France vs iPod! Format compatibility, Piracy/copyright law

France debates new tunes for iPod

By Thomas Crampton International Herald Tribune

FRIDAY, MARCH 17, 2006

[..] A bill under debate in the French National Assembly may require iPods to be able to play music purchased from competing Internet services, not just Apple Computer's own iTunes Music Store, and force changes in the business model that sparked the revolution in legal digital music downloads.

The outcome of the debate over what began as an update to French copyright law is far from clear. But taken to one logical conclusion, the amendments in Parliament could lead Apple, the market leader, to leave the French music business, said Jonathan Arber, a research analyst in London at the technology consultancy Ovum.

"My gut feeling is that Apple will simply pull out of France if these amendments get through," Arber said. "Weighed against breaking their business model for all markets, it doesn't make sense for Apple to continue operating with the iPod and iTunes in France."

Debate lasted late into Thursday night; a vote in the National Assembly is set for next week. The bill, which also proposes to turn individual digital piracy into a misdemeanor no more serious than a parking ticket, would next go to the Senate, where it is unlikely to face major change, political analysts say.

"Possible outcomes of this French law range from a destruction of copyright protection technology and the iTunes model - to something of little impact," said Olivia Regnier, who represents record companies as European regional counsel for the International Federation of the Phonographic Industry.

"No matter what the French Parliament decides, changes will have an impact across borders," she said, since e-commerce is easily conducted across borders.

Various critics say the plan is technically unworkable, unfairly undermines Apple and opens the door to more piracy by crippling technology that protects copyrights. Supporters see France setting a long-overdue legal precedent that opens Apple's closed iPod-iTunes digital music system to competition.

Apple would not comment on the legislation. Led by Steve Jobs, the chief executive, Apple persuaded the world's major record labels in 2003 to sell songs over the Internet at 99 cents each through the iTunes Music Store.

But the price of making it inexpensive, easy and attractive for consumers to buy online - rather than sharing songs on the Internet without compensating record companies or musicians - was the use of Apple's proprietary formats, making song buyers beholden to Apple and its iPods portable music players.

Now, there is a thriving digital download business worth $1.1 billion and 420 million tracks last year, and iPods account for more than 70 percent of the total devices sold. Music industry executives' broad backing of Apple has turned into public and private griping over the company's control over the price of iTunes downloads and the domination of the highly profitable iPod, at what they see as the industry's expense.

"The French government's approach is bold and the only one that makes sense," said Michael Bartholomew, the director of the European Telecommunications Network Operators' Association, a trade group based in Brussels.

"Just ask my 14-year-old, who bought music from another system and cannot play it on his iPod," said Bartholomew, who added that operators would benefit if more people exchanged music over their networks.

The amendments, supported by the government of Prime Minister Dominique de Villepin and tagged onto the so- called author's rights law, originate in part from a European view of the economy that makes it more acceptable for governments to order competition in the marketplace for the benefit of consumers than in the United States.

"Beyond making music compatible," said Martin Rogard, a spokesman for the Ministry of Culture, explaining the government position, "we are very favorable toward open-source software and think that free software should be interoperable with software that you purchase."

Renaud Donnedieu de Vabres, the minister of culture, told the Paris newspaper Libération, "I want to give the Internet world and the cultural industries a secure legal structure to permit a real development - or even explosion - of online cultural offerings." He added, "Everyone will be able to choose."

In a similar vein, the European Union's antitrust officials, saying that Microsoft had abused its monopoly in computer operating systems, in 2004 ordered the company, based in Redmond, Washington, to offer a version of Windows stripped of its music and video player to allow rivals access to the ubiquitous Windows desktop. Microsoft is appealing the decision.

France is, after Britain and Germany, the third-largest digital music market in Europe, according to GfK, a market research company based in Nuremberg, Germany. Downloads in France last year totaled 20 million songs worth €19.3 million, or $23.5 million, while 4.7 million digital music players were sold, it said.

As of Thursday, the copyright bill still had more than 400 amendments, many of them having to do with device interoperability. The most prominently affected device would be the iPod, but Sony's Walkman digital music players operate on a similar principle. In both cases, purchased online music can be transferred to the hardware only from a site owned by the same company - the iTunes Music Store for iPods and Sony Connect for the Walkman. Sony declined to comment.

"This is totally unfair for consumers who want to buy music from other services," said Stanislas Hintzy, managing director of OD2 for France and Belgium, a digital music wholesaler operating 10 music sales sites in France, including one for the national television station M6. "It is not right for iPod owners to be stopped from buying, for example, the latest performances from the French version of 'Pop Idol' that I sell," referring to the M6 TV show.

Microsoft licenses its digital music format, called WMA, to any company willing to pay for it and has thus become the second-most widely used music format after MP3s. Most non-Apple digital music players, like those produced by Samsung, Creative and Archos, allow WMA songs, while most online music merchants, like RealNetworks' Rhapsody, America Online's Music Now and Napster sell songs in that format.

"Microsoft encourages anyone in the market to license their format and platform," said Fabrice Milhoud, a spokesman for the company, which would stand to gain if iPod users could download WMA songs from non-iTunes stores. "We support consumers buying from any provider for any digital music player."

Technically, the French government's aim of making music playable on all digital devices is challenging at the least, said Mark MacGann, director general of the European Information and Communications Technology Industry Association, a trade group in Brussels.

"From a technical perspective, it is extremely complex to get these devices and services to speak with one another," MacGann said.

In addition, the cross-border implications are enormous, he said. "Governments cannot operate in a technology policy vacuum with a global industry," he added, saying that decisions should be made at least on a European level. "You cannot decide overnight to create a nirvana."

Concerns about the technology go beyond whether it is physically possible to make the systems work together. Apple's FairPlay technology and Microsoft's Windows Media build restraints into digital music so that copyright holders are compensated for sales and so that digital copies are limited. Forcing compatibility between the systems may end up overriding those protections and encouraging piracy, Regnier, of the recording industry group, said.

"Our main concern is maintaining the integrity of anti-piracy technology," Regnier said. "We want technology that enables very flexible use to encourage music sales, such as opening up iTunes, while also ensuring copyright holders are protected."

If Apple would take the same licensing approach to FairPlay that Microsoft does with Windows Media, legislating compatibility would not be necessary, she said.

"It should be the responsibility of the companies to make sure their digital music players work with music from all platforms," Regnier said.

Hintzy of OD2 agreed.

"If we want to stop pirates, we must make sure that iPod users can buy music from more places than just Apple," he said. "The only format that currently works on all these players is the MP3 format and that is 100 percent unprotected."