Tuesday, March 14, 2006

Opening up iTunes

France are considering opening up iTunes to other devices. At present iTunes downloads are in Apple's proprietary format. Originally this was important in securing appropriate digital rights management to effectively establish the legal downloads market. Nowadays that isn't an issue as other formats provide the same thing.

The problem is that iPods only play Apple's format or the open mp3 standard. They do not play standards that are supported, for instance, by Microsoft. Other players do this but cannot play using Apple's standard.

The French law will make it legal to utilise software to convert songs from one format to another. This would allow users to purchase songs from iTunes and play them on devices other than iPods or with programs other than iTunes. Thus, the link between Apple's dominant share of music purchases and players would be broken.

There are suggestions that Apple will shut down its iTunes store in France in response to this. It may have to if its agreements with copyright holders cannot be amended. But if it had a choice would this really harm Apple. After all, it would make the iTunes music store more attractive and there are plenty of substitutes for its iPod anyway.

Of course, the alternative to the French approach would be for Apple to open up iPod to alternative formats. This would allow consumers to purchase music from alternative sites. This would also likely make it easier for competition to trancend national boundaries -- something it isn't doing today (see this article for a discussion). From where I sit, that is where the big gains to competition lie.


Chris said...

The one critique I have is that Microsoft and standard should not be used in the same sentence. The windows media file format is proprietary to Microsoft and NOT an open standard. Apple uses AAC (proprietary to Dolby, actually), with the only Apple addition being the DRM. Why should Apple be forced to pay fees to Microsoft? Because France says Apple has to support someone elses proprietary codec? Is France willing to suck up that cost for Apple?

The only way to make this truly fair is to use a truly open standard for audio files. This would be the ideal situation for .ogg files. My understanding is that firmware upgrades should make this possible.

The only question is what the music industry will allow. Both Apple and Microsoft are nothing more than middlemen. Whether or not Apple chooses to close the iTMS may be a moot point if the majority of the content gets pulled by the music industry.

Alex said...

One problem with your last paragraph: Apple has no incentive to open up the iPod. They control over 70% of the market for both hardware and digital music. Opening the iPod to other DRM schemes would diminish the latter significantly. Also, relative to Apple's entire market for digital music, France is a fairly small piece. The losses in iTunes sales from opening up the iPod would most likely exceed the gains from keeping France. Allowing the iPod to be used with other services would also disrupt the user experience that Apple has worked to create.

Even though open players that can accept any content would be better from a competitive standpoint, it will not happen. The organization of this industry eliminates all incentives to do so.

Optimize.net said...

Considering Apple from the beginning based its entire business plan on selling iPods and not selling music (something that cannot be underscored enough), it is a ludicrous statement to first state that crippling its DRM would make iTMS more attractive, and then state that there are plenty of alternatives to the iPod anyway. Hm. Problem there.

Apple's model flourishes through intentionality. They intentionally do not depend on their music store to make a profit. If it does, it is to their added benefit. They have stated that other models that do not depend on the coupling of hardware sales, are thus working from a far less workeable standing.

Napster is still attempting to afford itself. What if 3 or 4 Napsters popped up. They'd all go out of business. The model isn't sustainable. Using new legislation to undermine someone's business model in favor of ones that cannot support themselves makes absolutely no financial sense. We've passed the dot-Bomb era. People need to recognize this.

Anonymous said...

Apple iTunes allows you to convert music from mp3 format into aac for use on the iPod... feel free to buy your music wherever you want and put it on your iPod... the French government wants people to be able to download from iTunes and put it on any mp3 player... very different objectives