06 July 2006

Apple's Big French Problem

It has long been argued that any publicity is good publicity. I've never believed that, and Apple must be ruing the reporting of the French "iTunes" law more than the law itself.

Let's get the law itself out of the way. I haven't read the newest details, but I know enough that a law designed to deal with a particular problem by placing restrictions and burdens on a particular technology will fail. The particular problem here is copyright. DRM is one (technology) method employed to protect that copyright. (Physical media is another method in the non-digital world). The law as passed seems to be a compromise over what was originally planned - and a compromise not in consumers' interests but in the interests of large companies (eg Vivendi Universal). The law is full of holes and outs. It will be a minefield to navigate a way through this, and will doubtless consume many companies' lawyers for many years. DRM has not been outlawed (one outcome that at least would have been clear and very pro-consumer). No large company I am aware of has an answer to interoperability except in as much as it protects their own interests (ultimately at the expense of the consumer). The law does nothing to ensure consumers' rights in the copyrighted material they purchase can be exercisable in a fair way into the future. It is a mess. And, Apple has come out of it the worst - despite not even having close to a dominant share of the French market.

But it is in the wider world market that Apple has suffered the most, through the simplistic and ignorant reporting of the issue. If I had a $1 for every time I've read that "music purchased through the iTunes music store can only be played on iPods" I'd be able to join the Bill and Melinda Gates foundation as runner-up to Warren Buffett. Why is it reported this way? Lack of space? Lack of intelligence? Bias? Somehow, Apple has been portrayed the villain that the French law is going to correct. But Apple is not the villain in DRM. (If you wish to comment on this here, then please kindly read the piece by John Gruber on Interoperable DRM first, THEN make your points on what you disagree with).

Sure, Apple has created a great opportunity for itself to actually give the world an alternative to Windows Media. And should it achieve a market dominance which it then abuses like the convicted monopolist that is Microsoft, then it should clearly be righted. But it has not achieved a market dominance anywhere yet, and certainly not in France. The French law will tilt things back in Microsoft's favour - not just through the law, but through the reporting. Microsoft's DRM is every bit as evil a DRM as Apple's. For people who like to have a choice in computer operating system, it is actually more evil. And, would I rather have my CD music encoded in an open format such as AAC which is offered by iTunes as a default (and is NOT an Apple format), or in WMA which is controlled by Microsoft? I understand the vast majority of the music on music players today comes actually from the original CD's and for many of us will continue to be that way for the foreseeable future. The reporting of the French "iTunes" leads relatively ignorant consumers (who only read the headlines and first paragraph of such stories) to believe that somehow it is Apple that has limited them, not the record companies in the first place. And how many people who turn away from Apple because of this will buy a Sony player which has EXACTLY the same issues as Apple only more restrictive in terms of devices that can be used, formats used, OS's supported and DRM flexibility?

Or when they purchase some music from eg the HMV store (See Charles Arthur's article from last year though the HMV link may be broken) instead of from the iTMS, will they know that their rights to burn the music and play it on multiple devices are considerably less than they are from the iTMS? (Note: check out Napster's ToS as another example of that!) The problem is, no journalist in the mainstream press really understands what the limits are of each system, and few are able to really critique it (exception Walt Mossberg who nails it pretty well in this column). Let's see what Michael Gartenberg of Jupiter Research has to say on it:

Let's be clear. The iPod is an open device. I can buy an iPod and never ever need to buy a song from Apple in order to make it work. In fact, the iPod supports the most common format for digital audio, MP3 and the bundled software allows users to easily convert their CDs into music for the iPod in MP3 or AAC format. Second, if you do buy a song from Apple through the iTunes music store (and there's a lot of reason why you might want to do that) you can easily burn the song to CD and then import it back into iTunes as an unprotected MP3 or AAC.

I get that not everyone wants an iPod but these issues that folks complain about are just non issues as far as I'm concerned. In fact, you face pretty much the same issues with just about any device you purchase. The nice part is, no one's forcing anyone to buy an iPod. There are plenty of good alternatives like the Clix, Gigabeat and Sensa lines from iRiver, Toshiba and SanDisk.

Note that Michael is picking up on what he overhears people are saying about the subject and that most of it is wrong. That they have been misinformed is in no doubt. Who is to blame? No wonder companies like Microsoft and Sony are staying tight-lipped on the subject even if they know that the French law (in theory) is problematic for them also. Anything that stops the runaway iPod train is a good thing for now in their eyes. And, the record companies also would like nothing more than Apple to be brought down a peg or two. I strongly suspect such companies to be behind the French law, and to have influenced the reporting of it. Silly conspiracy theory? Well, let's not forget that the recording industry has already had a significant impact on anti-terrorist laws across the EU as sponsored by our own UK and which I highlighted in an earlier blog posting. Our wonderful pro-consumer Lord Sainsbury ensured that such legislation could be used by the recording industry to find "terrorist" music pirates by ordering their ISP to hand over information.

