Apple Hacking Could Be Good for iTunes

Oct. 25, 2006 — -- Apple Computer Inc. today had no comment on reports that a well-known hacker had cracked the code containing the restrictions that prevent iTunes music products from being replayed on any other player than the iPod.

A 22-year-old Norwegian, John Lech Johansen, aka "DVD Jon," claims to have unlocked the playback restrictions placed on downloaded music not only by Apple but by some of its competitors too.

Johansen became famous when he was only 15 by posting software that unlocked the scrambling system used by the film industry to prevent illegal copying of DVDs. But this time, Jon's latest effort may not carry the word "illegal."

Apple uses copy-protection software to make sure music downloaded from its iTunes Music Store cannot be played back on devices other than the iPod. Similar restrictions are imposed by many other online music stores to prevent their songs from being played on the iPod because Apple doesn't support those systems.

Johansen has told many in the Internet industry that he got around Apple's restrictions by "reverse engineering," creating a code that mimics the company's restrictions. That is important legally.

U.S. law, according to lawyers at the Electronic Freedom Foundation, may support what Johansen has done.

"It is called interoperability," says Corynne McSherry, a lawyer at EFF. "Johansen has done his best not to raise a legal issue."

The law protects interoperability so that a new digital product developed by one company works with other software it doesn't control.

Think Microsoft and Web browsers.

The theory behind the law, McSherry says, is that software produced by different companies should be able to work together so competition isn't stifled.

"You have to be sure that my software operates with their technology so as a company, I can offer something new, in short, so that my software works with their software," she says. "We like competition in the United States, so that one company doesn't own all future development."

Apple likely has a different view. Just last quarter it sold almost 9 million iPods. And since the openning of its online music store, it has sold 1.5 billion songs at 99 cents each.

And Johansen's plan, unlike the fruits of his previous hacking, is to use this reverse engineering for profit. Through a company he has set up, called DoubleTwist, he plans to sell the technology.

A spokeswoman says DoubleTwist already has a client, presumably to sell music that would now be compatible with the iPod.

What will this mean for Apple?

It's too early to say. The company will clearly mount a legal challenge, but some analysts believe Apple could end up selling fewer iPods but more music.

"It could be in Apple's interest that when people download music from iTunes, that consumers will be able to import it to other places: your home, your computer, your car," McSherry says.

And other lawyers say there's a big difference between "reverse engineering" and hacking into a company's internal, confidential information or a bank's records, for example. That is clearly against the law.

But, a spokesman for Johansen says, "There's a certain amount of trouble that Apple can give us."