Apple-EMI deal dooms WMA? Huh?

Since that last post, I’ve seen a couple other articles suggesting that Apple’s decision to offer DRM-less tracks in the AAC format is going to strike the death blow for Microsoft’s Windows Media Audio (WMA) format.

Everybody loves a “Microsoft is losing” headline, but these articles are just stupid. Why?

  1. If device makers had thought they could steal iPod users by supporting AAC on their devices, they would and should have done so long ago. The huge majority of AAC files on people’s computers are unprotected files from CDs ripped in iTunes, not from the iTunes Store. (This is why the Zune natively supports AAC.) Removing DRM from a miniscule percentage of the overall number of AAC tracks out there doesn’t change the equation a bit. (In fact, if I were a player manufacturer, I’d support as many formats as I could afford to license so the user would never have to think about formats at all. Isn’t the idea maximum ease of use?)
  2. These writers seem to assume that the Apple-EMI deal will remain exclusive. I doubt that’s the case. EMI wants to sell tracks as broadly as possible, even to the tiny percentage of Zune users out there. Assuming they believe removing DRM will sell more tracks, why not allow Microsoft to sell DRM-free WMA files on the Zune Marketplace? And allow Napster, and Yahoo Music, and whomever else to sell DRM-free files in whatever format they choose. These folks would be happy to sell DRM-less tracks—like nearly every other digital media player, they support DRM because they have to, not because they want to. It’s costly to implement, alienates consumers, closes off interesting scenarios that might make users more prone to buy new digital media products, and so on.
  3. The Business Week writer talks about Microsoft’s “expensive licensing terms” for WMA. But AAC comes with licensing terms as well! And they’re more expensive for device makers than WMA (at least according to Paul Thurott).

News flash: Apple chose to make this deal for AAC because they’ve already licensed that format, and the iTunes infrastructure is probably built to deliver files in that format, and it’s a much more efficient (filesize for quality) format than their other option, MP3. Which, by the way, comes with licensing fees as well.

The undercutting of the PlaysForSure music store partners probably did more to hurt WMA than this deal will. And Microsoft doesn’t care because those stores weren’t selling many songs anyway, and Microsoft has plenty of other ways to push the Windows Media format—native support in every PC and Windows Mobile device shipped, Xbox Live Marketplace (for video), MSN Video, Zune Marketplace and so on.

But everybody loves a “Microsoft’s doomed” headline.

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3 Responses to Apple-EMI deal dooms WMA? Huh?

  1. 37prime says:

    Paul Thurrott? His source is Zunester…… hmmm that’s credible….. NOT!

  2. fifthdecade says:

    Quote: “In fact, if I were a player manufacturer, I’d support as many formats as I could afford to license”

    Which is why WMA will lose out – it’s more expensive to licence, and carries DRM on its back which the new AAC – a global standard – won’t do.

  3. mattydread says:

    Here, guys, check it out for yourselves:

    AAC licensing fees
    http://www.vialicensing.com/Licensing/MPEG4_fees.cfm?product=MPEG-4AAC

    WMA licensing fees:
    http://www.microsoft.com/windows/windowsmedia/licensing/final.aspx#WindowsMediaAudioStandardVersion_Final

    Looks to me like the license for the AAC codec (both encoder and decoder) in devices is significantly more expensive at low volumes, and stays more expensive unless you ship 10M units, in which case it’s $0.01 cheaper per unit–$0.25 for WMA, $0.24 for AAC. This is assuming a stereo device like an iPod, Zune, or other portable player, not a 5.1 device. There, looks like the WMA breakeven point is 5M units. And even then, WMA has a maximum annual payment, while it looks like AAC doesn’t.

    Am I reading this wrong?

    By the way, WMA doesn’t have to have DRM at all. In fact, you have to license Windows Media DRM separately:
    http://www.microsoft.com/windows/windowsmedia/licensing/final.aspx#WindowsMediaAudioStandardVersion_Final

    That does drive the cost per unit up, but if you want to compare apples to apples, WMA is usually cheaper to license than WMA. We don’t know what Fairplay would cost to license because Apple doesn’t license it.

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