The Ethics of Apple and iTunes

Apple’s music and video download application, iTunes, is the world’s largest online

distributor of music, TV shows, and movies. In the 2008 Macworld Keynote address, Steve

Jobs, Chairman and CEO of Apple, announced that there had been four billion songs sold, one

hundred twenty-five million TV shows, and seven million movies. (Block) Due to its success in

the TV and movie distribution business, Apple’s next business venture within iTunes is movie

rentals. By merely clicking a “Rent Movie” button for any given movie, the user can download a

movie for a lower price than owning it. There are certain limitations on the rental, including a

30-day window for watching it, and once the user starts watching it, they have 24 hours to finish

it. With this rental expansion, it is obvious that iTunes will do nothing but increase its market

share of digital entertainment.

While having a strong presence on the market where a user can find virtually any file he

or she wants is a good thing, iTunes packages all of their files with protection, known commonly

as Digital Rights Management (DRM). The idea behind DRM is that a user can only play his or

her media files on a number of authorized machines. If a machine is not authorized to play the

file, it will output an error and not load the file. In theory, DRM is necessary to protect against

file sharing across peer-to-peer networks, which users have a propensity to do in a

technologically-advanced age. Even if DRM is well-intentioned, there are serious ethical

implications with using it on every file and limiting a user’s fair use, which are further examined

within this paper.

 Apple’s proprietary format with iTunes media files makes it difficult for users to have a

choice when it comes to what type of MP3 or video player they want to own. In fact, if a user

does not own an iPod or iPhone, he or she cannot load any of his or her media files purchased

from iTunes onto it. Due to this lockdown on the format and player, it is obvious that Apple has

only itself in mind when selling their media files on iTunes. Also, due to Apple’s stranglehold in

the digital music market, it forces the end-user to conform to Apple’s way, or be stuck using

another less-featured, less-powerful item. This poses a serious ethical question: Is it right for a

company to have complete control over one sector of a market and to not allow any competitor

to have a fair chance at entering the sector? Obviously, Apple’s decision to keep iTunes and its

iPods closed shows their answer to any ethical questions posed. However, it seems as though

Apple has not completely thought out the implications of this decision.

By controlling the market, having barriers to market entry in order to prevent

competition, and being the primary price maker, Apple is showing signs of becoming a

monopoly, something that Microsoft had to deal with in 2001. If Apple continues with its

current mindset of being a closed format, they can fully expect to deal with the same anti-trust

lawsuits that Microsoft dealt with at the turn of the century. In fact, the French government

recently voted in favor of a law that would force Apple to open its digital music format. If this

law is adopted, the exclusivity between iTunes and iPods would cease to exist, if only in France.

However, if one government can pass such a law, then it is not out of the realm of possibility that

the United States could also file a massive lawsuit, like it did against Microsoft. Having such a

suit against it would be time consuming and would result in bad publicity for Apple. Also,

Apple has previously been affected by ethics cases, as was the case with the Microsoft hearings.

As a result of the Microsoft case, Apple is now able to release Microsoft products, mainly the
Office suite, for its own Mac computers. Lately, it has been ruled that Windows XP and Vista

are both able to be installed natively to a Mac computer. These results, however, put Apple as

the competitor, not the dominant company. Due to these findings, both Microsoft’s and Apple’s

stock have risen greatly. If Apple were to follow in the footsteps of Microsoft, and do the

ethically correct action by opening its format to any competitor, they would undoubtedly see an

increase in sales across the board. Users of off-brand MP3 players would use iTunes because of

its expansive library of songs, the biggest in the business. Also, more iPods would be bought by

people who use other music downloading services, because it would finally be open to them. In

general, most all consumers would benefit from this type of decision. Market prices would be

driven down due to competition, and the interoperability of iPods would drive their sales through

the roof. Due to all of these reasons, it is obvious that Apple must make the final decision to

open its media format to be able to be used by outside companies. It is not only in their best

interest, but also in the best interest of the market as a whole.

While there are many positives for making a decision such as this, there is no such thing

as a “perfect decision.” There will always be negative consequences to any action. For example,

Apple has stated that a ruling to open its format would lead to “state-sponsored piracy.” For the

most part, Apple has a point. An open format in the hands of the internet community is just

asking for media to be copied, reproduced, and sent across the peer-to-peer networks. However,

this is nothing new to the Internet piracy community. It is quite easy to take an iTunes music file

and re-record it, thereby removing the DRM. This, however, is a violation of the iTunes end-

user license agreement, which essentially means the user is breaking the law. Another option to

remove the DRM from music files is to burn them onto a CD, and then transfer the files from the

CD back into iTunes. By doing this, a user removes any protection on the song, but also
decreases the recorded quality of the song, something which most users do not want to do with

their music files. Also, at the present time, there is no way, through iTunes, to burn a DVD with

movies or TV shows that are able to be played in a DVD player. As a result of these limitations

with the reproduction of iTunes media files, if Apple were to open the format, there would

absolutely be a firestorm of piracy.

Although there are some definite drawbacks to Apple opening its format to the public, the

positives far outweigh the negatives. Apple would benefit by getting a larger following in both

the iTunes and iPod realms, competition would flourish with the introduction of the world’s most

popular digital media download center and the world’s most popular media player, and the

consumers would benefit from competition driving the prices down and having more than one

choice for their mobile media needs. The only major negative would be an increase in piracy,

which is already proven to be rampant across the music industry anyway. Nothing Apple can do

will ever stop the pirating, so there is no reason to take such a hard stance on it. Therefore,

Apple should do the ethically correct action and open its format to outside businesses and the

public in general.
 Works Cited

Block, Ryan. “Live from Macworld 2008: Steve Jobs Keynote.” Engadget 15 Jan.2008. 27 Jan.

2008. <http://www.engadget.com/2008/01/15/live-from-macworld-2008-steve-jobs-

keynote/>