There has been a lot of noise recently about the deal that Apple has cut with EMI - so I decided to dig into this story. Apple - DRM free? maybe finally Apple gets the picture. Given Apple’s proprietory history though this seemed like a strange twist indeed. Further investigation shows that users may in fact, quite to the contrary of the DRM free promise, be very careful about buying anything from Apple. But before getting into the risks lurking in this new value proposition - its worth revisiting the Apple on-line model.

The Apple proprietary interface

First of all to actually do anything with Apple you have to download their I Tunes player. So although they are in the business of selling content - they will ONLY do that if you sign up to their service. Lets be specific about this - unlike the majority of music sites who still encourage you to download their player - Apple will not let you see any items of content without their client software installed on your PC or Mac.

But there’s more. Interestingly Apple makes you agree TWICE to their licensing agreement (just in case you didn’t get it the first time). Oddly the second time I actually read the agreement and found all the usual disclaimers. Here though is one of my favorite clauses-

“YOU EXPRESSLY ACKNOWLEDGE AND AGREE THAT USE OF THE APPLE SOFTWARE (AS DEFINED ABOVE) AND SERVICES (AS DEFINED BELOW) IS AT YOUR SOLE RISK AND THAT THE ENTIRE RISK AS TO SATISFACTORY QUALITY, PERFORMANCE, ACCURACY AND EFFORT IS WITH YOU. EXCEPT FOR THE LIMITED WARRANTY ON MEDIA SET FORTH ABOVE AND TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, THE APPLE SOFTWARE AND SERVICES ARE PROVIDED “AS IS”…”

The significance of this kind of clause will be clear later when the full potential risk of what Apple has done dawns on the reader.

Once the player is downloaded - you can see some of these royalty free albums - but if you want to look at one item or dig deeper you have to log into the store with your Apple Number and Password. Now this is where I draw the line. No Apple number for me! If you are a faithful IPod/ITunes user however this next step is no doubt straightforward and no doubt seamless once entered into the Apple fat client (its a beauty - 32 MB download with lots of calling home of course …).

The Big Problem

OK so lets move past the fact that you might seriously object to having to download a fat client application, that acts as a browser, just to access Apple’s content. Here is the rub - according to a number of well informed sources - when you buy these files they EMBED your name and email address in them - and that data can be accessed relatively easily !!!!

The link below is a good quick summary from Information Week with corroborating checks and some very interesting links -

DRM: A Half-Step Forward, More Steps Back

Now the counter argument to this is that this issue shouldn’t matter as the files should only be used on the buyer’s personal devices - so what’s the problem? This shows a classic misunderstanding about security and the internet. First of all it appears Apple does not go out of its way to mention this issue - so largely speaking users are most likely unaware. To further amplify the risk Apple can help you upgrade all your EMI files in one swoop and is encouraging this through its pricing model.

BUT:-
What happens if a buyer loses their player?
What happens if this information gets out into the public domain?
What happens if your kids inadvertently share a file with their friends?
Would everyone in the chain be in trouble?
Even if Apple takes no action - what would EMI do?
[Guess that licensing exclusion clause really comes into play here!].

This is all disingenious - DRM freedom is going to actually encourage many buyer’s to do a little bit of sharing with friends - just like lending a CD - but the downside is a lot more draconian than buyers may have bargained for. It is possible that Apple has now provided more secure encryption in the files - but there is even a site now that shows you how to hack the file to get this information. Further concerns and questions have been raised about other kinds of hidden content in these files ie some 360K segments that have been identified and remain unexplained.

As you can imagine the blogosphere is very hostile to what Apple have done - and by and large have mostly ridiculed the launch from Apple. Frankly when buyers go into a store and purchase music they have an ackowledged right not to tell the retailer who they are - not only clearly do Apple insist on knowing this - they go one step further - brand you into the product permanently.

What does this really mean?

The real point about all this is whether Apple really understands the Internet (or worse cares) - and what this might in the end cost them. Even if they fix it - what was the mentality that caused them to do it in the first place? The network effect cuts both ways - good news and bad news travels fast. For a company on a roll, (over $100B market cap), this kind of venture seems ill conceived and very risky. Apple sells hardware well - and when it comes to design simplicity it excels - but the Internet is in the middle of a love affair with open source and wikimania, this is surely a bad time to upset 500,000,000 Europeans and North Americans alone who daily go on line. All it takes is You Tube to get a hold of this or Facebook (see my previous blog) and things could go bad to worse quickly.

Of further concern is that the very loyal buyers of Apple product could be offended by what appears to be a potential time bomb delivered to them unknowingly in the form of “branded” music files. By insisting that users must use the Apple fat client - the company is essentially insulating customers from the outside world even through the internet. It would appear that Apple have a considerable hold on their audience and this is great if they don’t mess up. In other words be careful what you wish for…

A great deal of the Apple model is counterintutive to the current modus operandi of the net - and thus its risky. But Apple have done well by being contrarian in the past - “proprietary more than ever” seems to be the plan.

So when looking at Apple stock and the future product announcements - there should be a note of caution that this company still has proprietary blues (and on the Internet this is a potentially deadly sin) - the real risk is that someone else finds a better blend of product and internet savvy. So far there have been no real takers.

Watch out for cameras too…

As a sideline one interesting comment on a blog was from a disgruntled Sony customer who attempted to integrate his camera with his computer and discovered some pretty strange DRM type activity invading his system. For now I am going to include this kind of research into my product buying criteria!