France Takes a Shot at ITunes

By Rob Pegoraro
Sunday, March 26, 2006

In the digital-music market, Apple has clobbered every challenger: Creative Labs, Dell, RealNetworks, Rio, Samsung -- even Microsoft and Sony. But can Apple overcome the French government too?

Last week, France's National Assembly passed an authors'-rights bill that would, among other things, require music-download stores such as Apple's iTunes to open their proprietary "digital rights management" copy-control software to users and competitors.

The idea behind that provision of this bill, which must still be approved by France's Senate, is to ensure that a music download can be played on any device, not just one allowed by the seller of that file.

That's how things work in the realm of audio CDs, but the download market -- make that, the part of it selling music released by major record labels -- hasn't worked that way so far. The major labels have insisted that their songs be secured against piracy with "digital rights management" software.

No industry-wide standard has emerged, so computer companies have pushed their own proprietary formats. And none has done this better than Apple. A crushing majority of the songs sold online -- over 70 percent in most estimates -- have been bought at Apple's iTunes Music Store and are protected by Apple's FairPlay software.

So-called DRM has a bad reputation for blocking legal uses, but FairPlay generally lives up to its name. It imposes minimal restrictions on your use of an iTunes download (for instance, you can't play it on more than five computers at once) and stays out of the way otherwise. You might not even notice its existence -- as long as you use Apple hardware or software.

Because Apple hasn't licensed FairPlay to any other company, you can only play an iTunes download in Apple's iTunes or QuickTime programs. You can only listen to that file on the go by putting it on an Apple iPod or one of the few cellphones with a version of iTunes.

Conversely, songs wrapped in another company's DRM don't work in Apple's software.

You got a problem with that?

Maybe not. As long as Apple continues to own the markets for music downloads, music-management software and digital-music players, you can argue that nobody's harmed by this situation.

Plus, you can burn a copy-restricted download to an audio CD, then copy that CD's music right back to the computer in an open, unrestricted format. All the big music-download stores allow this untidy workaround -- one I go through every time a non-iTunes site offers me a few free downloads in a futile effort to gain some traction in the market.

But as good as iTunes and the iPod are, they don't come close to covering the spectrum of possible music-listening choices.

There's no iTunes-compatible handheld organizer, alarm clock, car stereo, home theater or TV. And that's not for lack of trying on the part of other companies. Apple simply won't give any of them access to FairPlay -- even though it doesn't make any such products itself and so can't lose any sales in the process (unless you think that people would otherwise buy an iPod for every room in the house).

Having spent a lot of time and trouble developing a copy-control system that doesn't annoy customers -- a task that's eluded many competitors -- Apple feels no obligation to share the fruits of that labor. It's blasted the proposed French law, calling it an invitation to piracy and suggesting that it might bid adieu to selling music in France instead of submitting to it.

That French bill has no guarantee of passing, and Apple probably could afford to bail out of France if it does. But what if other countries follow suit?

Governments have not had a problem forcing companies with monopolies or near-monopolies to share information with competitors. Just ask Microsoft: Courts in both the United States and the European Union have ordered it to document the workings of its server software. (Among the companies making Microsoft-compatible networking programs: Apple.)

Apple's domination of the music-download market doesn't constitute a monopoly as strong as Microsoft's; even if Apple owns 80 percent of the market, that's much less than Microsoft's 90-plus percent share. And far more music is still sold as physical CDs than as file downloads.

But if present trends continue, the demand for laws like the French proposal will probably increase.

There's already one bill in Congress, the Digital Media Consumers' Rights Act, that would allow customers to defeat copy-control software as long as they weren't violating anybody's copyrights in the process -- for instance, if you wanted to listen to an iTunes download on a computer running the Linux operating system, for which Apple has yet to provide a version of iTunes. Under this bill, FairPlay would be fair game.

Government isn't the only thing that may take this choice out of Apple's hands. Programmers have already cooked up FairPlay-compatible programs; some let people buy iTunes songs without using iTunes, while others remove the FairPlay bits from a download, turning it into a standard AAC (advanced audio coding) music file. Apple has been able to update iTunes to lock out hacks like JHymn and SharpMusique, but can it keep that up?

History suggests not. In the long run, trying to stop a mass-market, proprietary format from being deciphered by motivated, skilled outsiders is like pushing water uphill with a sponge. If legislators don't force iTunes open, the hackers will. And when they do that, the odds are higher that the inevitable successful hack will strip away all anti-piracy controls.

The alternative for Apple is to reduce the need to hack FairPlay by licensing it to other companies. Apple could earn a tidy return on licensing fees, just as the CD's inventors have, while continuing its quest to ensure that every last person on the Metro has white iPod headphones stuck in their ears.

What about letting other music stores use FairPlay? Why not? Is there a better way for Apple to ensure the obliteration of Microsoft's Windows Media rights-management software?

Apple probably can't win the battle to maintain its grip on iTunes. But that doesn't mean it can't lose it profitably.

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