CE-Oh no he didn't! Part XXI : Gates tells consumers to ditch DRMed tunes, buy CDs

For our latest episode of CE-Oh No He Didn't, we turn to a perennial favorite: Bill Gates. At a recent blogger event (read: junket) up in Redmond, Gates apparently told the audience that DRM has "huge problems" (despite the fact that his company is one of its biggest proponents). Bill's a smart guy and his belief in DRM's suckiness isn't all that shocking, but even we were taken aback when he suggested picking up a freshly wrapped compact disc instead of pointing your interests towards his own company's music store, or in his words: "People should just buy a CD and rip it. You are legal then." Say, doesn't the RIAA seem to disagree with Mr. Gates' assessment, given that it still views ripping CDs has being sorta, um, illegal? And doesn't Microsoft go out of its way to break precedent by ponying up cash on Zune sales to RIAA cartel commander Universal Music? We realize there's only so much dogfooding one can do before going off the deep end, and we don't necessarily expect Bill to agree with every decision Microsoft makes. But what gets us here is that this is such a subtle and tacit admission of defeat at the hands of the record industry. The man DOES carry a Zune, and the man does actually listen to music on it, but maybe he doesn't realize that Microsoft could have held the power to strike a blow in the RIAA's armor and change things for the better for consumers -- Zune carrying consumers, like even he.

[Matt @ Dec 14th 2006 9:12PM]

he is crazy sometimes..

[JWRIGHT @ Dec 14th 2006 9:21PM]

Defeat? Sounds like the beginning of a resistance movement! Now Gates would speed things up a little if he would just buy the RIAA outright...

[Speed @ Dec 14th 2006 9:24PM]

Gates' and Jobs' jobs would be easier and consumers would be happier without any DRM. But if Bill and Steve want to play the tunes then they gotta pay the (RIAA) pipers.

[Zorque @ Dec 14th 2006 9:24PM]

It's nice to hear corporate entities admitting they're wrong. Though I have to wonder if Bill himself was ever for DRM. Maybe the other stockholders outweighed him?

[cire @ Dec 14th 2006 9:26PM]

Yeah he's a sore loser, just because Apple kick his ass in the music biz.

[John Doe @ Dec 14th 2006 11:45PM]

How retarded can you get? MS has really been in the market for about what? a month with the Zune and 6-8 months with their Music store? guess what? The first gen iPod sucked ass. MS has what? Something like 5 billion in the bank. do you think they aren't going to try this again and again and again until they get it right or until Son....sorry Apple screwed up somewhere down the line. MS has deep pockets. Deep enough to work out the kinks even if that takes 10 years. People who treat MS as irrelevant generally find themselves at the bottom of the dog pile licking MS's boots. Fanbois need to shut the hell up and get concerned....long term.

[JT @ Dec 15th 2006 8:50AM]

Well Microsoft not always can do that, they haven´t be able to do anything with Google, Google is still the first and MS has waste a lot of money on MSN search and yet nothing

[Nix @ Dec 14th 2006 9:28PM]

He is compeltely right. Companies do deals to make money, whether that companies CEO agrees with it or not.

Though its 2 of the biggest and most hated companies going to head to head.

Though i respect Bill Gates a lot as a business man, and i hate the RIAA a tonne more

[scru @ Jan 6th 2007 6:52PM]

Who doesn't. I hate the crap out of these people

[ryan @ Dec 14th 2006 9:29PM]

i thought bill wasn't the ceo anymore

[Nix @ Dec 14th 2006 9:32PM]

Cire, would u be a fanboy by any chance.

Yes apple have the majority of the market, mainly because of their timing, and has had a few years experience in that field ahead of microsoft.

Im sure Jobs hates the RIAA aswell.

[cire @ Dec 15th 2006 1:34PM]

No I like MS too, I love my X box, & I like MS Office. I like Apple too, I love my Ipod, I like My Mac pro. I just think that MS Zune is very poor design.

[Jr. @ Dec 14th 2006 10:02PM]

Apple's dominance of the market isn't just because of timing. We'll have to see if Apple is able to keep it's grip of the market, but there currently aren't any signs that they're about to lose it.

[Nix @ Dec 14th 2006 9:34PM]

Thats true, but i think its more then likely he was when microsoft made the deal.

[Brian @ Dec 14th 2006 9:38PM]

oh man, Gates is a bad ass now...

