DRMs and CLMs

Continued from 'A Sufficient Hardware Foundation For Future Firmware Perfection?'….

Now let's look at Microsoft's DRM strategy. No, I don't believe I'm about to commit a Career-Limiting Move. But I am going to give a counter-view to my boss's recent missive about Zune's lack of PlaysForSure DRM support. Consider the following points:

• Maury may not have known this, but PlaysForSure has been hacked, even with Windows Media Player 11. And, if the hacker is to be believed, the circumvention is inherently unrepairable by Redmond.
• Purchased PlaysForSure content can be burned to CD and re-ripped to a Zune-friendly format. Yes, this process is time-consuming and incurs a one-generation quality loss, but as my studies show, 128- to 192-kbps PlaysForSure WMA source files are a close approximation of the original audio. And given most listeners' tin ears, entry-level headphones and loud ambient listening environments, slight quality degradation is a practical non-issue.
• Subscription PlaysForSure is a consumer nightmare. For proof, search for my past writeups using terms like 'Yahoo' or 'subscription audio'. My iRiver H10 regularly locks up, necessitating a battery yank, and, if it freezes during a sync, corrupts the player's stored music library, forcing me to reinstall the latest firmware (the only reliable way to wipe the HDD clean) and re-download 5 GBytes' worth of tunes. Yahoo Music Engine (now Jukebox) upgrades have obliterated stored playlists, rendered already-downloaded music inaccessible, locked my wife and I out from our account (which can't differentiate between computers, meaning that when my wife logs in from her machine, the content I've previously downloaded to my PC also gets dumped onto her hard drive), and created other annoying issues. This isn't just an iRiver issue; my wife's Creative Zen Micro exhibits similar annoyances. And it isn't just a Yahoo issue; I've also read plenty of rants from unhappy users of Napster, Rhapsody and other subscription services.
• If Microsoft's claims are true, the PlaysForSure DRM is incapable of implementing some of Zune's enhanced capabilities, such as the previously mentioned three plays/three days sharing feature, or the rumoured upcoming 'pay to share' enhancement.

What does concern me, on the other hand, is Universal's recent revelation that Microsoft is paying it around $1 per player sold, on top of the traditional percentage of each Universal track sold or rented. One theory as to why Microsoft's doing this centers on the fact that while Apple's financial war chest expands to the tune of roughly $1 billion per year, Microsoft's is around 10x that size. Microsoft's attempting, so the story goes, to set a compensation standard that Apple will have to match (to its fiscal detriment) when it periodically renegotiates deals with the labels.

If true, I see it as 'blood money' akin to the blank media tax tacked onto the price of music CD-Rs; a dangerous precedent that inappropriately empowers the labels and will ultimately be to the detriment of consumers. However, the more likely explanation, in my mind, is that Universal insisted on the per-player payoff as a condition of access to its media portfolio and that Microsoft, coming from a position of low marketshare, had no option but to accept the extortion. If this scenario is accurate, Apple's in little danger of incurring similar near-term treatment, given the iTunes Store's online dominance.

Wrapping up, I'll point to a two-month-old Engadget interview with J Allard that's particularly stuck in my mind. Give it a read; focus in particular on the PlaysForSure section. Microsoft's success to date has largely come from a diverse PC ecosystem, consisting of countless hardware and software suppliers, marginally differentiated from each other and all playing on a common Windows field. Apple, in computers, chose a different, vertically-oriented approach that emphasized obtaining both hardware and software from a common source (Cupertino) and, while it arguably led to higher profit margins, also ultimately translated to a much lower market share.

The music business is the exact opposite, and I haven't yet been able to firmly put my finger on exactly why. Microsoft has largely failed to cultivate a PC-like music ecosystem fueled by its codec and DRM. Apple's vertically-aligned business model has, conversely, won out. Read between the lines of J's comments and you might also interpret that while Microsoft will continue to give lip service to PlaysForSure, vertically-aligned Zune will be its primary focus going forward. RealNetworks has sure seen the light; it's in the process of dropping PlaysForSure in favour of its homebrew Helix DRM.

While it might be easy to dismiss Zune as a 'too little, too late' offering, ponder the initial underwhelming response that the iPod got five years ago. Mighty Slashdot categorized the coverage in its 'well-thats-not-very-exciting' department, and Commander Taco's analysis was succinct (and amusingly off-course); 'No wireless. Less space than a nomad. Lame.' Microsoft's got lots of money and manpower, and it's long exhibited the tenacity to compete in areas it deems critical to its long-term success. PlaysForSure was Act 1, and it was lame, but the curtain's nowhere near closed on Apple's #1 competitor.