What’s Wrong with iTunes? Is It the iPod…Or What?

by Darcy Richardson Jun 16, 2006

Last week it seemed pretty apparent that the Scandinavian countries were going to gang up on Apple because of its iTunes service violating consumer laws. But the deadline has been extended.

Reuters reported that consumer-rights protection agencies in Denmark, Norway and Sweden have set the deadline for Apple at August 1 to respond to their claim. These countries, like France a couple months ago, think that customers that legally purchase iTunes music should be able to enjoy their songs on any digital music player. Since Apple is highly protective of its iTunes, the company currently will not relinquish its digital rights and allow iTunes to be a universal product. Hence, their policy is a disadvantage for the consumer.

Marlene Winter, Denmark’s National Consumer Agency representative, told Reuters that she knows her Norwegian colleagues are prepared to take the issue to court.

“If they get a ruling in Norway it will be very interesting for us because our consumer laws are so similar,” Winter said. If the court rules that iTunes does violate the Norwegian marketing laws, Apple’s punishment could be fines and a requirement to shut its Norwegian site. The countries want Apple to strip the blocking software from its iTunes service.

Meanwhile, protests have begun cropping up in the United States, according to other news reports. A group called DefectivebyDesign rallied demonstrators at eight Apple stores across the country last Saturday, including the company’s new 24-hour store in Manhattan. Wearing hazmat suits, they hoisted signs and handed out leaflets calling for Apple to stop using the blocking software.

Apple currently controls about 80 percent of the downloadable music market in the United States and the United Kingdom, and about half the market in Europe. Apple still can be very profitable because of its interoperable software no matter what the outcome of the court cases.

So far, Apple has shown no intent to back down. While reports said it looked forward to resolving the issues in Norway, the company responded to French regulators with a threat to pull the French version of its iTunes service out of the country. Apple added that, in its opinion, the legislation there was little more than “state-sponsored piracy.”

To some analysts, the question for Apple is whether keeping the copy protection is worth the bad press and the regulatory headaches. Credit Suisse analyst Robert Semple noted in a research report on Apple last month that “Europe remains the biggest opportunity for Apple.”

And yet Apple’s copyright laws are not as rigid as they seem. There are ways to maneuver around the DRM laws, although they take some extra steps. You can buy your iTunes, burn them onto a CD, and then upload them into another player. But this is too much work for many who don’t have the tech savvy (or let’s admit it, are just too lazy) to bother.

A news story about the iPod would not be complete without at least a mention or update about the Apple-Creative battle over the iPod for patent infringement. The United States International Trade Commission voted to institute an investigation of the iPod this week, according to PRNewswire.

Creative’s side says that the iPod infringes on the user interface portion of the “Zen Patent.”  Creative has requested that the ITC issue a permanent exclusion order and permanent cease and desist order. By instituting this investigation (337-TA-573), the ITC has not yet made any decision on the merits of the case. Talks between the two companies date back to before Apple first introduced the iPod.

So is this just another case of tech companies fighting to gain that competitive edge? Seems like the bigger they are, the harder they fall.


  • I still don’t understand what exactly Apple is afraid of.  Certainly Apple fanatics on this site are more than eager to argue that the iPod succeeds because its simply a better, simpler, and competitive product.  If that’s the case, then why Apple’s adamant refusal to license Fairplay?  It’s not because of the labels.  It’s not to protect artists.  It’s not because of piracy.  Apple’s policy serves one purpose and one purpose only, to keep out the competition.

    Beeblebrox had this to say on Jun 16, 2006 Posts: 2220
  • yyyyyep.


    Benji had this to say on Jun 16, 2006 Posts: 927
  • Fairplay = iPod compatibility. Win32 API = Windows compatibility. Both are closed systems, in a sense that no other entity can enter their markets with a clone. Both are market leaders, perhaps a “monopoly” is more correct term in this case.

    Any technology at some point will mature to saturation or obsolescence either by having too many choices, hence competition, or the market itself is dwindling (as in the case of the PDA market) due to adjacent disruptive technologies such as smartphones and tablet PCs.

    Clearly, the online download market is only in its baby-steps phase and forecast to grow exponentially in the coming years. Businessweek had recently calculated all online downloads to be less than 1% of the worldwide CD revenue in 2005. That is a huge market to conquer and we can’t blame Apple to be a tad greedy to keep all this potential cash flow to themselves. Apple is in the business to make $$ not to make everyone smile smile

    Licensing Fairplay to select Apple iPod hw developers like Belkin, Griffin, or IOGear, would not be that far-fetched since these guys already have relations with Apple in this front.

    The question then would be, “Can licensing Fairplay increase the iPod market penetration or would only cannibalize Apple’s bottom-line?” Remember Power Computing? Not so long ago, they went from obscurity to a choice for many Mac buyers for the fact that they out-designed and out-marketed Apple with their Mac clones.

