January 28, 2007 11:20 pm

Apple’s iTunes hits a sour note in Europe

Apple and its iTunes music download service are facing a growing headache in Europe.

Following the Norwegian consumer ombudsman’s ruling last week that Apple iTune’s lack of inter­operability with devices other than its own iPod is illegal, Germany’s federal consumer protection association, the VZBV, and the Dutch consumer protection agency, along with Finland and France, have joined a continent-wide move to get Apple to change its coding restrictions.

“Consumers have a right to listen to music they have bought online on all players,” says the VZBV.

Germany’s consumer protection minister, Horst Seehofer, plans to publish a jointly authored “Charter for Consumers of Digital Media” in mid-February.

The charter will call on online vendors such as iTunes to ensure that downloaded music can be played on all types of players, as well as demanding that they address data-protection and liability issues.

The VZBV hopes that the government will use this national initiative to create momentum for steps at EU level.

Germany holds the EU’s rotating presidency until the end of June. “The Charter will only be declarative in character, but we’re hoping that the German government will use it as a basis for a discussion with other states at EU level about Europe-wide measures,” the body says.

In France, Que Choisir, the consumer association, advocates an even more radical approach to that of Norway, arguing that any use of digital rights management was against consumers’ interests.

The French group is in the middle of a court case against Apple, after scoring a legal victory this month against Sony France, which operates a similar closed system tying music downloads to its own players.

Digital rights management and the lack of inter-operability has been blamed for slowing growth in legal digital downloads. Independent record labels sell their music in unprotected MP3 format, while EMI has started to experiment, recently releasing a Norah Jones single without DRM.

The British Phonographic Industry (BPI), which represents UK music companies, last year called for greater interoperability, noting Apple’s dominant share in the digital music download market.

Apple has until October 1 to make its codes available to other technology companies operating in Norway or it will be taken to court, fined and eventually closed down.

The question is whether the consumer protection groups in Europe will be able to force Apple to change.

“Apple should be concerned, with each country in Europe seemingly looking to follow the other,” says Struan Robertson, senior associate at law firm Pinsent Masons in Glasgow.

“Apple is aware of the concerns we’ve heard from several agencies in Europe, and we’re looking forward to resolving these issues as quickly as possible,” the group said in a statement last week.

“Apple hopes that European governments will encourage a competitive environment that allows innovation to thrive, protects intellectual property and allows consumers to decide which products are successful.”

So far, the European Commission has refused to join the crackdown on Apple’s iTunes, with one senior official saying last year that Brussels would need to study further market development.

Although iTunes continues to have a strong position in the online music market, the Commission could well struggle at this stage to identify a clear market abuse on competition grounds.

Moreover, the market for online music – while growing fast – is still much smaller than more traditional retail distribution channels, a factor that is likely to curb Apple’s overall impact on the music industry for some time.

The Brussels-based antitrust regulator received a complaint about iTunes from a UK consumer organisation several years ago, but its inquiry has so far failed to yield any results.

In any case, the complaint was directed only at national price differences.

Reporting by: Bertrand Benoit, Tobias Buck, Delphine Strauss, Emiko Terazono and Gerrit Wiesmann

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