Steve Jobs – Thoughts on Music – February 6, 2007 – Found by Nathaniel.:

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.

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. Though the big four music companies require that all their music sold online be protected with DRMs, these same music companies continue to sell billions of CDs a year which contain completely unprotected music. That’s right! No DRM system was ever developed for the CD, so all the music distributed on CDs can be easily uploaded to the Internet, then (illegally) downloaded and played on any computer or player.

So if the music companies are selling over 90 percent of their music DRM-free, what benefits do they get from selling the remaining small percentage of their music encumbered with a DRM system? There appear to be none.

Dvorak chimes in on Jobs’ proposal in his latest MarketWatch column:

Music sharing used to be a common thing people did, but it’s now limited to swapping CD’s (or copies of CD’s). As we move to pure online distribution the sharing of purchased music is severely limited by DRM.

This limitation will kill the industry since the social networking (aka music sharing) has been so important to the discovery process.

I would like to finish with the marketing observation that the record industry hates. During the heyday of Napster and open free music sharing and trading, when million of people swapped songs, the CD business was booming. Once Napster was shut down, and along with it the social network of music discovery, sales began to plummet. They are still falling.

Apparently these people are clueless about their own industry and how it works.

John’s right. Whenever there is a lack of exposure to new music the music industry takes a dive. Some of you might be old enough to remember when the music industry crashed back in the early 80s. Experts and pundits at the time laid the blame on piracy and video games. The theories were that kids were sharing music via cassette tapes and that kids were too distracted by video games to buy music. Sound familiar?

So the early 80s had Tom Petty shooting an arcade video game with a gun in one of his videos and Bow Wow Wow pissing off the industry with their pro-copying song “C30, C60, C90, Go.” It all seems so incredibly naive now.

Of course the music decline had nothing to do with either cassette tapes or video games. It was that white kids were sick of what radio was playing. (I’m guessing black kids were sick too, but I cannot speak from their experience.) They were sick of faceless corporate rock featuring bland music by such groups as Styx, Journey, and Reo Speedwagon. They wanted their own music, but no one was playing it.

However, once MTV got into enough homes it started exposing kids to new music and the industry took off big time. MTV brought black music to white kids along with English new-wave, metal, and alternative. (And the surge was certainly helped by the release of the CD format which made plenty of people re-buy their music collections.)

That huge wave continued until the 90s when MTV stopped playing new music. About that same time the radio industry started consolidating and extremely narrow play lists killed off any music diversity heard on the radio. The music industry was stuck exactly where it was back in the 80s: Radio stations playing bland corporate music and fans not giving a damn because they had nothing worth giving a damn about.

It was also at that time that I stopped buying new music. Most of the music I had been exposed to was via word of mouth, sharing mix tapes among friends. Artists such as Husker Du, John Zorn and Fishbone. Once I went to law school and didn’t have time to hang out and share music with friends my exposure to new music ended.

That changed with Napster. The cool thing about the original Napster was that it more than peer-to-peer, it was actually person to person. With modern P2P programs you’re not downloading from one person, but from several people all at once. But with Napster you were connected to one person and they were connected to you. When you saw someone download one of your favorite songs, you’d think, “Gee, if they like that song, they might have something I would like.”

I’d check out share lists of those people and would be exposed to music I had never heard. And I’d chat with people all over the world about music. I went from buying no new music to buying about two or three CDs a month. Bands such as Wilco, the Old 97s, and Pizzicato Five, to name a few.

Of course that ended when Napster pulled its plug. And because other P2P programs didn’t have the same person to person feel, I stopped being exposed to new music and stopped buying new music again. Modern P2P programs are only good when you already know what you want. They’re not designed to expose you to music you’ve never heard. And we have the music industry to blame for that.

As John points out, the music industry has to accept that the vast majority of people only buy music they’re exposed to. People will see a movie based solely on a commercial, but they will not buy a CD based on a commercial, unless they’ve heard at least one song enough times to actually like it. Marketing music is odd because you basically cannot sell it until after the person has already “used” the product.

Nowadays the music industry is holding its assets so tightly that they’re killing themselves off.

If the industry really wants to save itself, here’s what they should do. First, come out strongly against radio consolidation. In fact, press the FCC and Congress to backtrack and open up radio ownership. Push for licenses for as many low-wattage stations as possible. Let’s go back to the time when radio stations existed not solely for profit, but because the owner and DJs loved music. (I have a theory that people with MBAs are unable to love anything that cannot be quantified, so maybe they should be banned from working in the radio industry!)

Second, treat internet radio as a marketing tool and not a source of direct revenue. Real radio only has to pay the composer for playing music. Why should internet radio be any different?

Third, create a music television channel that plays nothing but music videos. Then spin it off and give it complete independence so it’s free to innovate and play any form of music. Don’t let it become a drone of the corporate music industry.

Fourth, accept that music is more than just a product. It’s not a new floor cleaner or a dessert topping. It’s an integral part of people’s lives. People use music to shape their identity in ways no other product can. Locking up music is about as asinine as locking up your first kiss or your first roller coaster ride. It’s a part of our identity and culture and people should be allowed to revel in it, not be locked away from it.