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The Honolulu Advertiser
Posted on: Saturday, March 18, 2006

France declares war on iPod

By Laurence Frost
Associated Press

French lawmakers have moved to sever the umbilical cord between Apple Computer's lucrative iPod player and iTunes online music store.


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PARIS Apple Computer Inc. faces a serious challenge in France, where lawmakers have moved to sever the umbilical cord between its iPod player and the iTunes online music store threatening its lucrative hold on both markets.

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

Thanks to the 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 designed not to play music from rival services.

According to the latest amendments, however, copy-protection technologies like Apple's exclusive FairPlay format and Sony's ATRAC3 "must not result in the prevention of the effective application of interoperability."

Companies would have to share all "information essential to the interoperability" of their copy-protection formats with any rival that requests it. If they refuse, a judge can order its delivery, on pain 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 anticompetitive situation, with the consumer held hostage as a result," read the explanatory note accompanying one of the key amendments, introduced by five lawmakers from the governing conservative Union for a Popular Movement.

Lawmakers voted to approve the amended text yesterday and will hold a further formal vote on Tuesday, before the bill is sent to the Senate for its final reading.

Although the draft law would affect Sony the same way, the phenomenal market penetration of the iPod and iTunes spells higher exposure for Apple, analysts say.

Apple spokesman Steve Dowling declined to respond to the draft law or to 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 helps the iPod's appeal. Breaking their exclusive link removes both advantages.