    Solution = do not compete with your licensees. If I were a licensee, how would I be assured if my licensor is my biggest competitor? I doubt I would get fair competitive terms to even consider licensing.

    Conclusion = Apple will not license Fairplay unless they stop manufacturing the hardware themselves. The chance of that is near-absolute zero.

    Robomac had this to say on Jun 16, 2006 Posts: 846
  • That is a huge market to conquer and we can’t blame Apple to be a tad greedy to keep all this potential cash flow to themselves.

    Sure we can.  Especially when they are abusing their monopoly power the same way Microsoft does.

    Apple is in the business to make $$

    Either Apple can compete in the iPod market without cheating, or they can’t.  I think they can, but ironically the most rabid Apple fans don’t seem to agree.

    Beeblebrox had this to say on Jun 16, 2006 Posts: 2220
  • Well, one way to solve this is to have the governments of the world grow a pair and tell both microsoft and apple to play nice.  Europe seems to be doing that with Apple at the moment while places like Brazil and China seem to be forcing Microsoft’s hand in the other way, where either they offer a competetive price or they’ll develop a free alternative.

    At the moment it looks like some American law makers are trying to close the loop-hole with DRM by making it illegal to rip cds thus no longer letting you use this ability to get around the DRM.  Personally I doubt this would ever pass through congress, at least not without covering the loophole of being able to back up your data first so that it could hold legal water.

    Chicken2nite had this to say on Jun 17, 2006 Posts: 79
  • Mainly governments intervene to protect their own tech industry, such as the French bill and now in Scandinavia proposing similar laws agains DRM in general and not against the iPod directly.

    In a free market economy, such as ours, we have in us a powerful voting mechanism called - our wallet. I do not completely agree that every digital content should be DRM’d where your ‘fair use’ doctrine is invaded at every angle. I would rather have Congress reconsider what constitute ‘fair use’ in the digital world. With what they have done instead is to give us the DMCA (Digital Millenium Copyright Act of 1998) that limited your rights to mere usage - meaning your purchase does not give you the right to property, as discussed greatly in other threads. In CDs and DVDs you purchase the right to play and listen to the content but the content is never yours. The plastic you can keep forever as consolation. wink

    Perhaps asking too much of our governments to control DRM is the wrong approach. We as free-market ‘ballot’ holders have the final say and we should exercise them as such.

    Robomac had this to say on Jun 17, 2006 Posts: 846
  • well said and fair enough

    Chicken2nite had this to say on Jun 17, 2006 Posts: 79
  • Asking too much of our governments? I hate to break it to you, but governments are the law-making bodies whereas the so-called ‘free-market’ is some kind of ethereal disneyland duct taped together with a dash of self-interest. Your quaint ballot/money analogy is cute, but it is just that: an analogy. If spending money can be analogous to voting, it is voting with an incredibly unfair advantage. He who has the most money gets the most votes. Who has the most money between consumer/corporation? The shareholders and in particular the higher ups: in a word, precisely those whose best interest is the company not going out of business. Sure, electorial candidates in a democracy get to cast a ballot for themselves, but they only get one like everybody else. If we gave them a couple hundred million, there’d hardly be a point in calling an election.

    the parallax view had this to say on Jun 18, 2006 Posts: 25
  • well just keep in mind that money equals speech under US law; hence all them lobbyists.  was thinking of making such a point earlier, I was just too drained from the previous talkback to get into another snowball fight.

    Chicken2nite had this to say on Jun 18, 2006 Posts: 79
  • Parallax relax I am sure Canada with all her socialist democratic ideals will become one day a hotbed of technology like that in America. Last I heard your “healthcare for all” is not entirely without its problems but that is another story.

    I will never say that the American “free market” ideals is even close to near perfect. No, not every wannabes can enter a particular market with equal footing as other entrenched and established giants such as our beloved Apple or Microsoft. Those companies had their starts in this way too - fighting it through to make it to the next day. The riches were not given to them hand to mouth. It is called reality, Parallax. You want to play with the big boys you better have the guts and balls to play or the ‘boys will kick you under so hard you’ll cry uncle. You think asking your government to make the playing field for every wannabes like you will work? Remember those ‘boys have more $$$ than you. If you are not very cunning to begin with you will not even make it to introduce a product.

    Do you know how a product becomes a product? I do. I am working on one as I speak and it has been quite a rough ride. A product is typically 2-3 years to fruition and that is optimistic. Yes, it would be great if there will be a level playing field but like I said, do not depend on your government to do this for you. You have to out-maneuver your competition based on the merits of your product.

    The government do have responsibility in keeping monopolists from choking the market and it will and must prosecute those who do abuse their positions illegally. If Apple and others are illegally possessing their market position, and I still have to hear a convincing point in this matter, then fine they should be sent to court and face justice. Otherwise, those people complaining about such market positions are only to defend their slow obsolescence and death (Creative Tech and others).

