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How Apple and iTunes Spat in Your Green Mountain Coffee

Stocks in this article: GMCR AAPL AMZN SBUX

PORTLAND, Ore. (TheStreet) -- A company built around hardware with functional obsolescence decides to enclose its ecosystem by using digital rights management to limit the use of its fairly interchangeable software.

Why are we seeing this flawed plotline again in 2014 when we learned how the story ends in 2009?

Mostly because Green Mountain Coffee Roasters (GMCR) thinks that turning its Keurig business into iCoffee is just about the only way it can keep third-party suppliers from cutting into its take. According to a report earlier this week from TechDirt, Keurig has been striking proprietary agreements with its suppliers that will make their K-Cup coffee pods exclusive to new Keurig machines that the company will introduce in the fall. A lawsuit filed by Treehouse Foods against Keurig found that the company is working with the coffee-equivalent of DRM to not only make third-party and refillable pods unusable in its new machines, but to lock its new K-Cups out of older, more open-source Keurig models.

Where would Green Mountain get a nutty little idea like this? About 10 years in the past, when Apple's (AAPL) iTunes was still selling songs laden with DRM and the restrictions that accompanied it. Back in the bad old days, you could only play your purchased song on five approved computers and could only be played on either iTunes-enabled computers or iPods. It gave Apple the appearance of a locked ecosystem, but all it really did was spur the development of DRM-stripping software and the rise of digital music competitors, including Amazon (AMZN).

Steve Jobs, for his part, hated it. The DRM tracks clamped down on potential music revenue and only further weakened iTunes in the eyes of music lovers who were already less than enamored of its m4p file format. With the iPhone debuting in 2007, Jobs went to work knocking down DRM restrictions and getting the labels to play ball. It still took until 2009 to get everyone to comply and to get rid of DRM once and for all.

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