apple is trying to "skim" the high margin business first. They are playing it very well.
4. Yes, they are trying to drive the others out of business first. Not a bad strategy...at least weaken them until Apple opens the door and says..."Suuuure...we'll license FP to you now." Simply puts Apple into a higher leverage position.
5. Apple currently offers a wide range of iPod devices from $99 to $499 in (almost) $50 increments. They are covering most of the market. There can be (and are) few legitimate complaints about price (Apple is actually doing pretty well there).
6. Though this guy didn't do, I see endless comparisons to Apple losing the computer market...squandering their lead. Well let's be clear about a few things:
a. Apple DID have a market share lead with the Apple II...but NEVER with the Mac.
b. Apple had a technological lead with the Mac..but NEVER market share.
c. Apple "losing" the computer market had to with a combination of of the transition to the Mac (their non-compatible next-generation machine), high cost, and fierce competition with Microsoft/IBM who presented an ostenisbly more "open" platform for less $...that was "good enough". The Mac never got the traction that iPod has.
d. The times, environment, markets, people, circumstances, etc, are all very different this time. In particular, iPod is something that is much more about Apple's strengths (design, ease of use, hip, etc.) than desktop, utilitarian computers (primarily for business)...Microsoft's personality fits the latter but not the former.
7. Apple doesn't really need any of our advice.
Originally posted by ipodandimac
as an ex-apple shareholder, it's stuff like this that convinced me to sell.
I'd be curious to know when (at what price) you chose to sell. This might give us some insight into your investment prowess.
Originally posted by cesjr
Another factor against licensing at this point is that Apple can innovate more rapidly and better guarantee a glitch-free, reliable user experience by controlling all the pieces. As we all know, this is Apple's standard modus operandi from the beginning and particularly since Jobs returned. The Microsofts of the world are well aware of this and are just waiting for apple to slow down, either through running out of things to innovate or through neglect/mismanagement (which at this point would probably requires Jobs to leave or lose focus).
Great point.