Closed or NOT, let’s look at the Business angle:
What is a Record label ? A record label is a brand associated with the marketing of music recordings and music videos.

Do you buy the Music for the Record label brand ? Do you buy a book because it comes from a certain publisher ? Do you remember the label of your favorite song ? Or the artist ?

So essentially the Record label provides (1) Marketing muscle (billboards, promo’s) and (2) Distrubition (Tower Records, Target, …) to the Musician. In the old days, it was a MUST to have a Distribution channel to reach so many stores in the US, and across the world. In a sense, this was a Supply-Chain problem.

Apple has solved the Supply-chain problem. Apple is buying Music from the Record labels just like Target, but doing a lot better job.
- Give Consumers the option to buy only the songs they like
- Indie labels, Artists can get distrubition at ITunes
- You can get your obscure song, which the Store can NOT carry (the long tail …)
- No Inventory, No carrying cost
- Take the Music with you … to your Gym

It has changed the Music buying & listening experience fundamentally (read value creation). It is paying the Music industry 70 cents for every song that it sells. W/out Apple the Music Industry would be in a worse situation.

In Summary, AAPL is doing a lot better job as a “conduit” between you and the Artist than your old record label and Tower Records, and all the other APPL wannabe’s – that’s why the rising market cap for APPL and decreasing for the label.

Google and YouTube is another story … in another post.

1. First, people buy iPods for the easy-to-use, seamless, well-designed system that it is. The iTunes store is not a driver for the purchase. The store is convenient, but most people fill their iPods from their own CDs and from piracy. So the iPod would continue to sell on its own merits even if you could buy songs from elsewhere or play iTunes-bought songs on other players (which you might still not be able to do without DRM as very few players offer the underlying AAC format used by iTunes).
2. Second, you infer that iPod owners would buy from another store instead of the iTunes Store. But why would they? What do any of the other stores offer that iTunes doesn’t? eMusic, whose non-DRMed songs work on the iPod, outsells the other stores. It’s not subscriptions as those won’t work without DRM. iTunes is the 800lb gorilla of music stores. They’d be very few iTunes sales lost.
3. Third, getting rid of DRM would free Apple of the expense to maintain and the liability to protect the FairPlay DRM. In addition, the presence of DRM and its required keys complicates innovations in iPods, iPhones, and iTunes. For example, wireless or LAN sharing would become much simpler without DRM.
4. Finally, Apple believes more people would download music instead of buy CDs or piracy if there was no DRM involved. If true, the market would be larger without DRM, and iTunes would likely be the major beneficiary of such demand (since it is arguably the most comprehensive and easiest to use store, and most people are already familiar with it).

DRM free music is good for the iPod.

Each was made available for play in my livingroom and/or car CD player in less time than it took to download the selections. I just fail to see what the “lock-in” is. It is certainly less restrictive than with any previously available analog media — after all these years, I’m still unable to get any cassette to play on my turntable.

So, it seems to me that you should be complaining about the closed system YOU have chosen to use. Correct me if I’m wrong, but I don’t recall seeing any turntable (or reel-to-reel, or cassette) aficionados complainig that their choice of player will not accomodate Apple’s (or any one else’s) DRM.

BrotherStephan, 5% of 1000 songs is 50 songs that I would have bought from iTunes store. Those songs won’t work on any other player. That’s a $50 switching cost for me. That’s what closed systems do. Raise entry barriers for competition and raise switching costs for consumers.

Apple is a man among boys in this situation and the competition has proven itself inferior and incapable. Apple is at the top of their game and their attention to detail withstands even with their music player domination.

1) People who have a distained for Apple and Apple products;
2) People who for years have been waiting for the day that Apple folds up shop and simply goes away- maybe those nasty Mac vs. PC commercials don’t help;
3) People with platform envy because they’ve bought the wrong product.

Everyone else, like myself, couldn’t care less which player you have which MP3 player you own. And this is probably 95% or more of the people.

Walmarts market cap is bigger than P&G, so the content versus distribution debate has relevance in the hard world also. About the proportion of value(Content : Distribution) in the soft world, I totally agree that distribution channel seems to be ruling except for Microsoft excel on top of microsoft vista combo.

Music lovers have benefited from MP3 and I am sure that my generation will not pay for music except for live concerts. So Musicians have to work more and do more live concerts which is again good for the listerner. Steve Jobs is sitting on the fence, but the iPhone looks like a home-run.