'Abandon DRM' shocker: Apple CEO pens open letter

In a rare open letter from CEO Steve Jobs, Apple has urged record companies to abandon DRM technologies.

The letter, posted on Apple's website and entitled "Thoughts on Music", is a long examination of Apple's iTunes and what the future may hold for the online distribution of copy-protected music. In the letter, Jobs says Apple was forced to create a digital rights management system to get the world's four largest record companies on board with the iTunes Store.

But there are alternatives, Jobs wrote: Apple and the rest of the online music distributors could continue down a DRM path; Apple could license the FairPlay technology to others; or record companies could be persuaded to license music without DRM technology. The company clearly favours the third option.

Jobs wrote: "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."

Jobs' letter is a bit surprising in that Apple, with the most successful online music store on the planet, has profited by including DRM technology in its products, said Mike McGuire, an analyst with Gartner. "I think it's really interesting that the company that's the greatest beneficiary of DRM systems is basically telling the industry 'this is a problem, you need to fix this'," he said.

RealNetworks saw Jobs' letter as a vindication of its efforts to encourage interoperability between music services, which led as far as the Harmony software that allowed songs bought from other online stores to play on the iPod.

Dan Sheeran, senior vice president for digital music at RealNetworks, said: "We've been talking about the need for open formats for a very long time."

The letter appears to address critics of the iTunes Store in Europe, most recently evidenced by a decision in Norway, where regulators deemed the iTunes Store illegal. An Apple representative said the letter was not written in response to those recent legal decisions.

Jobs wrote: "Much of the concern over DRM systems has arisen in European countries. Perhaps those unhappy with the current situation should redirect their energies towards persuading the music companies to sell their music DRM-free."

James McQuivey, an analyst with Forrester Research, said: "You've got to hand it to Steve Jobs, he knows how to attract attention and how to deflect attention. He turned the whole European DRM question on its ear. 'You want me to open up FairPlay? Well, I don't even want FairPlay.'"

The Recording Industry Association of America (Riaa), however, issued a statement interpreting Jobs' letter as an offer to license the FairPlay technology.

It said in an emailed statement: "Apple's offer to license FairPlay to other technology companies is a welcome breakthrough and would be a real victory for fans, artists and labels. There have been many services seeking a licence to the Apple DRM. This would enable the interoperability that we have been urging for a very long time."

Opening the FairPlay DRM technology wouldn't be a wise strategy because Apple would have to give up the secrets of how that technology works, and it's likely that a hack for the technology would appear very quickly, Jobs wrote. Under its agreement with the record companies, Apple has just a few weeks to fix FairPlay if a breach is detected - otherwise the record company can pull all of its songs from the iTunes Store, he wrote.

Jobs added in his letter: "Apple has concluded that if it licenses FairPlay to others, it can no longer guarantee to protect the music it licenses from the big four music companies."

An Apple representative declined to comment on the Riaa's interpretation of the letter.

Jobs countered arguments made by regulators in Europe that iPod users are locked into iTunes by noting that Apple believes only about three per cent of songs on any given iPod were purchased from the iTunes store. The rest were ripped from CDs that have no copy-protection technology and can be freely shared between computers and other MP3 players, he said.

He wrote: "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."

A representative for EMI Group noted the company has been experimenting with MP3 files for sale through outlets such as Yahoo! Music. But he declined to comment beyond that when asked if EMI was planning to sell more songs without DRM in the MP3 format.

A Sony BMG representative had no immediate comment on Jobs' letter, and representatives for Warner Music and Universal could not be reached for comment.

CNET News.com's Ina Fried contributed to this report

Tom Krazit writes for CNET News.com