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For Companies, When Defeat Leads to Victory

Stocks in this article: CKEC CNK MCS RGC AAPL TR SNE

BOSTON ( TheStreet) -- For U.S. companies, when the going gets tough ... give up.

Faced with unpopular strategies, companies may find it suits their case -- and even benefit their bottom line -- to bow to public pressure, go with the flow and display the appearance of giving people what they want.

Consider Apple (AAPL), a company notorious for its "gated community" approach to software, apps and digital media.

For years, a battle raged over the company's digital rights management software (DRM), proprietary and secretive coding intended to prevent piracy of the music offered via the iTunes music store and library. Aside from consumer grousing, the protection scheme led to unsuccessful class-action lawsuits on antitrust grounds. Though Apple may not relent anytime soon on its tight "app store" policing and copy protection for TV and movies, it has waved the white flag when it comes to mp4 music files.

Back in February 2007, Apple CEO Steve Jobs, in an open letter that was praised by some and derided by others as hypocritical, addressed the firestorm over DRM and claimed that his company would prefer to do away with it altogether. The Apple founder blamed record companies for having to implement a DRM system in the first place.

The "big four" music companies -- Universal Music Group, Sony BMG (SNE), Warner Music Group (WMG) and EMI -- control the distribution of over 70% of the world's music and required Apple to protect their music from being illegally copied, he said. The solution was to create a system that envelopes each song purchased from the iTunes store "in special and secret software, so that it cannot be played on unauthorized devices."

Still, Jobs advocated a move "to abolish DRMs entirely."

"This is clearly the best alternative for consumers, and Apple would embrace it in a heartbeat," he wrote. "If the big-four music companies would license Apple their music without the requirement that it be protected with a DRM, we would switch to selling only DRM-free music on our iTunes store."

Why would the big-four agree to this?

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