French iTunes Law Could Help Record Labels Break $1/Song Pricing

from the shifting-power dept

After plenty of changes, it looks like France has approved a new law to get Apple to open up iTunes, by requiring it to share technical information, under certain conditions (which turn out to be quite important). If you recall, in the original version, it would have forced anyone selling music to open up the content so it could be played on any device. Rather than using that as an opportunity to experiment with DRM-free music, Apple instead announced that it would probably leave the French market. This resulted in a series of negotiations and changes so that the new bill doesn't require full openness. It only requires that anyone selling copy-protected music give technical info to competitors who request it to make sure that songs from one service can play on other devices -- with one major exception. If the restrictions are part of the contract the music store has with the record labels, then they do not need to open them up. In other words, expect Apple to renegotiate its contracts (if they don't already have this) to make sure that its FairPlay copy protection is a part of the contract.

However, this does bring up one interesting possibility. It hands some power back to the record labels if the renegotiation is necessary. The record labels should (but probably don't) recognize that forcing Apple to open up actually helps them -- because it takes away Apple's power position in the market. Thus, if they refuse to renegotiate the contract and force Apple to open up (if it stays in France) it could give them their first opening to breaking down Apple's dominant position. Alternatively, the record labels could use this as a negotiating ploy to finally get Steve Jobs to back down on the $1/song price that he demands, and which the labels have wanted to ditch for years. Either way, it seems like this law could give some power back to the record labels -- which seems like the opposite of its original intention to give more power to users.


Reader Comments (rss)

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  1.  
    identicon
    anonymous coward, Jun 30th, 2006 @ 9:59am

    $10 says that Jobs tells the labels and frogs to go pound sand.

    first!

     

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  2.  
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    Anonymous Coward, Jun 30th, 2006 @ 10:05am

    Good analysis. One problem though - the labels would have to accept DRM-less music to do it. So if I'm Jobs, and they come to me and say "we think music should be DRM-free. Oh, by the way, change your pricing scheme," I laugh at them. He'd have to know right away that it's a bluff, and a bad one.

    I mean, which one's worse to the RIAA; flat pricing scheme or unprotected content? I don't see this one happening.

     

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  3.  
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    Joe Smith, Jun 30th, 2006 @ 10:12am

    It is probably already a term of the contract that Apple is only allowed to sell the songs for use on the iPod. The record companies would not have agreed to give Apple a general licence to republish their material.

    If the record companies wanted to sell into the French market music without copy protection for a price over a dollar per song they are of course free to do so on their own at any time.

     

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  4.  
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    Anonymous Coward, Jun 30th, 2006 @ 10:36am

    So let iTunes pull out of France. Like anyone really cares. Apple loses a market, The RIAA and the major labels lose a market. As artist dissatisfaction grows among the major lables this will just be another nudge toward jumping ship to Networkk or independant lables. The internet has proven time and again that neither the artists nor the consumers need Sony or any of the other major labels. These labels and the RIAA are just a drain that suck money out of both the artists and consumers pockets.

     

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  5.  
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    DaveS, Jun 30th, 2006 @ 10:38am

    I'm not buying it...

    At the risk of offending the French, France isn't a big enough market for Apple to consider renegotating its deals with the labels. It might be a different story if it were the entire EU.

    I agree that Apple's negotiating power with the labels is directly related to its share of the DAP market. It's not an entrenched position - there's certainly nothing technical in the Apple offering that can't be duplicated, which leaves only the brand itself. As long as Apple is seen as "fighting for the little guy" against the labels, it will continue to enjoy a favorable brand position, something that Sony can never hope to duplicate, being one of the "bad guys" at the labels.

     

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  6.  
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    Vincent Cayenne, Jun 30th, 2006 @ 11:24am

    Terrible analysis

    The analysis presumes that *Apple* mandates or prefers the DRM.

    iTunes and all iPods have absolutely no problem with non-DRM content. And Apple's position is hardly assailed by non-DRM content's availability. The RIAA and similar labels' representative bodies are *strongly* opposed to non-protected content and would be hard-pressed to agree to any release of their captive artists' content in an unprotected form. They've even spent the last few years experimenting with ways to prevent the consumer from even accessing the content on CD without protection.

    Apple need not worry that the music industry will consider the French law as an arrow in their quiver. And you can bet that none will renegotiate with non-DRM as an option on the bargaining table. That option will be in the dustbin before the players even sit at said table.

     

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  7.  
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    CRAP, Jun 30th, 2006 @ 11:39am

    Lay Person

    Look France sucks anyway!

    So who cares. Don't give them anything that improves their quality of life.

    They'll just probably steal the code and call it FrenchTunes.

     

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  8.  
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    Mike (profile), Jun 30th, 2006 @ 12:08pm

    Re: Terrible analysis

    The analysis presumes that *Apple* mandates or prefers the DRM.

    Apple has made it clear that they now do very much support DRM, in part because it gives them tremendous lock-in.

    And you can bet that none will renegotiate with non-DRM as an option on the bargaining table.

    You misunderstand what I'm saying. The labels don't have to negotiate for non-DRM, but all they need to do is make sure that DRM is not in the contract. Apple can still sell the songs however it wants -- but would then be forced to tell other providers how to interoperate. That opens up the market, even with DRM still enabled.

     

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  9.  
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    Mike (profile), Jun 30th, 2006 @ 12:10pm

    Re:

    One problem though - the labels would have to accept DRM-less music to do it.

