How Apple killed Microsoft’s music format monopoly dreams
Today’s announcement by Apple & EMI about plans to offer EMI’s music catalogue in higher bitrate, DRM-free versions on the iTunes Store for $1.29 per song is huge. I don’t think it’s quite sunk in yet to the majority of people in the industry, or the web, just how huge it is. It’s pretty much a given that the rest of the music labels will be forced to follow EMI’s lead and open up their catalogues to high-quality DRM-less music downloads as well. Not only because they’ll bow to the competitive pressure from EMI’s soon-to-be success, but because they’re too greedy to pass up the opportunity to boost digital revenues by an extra 30% almost overnight. So it’s only a matter of time before all music sold through iTunes is offered in higher-quality 256kbps Advanced Audio Coding (AAC) format, completely free of digital rights management.
There seems to be a big misconception about the AAC format. Many people seem to think it’s an Apple owned format, but that is incorrect. AAC is an open standard, and was developed by Dolby, Fraunhofer, AT&T, Sony and Nokia to replace MP3; it was declared a standard by the MPEG group back in 1997. Apple chose AAC for it’s iTunes Store because it was the logical industry standard format for their needs. It offers better quality audio at smaller file sizes and supports features like 5.1 surround sound and DRM. Apple’s DRM solution is called FairPlay, and is used to encrypt the AAC file so it’s playback can be limited to authorized devices. Remove FairPlay and you’re left with an open, industry-standard music file which will never, and can never, be controlled by Apple or any other single company. AAC has already gaining widespread support in the consumer electronics industry – even Microsoft’s Zune can play DRM-free AAC audio files.
Microsoft’s Windows Media Audio (WMA) format, in contrast, is a proprietary format. Only companies and devices that license it from Microsoft can use it. It was created so people would require Microsoft’s products in order to play back their music and by extension, make Microsoft lots of money. But in order to convince third party music sellers and device makers to support WMA, they needed to offer value. That value came in the form of a digital rights management system that could be licensed, saving everyone from having to make their own DRM system, the way Apple did. The record labels wouldn’t allow their music catalog to be sold digitally without some form of copy protection, fearing it would contribute to online piracy. So company after company came knocking on Microsoft’s door seeking to license their WMA/DRM solution, later branded “PlaysForSure”, in order to get a slice of the music download action. The record labels were set to hand Microsoft it’s music monopoly.
Apple no doubt saw the risk of letting Microsoft take over the digital music market. They were already seeing what Microsoft’s domination in the web browser and office suite markets was doing to lock people into the Windows OS. To combat the WMA threat, Apple at first decided to try promoting the MP3 format by releasing iTunes in early 2001 and the iPod, later that year for the Macintosh – both of which were promoted as “MP3 players”. But it was Apple’s decision to take iTunes and the iPod to the Windows platform a year later that was the trojan horse that would eventually lead to the death of WMA. In 2003, Apple launched the iTunes Music Store, later renamed the iTunes Store, and cemented their position as the leader in digital media, bringing AAC along for the ride. The rest is, as they say, history.
Once iTunes goes completely DRM free, competing stores will be forced to go DRM free as well, in order to compete. They’ll also jump at the chance to finally be able to sell music to iPod owners, something they’ve been begging for ever since the iTunes/iPod duo took over the market. But there’s one little thing–the iPod doesn’t play WMA formatted music. So one by one, Microsoft’s former media partners, no doubt still smarting from being locked out of Microsoft’s Zune party, will start selling DRM-free music in AAC format. Why? Because WMA, and even MP3, require royalty payments to use. AAC does not. There’s no point whatsoever in continuing to sell WMA formatted music, if you aren’t using Microsoft’s DRM copy protection.
So as the whole world adopts industry standard audio formats over the coming years, where does that leave Microsoft and their closed, proprietary WMA audio format? Dead in the water. Microsoft will be forced to adopt AAC for their Zune Marketplace, otherwise they’ll lock themselves out of all the consumer devices that are developed to support AAC, but won’t support WMA. Not to mention, even Zune owners won’t want to buy WMA formatted music for fear of not being compatible with future device purchases. WMA has lost it’s value proposition and will die a slow death along with Microsoft’s aspirations of obtaining a music format monopoly. It’s a great day for music lovers as well as the consumer electronics and music industries, and no doubt will be seen as the day Microsoft lost the music format war.
1 comment April 2nd, 2007