Apple's French debacle!

In a major step being taken by the French government to boost the legal digital music market, amendments are being proposed in the online copyright bill in France. If all goes according to plan, this step is all set to pose a major threat to Apple Computer Inc. in two of their fastest growing markets, which includes that of the iPod music player and the iTunes online store. The bill, it is said has been designed to adapt the country's copyright rules to the fast changing market for online content.

Under the current scenario, while other services like Napster, Virgin and HMV, allow users to download to a number of different players owned by a number of different manufacturers like Samsung and Creative, Apple iTunes users can only download music to transfer to an iPod or Motorola iTunes phone. Once passed, the bill will force Apple to allow its customers to transfer songs bought in the store on to devices other than the iPod. In other words, copyright-protected technologies like Apple's FairPlay format and Sony's ATRAC3 will now have to work with competing services and players. Also, under the law, any company's refusal to share all essential information with any rival that requests could be challenged in court. The final vote to either accept or reject the proposal is expected to be made in French parliament on Tuesday. This could have serious implications to Apple's music dominance. This is especially so now, because although iTunes was initially driven by iPod sales, analysts now believe that the two offerings 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. The law if passed by the senate 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. 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. According to Government officials, the law is aimed at preventing any one company, be it Apple or Microsoft, from building a dominant position. Stressing the same, senior parliamentarian who helps guide law in France, Christian Vanneste, said, "We must not permit piracy or the emergence of a monopoly." "Without guaranteed interoperability, we run a major risk of captive client bases and an anti-competitive situation, with the consumer held hostage as a result," read the explanatory note accompanying one of the key amendments. This controversial French bill also includes prison terms and large fines to stamp out illegal downloading of music and film by hackers possessing or using software to remove copyright protection.