    So, Apple is legally entitled to their market clout. They did it with great products followed by an enviable marketing style. And that’s how you play in an imperfect free market.

    Robomac had this to say on Jun 18, 2006 Posts: 846
  • Not entirely relevant, but about a month ago when I went to see X-Men 3, I saw what might’ve been one of the best trailers I’ve ever seen, in that it actually made me want to go see a movie I had no interest in seeing beforehand, knew nothing about, and isn’t the kind of flick that generally peaks my interest.

    Of course I’m talking about Snakes on a Plane.

    Kidding, it was The Devil Wears Prada, and the entire trailer was simply one of the opening scenes cut down to two minutes which perfectly set up the characters without making you feel like you’ve seen the movie. 

    Compared to half-assed attempts at letting you watch the first 10 minutes of a movie like triplex2 or Electra, proving beyond a shadow of a doubt that it is indeed a crappy movie, here they cut it down to a simple scene for your consumption to see if this is the kind of movie you want to see.  This is the sort of ad campaign that should be the standard not the exception that proves the rule. 

    Of course, now that I think of it, the Hitchhiker’s Guide to the Galaxy trailer where the trailer was the guide entry on movie trailers was probably better, still it’s refreshing in a different kind of way.

    Chicken2nite had this to say on Jun 18, 2006 Posts: 79
  • The government do have responsibility in keeping monopolists from choking the market.

    You cannot argue both for a free market and anti-trust at the same time (well, at least not without contradicting yourself).  It would be like saying that the govt should take away our rights in order to protect our freedoms.

    Personally, I think a competitive market is more important than a free one.  Once a company reaches defacto monopoly status, the rules change (legally and ethically) for what that company can do to compete.  Both Microsoft (in OS’s) and Apple (with iPod/iTunes) refuse to compete fairly and have taken steps that unquestionably leverage their market dominance to crush the would-be competitors from getting any kind of foothold.

    Again, what is Apple afraid of, and why don’t the defenders of their anti-competitive practices think the iPod can compete without cheating?

    Beeblebrox had this to say on Jun 21, 2006 Posts: 2220
  • it is called reality, Parallax
    If you want to talk about reality, spare me your chauvinistic free market fantasties.

    the parallax view had this to say on Jun 21, 2006 Posts: 25
  • “I will never say that the American “free market” ideals is even close to near perfect.” -By Me.

    “You cannot argue both for a free market and anti-trust at the same time (well, at least not without contradicting yourself).  It would be like saying that the govt should take away our rights in order to protect our freedoms.” -Beebx

    Did I say anywhere that American “free” market is perfect? Even if it is 99% perfect (which is doubtful), then the 1% of those are monopolistic, bloated hegemonies (M$ including).

    The very definition of a “coercive” monopoly from the Wikipedia follows: “A coercive monopoly is a form of monopoly where a firm is able to make pricing and production decisions independent of competitive forces because all potential competition is barred from entering the market.”

    Barred from entering the market? Is that so, Beeb? Apple, in your accusations, is now illegally barring everyone from entering the iPod market? How so? Can you illustrate further and give me links I can further chew on? I’d love to read up on it with a big glass of German bier and bratwurst.

    Erecting very steep barriers to entry such as high quality, superb marketing, clicking executive panels, enviable channel distribution system, and even the greatest luck this side of Cybersphere since Bill is NOT illegal. I don’t see any moves by Apple every bit illegal beyond the minds of cynics. Do not be make such false accusations without a bit of salt to spice that claim OK?

    “If you want to talk about reality, spare me your chauvinistic free market fantasties.”-Parx

    I’m sorry I have offended your feminine side Parallax. I “stand my ground”, as one of my greatest mentor once said, and I do it with pride and dignity. Why don’t you take some time to write a constructive rebuttal and not a one sentence fallacies. I know you can do it.

    Robomac had this to say on Jun 23, 2006 Posts: 846
  • Since you’re so diligent with looking up definitions in the dictionary, I’m perplexed that you would think that the word ‘chauvinist’ has anything to do with femininity.  I’m also sorry to say that the free market includes Canada as far as I’m concerned and consequently my use of the term encompasses North America. If I wanted to take a specific stab at the U.S. (which I don’t see much use in doing) I would have specified ‘The United States Free Market” in the same way that if I wanted to tell you that you had offended my feminine side, I would have used the phrase “Male Chauvanist”. In any case, I find it difficult to understand how you could possibly associate your responses to me with anything resembling ‘pride and dignity’ since you began your previous reponse with a fallacious stab at my country in the form of a pathetically ignorant stereotype that had absolutely nothing to do with my post, then went on to make an obviously pathetic and cheap stab at my supposed ‘masculinity’. Maybe you meant ‘jingoism and pugnacity’?

    the parallax view had this to say on Jun 26, 2006 Posts: 25
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