French decision could eat into Apple’s core

23 Mar 2006

Yesterday’s decision by French legislators to force Apple to remove controls on its iTunes service that restricts customers’ use of the music to its iPod music players could strike a serious blow to the company’s online music model, it was claimed. Apple today hit back saying the decision undermines successful attempts to make legal music downloads viable.

French legislators in the lower house yesterday approved a law that would break the tight link between Apple’s iTunes online music store and the iPod player.

The law requires that songs bought from iTunes — or any other digital music site — can be played on any music player.

The decision was made on the basis that if a particular digital music platform was successful, it might in turn act as a dominant gatekeeper in the digital world that will embrace not only music but movies and games. The law seeks to break down the barriers created by incompatible digital rights management (DRM) formats that prevent music files being played on a rival manufacturer’s device.

The decision has ramifications not only for Apple but also for consumer electronics giant Sony and software giant Microsoft.

However, forcing Apple to allow the music sold on its site to be played on other devices might in turn breach the company’s contracts with music labels.

Apple today hit back at the French decision, warning that the law could force digital music sales to plummet at a point where legitimate alternatives to piracy are beginning to bloom.

Industry groups and analysts have condemned the new law, which they say could undermine the industry’s most successful attempt so far to make legal music downloading viable for both consumers and the music industry.

Apple recently revealed that one billion songs have been legally downloaded from the iTunes music store since it was launched less than three years ago. According to its first quarter results in January, Apple shipped 1.2 million Macintosh computers and 14 million iPods during the quarter.

“The French implementation of the EU Copyright Directive will result in state-sponsored piracy. If this happens, legal music sales will plummet just when legitimate alternatives to piracy are winning over customers. IPod sales will likely increase as users freely load their iPods with ‘interoperable’ music which cannot be adequately protected. Free movies for iPods should not be far behind,” Apple stated.

By John Kennedy