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January 24, 2007

legal

Under the Gavel: Apple must decide if it’s Norway or the highway

Posted Jan. 24, ’07, 10:05 AM PT by Dan Moren
Category | Legal

Gavel, made of Norwegian woodHave you been pining for the fjords? Our last real update from the Norwegian woods was back in September, though the country hasn’t exactly been silent since then, throwing their lot in with France and Germany earlier in the week. Now, they’ve taken the next step and declared that iTunes’s DRM is persona non grata in the Kingdom (yes, they still have a king: Harald V, if you’re wondering).

Torgeir Waterhouse, the head of the Norwegian Consumer Council (Forbrukerradet, if you’re thinking of going native), has thrown down an ultimatum to Cupertino:

“iTunes Music Store must remove its illegal lock-in technology or appear in court,” he said. “As of right now we’re heading for a big breakthrough that will hopefully pave the way for consumers everywhere to regain control of music they legally purchase.”
Or they could just close the iTunes Store in Norway, Torgeir buddy. Have you thought this one through? An Apple spokesman said that the company was aware of the concerns, and looks forward to resolving—yada yada yada.

And what news on Norway and DRM would be complete without a mention of the handsomest devil in Norway, Ombudsman Bjørn Erik Thon? While quotes from Thon were not forthcoming, he has apparently sided with the Consumer Council, dictating that since DRM is part of the iTunes Store’s contract terms, it falls under the Norwegian Marketing Control Act, which specifies that the DRM must provide “balanced and fair rights to the consumer.” Balanced and fair? Why didn’t you just say so? We’ll get FOX News right on it.

[via iPod Observer]


15 Comments

Daniel said:

Perhaps this is an unfair comparison (I'm not, I admit, a computer/tech savvy person, generally speaking), but where were all these European countries when Sony was leveraging it's might with proprietary standards that could be used only by Sony merchandise in areas where Sony was clearly dominant? Where were they when Nintendo had killed every other gaming kid on the block (and then utterly blew it by dragging Sony into the console business by stabbing them in the back after they produced a console peripheral device for Nintendo)? Hell's bells, what about when Microsoft was using it's virtually complete control of the OS market to gut Netscape like a fish?

January 24, 2007 10:19 AM
Farhan said:

Home money does Norway account for iTunes sales? I'm guessing not a lot. So Apple should drop them.

As for "Fair and Balanced"; I think (and I could be wrong) Apple's DRM is far less restrictive than any of the others out there.

Are they asking other online music retailer to do the same is this witch hunt directed towards Apple?

January 24, 2007 10:36 AM
BenC said:

Why would you take the side of Apple on this? DRM restricts the rights of consumers. This law sounds like it also helps to prevent monopolies from forming. If the positions were reversed and they were doing this to Microsoft's Zune-store (try not to laugh) would you still stick up for DRM then?

January 24, 2007 11:44 AM
Dan Moren said:

Saying that I'm taking Apple's side would be kind of an overstatement. I've stated my opposition to DRM a number of times. While I applaud Norway for taking this liberating step, I don't really think it's going to do a whit of good in terms of changing Apple's mind on the matter; they still believe that they benefit too much from the lock-in.

January 24, 2007 11:54 AM
Joel said:

Allow me to bring up an important point. It is QUITE possible that you don't actually OWN the music you "buy" from the apple store... but that you agree to a LICENSE of the music.

If this is the case, then apple has a good defense in their case because it is something the end user contractually agrees to. I've looked at enough digital media licenses to assume that this probably is the case (I looked around apple's site but could not find any relevant terms though... it would be worth looking for)

January 24, 2007 12:13 PM
Daniel said:

I don't applaud Norway for taking this step at all. For the most part, I strongly favor letting the market govern itself. It certainly has a far better track record, in my opinion. Moreover, in the international community, there are even more problems: which country's standards govern when something is too restrictive? Too dominant? Using which demographics or statistics? Limited to what region? The permutations are endless and merely highlight why governments should allow consumers to buy or abandon those schemes that apply too much pressure. I can see caveats for necessaries (i.e. medicine and other things that are required for health/safety) or for raw materials (i.e. oil, steel, etc.) that are the cornerstone to a multiplicity of industries and products. But I'm pretty sure iTunes isn't sufficiently vital to qualify under those caveats.

January 24, 2007 12:52 PM
Greg said:

You know, all this talk about consumer rights is just crap. In fact, it all boils down to one whine:

"Apple is too successful to only allow music to play on an iPod."

If we're going to whine, let's at least whine about the one thing it all boils down to instead of disguising it under "consumer rights" and other crap.

January 24, 2007 2:44 PM
lionel77 said:

I've bought more than 800 songs through iTunes in the past, because I thought that DRM was inevitable and I'd much rather help Apple's FairPlay become the dominant one than risk getting stuck with Microsoft's PlaysForSure. But now I've completely stopped buying iTunes tracks, because I think there is a realistic chance that we can get rid of the plague of DRM with the help of those European countries and independent services like eMusic (which btw. is now my main source of music).

I completely understand being an Apple fan, but actively arguing for the crippling of products is something I simply can't wrap my mind around (I'm not referring to you here, Dan, but to other people in this thread). You might think you have to do this to be loyal to your favorite brand, but they would do just fine, even without the DRM lock-in, because their products are superior.