[Totalfixation @ Dec 14th 2006 9:41PM]

You guys give out the weirdest comments, I think he is right, even thought his company is a huge proponent of DRM. it's simply because he doesn't own the media, it's the RIAA and the MPAA so he has to abide by the rules of the RIAA and MPAA. If you buy a CD and rip it, I don't think any court in the world will fine you, when you own a copy of the CD, thats why i think he is right. I find that Bill gates has another plan that will get rid of the DRM hassles while helping his company make money and for some reason i think its going to be in the next iteration of the Zune that will prove it. For the Zune, you might think the Zune suck arse. But in my opinion, it has alot of potential. Just a few firmware releases will prove it. Just look at the original Xbox and now the x360. Microsoft tends to built up things and improve on it. This is something I really want to point out, and its going to be in bold. THE PEOPLE AT MICROSOFT ARE NOT STUPID, THEY ARE THE WEALTHIEST COMPANY AROUND AND THEY DIDN'T GET THERE BY BEING STUPID. A LOT OF PEOPLE THINK THEY DON'T KNOW WHAT THE HELL THEY ARE DOING BUT I THINK THEY ARE GOING TO PROVE EVERYONE WRONG.

[ELmo @ Dec 14th 2006 11:22PM]

Microsoft is far from being the wealthiest company around. Citibank holds that distinction and there are a few energy companies and auto manufacturers not to mention a bunch of other companies that have waaaaaaaaaaaaaaaaay more money than Microsoft.

But Bill is right. DRM sucks, and like others have said before, I'm sure Jobs agrees. It is a necessary evil for both MS and Apple, otherwise the idiots at the RIAA and MPAA wouldn't let them sell their merchandise, not that pwoplw won't continue to pirate music and movies, especially when the consumer knows how little the artists make in the revenue schemes. Before anyone yells at me, I am not talking about actors at all. It's the writers that get the shaft.

[EBG @ Dec 17th 2006 11:29AM]

BTW, the Caps Lock light is supposed to be off.......

[Miula @ Dec 14th 2006 9:41PM]

I do agree with Mr. Gates.

Currnet DRM sux. Consumers should have more rights.

---
Businss Talk
http://blog.miula.cc

[Ben @ Dec 14th 2006 9:58PM]

Gates has always been more of a visionary than a businessman. I'm sure he (and MS) would like nothing more than to do away with DRM. It does no good for MS, or Apple for that matter. But reality is reality and building DRM into the Zune and paying universal was the only way to get access to the music. Apple and MS may be heavyweights, but iTunes/Zune marketplace aren't a big enough part of the music industry to enable them to push the RIAA around.

[dow @ Dec 14th 2006 10:02PM]

He's a smart guy, and he knows what the reality of the situation is -- his hands are just, for the most part, tied.

I've always been impressed with Bill Gates and his wife and their insight. Look at their foundation, trying to do the most good with the money that they have. Rather than spending billions on fashionable research areas like breast cancer, they spend their research dollars on things that can the most good for everyone, like the eradication of polio, or new TB or malaria treatments. These are issues that effect millions, if not billions of people in the world.

In short, he's a brilliant guy, knows what the current DRM situation is, and is able to speak his mind about it.

[Paul @ Dec 14th 2006 10:12PM]

You know what I think it is? I think the guy's so filthy rich that he knows he can say what he really thinks without any repercussions. You know he's right when he says that. DRM does suck. So if the head of the world's largest software company tells you "yeah, I feel you, DRM definitely does suck the way it is now", it kind of makes people say "Hey, maybe he isn't such a scheming douche". More people would raise more hell if he said the opposite.

[Mix @ Dec 14th 2006 10:26PM]

I think he finally has figured it out! Maybe he tried using some content that was DRM'ed and figured out really how frustrating it is. haha

[TriZz @ Dec 14th 2006 10:34PM]

He probably only DRM'd the music because he had to. To sell the music, the RIAA/music conglomerates would want it DRM'd. Since they wanted to get into the music business, they have to play by the rules. It doesn't necessarily mean that he likes it or agrees with it. That's why he's suggesting the alternative.

...remember, beyond being a business man - Mr. Gates is still a geek.

[John P. @ Dec 14th 2006 10:46PM]

Hmmm. What if buying something - say a Zune - meant much of the profit (but not all) goes to the RIAA, and is split accordingly to the labels (yeah right!). Much more than what Universal is getting from MS. In turn, the RIAA gives Zune carriers free reign to ANY mp3 (wmv, whatever) that is of a song of one of the RIAAs labels, without any legal implications. No DRM (cold day in hell...).

So, sort of like, "We're the RIAA, we are going to sue you for downloading that song... unless you own a Zune."

I suppose it could also go for the iPod as well, if Jobs wanted this sort of thing.

I don't have enough financial knowledge of profits, costs, margins, to know if this could even work out. For us, it would stink, because mp3 players would rise in costs, and online music stores might fold (Would they be crushed financially by the bandwidth used when music is essentially free, or the profits are very small?).

