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Rocketta
Mar 18th, 2006, 12:30 PM
Draft Law Clouds iPod's Future in France

By LAURENCE FROST, AP Business WriterFri Mar 17, 5:42 PM ET


Apple Computer Inc. faces a serious challenge in France as lawmakers move to sever the umbilical cord between its iPod music player and iTunes online store — threatening its lucrative hold on both markets.

Amendments to an online copyright bill, adopted early Friday, would give rivals access to the hitherto-exclusive file formats at the heart of Apple's music business model as well as Sony Corp (NYSE:SNE - news).'s Walkman players and Connect store.

Thanks to the massive success of the iPod models — in the United States, the players accounted for 72 percent of the portable media player market in 2005, according to NPD Group — iTunes has become the global leader in online music sales. The iPod is currently designed not to play music from rival services.

According to the latest amendments, however, copy-protection technologies like Apple's FairPlay format and Sony's ATRAC3 must work with competing services and players. Companies that refuse to share all essential information with any rival that requests it would be ordered to do so by a judge, under threat of fines.

The draft law could force Apple to let French iPod users buy their music from download sites other than iTunes. Owners of other music players would also be allowed to buy songs from iTunes France.

"Without guaranteed interoperability, we run a major risk of captive client bases and an anti-competitive situation, with the consumer held hostage as a result," read the explanatory note accompanying one of the key amendments.

Lawmakers in the lower house voted to approve the amended text early Friday and will hold a further formal vote on Tuesday before sending the bill to the Senate for its final reading.

Although the draft law would also apply to Sony, "the implication is most serious for Apple" because of the phenomenal market penetration of the iPod and iTunes, said Roger Kay of U.S.-based research firm Endpoint Technologies Associates.

Apple spokesman Steve Dowling declined to comment on the law or say whether it could force the company to withdraw the iPod or iTunes from the French market. Sony also refused to comment.

Although iTunes was initially driven by iPod sales, some analysts say the two offerings now reinforce each other. Apple's large online music catalog, the result of its superior bargaining power, also boosts the iPod's appeal. Breaking the exclusive link removes both advantages.

Critics of the draft law say legislators have no business forcing Apple to share its proprietary format, arguing that most customers know about its limitations when they choose to buy an iPod. But consumer groups argue that the only way to give customers real choice is to end the restrictions.

"It's an essential condition for consumers and for the market itself," said Julien Dourgnon, a spokesman for UFC-Que Choisir, France's main consumer organization.

UFC has already filed a lawsuit in French courts, attacking Apple's exclusive music format as a form of anticompetitive behavior.

"It's only by resisting interoperability that Apple is able to keep this dominant position," Dourgnon said. "Once there's interoperability, it's over."

If the draft law goes through in its current form, experts say, Apple could have three broad courses of action from which to choose.

The company could look for technical solutions to comply with the new law in France while maintaining its format exclusivity elsewhere. Sales from iTunes sites are already restricted to local markets using credit card details. But preventing newly interoperable iPods from being used outside the "walled garden" would be much harder — although shipping them with French-only software could help.

Alternatively, Apple could follow the example set by Microsoft Corp. in its standoff with EU antitrust authorities: Drag its feet over compliance and wait to be sued. Court proceedings are long, damages relatively light and class actions impossible in France. Apple might calculate that its iPod and iTunes profits dwarf any potential penalties.

Finally, Apple could be forced to withdraw from Europe's third-largest music download market — or threaten to do so while seeking a change in the law.

"They may have to bluff initially by pulling product off the market and making everybody uncomfortable," Endpoint's Kay said.

But Apple's transformation into a major force in digital entertainment may ultimately lead to antitrust challenges elsewhere, including the United States, Kay said.

In that case, the French move will turn out to have been just the start of something bigger, he added. "Creating an open version of the iPod ecosystem is what everybody in the world except Apple would like."

Rocketta
Mar 18th, 2006, 12:32 PM
so I'm not understanding??? Do Ipods work different in France because I've never once bought a song off of itunes? :scratch: Is the complaint that once you import a song into itunes you can't use that version elsewhere? but if you buy mp3's and save it in that form as well then you can get them and keep them from anywhere??? :scratch:

controlfreak
Mar 18th, 2006, 01:52 PM
Isn't it called a jePod in France?

CooCooCachoo
Mar 18th, 2006, 01:58 PM
Isn't it called a jePod in France?

Lame.

Paldias
Mar 18th, 2006, 03:25 PM
I think the bigger issue is that France is allowing people to steal from artists by downloading off of p2p users such as BearShare etc. It's just not right.

Wigglytuff
Mar 18th, 2006, 04:42 PM
trust the french to fuck up anything of value....

*checks for red dots to see who doesnt have a sense of humor*

Rocketta
Mar 18th, 2006, 10:23 PM
but I'm still wondering what they mean? Are they saying that when you download a song from itunes you can't get it in mp3 form?

CJ07
Mar 18th, 2006, 10:37 PM
does france have to make everything socialist?

Rocketta
Mar 19th, 2006, 01:50 AM
does france have to make everything socialist?

ah, yeah if that's what they want seeing it's their lives and country. :shrug:

ClaudiaZ-S
Mar 19th, 2006, 05:40 AM
When U buy music in itunes, you can't listen it with other players so it's obvious! :worship: You buy music & U can't listen it! You believe it's fair! :eek: :confused:

~CANUCK~
Mar 19th, 2006, 05:57 AM
When U buy music in itunes, you can't listen it with other players so it's obvious! :worship: You buy music & U can't listen it! You believe it's fair! :eek: :confused:
Um but there are examples of this stuff all over the place, i buy a game for my ps2, so why can't i play it on my gamecube, someone buys software for there windows based computer why can't they use it on there mac also. Its just part of life, why should apple let you play stuff on the competitions players?

CJ07
Mar 19th, 2006, 06:10 AM
ah, yeah if that's what they want seeing it's their lives and country. :shrug:
well they can do that if they want.

but they shouldn't come running to us for help once they realize their country is fucked up.

I mean Capitalism, despite its flaws, truly is the best system. It gets proven everyday

Veritas
Mar 19th, 2006, 06:38 AM
Lame.

:haha: :lol: :rolls: