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Apple accused of stifling rivals with iTunes |
| 2008-03-22 |
Source:
The Guardian |
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The online music store eMusic accused its rival Apple yesterday of being anti-competitive if it goes ahead with plans to bundle free access to its iTunes catalogue with every iPod music player it sells.
The world's second-biggest digital music store after iTunes, eMusic said Apple's reported proposals would be a major blow to music retailers and record labels. The chief executive of eMusic, David Pakman, compared the situation to anti-competition cases against the software company Microsoft, which has been fined hundreds of millions of dollars for bundling media applications in with its Windows operating systems.
"If you have to buy iTunes when you buy iPods that is clearly anti-competitive behaviour by a monopolist," he said. "It would absolutely catch the eye of European competition authorities."
Referring to iPods and the music download market, he said: "It's about using market power you have in one market to damage competition in another."
His remarks come after a report in the Financial Times that Apple is in discussions with the big music companies about a new business model that would give customers free access to its entire iTunes music library in exchange for paying a premium for its iPod and iPhone devices.
Apple declined to comment on the report but music industry sources confirmed that preliminary talks had taken place with the iPod maker.
Pakman said it would be less anti-competitive if Apple were to make the bundled downloads optional, charging a premium on iPods and iPhones that included access rather than always including access.
But, depending on the price, it could still spell disaster for labels and music retailers. "If you could buy all the music you wanted for $20, why would you buy CDs or downloads?" he said.
The eMusic boss, whose service has 3.5m tracks, believes Apple is responding to the growing trend towards music downloads in MP3 format, which is free of copying protections.
Pakman's own service, which sells MP3 tracks, has a number of new competitors, including an MP3 store on the UK website Play.com.
On iTunes a large number of tracks remain protected by DRM (digital rights management).
Music industry sources rebuffed Pakman's assertion that doing a deal with Apple would make them "dangerously dependent" on the company.
With piracy still taking a large chunk of revenue out of the industry, record labels are keen to make music easier to buy legitimately. Some in the industry feel that revenues from subscriptions or as one-off fees for long-term access to iTunes may be better than no revenues at all for pirate downloads.
"If we are getting a cheque every time someone buys an iPod, then fantastic," one industry source said. "But it's a case of what the number is." |
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