Memo to People Who Want to Open Up Apple’s Closed Ecosystem

November 19th, 2005

I’m a free market person through and through and I do not like monopolies of any kind. I am happy, for example, that Microsoft’s share of the browser and operating system market appears to be eroding, if only a tiny bit. At the same time, it’s fair to say Apple has a monopoly of its own with the iPod. It will only mate with iTunes for downloads. If you want to use another music service, well, that’s just too bad.

Of course, this closed system has been part and parcel of the Apple business model. And, as I said in my commentary on whether Mac OS X will ever be licensed to other PC makers, there are undeniable advantages to Apple’s approach.

First, of course, iTunes is the largest legal music site on the planet, and has over two million tracks available. So, with rare exceptions, such as the Beatles catalog, you can satisfy most of your musical needs. The interface is relatively easy to navigate, and runs the same whether you’re using a Mac or Windows PC. Although there is a digital rights management system in effect for the songs and videos you buy, it doesn’t really interfere all that much with the way most people handle their tunes.

What’s more, iTunes is mostly reliable and stable, so except for the usual version point-zero bugs, which are quickly fixed, you can depend on it to operate as you expect. After you get the hang of it, the process of ripping a CD, buying songs from iTunes and transferring the whole kit and caboodle to your iPod is a piece of cake. You hardly have to think about it. Unlike the other music services and the music player makers, Apple offers a complete music management system. Everything works together, and you don’t have to put up with the uncertainties and incompatibilities that some encounter when using one of the other music services along with someone else’s music player.

Forget for the moment that the iPod is a cultural icon and the standard bearer for music players. Forget that Apple keeps making it better and pricing has become downright aggressive. You put the entire package together and it just works.

At the same time, technology pundits want Apple to let you use other music services with your iPod. I suppose that sounds pretty reasonable. After all, it’s possible a selection available on another service isn’t offered via iTunes, such as the first digital version from John Lennon’s solo catalog. Sure, maybe iTunes is a superior service, overall, and offers better integration with the iPod. But Apple makes most of its money from the hardware. The music store barely breaks even and is really just a promotional arm to sell more players. So where’s the harm in giving users a choice?

The theory goes that Apple might actually sell more iPods because there are fewer restrictions on how you can use it. In the end, people might try Napster-to-Go and Yahoo Music, for example, and just choose to return to iTunes. So what’s wrong with that?

Well, as a practical matter, I cannot see where this is as onerous to Apple’s income as cloning the Mac OS. If the goal is to sell as many iPods as it can, allowing the player to operate with any music service shouldn’t be all that treacherous a move. It is true, of course, that the largest iTunes competitors all employ DRM technology from Microsoft, which means that Apple would have to cut a deal with Bill Gates, or one of his lieutenants. It may also mean that hardware changes would have to be made to the iPod to accommodate the expanded support, although this might be accomplished with a firmware update of one sort or another.

In the end, I still believe iTunes will dominate the business by a huge margin. All right, maybe Apple will have to add a subscription-based alternative to keep up with the competition, but is there anything wrong with that? I am not enamored with subscribing to music, but I can see its value as a way of sampling new tunes before you buy a new tracks or even an entire album. Sure, you get a free 30-second sample from iTunes, but is that really sufficient to get a feel for a song?

Now from Apple’s point of view, I can see where the company, aside from other considerations, might not want to be blamed if you run into a compatibility problem with another music service. It’s also true that Steve Jobs wants full control and can offer perfectly reasonable and logical reasons why it makes sense in the digital music arena.

Of course, nothing is forever, and if Apple felt threatened by its competition, perhaps it would open up its closed system to give iPod users more options. It’s very true that the growth of the music service hasn’t quite kept pace with the growing iPod user base. But I’m not holding my breath, not for a moment. Even though I can see the advantages, we all know that Steve Jobs has other ideas.

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