Lock-in and Licensing

This is an excerpt from a Microsoft employee’s blog extolling the virtues of Windows Media over Apple’s media format (AAC):

“Let’s say it’s 2006. You have 500 songs you’ve bought on iTunes for your iPod. But, you are about to buy a car with a digital music player built into it. Oh, but wait, Apple doesn’t make a system that plays its AAC format in a car stereo. So, now you can’t buy a real digital music player in your car. Why’s that? Because if you buy songs off of Apple’s iTunes system, they are protected by the AAC/Fairtunes DRM system, and can’t be moved to other devices that don’t recognize AAC/Fairtunes. Apple has you locked into their system and their devices. (And, vice versa is true, as any Apple fan will gladly point out to you). What does that mean if you buy into Apple’s system? You’ve gotta buy an FM transmitter that transmits songs from your iPod to your car stereo. What does that do? Greatly reduces the quality. How do I know that? Cause the Microsoft side of the fence has FM transmitters too. I saw a few on Friday. But, what we have on our side is a format (WMA) that’s already being adopted by car stereo manufacturers. So, now when you buy a new song on Napster, it can play on your car stereo, or on your portable music player. Is the choice to do that important to you? If not, then you can buy an iPod and music off of iTunes.”

Wow. This guy is actually scared. He sees a future where Micro$oft is not on every device you own- and where there’s no lock-in to the Windows operating system.

After the HP deal, I could easily see Apple signing agreements with companies like Pioneer or Harmon Kardon to make AAC perfectly compatible with music purchased through the iTunes store. (Licensing is the key word to remember.)

Also, there’s a nice article on Steve Jobs, Apple and Pixar in this week’s Business Week that’s worth your time.

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