So, as soon as Apple is dumping their DRM in iTunes, I'll be happily buying songs in bulk from them again, but until then, I am buying my music through eMusic (which is also a good deal cheaper than the other online music stores).

January 24, 2007 4:21 PM
Jack said:

Tying is not anti-competitive. Anyone is free to make a similar product/service. If a country wants to make DRM in general illegal, that is one thing. But they cannot tell one company and not the whole industry, including the content controllers/providers.

January 24, 2007 8:13 PM
msadesign Author Profile Page said:

Look. I am an architect. Could I please get paid everytime someone looks at one of my buildings? or whenever a person enters the building? and what about a painter? should she be paid on every view?

The concept of DRM is so fundamentally flawed that at some point it has to dissappear simply out of fairness. I want artists to make money, sure. But why do they get paid over and over and over for songs they performed perhaps 25 years ago?

I love my iPod and I do buy from the iTunes Store. I bitch about it. It's the least restrictive and most convenient [I use eMusic but there is far less to choose from].

January 25, 2007 5:00 AM
Daniel said:

Saying anyone in this thread is "actively arguing for the crippling of products" is simplifying the argument to the point of inaccuracy. I certainly don't advocate measures by a company that "cripple" products. More importantly (and if you take the larger view), companies are not going to "cripple" their products because to do so is to result in market share loss. Look, this isn't difficult. Either you think consumer response is the best method of marketplace management or you think government regulation is the best method of marketplace management. To those who think we need government to do so in the instant case, I respectfully disagree. With the limited exceptions I listed above, there is no reason why (as lionel so aptly illustrates) allowing consumers to leave off buying from iTunes is not a perfectly sufficient check and balance in the instant case. Competition works. If enough people leave iTunes for the same reason Lionel is, they'll change. I don't like governmental interference (often unwarranted and ill-advised) short-circuiting the normal competitive process.

January 25, 2007 6:04 AM
Dan Moren said:

Competition works—sort of. Few of the people who frequent this blog would argue that Windows is superior to the Mac OS, or that it has been at any point in the past twenty years. And yet Microsoft has a 90% marketshare relative to the Mac—despite an attempt or two at government intervention.

My complaint with DRM and competition is that in the digital download market, it's not as if we're given the option between two identical services, one of which uses DRM, one of which doesn't: were that the case, I think the choice would be pretty clear for most people there. We're looking at a choice between DRM-regulated services that have the vast majority of popular content (e.g. iTunes) versus unprotected services that have limited content (eMusic). If the record companies don't give us the option to download DRM-free music, how can competition possibly decide that's what people want?

One possible answer is for the record companies to see that when it comes to buying DRM-free content vs. DRMed content, the former is still coming out far far ahead—most people are still opting to buy their music on CDs rather than via music downloads. Chalking it up to that single factor is probably reductionist, yes, but I believe it's a movement which is growing, despite the fact that the record companies, which hold the keys to the kingdom, seem to be largely ignoring it.

And despite the fact that I'm no economist, market forces seem to me to be a self-fulfilling prophecy that in the end don't yield the best solution, but rather the most profitable solution. To me, those two things are not interchangeable.

January 25, 2007 8:03 AM
Greg said:

Companies don't give us the option because we consumers have made it clear that we cannot be trusted (since we love to steal, er, share, er, BORROW from file sharing services--yeah, that's right, we're just borrowing...)

January 25, 2007 8:21 AM
Daniel said:

I'll give you 10 to 1 odds that for every example you give where competition didn't work, I can give a multitude where it did. The key isn't arguing the exceptions, but the general rules.

As for having an "option between two identical services"... well, true enough. Market competition is never about having "two identical" anythings really (that's an issue of infringement, not competition). It's about the end product and the comparison between all the similarities and differences... it's about trying to woo the consumer to want your product for those things it does better than your competitors'. The consumer is the target audience, not the government. And that's why, as a general rule, consumer choice (as opposed to government regulation) is the better means by which the marketplace is regulated.

You ask, "If the record companies don't give us the option to download DRM-free music, how can competition possibly decide that's what people want?" Ahh, but you've so accurately pointed out to me that you do have that choice. Again, it's not identical, but go and buy the CD. You'll get it DRM-free all day long, if my slippery grasp of the technology is correct. And, again, if people really don't like DRM enough and the market drives people to get CD's, then Apple/iTunes will probably rethink the profitability of losing those millions upon millions of downloads.

Bottom line, if you applaud hard-line tactics by governmental units in something as minute as this, you're opening Pandora's Box in just about every conceivable consumer product where one product has a strong edge (better start watching out, e.g., for your Nintendo DS, Dan, in the handheld game console market). I think such measures are unnecessary and over-reaching.

January 25, 2007 8:44 AM
Toralf Sandåker said:

Could Apple move iTunes out of Norway? Yes, it could. But it's too late for that. This is no longer a Norwegian-only case. Consumer authorities all over Europe are backing these moves and following up with appropriate actions. Now, Germany, France and soon the whole EU. That makes up a market much bigger than the US market itself.

Could Apple move out of the whole EU? Of course it could. But just as obviously, it never would.

Consumers vs. (anti-competitive) DRM: 1-0

February 7, 2007 1:30 AM

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