Jobs acknowledged “DRMs haven’t worked, and may never work, to halt music piracy.” But he does not believe users are locked into using music players from one company when they buy DRM music from that company’s online music store. He stated:

Today’s most popular iPod holds 1000 songs, and research tells us that the average iPod is nearly full. This means that only 22 out of 1000 songs, or under 3% of the music on the average iPod, is purchased from the iTunes store and protected with a DRM. The remaining 97% of the music is unprotected and playable on any player that can play the open formats. Its hard to believe that just 3% of the music on the average iPod is enough to lock users into buying only iPods in the future. And since 97% of the music on the average iPod was not purchased from the iTunes store, iPod users are clearly not locked into the iTunes store to acquire their music.

He points out that 90 percent of songs are sold on CDs that are not DRM protected. After asserting that DRM does not appear to be good for much. Jobs states:

If anything, the technical expertise and overhead required to create, operate and update a DRM system has limited the number of participants selling DRM protected music. If such requirements were removed, the music industry might experience an influx of new companies willing to invest in innovative new stores and players. This can only be seen as a positive by the music companies.

He concludes by asking those against DRM to focus on the convincing Universal, Sony BMG, Warner and EMI to license music without DRM.

Will this announcement move the marketplace towards a DRM-free model? Bill Gates criticized DRM, yet Microsoft’s new music player the Zune and the Zune Marketplace operate as a closed DRM protected system much like Apple’s iPod/iTunes combination.

The governments of Norway, Denmark, Sweden, France, Germany, Finland, and the Netherlands have “rebelled” in some form against Apple’s DRM system that prohibits users from playing a song downloaded from iTunes on a music player other than an iPod. It will be interesting to see if European authorities take Job’s invitation to “redirect their energies towards persuading the music companies to sell their music DRM-free.”

Sealand was founded on the principle that any group of people dissatisfied with the oppressive laws and restrictions of existing nation states may declare independence in any place not claimed to be under the jurisdiction of another sovereign entity. The location chosen was Roughs Tower, an island fortress created in World War II by Britain and subsequently abandoned to the jurisdiction of the High Seas. The independence of Sealand was upheld in a 1968 British court decision where the judge held that Roughs Tower stood in international waters and did not fall under the legal jurisdiction of the United Kingdom.

Torrent Freak provides a list of alternative island nations that might work if the deal with Sealand doesn’t fly.

It seems that a company called Havenco is already (or has in the past) providing webhosting from Sealand. Havenco states “HavenCo provides a place for secure e-Commerce, privacy-protected Internet services and uncensorable free speech.” Uncensorable free speech? This is the same type of argument that Yahoo made in 2000 to a French Court. There, the French court ordered Yahoo to block Nazi goods from appearing for sale on web pages in France. Yahoo’s servers were not in France. But as Tim Wu explained in a Legal Affairs article, the plaintiff showed that Yahoo could identify and screen users by geography. Yahoo eventually complied because it had assets in France that were at risk of seizure.

Whether its HavenCo or Pirate Bay operating on Sealand or some other micronation, it is doubtful that a rouge company can escape influence of “U.S. content owners.” Pirate Bay needs internet access, right? Otherwise only those people that fly in and live on the island can partake of the content on Pirate Bay’s servers. Looking at the Sealand platform, I’m not sure people will be beating down their door to live there. Plus the platform’s size means only a limited number of people could fit on it. So, Pirate Bay will need a company in some other nation to provide a connection to the internet. The connection could possibly come from England because England is close to Sealand.

Yesterday, Market Watch reported the International Federation of the Phonographic Industries (IFPI) — which represents the recording industry worldwide — “threatened to take legal action against Internet Service Providers if they failed to take action against users who illegally upload and download music.” The IFPI Chairman John Kennedy said:

That job (of prosecuting file-sharers) shouldn’t be ours - it should be done by the gatekeepers of the Web, the Internet Service Providers, who unquestionably have the technical means to deal with copyright infringement if only they would take responsibility for doing so.

Here, if Pirate Bay comes up with the funds to purchase an island nation, the IFPI is going to sue whoever is providing Pirate Bay with internet access. If the ISP is in the UK, the IFPI might sue them in the UK courts. The IFPI might bring a claim before the WTO. The IFPI might employ diplomatic pressure of other nations to force the nation where the ISP is located to shut down the connection.

According to HavenCo “Sealand currently has no specific regulations regarding patents, libel, restrictions on political speech, cryptography, restrictions on maintaining customer records, DMCA or music sharing services.” But as the Yahoo case shows, that may not matter. Even Bill Gates criticized DRM, but unless you want to live on Pirate Bay’s island, the pirate’s treasure is probably not going to be accessible to you via the internet from treasure island for long.