This is regarding notorious source code breaker Jon Lech Johansen, or "DVD Jon," who previously broke the code for encrypting DVD and other downloads. Now this is on FairPlay.
So while iPod and iTunes are exclusive, this cracked code allows users to bypass the inter-dependability and turn it into interoperability. Johansen reverse engineered the code. Apple may not like this one red bit, and you can bet their attorneys are going to block this all they can. But the issue here is that Apple touted itself for years as the alternative system, yet now the iPod/iTunes dominance has taken what used to be the Win-Tel (Microsoft-Windows and Intel-Pentium) alliance to a new modern day extreme.
Yes, this gets into a controversial area. Everyone loves their MP3 players (if that term isn't old-school already), and iPod users take this to the extent that it is THE must-have fashion accessory.
"DVD Jon" has set up an entity named DoubleTwist Ventures to capitalize off this and other efforts. As noted, Apple isn't going to like this one red bit. But at the end of the day, they have already established dominance to the point that if they open up some of the hardware and download systems as interoperable instead of inter-dependable it may actually help the company.
This is obviously very controversial territory. In no way is this meant to be an endorsement of hackers or copyright violations. But entirely closed systems and incompatibility is something that the public doesn't want to last forever. Apple has already established itself as THE leader here and that probably won't change any time soon. PERIOD.
For a while last year Audible, Inc. (NASDAQ:ADBL) was almost giving away MP3 audio/video players to those who signed up for long-term contracts, yet iPod/iTunes still rules the roost and finding Audible.com subscribers isn't exactly an easy task. Go ask Napster, Inc. (NASDAQ:NAPS) how well their "Own Nothing" campaign of just leasing unlimited music went, since now the company is trying to find a buyer for the entire company. Microsoft Corp.'s (NASDAQ:MSFT) Zune is still yet an unknown entity and SanDisk Corp. (NASDAQ:SNDK) just felt the wrath of the demanding stock markets on its margins and outlook.
Apple is not going to like this, but this won't be the death of Apple's stranglehold iTunes and iPod have on music downloads in any real way. If the hack (or shall we call it a 'workaround') actually does get to legally stand, the funny thing is that it could actually work favorably for Apple because they have created such fanatical brand loyalty. Time will tell.
Jon Ogg is a partner in 24/7 Wall St., LLC; he does not own securities in the companies he covers.
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Reader Comments (Page 1 of 1)
10-25-2006 @ 8:34PM
jbelkin said...
Other than the tech press' insistence on calling iTunes "closed," the only people this appeals to are hackers. 95% of itunes users are people who like it because it's Look, Preview and CLICK - you are done - the fact that it takes another two steps to play on an Creative or a SanDisk is a NON STARTER. It's like saying you can't use your floor mats from your BMW in your Kia - it matters very little. THe whole hacking cracking thing really just appeals to a small part of fiddlers who loath anything as-is - they insist on tweak,ing it even though itunes clearly given you a DRM choice with ONE click and a CD-R ... but no, what's the fun in that? Last year Rhapsody offered the "itunes-compatible" music ... they're online music market share is 4%. Itunes is at 82% - people do not care their BMW floormats do not work in another cheaper car because it's NOT THE SAME AUDIENCE. This is for 2% of the market and if DVD Jon is charging for it? 90% of that 2% will pirate it so his real paying audience worldwide - maybe 10,000 people if they all pony up. It's ahobby not business and as you point out, it will only really just sell more ipods as that 1% of hacker will think, now I can "hack it."