For a start, and assuming everything I say in a moment is false, it unpicks the bundle that you've depended on since the LP format became popular. If people pick and choose the tracks they want, and reject LP length bundles, you're looking at an industry the size it was in 1965 - when it wasn't much more than a cottage industry. But that's not the biggest reason.
It costs £10,000 to fill an iPod today. Some of us might have spent something like that over the years on music, you're thinking. But if you're 25, and most of your music has been free, then the psychology is very different: an iPod is an empty beer glass waiting to be filled. Why else can it hold so much music?
In five years' time, iPods will fill themselves, like a TiVO, 24 hours a day. Apple might not build an iPod that does, but someone else will. Compared to the self-filling iPod, the Peer to Peer problems you have today will look trivial. We've already got the Bug - a digital radio with record and rewind facilities that transfers CD-quality MP3 files to another digital device. It doesn't have a hard disk, but next year it will. There's no reason why I wouldn't leave that on day and night, flick through for "Britney" songs and delete the rest, say. That's three clicks.
In five years' time the Bug will be in my phone. So in the time it took me to eat lunch today, my phone will have leeched dozens of CDs, and simultaneously recorded CD quality sound from the radio.
Do you think you can turn that tap off? Even if you can turn that tap off, do you think you can justify that to your customers? For the current plans to work you're going to need a change in social behaviour on the same scale as Stalin's collectivization of agriculture, Mao's Great Leap Forward or BF Skinner's Walden Two. All of these attempts caused a lot of misery before they were abandoned. Prohibition lasted thirteen years.
Now I don't know if this social coercion that you plan, this huge sea change in behavior, using DRM, will be successful or not, and neither do you. But I can guess.
In ten years' time this will be moot. Digital distribution will make almost everyone in this room richer; publishers, songwriters, network providers. You'll discover that technology is a tool that monetizes the consumption of music, rather than a tool for preventing people from listening to music. In ten years, you'll have CDs that play themselves. The electronics will by then be so cheap that the thing you hold in your hand - a book, for example, or whatever package those songs are in - will be able to transmit its contents to the nearest speakers. If you're around then, it will get very interesting - because the technology will do what all good technology does, and have made itself invisible. You won't have Steve Jobs to complain about any more - or any other technologist. You should start thinking about that and maybe I'll see you next year to talk about it. But that's another reason to be optimistic. You have the recordings.
Now back to the near future
See, the upside of people not changing their behaviour so very much, is that a large number of people will still want a Cliff Richard record this Christmas. So the winners will be the guys with the largest resources. Yup, EMI, Universal and Warners: that's you.
But you must leave the denial phase. Only then will you be able to remember how to make money.
There's a very simple model: raise a pool of money and divide it up.