[Phoenix Enigma @ Dec 16th 2006 3:57PM]

@ John P -
What you're suggesting does really work, at least kind of. In Canada, we pay an extra CDN$15 on mp3 players 512MB, and something like CDN$0.10 on every blank CD, in order to 'compensate artists for losses from music piracy'. Because of this, no Canadian, AFAIK, has ever been sued over music piracy, because they have 'paid' for the music. Of course, the recording industry here isn't too happy that their cash grab backfired on them, but us consumers love it. I'll happily pay an extra $30 on a iPod to know my music downloads are legal!

[3rdsun @ Dec 14th 2006 10:52PM]

That's why I like Bill so much. He seee the problems and address them even if he gets tarnished in the process. But if Apple CEO said such a thing he would be hailed as a prophet.

[Kragen Sitaker @ Dec 14th 2006 10:54PM]

At the oral argument in the MGM vs. Grokster case, the petitioners (the MGM anti-Grokster side) argued that ripping your own CDs to play them on your MP3 player was clearly legal, and they weren't trying to oppose that sort of thing. Petitioners included Arista Records, Atlantic Recording Corp, Rhino Entertainment Co., Bad Boy Records, Capitol Records, Elektra Entertainment Group, Hollywood Records, Interscope Records, LaFace Records, London-Sire Records, Motown Record Co., The RCA Records Label, Sony Music Entertainment, UMG Recordings, Virgin Records, Walt Disney Records, Warner Bros. Records, Warner Music Latina, Zomba Recording Corp., and a number of other music companies, but not, as far as I can tell, the RIAA, BMI, or ASCAP.

None of these companies have any business changing their mind about this now and claimming that it is illegal.

[King Kong @ Dec 14th 2006 11:15PM]

if hear bill b'fore you see him thats cause hes got king kong king king king king kong in his trunk.

[Charles Lee @ Dec 14th 2006 11:44PM]

I find it odd that people talk about online music stores like all of them use DRM. eMusic doesn't, and since I signed up 6 six months I haven't been looking back.

Sure, one doesn't get access to major labels with eMusic, but I don't think the average Engadget reader is likely to be a Robbie Williams, either, so who cares?

[Javaflash @ Dec 14th 2006 11:55PM]

I think DRM should be an open standard or a licensed/shared property. There shouldn't be any barrier for purchased content to travel from one person's device to that same person's other device. However, there should be a steep barrier for content to travel from one person's device to another person's device.

For the record, Bill is still the largest shareholder of Microsoft so I reiterate... don't play poker with Bill. He is no Warren Buffett.

[Fancypants @ Dec 15th 2006 12:16AM]

Don't you get it? The Zune is a ploy to bring down the RIAA: create a DRM delivery device with the cooperation of the RIAA and make it so BAD that it could never possibly succeed. Everyone will realize that it's easier to just rip a CD and DRM will fail. Then comes ... profit!

The man is a genius.

[Steven @ Dec 15th 2006 12:34AM]

@Speed:

Bill doesn't own MS anymore...

[Dave95 @ Dec 15th 2006 12:37AM]

While I do agree, down with DRM!

This admission by sir Gates gave me a chuckle. If it were coming from a legitimate defender of consumers right great, but this is sir Gates here. MSN Music customers who bought music from their store before MS decided to close shop are left scratching their heads because Zune won't support PlaysForSure. Blink once and watch as once partners become competitors, leaving once again their own PlaysForSure customers out (Urge, WMP11, Media Center).

Sorry but if it was Microsoft who controlled this space and not Apple, would he make that statement?

I don't buy music from iTunes or any of the DRM infested sites.

[nerdXcore @ Dec 15th 2006 12:46AM]

The CD will never die as long as DRM continues to infuriate customers.

[applesucksLeo @ Dec 15th 2006 12:55AM]

The itunes model is too inflexible to survive long-term. Why should I pay 99 cents for so-called music if it is encoded at 128kbps and THAT is the only choice (not to mention the DRM).If they want it to work , get rid of the DRM and offer choices for the encoding.I prefer lossless as todays HDD`s are so large and cheap.ALLofMP3 offers lossless for a little more money , so why can`t the download services do the same ?John C Dvorak was on to something.He pointed out that with cassettes the music industry put a tax on the blanks to compensate them for the copying going on.Nobody complained back then or really noticed it.Put a tax on the HDD`s and other media and give us no-DRM music in many different quality levels based on price all the way up to lossless , otherwise none of these services are going to be mainstream as a CD replacement. When I take my CD`s with me I don`t have to worry who`s player they will work in.Downloaded music should be the same.Without a tax of some kind DRM isn`t going away.The tax worked back then...and it can work today.