It is somewhat ironic in the week in which the EU is set to fine Microsoft over $500m (and of course, we consumers who were hurt by their behaviour will receive nothing), that the French have handed Microsoft such a coup to allow WMA to become one of Microsoft's future monopolies (and let's not forget some of the EU case was in fact exactly about WMA). No doubt, eventually the anti-consumer problems created out of this legislation will be addressed, but not before the damage is done (DRM'd material for everyone providing of course you have a Vista-equipped PC? Linux and MacOSX out of the question.)

There is even further irony if the rumours published just yesterday on the possibility of a Microsoft-branded WMA player (I use WMA rather than MP3 for a reason) come to pass. Yet Microsoft is adopting the very same approach used by Apple that is being attacked with not a mention in the press!

Whether this episode will be an important turning point in Apple's success with the iPod is hard to gauge at this point. It might be just a small blip as the iPod goes from strength to strength. But if the iPod becomes just another player in a WMA-Plays-for-Sure DRM-dominated world, we will surely look back on this time as pivotal. Apple would have been undone not by their own actions, but because the iPod has become synonymous with MP3 player and so ubiquitous. Poor understanding by lawmakers and press would unravel the success of one company without leading to a better consumer solution. No doubt that self-same press would blame it on Apple having a "locked-in approach", while failing to recognise that it was exactly that approach that made it so successful (in their eyes too) by making it so simple, reliable and usable. There are those in the press that fear an Apple monopoly (rather than DRM lock-ins) on music players, and want to avoid that before it becomes a reality. But, at this stage, the market is working very well indeed, and the only market in which this is even close to a reality is in the US market - certainly not in Europe. That market is capable of dealing with itself. For those that have a beef with locked-in DRM, then really the complaints should be more widespread and include the even more proprietary WMA (which has both DRM AND format control with one company), and the equally nasty Sony ATRAC/Connect format.

But the fundamental problem here which no one seems to want to address is the issue of copyright itself - not how some part of it is enforced. This should be where the debate is held. The EU should enforce copyright as a pan-European single-market right (there should be no need for a French iTMS and a UK iTMS for instance). And it should ensure that minimum and fair consumer rights to enjoy the copyright they have purchased are enshrined in legislation. That should also allow for the transfer of that copyright unless such copyright is enjoyed as a rental. I mentioned in an earlier post the issue with digital maps on GPS receivers. This actually is a far worse problem financially for consumers today than music is but has no visibility yet (volume? userbase?). What about movies? What about computer games (what a scam when you must pay twice for the game on 2 different formats!)? What about digital images of fine art?

When you purchase copyrighted material it is for you to enjoy as you please (within reasonable limits), and it is fundamentally wrong that an oligopoly of companies in each business area (music, movies, games, etc) control the copyright on their terms only. The EU could achieve a radical restructuring of the relationship between copyright holder and consumer with some clever legislation. Personally, I would accept DRM as part of the technical implementation of such a solution provided my rights were enshrined. I would even be prepared to pay a fee should I wish to change the DRM or to transfer my ownership of it. In this day and age of micropayments, is it really too difficult to design a system which registers our purchase and ownership of each copyrighted piece we obtain, and then allows us to enjoy that in any format we so choose for an unlimited time? It could even permit transfers of material - perhaps with a small cut going back to the original artist each time. You could register or you could choose not to register. Those that register might pay a little more over the lifetime of the work but would essentially have an insurance policy so that they could enjoy the material as formats change and in the event of fire or other destructive event. If our long terms risks of purchasing copyrighted material (format obsolesence, destruction, theft, etc) were reduced, would we buy more now? I think I would (glances at large numbers of unplayed videos on the shelf, but not as large a number as would be there if DVD had not come along, and then HDDVD/BluRay - I haven't bought a DVD lately either!).

Anyhow, that's the Hobsblog solution - admittedly not thought out in detail. I believe those that wish for a DRM-free world are wishing in vain even if I would like to think a fair balance would be reached between artist and consumer (with a reinvention of what's in between). I'm sure those that object to DRM in totality will disagree with me. But what about those who accept some form of DRM today? Would you prefer this type of approach to protecting your rights long term on the copyright material you purchase? That if you wish to switch from Windows Media Format to Sony ATRAC Connect you can do so subject to a small transfer fee? That if you buy maps from one company, you can exchange those maps with those from another company that supports your new device? That if you buy a digital image on JPEG you can have it in JPEGX+ format in 20 years time (though at the same original quality)? Come on lawmakers and the press - attack copyright law NOW!

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