American Green Inc (ERBB)

[neilbolton]

Merlyn,

I agree with that post somewhat. However, you are not right in saying either force Apple to embrace DRM or create another distribution outlet where DRM encoding is mandatory.

As far as I know Apple fully embrace DRM. They use Fairplay, which is their equivalent to Windows Media DRM and I understand tracks downloaded from iTunes Music Store are controlled by Fairplay. The issue the labels have is Apple not allowing Fairplay as a DRM alternative on copy protected disks. That forces the labels to either prevent those CDs running on a MAC to hinder piracy (EMI solution) which antagonizes the consumers or allow those CDs to play on a MAC enabling piracy (BMG solution). All the labels want is for Apple to allow them to use the same Fairplay DRM on CDs that Apple itself uses on iTunes.

The labels could withhold their music from the iTunes store either permanently or for the first few weeks of release to force Apple's hand. But that also risks the labels losing revenue through that outlet medium, so its a doubled edged sword. And that loss may not be recouped in CD sales, as it might drive the users to the P2P sites.

The biggest weapon against Apple is as you say the threat from alternative MP3 players, especially cell phones. If the other players are able to import tracks from the CD using Windows Media say, but not iPod users, or if iPod users have to go through some set of gymnastics to get those tracks, then I think Apple will lose their edge and risk losing their commanding position in that market.