French Slow Innovation By Violating Apple’s Intellectual Property Rights

THE French take pride in their revolutions, which are usually hard to miss — mass uprisings, heads rolling and such.  So, with the scent of tear gas in the air this past month from the giant protests against a youth labor law, it was easy to overlook the French National Assembly’s approval of a bill that would require Apple Computer to crack open the software codes of its iTunes music store and let the files work on players other than the iPod.  While seemingly minor, the move is actually rather startling and has left many experts wondering (as ever):  What has possessed the French?

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If the French gave away the codes, Apple would lose much of its rationale for improving iTunes.  Right now, after the royalty payment to the label (around 65 cents) and the processing fee to the credit card company (as high as 23 cents), not to mention other costs, Apple’s margin on 99-cent music is thin.  Yet it continues to add free features to iTunes because it helps sell iPods.

Opening the codes threatens that link.  Apple would need to pay for iTunes features with profits from iTunes itself.  Prices would rise.  Innovation would slow.

Even worse, sharing the codes could make it easier for hackers to unravel Apple’s FairPlay software.  Without strong copy protection, labels would not supply as much new music.

 

For the full commentary, see:

Austan Goolsbee.  "ECONOMIC SCENE; In iTunes War, France Has Met the Enemy. Perhaps It Is France."  The New York Times  (Thurs., April 27, 2006):  C3.

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