Apple's Jobs calls for DRM-free world

In a rare open letter from CEO Steve Jobs on Tuesday, Apple has urged record companies to abandon digital rights management technologies.

The letter, posted on Apple's Web site and titled "Thoughts on Music," is a long examination of Apple's iTunes and what the future may hold for the online distribution of copy-protected music. In the letter, Jobs says Apple was forced to create a DRM system to get the world's four largest record companies onboard with the iTunes Store.

But there are alternatives, Jobs wrote. Apple and the rest of the online music distributors could continue down a DRM path; Apple could license the FairPlay technology to others; or record companies could be convinced to license music without DRM technology. The company clearly favors the third option.

"Imagine a world where every online store sells DRM-free music encoded in open licensable formats," Jobs wrote. "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."

Jobs' letter is a bit surprising in that Apple, with the most successful online music store on the planet, has profited by including DRM technology in its products, said Mike McGuire, an analyst with Gartner. "I think it's really interesting that the company that's the greatest beneficiary of DRM systems is basically telling the industry, 'This is a problem, you need to fix this,'" he said.

The letter appears to address critics of the iTunes Store in Europe, most recently evidenced by a decision in Norway, where regulators deemed the iTunes Store illegal. An Apple representative said the letter was not written in response to those recent legal decisions.

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

Opening the FairPlay DRM technology wouldn't be a wise strategy because Apple would have to give up the secrets of how that technology works, and it's likely that a hack for the technology would appear very quickly, Jobs wrote. Under its agreement with the record companies, Apple has just a few weeks to fix FairPlay if a breach is detected--otherwise the record company can pull all of their songs from the iTunes Store, he wrote.

He countered arguments made by regulators in Europe that iPod users are locked into iTunes by noting that Apple believes only about 3 percent of songs on any given iPod were purchased from the iTunes store. The rest were ripped from CDs that have no copy-protection technology and can be freely shared between computers and other MP3 players, he said.

"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," Jobs wrote.

Jason Reindorp, marketing director for Microsoft's Zune unit, said that Jobs' call for the "abolition" of DRM "seems to be kind of irresponsible" as well as an about-face.

"DRM is not necessarily the bad guy," Reindorp said, noting that the value of protected content is determined by how the technology is applied and which business models are employed in distributing content. "DRM enables a lot of cool scenarios like subscription music. If you didn't have DRM, those wouldn't be possible."

Many record company executives are unlikely to be thrilled by the letter, McGuire said. However, there's also the possibility that others within the record industry who have been calling for a change could seize upon the letter as evidence that the current system is broken. The New York Times reported in January that music industry executives at Midem, an annual industry conference, were openly discussing the sale of DRM-free music via the MP3 format.

"That's where the interesting negotiations happen, what happens within the labels," McGuire said. But negotiations are also likely under way between Apple and the record companies for an extension to their iTunes licensing deal, and Jobs' letter could be positioning Apple for the next round of talks, he said.

CNET News.com's Ina Fried contributed to this report.