European Commission launches iTunes probe

Author: Brett Thomas
Published: 4th April 2007
Comments (8) Stumble
European Commission launches iTunes probe

"Oh no, Steve-o" - iTunes is officially being probed by the European Commission.

For every action, there is an equal and opposite reaction. At least, that's what my physics teacher always told me. I never thought it would apply to technology news, though. Just a day after Apple and EMI announced DRM-free music, the European Commission has announced an investigation into the iTunes service. The charges? Unfair competition and price fixing.

The price fixing charge is actually one that I've recently ranted about. Essentially, the EC is attacking the requirements that different countries only be allowed access to certain music, and at different prices than their neighbours. If your IP comes from a particular country, you have no option to buy certain songs, and your cost may be a few pence per song more expensive than a person one country over. Digital distribution, the EC argues, should make these differences obsolete, not more easily enforced for the gain of the record labels.

Unfair competition charges arose due to Apple's FairPlay DRM model, which the EC has said penalises consumers. By definition, the body argues, DRM is an assumption that the consumer will be guilty of a crime before they even purchase the product. Also, the limited number of computers and devices authorised to listen to the music at any one time restricted a user's rights to access his or her content at will.

Believe it or not, the music service isn't the real target of the investigation, it just happens to be the the best doorway into the real goal - record label practices. The EC paperwork makes it clear that iTunes is functioning as a rather unwilling carrier for practices popularised by the RIAA and MPAA. DRM and pricing structures are things that Apple actually has argued strongly against ever since it launched the service. "Our current view is that this is an arrangement which is imposed on Apple by the major record companies and we do not see a justification for it," said Jonathan Todd, the Chairman in charge of the investigation.

However, it's likely Apple (and the consumer) will suffer the penalties for the investigation. iTunes is the largest legal distribution service in Europe as well as the world, and the costs to defend itself certainly won't come from the penny-pinching pockets of the RIAA. It seems almost as if Apple is being penalised for making the first step simply because it's not straight to the end result. The record companies were already scared of digital distribution - it took the careful design and negotiation that went into iTunes for them to embrace any form of it at all. Since that time, Steve-o and company have been fighting against various aspects of RIAA practices including DRM - and now that the business model has proven to be revenue that even the RIAA can't ignore, people are just starting to listen. People like the heads of EMI...

What do you think of the EC's announcement? Long time coming, or possibly more harm than good? Tell us your thoughts in our forums.
Quote Pricester 4th April 2007, 14:42
I'm no expert on this (dated a lawyeress once, don't know if that helps or not), but the impression I get from both the original article (and other reporting), and the EU's very definition of a "Statement of Objections" is that this will be a public and legal forum for Steve Jobs to repeat his Open Letter to the copy protection industries.

While the original open letter pushed at the RIAA and MPAA with a challenge to respond, this investigation will allow Apple the chance to formally and legally blame the RIAA and MPAA for forcing Apple to break the law.

I reckon it's much like the police arresting a small-time drug dealer - not to get at him, but to target his supplier and get the testimony they need...
Quote cjmUK 4th April 2007, 14:55
I read it the same way. The EU isn't going to fine Apple 23 gazillion euros; it will simple tell it to stop selling DRM-infected music within the EU. The RIAA will then have to relent and grow up a bit, or they'll have to stop selling digitally in the EU. With EMI music selling DRM-less, it means that punters will still be partially supplied with cheap musical goodness, while the RIAA will see its members profits plummet. One will assume the MPAA will be equally affected.

This is all based on the premise that the EU legislators know their arses from their elbows and don't screw it up.
Quote Da Dego 4th April 2007, 15:01
And in the meantime, it will greatly hurt Apple's revenue streams from iTunes by shutting out almost half of the digital distribution world - "don't sell DRMed music" is exactly what I'm meaning by apple ending up penalized. That is a pretty serious thing.
Quote cjmUK 4th April 2007, 15:09
Quote:
Originally Posted by Da Dego
And in the meantime, it will greatly hurt Apple's revenue streams from iTunes by shutting out almost half of the digital distribution world - "don't sell DRMed music" is exactly what I'm meaning by apple ending up penalized. That is a pretty serious thing.

I'm hardly crying into my cup here. Apple have be complicit with the big labels if perhaps not as bad as them, but they have been making loads of cash all along. They've been quite happy to sell music which can only be played on their own devices.

Nobody is going to starve here.

And let's face it, the results will be leaked in ample time to allow the labels and Apple to come to new arrangements. If they don't it will be their own fault.
Quote DXR_13KE 4th April 2007, 23:39
so... this is a way that the EU made to change the RIAA.... nice :D
Quote cjmUK 4th April 2007, 23:41
Quote:
Originally Posted by DXR_13KE
so... this is a way that the EU made to change the RIAA.... nice :D

Hopefully...if it works...
Quote Constructacon 5th April 2007, 09:36
Quote:
Originally Posted by Da Dego
And in the meantime, it will greatly hurt Apple's revenue streams from iTunes by shutting out almost half of the digital distribution world - "don't sell DRMed music" is exactly what I'm meaning by apple ending up penalized. That is a pretty serious thing.
That would cause the most hurt to the RIAA (and MPAA) as they will be the ones missing out on their cut of the sales. EMI (and anyone else who follows suit) will benefit more as their products will become more prominent on iTunes due to a smaller field of offerings.

The best thing that can come out of this is if the EU only allow DRM free products at a uniform price structure accross all regions. At worst, more of the public will become aware of what their plight actually is and hopefully more people will rally to their own cause.
Quote Fod 5th April 2007, 10:44
uh, does the RIAA hold any authority in the EU whatsoever?

i thought it was the BPI that called all the shots over here
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