> The third alternative is to abolish DRMs entirely. 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. If the big four music companies would license Apple their music without the requirement that it be protected with a DRM, we would switch to selling only DRM-free music on our iTunes store. Every iPod ever made will play this DRM-free music.
"Thoughts on Music" | Steve Jobs | February 6, 2007
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And I've got a bridge in Alaska to sell you. Taking Jobs 100% at his word (i.e. Apple was dedicated to DRM-free music, was in continual negotiation with the labels to strip it, and was contractually obligated to continue to use it despite their reluctance), here's how the timeline ultimately turned out:
* October 23, 2001 - First iPod introduced
* April 28, 2003 - iTunes Store w/ Fairplay introduced
* February 6, 2007 - Job's "Thoughts on Music" letter
* April 2, 2007 - EMI agrees to sell iTunes catalog DRM free (initially for slightly higher price)
* ~ August, 2007(?) - Universal sells DRM-free tracks on iTunes Store competitors
* January-April 2009 - Apple completely(?) removes Fairplay from all iTunes Store tracks
The most notable thing to me is that around mid-'07 to '09, you start to see music sales no longer experiencing the same growth. Incidentally, app and video sales begin in approximately the same period and fill in to maintain total growth -- no one ever accused Apple of being stupid. Point being, by the time Apple removed DRM (and debatable in terms of Jobs' letter's timing depending on how their higher-fidelity internal numbers were looking), music was on the decline.
End result: Apple had 4 years of first mover advantage, then did away with DRM at a time when music sales were no longer experiencing growth.
Are savvy business / PR decisions and coincidence from an altruistic Apple both explanations for the above? Yes. Do I personally believe Apple was pushing tooth and nail to undermine a key business strength of their platform the entire time? No.
(Feel free to correct my timeline or numbers if I'm off on something. This isn't exhaustively researched!)
Except your facts are incomplete[1] and you've mixed them in with straw men.[2]
[1] Your original claim ("as soon as Apple realized how much money could be generated by adding DRM") that Apple is the one that wanted DRM on music ignores the facts of (a) every other music store that opened at the time also had DRM and (b) the fairly common knowledge that Apple's money business was selling devices and that, in the time frame we're talking about ($0.99 songs), Apple made very little profit on music sales once you factor in the cuts to the label, artist, publisher, credit card fees and store costs (some discussion at http://ask.metafilter.com/23257/Show-me-their-money).
[2] No one said that Apple didn't want DRM for 'altruistic reasons' or that 'Apple fought tooth and nail to remove DRM', these are straw men you injected. I just made the obvious claim that DRM was a label requirement. Apple would have loved to give away the music for free, they would have sold a lot more ipods. Why would Steve Jobs write a letter about DRM at all if Apple secretly wanted to keep DRM?
[1] You don't believe that there's a direct correlation between (I buy an iPod) -> (I buy even a fraction of my music that only plays on iPods) -> (I'm more likely to buy another iPod in the future)? I figured that business strategy was pretty self-evident when I said "first mover advantage," so didn't explicitly spell it out.
[2] "Apple would have loved to give away the music for free, they would have sold a lot more ipods." This is where we disagree. I believe that they would have sold fewer iPods, as the incentives for purchasing another iPod over the an alternative player in [1] would no longer be present.
Per that belief, I consider the statements "Apple didn't want DRM for altruistic reasons" and "Apple would have loved to give away the music for free, they would have sold a lot more ipods" to be equivalent. If you don't accept the premise that Fairplay was vendor lock-in (as both Realplayer and a few lawsuits alleged), then obviously that wouldn't be altruism.
"Apple fought tooth and nail to remove DRM" is a question of motive and effort. The fact is they eventually did away with DRM because the market dictated it. The question is whether they did away with it (a) as soon as possible, (b) purely as a market response, or (c) as late as possible.
The statement that "Apple didn't want DRM, the labels insisted on it" is largely irrelevant. What matters is whether they made financial gain from employing DRM, and, if so, whether that impacted their timeline and dedication to removing it.
"Why would Steve Jobs write a letter about DRM at all if Apple secretly wanted to keep DRM?" That's where I thought the timeline was interesting. To me, it wasn't that Steve Jobs wrote a letter about DRM, it's that Steve Jobs wrote a letter about DRM after the growth portion of music sales was finished.
*Again, if you don't feel Apple benefited financially from the vendor lock-in provided by Fairplay, all of this is a moot point as we're going to arrive at radically different conclusions anyway.
So iTunes sales slowed down when music streaming started to get traction. Apple did away with DRM when the majority of the record companies agreed to. I don't doubt for a second that Universal might have sold music without DRM elsewhere, why denying iTunes the same. The record industry were always afraid of the monopoly situation iTunes was becoming.
Look at how the iPod+iTunes morphed as soon as Apple realized how much money could be generated by adding DRM and a store.