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What DVD Jon's iPod crack means for you

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Analysis As we reported three weeks ago, reverse-engineering specialist "DVD" Jon Johansen has decoded the encryption that locks down iTunes-purchased music - and he's formed a company to license this to all-comers. Now Johansen has reverse-engineered rival DRM formats, permitting encrypted songs purchased from Apple rivals to play on iPods.

The music business is likely to be rejoicing - it blames a market divided into incompatible DRM silos for the less-than-spectacular adoption of digital downloads. Despite all the hype, digital sales won't surpass CD sales until 2014, based on linear growth rates. And despite claims that they're being robbed into penury by "pirates", the music industry finds unexpected ways of profiting from its assets. The ringtone business, for example, grossed $75bn for operators last year - double the global revenue of the music industry.

And just in time for Christmas, Microsoft has added another new major DRM system that's incompatible with all the others, with Zune. The confusion might be minor, but so long as it remains, potential consumers will stay away.

So there's plenty of goodwill from everyone involved: from stores that sell MP3 players, manufacturers who make them (particularly mobile handset vendors), from current and potential retailers, and everyone else in the music value chain. All stand to profit from consumers knowing they can play music acquired anywhere on any device.

Except for one party, perhaps. Isn't Johansen's new outfit DoubleTeam spoiling for a fight with Apple? If ever a company seems to have been created with a lawsuit in mind, it's DoubleTeam.

1998's draconian Digital Millenium Copyright Act, the DMCA, prohibits reverse-engineering except "for the sole purpose of identifying and analysing elements of the program necessary to achieve interoperability with other programs... (which is good for Jon) "... to the extent that such acts are permitted under copyright law." (which isn't so good). It's a grey area in other words.

But Apple has yet to pull the trigger. Real Networks has been making Helix DRM-encoded music from its Rhapsody store playable on iPods, and any other AAC-capable device, for two years now. Despite threatening noises, Cupertino has opted to use technical rather than legal means to block Harmony, Real's compatibility program.

When Johansen reverse-engineered FairPlay DRM three years ago, fanatical Apple supporters wrote to us urging the company prosecute him.

"I hope they jail this bastard as soon as possible," wrote one.

But Apple stands to gain financially from interoperability as much, if not more than anyone else. Apple's online store is tightly integrated into its music jukebox. It makes far and away the best MP3 music player. A larger market means many more iPod sales for Apple, the really profitable part of its music business.

Of course, this might require Apple to hold its nose - but given the choice between losing the iTunes store and losing the iPod, there's little doubt which it would choose.

There's some irony if Apple fails to learn the lessons of the Macintosh. Jobs has now been at the forefront of creating two markets, and in each case seems terminally resistant to the market becoming horizontal. He just can't let go. ®

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