[Fancypants @ Dec 15th 2006 1:33AM]

No, taxes or levies on blank media is a terrible idea, don't you dare encourage it! Do a little research on levies that already exist:

http://arstechnica.com/news.ars/post/20060227-6274.html
http://en.wikipedia.org/wiki/Blank_media_tax

Levies on CD-R media can now account for over 70% of the total cost! They tried to impose a levy on MP3 players that was thankfully repealed.

[mimsey @ Dec 15th 2006 1:06AM]

"Microsoft could have held the power to strike a blow in the RIAA's armor and change things for the better for consumers"

What would they do to make things better?

just an honest question.

[Brian @ Dec 15th 2006 1:08AM]

Gates isn't the guy in charge of Microsoft... the board of directors is. Not only that, but Gates is in that transitionary process of stepping down... meaning there's one more relatively powerless guy above him, as well.

[pcbuilderchris @ Dec 15th 2006 1:32AM]

i look up to this guy once i get on my money im going to visit him gates if you read this look out for christian white

[MosquitoControl @ Dec 15th 2006 1:53AM]

Microsoft doesn't have the clout to break the RIAA stronghold. Apple, probably. Microsoft, no.

They could get the ball rolling, but risk shooting themselves in the foot.


Simple solution - don't listen to music covered by the RIAA. Only a tiny handful of really good albums were under the RIAA umbrella this year.

[ev @ Dec 15th 2006 1:55AM]

OOOHH MR.Gates has a Zune!!!! i got to go buy one now

[tiuk @ Dec 15th 2006 2:07AM]

Man, in the past few years Gates really seems to "get it". I love this guy.

[Jeff @ Dec 15th 2006 7:53AM]

"but maybe he doesn't realize that Microsoft could have held the power to strike a blow in the RIAA's armor and change things for the better for consumers"

I think both Apple and MS have honestly already done that. They didn't *have to* include the ability to rip CD's to mp3 with their software. And I'm sure the RIAA would love it if they hadn't. But they did, and both Steve Jobs *and* Bill Gates have now espoused the benefits of CD ripping (yes, Jobs has said it too, though you have to go back about 5 years).

Now we're seeing all sorts of reports over the past few days about how online music sales are tanking, even as portable music player sales continue to grow. How and why this is happening should be obvious - no doubt some of the music finding its way onto players is pirated, but I guarantee most of it is ripped from CD. (I have 3,200 tracks on my iPod ripped from CD.) *This* is the way you "stick it to the man".

Concurrent with this, you see sites like eMusic coming out with major sales milestone announcements (selling 100 million DRM-free mp3's) and you see the major labels starting to test the waters of selling DRM-free mp3's themselves (via Yahoo or wherever). So they are starting to learn. It will take a while, but they'll get there.

DRM is dead, or at least dying. And a big reason for that is the ability to rip from CD in iTunes, in Windows Media Player, and in the Zune app (whatever the hell it's actually called).

[FrankTheCrank @ Dec 15th 2006 8:35AM]

I HATE TO SAY IT....

HE's RIGHT!!!

[Raymond @ Dec 15th 2006 9:39AM]

No DRM suggests a revaluation of patent and copyright law. Its a box both Gates and Jobs have to live in.

I admire Gates for what he had to say. But he has to walk carefully as no one wants to open Pandora's box with the morons we have in congress.

[Jason @ Dec 15th 2006 10:28AM]

He probably had a bunch of itunes and realized they wouldn't play on his new zune...

[keith waddington @ Dec 15th 2006 10:37AM]

Wake up people: if HIS on-line music store was number one do you think he'd be saying this? He didn't get to own a monopoly by loving consideration for suckers like us.

Once a slime-ball always a slime-ball.

keep smiling
waddo

[Elizabeth @ Dec 15th 2006 11:07AM]

DRM doesn't do you any good if your primary business is hardware and software rather than content. MSoft and Apple only kowtow to the RIAA because it isn't possible to reason with them.
It is actually true that for a consumer who's willing to do it (and wants the whole album), buying a CD and ripping it is the best digital purchase you can make: you get a perfect, un-DRM'd digital copy, in any codec you like. And, yes, it's legal to rip a CD you've purchased- it's what you do with the files afterwards that could be hot water.

[Rick Lyon @ Dec 15th 2006 12:29PM]

Bill isn't admitting anything. He knows Apple's hold is tightly connected to iTunes. The Zune store sucks. So, you make the consumer think that buying CDs is the best way to get your music, then it makes the iPod and Zune on the same level in his eyes. THis is about his Zune, not his mistakes (well, the Zune...)