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3/22/2006
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Apple Battles French Effort To Open iTunes

The company would likely just leave the French market if a bill to open iTunes were signed into law, one analyst says.

Apple appears more likely to pull out of France than bow to government pressures to open iTunes.

In addition to Apple's tough stance against proposed legislation that would require all downloadable music to be interoperable, there are other factors on Apple's side as the company battles legislators in France.

Jan Dawson, research director for Ovum Enterprise Services in Boston, said that several factors driving the push in France are unique and therefore it's unlikely pressure to open iTunes would spread throughout the European Union or to the United States.

"There are some French-specific conditions," he said during an interview Wednesday. "There's a history in France of trying to get everything standardized, to get everything to French standards. You have also got the fact that the main companies involved here are all big U.S. companies."

Dawson said that the French show more resistance to having their markets dominated by foreign companies, especially those based in the United States, than in most other European nations. Since it is even more unlikely the momentum to open iTunes would ever reach the United States, he said Apple would likely just leave the French market if the bill is signed into law.

"It's likely to lead to Apple pulling out if they can't sell the way they want to," he said. "People could buy once in France and sell it a million times, which would devalue sales in the U.S. In other countries, there is more recognition that some kind of protection of digital rights is needed. If you strip out what is proprietary, it might leave you with an inability to protect content."

Dawson said that modern technology makes it so easy to copy and distribute music that proprietary restrictions are necessary to protect copyrights.

"It has been a problem in the past, but people had to make every copy one by one and hand it to other people, so the impact was going to be limited by that," he said. "Now you can take one digital copy and stick it up on a Web site and distribute it to millions of people."

John Kennedy, chairman and CEO of the International Federation of the Phonographic Industry said the recording industry supports interoperability because it's important to consumers, but it shouldn't endanger the technology used to enable legitimate offerings of music and services online.

"In addition, the copyright draft provides for a range of sanctions for unauthorized peer-to-peer exchanges, but how they would be implemented still needs to be clarified," he said in a statement issued Wednesday. "It is crucial that any fines for the illegal exchange of music on unauthorized peer-to-peer services should be genuinely deterrent."

Though other companies would be affected by the legislation, analysts have said Apple has the greatest share of the market and therefore the most to lose. International media widely reported on an e-mail sent out by Apple representatives Wednesday saying the bill promotes piracy.

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