The announcement that Apple is eliminating digital rights management controls from its I Tunes service is the final nail in the coffin of technology based solutions to piracy. Every time Apple or Microsoft would roll out a new DRM solution, it would take the hackers in Moscow about 20 hours to crack it and publish the hack. The belief on the part of both the RIAA and the MPAA that some technological magic bullet would be discovered was always a pipe dream.
In contrast to the parlous state of the CD business, the music publishing business is flourishing as never before, because of one simple difference–the mechanical license. Every time you go into a bar or a Gap store that is playing music, they are paying a fee to ASCAP or BMI for that privilege and the songwriter is getting paid. They do a monthly sample on a small percentage of the retail, radio, elevator, Internet and other outlets and divvy up the money. It works.
For the last 16 months I have been quietly suggesting to U.S. Trade representatives that the only solution to the real IP theft problem is some similar content license fee on worldwide broadband service. Assume that some international body like UNESCO was collecting $3 per month per subscriber from AT&T and China Netcom and every other provider. By my calculations that would come to about $1.5 billion a month to be doled out to copyright holders. Needless to say, if you counted in the cellphones running broadband, that figure would double and continue to grow as broadband spreads. Perhaps video downloads might get slightly more than audio, but it would not be hard to sample the world’s networks to see how to divvy up the funds. Companies like Big Champagne already do this.
Piracy is not a trivial issue. I can tell you that no one gets any home video revenue out of Asia or South America, even though millions of DVD players are sold there. We need to accept the reality of online file sharing and stop pretending there is some magic box DRM fix to this problem. Apple’s decision is at least a reality check.