Apple’s CEO wrote an open letter today decrying DRM. I’m happy to see it. In it, he wrote a really interesting factoid about the consequences of DRM:
Today’s most popular iPod holds 1000 songs, and research tells us that the average iPod is nearly full. This means that only 22 out of 1000 songs, or under 3% of the music on the average iPod, is purchased from the iTunes store and protected with a DRM. The remaining 97% of the music is unprotected and playable on any player that can play the open formats. Its hard to believe that just 3% of the music on the average iPod is enough to lock users into buying only iPods in the future. And since 97% of the music on the average iPod was not purchased from the iTunes store, iPod users are clearly not locked into the iTunes store to acquire their music.
The point made is that DRM isn’t really locking people in because most of people’s music isn’t from iTunes.
He’s sneaking around the issue. 22 songs works out to $22 “invested” in the iPod. That’s $22 extra “tax” every competitor of the iPod must offset just to let the consumer break even for switching. That doesn’t include the cost of learning new software, the risk of the new player sucking, or the time spent re-buying and setting up the new player. Nevertheless, the point is that the $22 plays a significant role in keeping the iPod competitive.
This may help explain why the cheaper prices haven’t persuaded consumers to switch, for example, to the Zune.
Zune’s success is diminished though when we consider that it took 9% of the hard drive MP3 player market. These numbers also do not include sales from Apple retail stores, which sell only iPod players.
Anyway, Jobs also talks candidly about the idea of DRM-free media:
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.
Don’t worry, Jobs. The day will come, and your iPod’s iron grip on digital media will help it happen.