    Not so. As long as the contract isn't specific, there can still be DRM. The only thing is that Apple would have to reveal how Fairplay worked to other providers so there could be compatibility. It doesn't mean *no* DRM, it's just how specific the contract is.

     

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  10.  
    identicon
    Chronno S. Trigger, Jun 30th, 2006 @ 12:30pm

    $1 a song

    Why do the RIAA people want to raise the cost of the songs? Go out to a store and get a 20 song CD for $15 or go onto I tunes and get the same 20 songs for $20. And they don't think that’s enough money yet? I think its too much.

     

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  11.  
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    iTunes, Jun 30th, 2006 @ 1:38pm

    Cronno St

    um....the only way you pay 20 bucks for 20 songs, is if you buy them individually. if you buy them as an album, bam 9.99

    so there.

     

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  12.  
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    Stefan, Jun 30th, 2006 @ 2:01pm

    F the French

    Seriously the Fraugs can S a D!

     

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  13.  
    identicon
    someone out there, Jul 1st, 2006 @ 7:22pm

    The Alternative

    There is an alternative. It may be a bit sketchy, but allTunes provides a service of download by the MB. An entire album costs less than 2.00USD.

     

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  14.  
    identicon
    GryphonDWB, Jul 2nd, 2006 @ 1:39pm

    People Have Short and Addled Memories

    It's a little annoying to read spots like: "expect Apple to renegotiate its contracts (if they don't already have this) to make sure that its FairPlay copy protection is a part of the contract". HELLO... are you paying ANY attention? Apple didn't want DRM to start with, the record companies required that it be a part of the system, and that's that. People keep looking at the business and thinking Apple is purely trying to sell music. It's kinda like the record is stuck and I need to slap the side!

    Apple is trying to sell iPODS. Now.. DRM has certainly helped Apple to retain customers who might bristle at transferring their songs... but that's a result of the contracts Apple had to negotiate. Likewise, people using Microsoft's DRM and looking to switch to a player that doesn't support Microsoft's system... are also screwed. Does it mean the music industry will come back to Microsoft and say... Won't you please make our music DRM free? We'd really like that... Come now.

    If the music industry said, "Hey, we don't want DRM." Apple would be saying, GREAT! Groovy! We'll focus on making cooler iPods with features that aren't restricted by DRM. As it stands, the RIAA thinks that most of the music on iPods are pirated. How much more so woud it be the case, if Apple didn't have to monitor "rights", could allow iPods to connect to ANY iTunes installation and "download" someone's collection regardless of whether the music were purchased online, and if Apple could simply allow every feature in iTunes to branch out... like "two way music syncing", "Internet-wide" stream-sharing with fully-integrated WebDJ-like full-song playlists... If Apple could get away with it, it would do whatever would make its products more popular. Trapping people into a restrictive usage contract isn't where its business interests lie. Maintaining its end of its contracts clearly is.

    Please keep the story straight, so people don't get misinformed. The whole "C.R.A.P." thing is silly, considering no one requires anyone to put DRM on an iPod or to use DRM in iTunes. If you never go to the iTMS, you'll never need to know anything about it.

     

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  15.  
    identicon
    Anonymous Coward, Jul 3rd, 2006 @ 5:17am

    Re: Re:

    "Not so. As long as the contract isn't specific, there can still be DRM. The only thing is that Apple would have to reveal how Fairplay worked to other providers so there could be compatibility. It doesn't mean *no* DRM, it's just how specific the contract is."

    Yes, but we're talking negotiation here - that's the premise, right? So a record exec comes to Apple with some nefarious scheme to get non-flat pricing by dropping the DRM requirement. Whatever Apple actually wants, what they say is "Great idea! We've been wanting to sell unDRM-ed music for years!" Then the record exec tucks his tail back between his legs and walks away, because he can't risk calling that bluff.

    Put another way - there's *no way* the record companies do a deal with Apple that doesn't feature DRM specifically outlined in the contract. Otherwise, Apple could start selling DRM-less music at any time, for any reason, most specifically including bargaining leverage. Once the contract is in place, Apple could start selling unprotected content to get any concession they want from the RIAA. The RIAA is just too paranoid about pirating to allow it. And that means that Apple still owns them.

     

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  16.  
    icon
    rijit (profile), Jul 6th, 2006 @ 12:23am

    heh

    Considering the RIAA and the MPAA are trying hard to get laws passed that make it illegal for content not to have DRM, I doubt they would ever do anything to encourage DRM free anything.

     

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  17.  
    identicon
    Ntshepe, Mar 29th, 2007 @ 6:26am

    Re:The strength of the French Market

    No. I agree that France might not be a strong enough market, but I believe Apple is seing its growing potential. heck! I'm in South Africa and I can see the growth.

     

    reply to this | link to this | view in thread ]

  18.  
    identicon
    Anonymous, Mar 29th, 2007 @ 6:31am

    Re:F U Back

    F U Back from Africa Stefan you better watch that mouth of yours

     

    reply to this | link to this | view in thread ]

  19.  
    identicon
    Darius Denzel Wesley, Jul 27th, 2008 @ 8:01am

    www.googlle.com

    this is Darius Denzel Wesley and call me up at 203-634-6882 anybody anyone anytime too hear me rap and any record producer or lable.

     

    reply to this | link to this | view in thread ]


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