iTunes and Lawsuits

Newsweek's Stephen Levy puts his finger on the insanity of the current legal music download offerings.

This is crazy. Online prices should always be much lower than physical CDs. The economics of downloading favor high volume. CDs have to be pressed, warehoused and shipped, but in the online world, you transmit a file to the vendor and just collect money. When a super popular artist like Norah Jones emerges, forget about convincing a hundred thousand people to download it at $13-get a million people to make the mouse-buy for five bucks. It's nice to sell 100,000 Norah Jones albums online at $13, but even better to sell 2 million at five bucks a pop.

Then there's the situation with digital rights management, or DRM, these are the protections built into legally sold digital tunes to prevent infringement. But one problem of DRM has nothing to do with piracy. Because different online stores use different DRM schemes, sometimes legally downloaded songs won't work on all playback devices. For instance, the songs you buy from the iTunes store work on only one music player, the iPod, because Jobs refuses to license Apple's protection schemes to others. Can you imagine if the CD you bought from Tower Records only worked on your living-room stereo but not in your car? You'd think that the music labels would want to fix this, but according to Jobs, during the renegotiation the issue of compatibility never came up. Who's looking out for the consumer?