Apple, Labels Focus on Copy Protection

In this file photo from Tuesday, Jan. 10, 2006, Apple Computer Inc. CEO Steve Jobs applauds employees during his keynote address at the MacWorld conference in San Francisco. As a new round of talks ramp up this month between Apple Inc. and major recording companies, Jobs has opened the door to higher prices _ as long as music companies let Apple sell their songs without technology designed to stop unauthorized copying . (AP Photo/Paul Sakuma, File) (Paul Sakuma - AP)

While studies have suggested that only a fraction of the music on most iPods is actually purchased on iTunes, the service has ridden the iPod's coattails and helped cement its position as the top-selling online music service and one of the biggest music retailers overall.

That's given Apple considerable leverage in its dealings with the recording industry.

Last year, the main issue that dominated iTunes licensing talks was pricing, as some of the big music companies urged Jobs to entertain charging more for some songs than others.

The dispute percolated for months, but Jobs didn't budge, not wanting to complicate iTunes' simple pricing scheme for singles.

Eventually, the music companies each agreed to one-year deals, which expire this spring.

Now, Apple is facing pressure in Europe to license its brand of DRM technology to rivals so consumers can play the music they buy on iTunes on any digital music player, not just iPods.

Critics of the recording industry have argued for years that the labels are alienating customers by placing copy restrictions on legal music downloads, especially as many CDs have been sold without them.

The technology behind such measures differs, depending on the retailer and the music device. Apple, for example, has its own version, called FairPlay, that only works with iPods, making it cumbersome for consumers to transfer songs from iTunes across other portable digital devices. Likewise, DRM systems used at other online stores won't work with iPods.

Many music fans who don't want to deal with the hassle simply turn to online file-sharing networks to download no-strings tracks for free.

The recording industry has argued that copy protection software itself is not what makes some songs incompatible with some digital players, but the fact that there are different versions of the technology in use. The music companies have called on Jobs to license FairPlay to makers of rival devices.

Jobs has countered that the best way to get rid of technological barriers is for record labels to strip the copy safeguards from their music. He defends keeping FairPlay closed, saying that if it was widely available, it would become easier for hackers to figure out how to bypass it.

No matter what, Apple plans to continue selling standard, copy-restricted versions of songs for 99 cents each. With the EMI deal, Apple will this month start selling $1.29 premium tracks that are not only DRM-free but also of higher quality, compressed at twice the usual bit rate.