EMI / Apple announcement: The beginning of the end for DRM

I never really thought I’d see this day, but today, EMI (one of the four large music labels) has announced that it will offer its music catalog DRM-free through iTunes (see also coverage in the NY Times). This means that users can buy any EMI song as an unrestricted MP3 file which they can then freely copy or use on any device, not just iPods.

Despite the groundbreaking nature of this announcement, it makes a lot of sense. Record labels have realized that DRM technology has done very little to prevent users from illegal copying and sharing of music. According to Steve Jobs, less than 3% of the music on iPods consists of DRM-protected files bought on iTunes. The rest are DRM-free files ripped from CDs. So, is EMI throwing in the towel? In a way yes, but that’s not the whole story. What they’ve finally realized is that they need to change the way they make money off of their recording artists. Instead of trying to force the market to consumer their product (music) their way (bundled in CDs or with restricted usage rights), they will let the market decide how to use the product (unbundled and flexible to use). And now they can concentrate on creating value-added services that go beyond the song itself (starting with the fact that they are charging more – $1.29 – for DRM-free songs). I wouldn’t be surprised if the recording labels started encroaching on areas that have traditionally been the bread and butter of musicians, like concerts.

How about Apple? Have they also thrown in the towel after the legal attacks on their highly restricted integration between iPods and iTunes? Call this a truce. Now nobody can accuse Apple of hijacking the market by forcing iTunes buyers to use iPods, since the DRM-free songs can be played on any device. Besides, why should Apple worry? For years people have speculated on what would be the “iPod killer.” Many have tried (including Microsoft – has anyone ever actually seen a Zune?) and all have failed. Not because iPods are necessary to play the music bought on iTunes (though I’m sure it’s helped), but because iPods are a marvel of design and functionality and because Apple is brilliant on building a brand. So, why should Steve Jobs care if iTunes songs will be played on non-iPod devices? Since the EMI catalog will be available DRM-free only at iTunes for now, Apple will actually gain more customers. It will be the owners of other digital devices that will come to iTunes to buy music. I don’t think it’s that far fetched to imagine Apple turning iTunes into a music store for all devices, with agreements to provide syncing for them as well. iTunes itself was never the strong point of the competitive strategy. That was the iPod. So, why not open iTunes to all and let iPod compete on its own merit, which is a formidable proposition anyway?

And there’s another huge benefit to Apple (and Steve Jobs) that comes from this announcement. They will be credited (again) with changing the digital media landscape and for managing to rid the world of the much hated DRM plague. Don’t you think that this alone will get them some more customers buying songs at iTunes? Not to mention it will make Steve Jobs feel even warmer and fuzzier inside than he already does?

Wikis: They’re not just for encyclopedias anymore.

Business Week has a great special section on Wikis this week. For the uninitiated, Wikis are basically online collaboration tools that allow multiple users to collaboratively create and edit documents. It’s how Wikipedia works. But Wikis have made huge inroads within companies. The possibilities are endless. For example, a software development company can allow its developers to develop and test code through a wiki. It can also allow its team of remotely based technical writers to write the software documentation. One article in BW’s special section talks about many other examples of large corporations implementing Wikis for internal purposes.

But why stop with employees? Why not let the customers do the work? This is nothing new. Companies like Microsoft have successfully used forums and bulletin boards to allow their customers to help each other with all technical issues. Personally, I have always had better luck getting help from such online forums than any company’s technical support team. So, a Wiki can allow the customers to basically build and edit a knowledge base, one that isn’t organized in the form of questions and answers in long complicated threads, but in the form of self-contained articles. eBay has been trying this with eBay Wiki. The beauty of Wikis is that all the information created is never static. It’s constantly alive and changing to (hopefully) reflect the changes in the world it describes. To borrow a metaphor from biology, the information becomes the organism and the users who create and edit it become its adaptive cells.

Of course there are those who say it’s not going to work. That there’s too much room for vandalism and unscrupuplous misuse. But the same can be said for email or even the telephone. As a technology becomes well integrated with the social norms, regulations, and culture of an organization, it becomes less and less misused. Maybe it’s the fact that employees realize that everyone is collectively better off if the technology is used appropriately. Maybe it’s because organizations develop clearer guidelines and sanctions for misuse. Whatever the reason(s), the result is the same. So, let Wikis grow and use them as much as possible. Soon, there will come a time we won’t remember how we worked without them.

Google tackles Microsoft

So, Google today announced its Google Apps Premier Edition. It’s basically an integrated suite of applications for businesses and with this product, Google is competing directly with Microsoft’s Office and Outlook. A standard edition of Google Apps has been available for a while now, and has included Gmail, a web-based calendar, Google Spreadsheet, and Google Docs, among other things. The beefed-up premier edition offers enhancements like telephone support and 10Gb of storage space per user, all for just $50 per user per year.

Back in the mid-to-late 1990s, I remember when many people believed that Microsoft’s undoing would come from Java. The idea was that Java-based applications (like a wordprocessor or spreadsheet app) that could be downloaded through a web browser, would render Microsoft Office obsolete. Why would you need to buy a license and install Microsoft Office on your expensive fat client PC when you could just buy a stripped down thin client and run all your applications as Java applets that you download using a web browser? Of course, that never happened. Java applets were huge, took a long time to download (especially at the connection speeds of the time) and run, and were often buggy.

 The difference today is that truly web-based applications, using Ajax or simply Javascript, are efficient, effective, centralized, and user-friendly. Google Apps Premier Edition may not replace Microsoft’s products in the next few months or even in the next couple of years. But it is definitely a step in the right direction, especially for small and medium businesses. Microsoft knows this and they have repeatedly said that they are moving on a web-based model as well, though probably not as quickly as companies like Google and Zoho (who must be feeling very nervous today after Google’s announcement). Who will win this next battle of the productivity software remains to be seen.