The “iTunes Law” in France
A new, heavily disputed law in France, known as the “iTunes Law” required DRM vendors and commercial platforms to open their technology to competitors in order to make it interoperable in its’ draft stage. Also, companies would have been liable if consumers used their technology for illegal purposes, such as downloading and copying mp3s. These two aspects would have had a huge impact on the way Apple exploits its’ iTunes and iPod operation. However, after threats of leaving the French market and calling the law “state sponsored piracy”, the French legislator came to a compromise. Apple can now continue linking iTunes products specifically to the iPod, but they do require the permission of the copyright holders. This will create a shift in the balance of power from Apple to the labels and artist.
Read two good articles in the Economist and on the EDRI websites
2 Responses to “The “iTunes Law” in France”
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An interesting point about the economics of iTunes and the iPod is made in the Economist – in some sense it is like printer catridges, but also different:
Indeed, manufacturers make much of their money from the cartridges, not the printer itself, which is often sold cheaply. Economists explain this business model as a clever way for companies to “meter” their customers, charging them according to use. If they could not tie their customers to their cartridges, they would charge more for the printer itself, and the kind of person who now uses his printer rarely would not buy one at all.
Apple’s business model, however, turns this on its head. Apple makes its money from sales of the iPod, not sales of music; the printer, not the cartridge; the razor, not the blade. As Bill Shope, an equity analyst at JPMorgan, puts it, the music store is a “loss leader” that serves only to boost sales of the iPod. It is as if record stores existed only to sell record players.
reply to Administrator:
The lock-in you’re describing above, cheap printers – expensive cartridges, is becoming more and more an eye-soar to the European commission.
Take for instance the reparation-clause ((2005/C 286/03)) which aims to limit the protection of the design of spare parts intended for repair works. The owner of the intellectual property rights on the design of a certain part will not be able to use those rights against someone who copies that design and manufactures the same part, as long as the part is intended for repair works. The best example of affected industries is the automotive industry. Without the possibility for third parties to manufacture spare-parts the entire market for auto-repairs would be monopolised by car-manufactures. With the repair-clause this is prevented, as it allows third parties to copy the part and manufacture their own versions intended for repairs.
Add to that in the BeNeLux it is already impossible to protect designs that serve a physical interconnectivity role. Connectors can not be protected. It becomes all to clear that the printer-cartridge system will soon lose some of its appeal.
It that light Apple has struck a goldmine. It circumvents the type of measures being put in place by the European Commission by turning things upside down. The French however seem intent to battle this inverted approach as well…