How the iTV could save Apple from its own DRM

Let me start by getting this off my chest. I love my iPod. I was lucky enought to get one of the new 30 GB iPods for my birthday and pair it up with iTunes 7 on a 15" MacBook Pro. I love the seamless handshake that OS X does with both the iPod, iTunes and the media center experience built into Front Row. The podcasting features in the iTunes Store and Podcasts category in iTunes have turned my iPod into a timeshifting internet radio and TV that makes my workdays, errands and commutes pass much more quickly and enjoyably.

However, I haven't purchased a single thing from the iTunes store. The biggest reason is DRM. I just don't like the idea of spending money on something that I may lose the right to use even accidentally. I don't like the idea of purchasing content that artificially limits the number of devices that will play it. This may change if I start buying the odd song to learn for my band or odd show I might have missed. I'm willing to risk a couple of dollars occasionally. But I don't really see myself dropping $10-12 on an album or $15 for new a movie when I can just buy the same content on a platter and rip it (with Handbrake for DVD or iTunes built in mp3 converter for CD) for use with the iPod. At least that way I still have the original disc and the converted versions that I make will work with anything I own that's file-compatible.

A recent study in the UK seems to anecdotaly suggest that a lot of people haven't found the iTunes Store that compelling either with an average of 20 songs out of thousands on a giving iPod being iTunes downloads. It almost seems like the iTunes store is selling iPods. This is very interesting because in other digital media markets, such as video games, the platform is often sold at or below cost in order to try make money on media licenses. For example, it's common knowlege that Microsoft lost money on every original Xbox it sold trying to cram it's foot into the console market. The iPod, on the other hand, is one of Apple's most profitable products, with an estimated 52% margin on some models.

As for the iTunes Store itself, some people are using it and for some already compelling reasons. The two more persuasive arguments that I've heard boil down to convenience of purchase and convenience of use. Convenience of purchase really is a reflection of how the iTunes Store enables impulse buying and accomidates our feelings of sweet, sweet laziness at the end of a work day. Why get off the couch to go rent or purchase something when you can give in to the same rhythm of "I see it/I want it/I click it/I buy it/I use it" that has made purchasing software online so appealing?

Convenience of use was described by Robert X Cringley in this article where he relates how serving content from a hard drive is a killer feature for parents with little children who want to watch the same DVD over and over again:

And while my kids are in the room, let's pull up the single greatest selling point for digital downloads that has been missed by every story to date -- fingerprints. I'm not talking about reverent movie buff fingerprints, but the brutal peanut butter-and-Doritos fingerprints of a frenzied two year-old in need of his Dora the Explorer fix.

Probably half of the DVDs at our house have problems being read -- problems that don't appear at all on the dozens of Arthur and Clifford episodes I captured and now play through my MediaMVP network box. For families with small children -- millions of families in the U.S. alone -- having movies and TV shows on a server, safe from destruction by little fingers, is a huge argument in favor of electronic delivery.

Replacing an Apple Remote is a lot cheaper than replacing even three DVDs. Apple did a good job making it rugged and simple enough for a child to use. I use mine to browse and play content from my laptop a lot lately and it's a very compelling experience. If they can translate that to my home entertainment center while and give me access to the media I've already got saved on my home network, I'll get out my credit card. Of course, for Apple to deliver this with the elegance and user experience regular people will find appealling will require them to ship the iTV, their final weapon in the assault on the living room that they started with FrontRow.

The iTV is going to make video content from the iTunes Store even more appealing. I can already hook up my MacBook Pro to a TV or an HDTV and treat it like an iTV, but doing it every time I come home would be a bit of a chore. Also, while I'm treating my laptop like a home theater system, I've tied it up for doing other things. Other people have purchase Mac Minis just to use with their home theater systems, but $599 is still pretty hefty chunk of change for a lot of people to spend on a single purpose box.

With the iTV, Apple will offer us a box that costs $299 and that's simple to hook up to a home entertainment center and leave there. The selling point is that you can play all of the audio, video and image media from machines on your network on what's likely to be your best monitor (the TV) with your best speakers (the ones hooked up to it) in the room best set up for it. You can stretch out on your couch or easy chair and do this comfortably for long periods of time. There's probably even extra seating there if more than one person wants to hang out with you while you do it. You get something many of you may not have even realized that you wanted, but Apple gets something it's wanted for a long time.

The iTV will give the iTunes store a beach head directly into living rooms across the country. Suddenly it will be seductively easy for regular people to purchase TV shows and movies and then play them on their big screens without leaving the house. Unlike cable company DVRs, you can keep things indefinitely and upgrade storage capacity whenever you like. Unlike Netflix, you won't have to wait on a random movies from your queue. Unlike OnDemand services, you'll still have it 24 hours after you order it. Leo Laporte recently related giving up his cable service, because he found that it was cheaper to purchase individual shows and movies.

You'll still purchase your content from them on your computer, but you won't watch it there anymore. If you're running a laptop, you can do it right in the same room. This could turn the iPod/iTunes store dynamic back around and make Apple a media company with market penetration and sales volume to really envy. The DRM so many people find distasteful will still be there but it won't matter as much to average consumers. Many people are going to find that they don't care whether or not this week's episode of Grey's Anatomy or Heroes works with every computer or device they own, because it will work on the one device the care about: their couch.