A discussion rippled across the web today regarding the upcoming Apple vs. Microsoft music war. Scoble’s A challenge for webloggers: handling organizational difficulties argues for Microsoft’s music format over Apple’s. File formats? A terrible déjà vu chills my spine. Haven’t we played this game before and lost when it came to writing documents (Word), spreadsheets (Excel), editing graphics (Photoshop), and creating presentations (PowerPoint)? After each of these battles, one program came out on top. Each program has two things in common. One, they each occupy a monopoly in their genre. Two, they won their monopoly by locking users into file formats for compatibility’s sake. Another war is brewing, and again it will be one over file format dominance — this time Microsoft’s WMA versus Apple’s AAC. And again the real casualties will not be the application developers but the consumers.
Market competition is good for everyone. When developers compete, consumers benefit from cheaper prices and better products. When people were choosing between Word and WordPerfect, they were making their decisions based on which application they liked better, not on how those programs saved files to a disk. Now, people use Microsoft Word because they need to be able to send the documents it creates to each other, not because it’s a better product. (Yes, other applications are now compatible with it, but that’s now — now that the war has been won.)
Consumers don’t care about file formats. They care about compatibility, and they care about features. They want software to do what they want it to do, but they don’t care about file formats. People want their music to play through their speakers and they want it to sound good. They want their jukebox software to make it easy to find and play their music. Very few care, or even know, which period and three letters follow the name of the song, whether it’s .aac, .wma, .mp3, or .ogg. While some formats offer smaller file sizes or better sound quality, the capacity of hard drive-based players is already well above the size of the average music collection, and the ears of most listeners don’t hear the flatness of lossy compression. To the overwhelming majority of the population, the differences in music brands are imperceptible.
Before Apple released iTunes for Windows, most Windows users ran WinAmp. Now most of them use iTunes. Why? Not because they prefer the sound of AAC to MP3, but because iTunes is a better program and provides access to the iTunes Music Store. It smoothly imported their MP3 collections into its library. Each could be set each one up side-by-side and users could decide which was better. But of course once they start throwing money into the iTMS and building a collection of AAC files they won’t be able to try out any new, potentially better, software.
Scoble’s argument that people should choose WMA over AAC because more devices support the former than the latter misses the point. People shouldn’t have to care if their device will play their music or not. Scoble says:
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.
In arguing for open formats over proprietary ones, Cory Doctorow has the solution, but it isn’t one that the consumer, who doesn’t know the difference, is going to make. Tom Coates nails it:
It should be obvious to car audio manufacturers that they should be able to play AAC tracks — that there are hundreds of thousands of people across America (and soon Europe) who are going to want to be able to do more things with their bought songs.
Manufacturers of stereo equipment should be making products that play everything. Why should they care that Apple or Microsoft would rather your home stereo only play their format? Their customers just want to be able to play music, and in the digital age there’s no reason why devices shouldn’t play both. Coates says:
The examples that people cite about competing formats no longer hold true for music. It’s not like VHS and Betamax — we’re not talking about hardware with different sized slots that you can only fit one kind of music delivery system into.
The dirty secret is that Apple and Microsoft are happy to pretend they’re caught in a prisoner’s dilemma where the only outcome is war. But that game only applies when the two parties can’t communicate with each other. They could get together and work out a cross-platform DRM, but that would mean that they’d be competing on the same field. What’s really true is that neither company wants to go head-to-head with the other. And because each can lock the other out with proprietary formats, they never have to. With the newly instated number portability, mobile phone companies are being forced to do things like price competitively and offer better service. Why? Because now cell phone providers are now in actual open competition, and the invisible hand can sort out the rest.
To see how all of this could play out let’s say that Microsoft launches a new version of Windows Media Player that connects to its own music store. Say that this new store and the iTMS are basically comparable in price and selection, such that any given individual if choosing one or the other for the first time could choose either service based on their preference for the user experience alone. They buy a few hundred songs from one service, and then the other service releases a new version that’s better in some way or offers some new feature. This individual would like to change to the other service, but can’t because of his sunk cost in music and a portable player. Now he’s stuck using a service he doesn’t like because of a file format he has no reason to care about. Who wins? The software company. Who loses? The consumer. Next Apple and Microsoft get lazy. Since everyone with large music collections can’t switch to a new service with their incompatible music, the companies only court new blood, and have no reason to provide help or better products to current users.
Here’s another way it could go: one company wins because its product is better and its accompanying format/DRM-schema attains the monopoly. Innovation stagnates. Eventually another company wants in and has to pay royalties to use the format. Or maybe someone invents a new, better one, but the old company never supports it properly. (This happened with image files, and five years later Internet Explorer still doesn’t properly render PNG images.) Who loses? The consumer.
Or, both companies could use compatible formats. Both could compete in the open market, using superior products to get ahead. Once equilibrium has been reached, one or the other would be forced to innovate to tip the scales. Maybe a third company would come along and both have to scramble or risk obsolescence. Who wins? The company that makes the best product. Who wins? The consumer.