‘Apple’s core problem with France’

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Adam Livingstone writes for BBS Newsnight:

Because if you’re Apple computers, you’ll make more money by selling the iPods expensive and the music cheap. But if you’re (say) Vivendi Universal, you don’t get a slice of Apple’s hardware sales. So you want the iPod to be cheap enough that the punter buys into the technology but then spends the bulk of his money on downloading the music itself at a decent price.

The poor music execs have had to cut down on the white powder deliveries by some margin – and for that they have the Internet and themselves to blame. Now if you make either hardware or software you have the same two choices here. In a small controllable market you can sit down with your opposite number and work out a system that lets both of you make a profit. That might be illegal sometimes, but I’m sorry to say it has been known to happen anyway. Or you can let capitalism, red in tooth and claw, find a winner out in the jungle.

Which brings us back to iTunes. Apple’s fantastically successful music download service has been selling tracks by the billion to the public for three years now at low prices. The chaps from Silicon Valley have been making a pile of cash selling their iPods off the back of this while the poor music execs have had to cut down on the white powder deliveries by some margin. And for that they have the Internet and themselves to blame.

So far so good…. but futher down in the article he writes:

So how do Apple keep their competitive advantage? Their best answer is something called Digital Rights Management. They sell music online, but it isn’t sold in that universal MP3 format so beloved of pirates.

iTunes music is only playable on an iPod, and then only by the person who pays for it. In other words iTunes is 80 per cent of the legal download market but you need an iPod to use it.

But iPods don’t play the digitally protected formats used by other legal download services, so if you have an iPod and you’re law abiding then you’re locked into iTunes. It’s a virtuous circle for them, but a vicious one for their competitors.

Sure, Apple’s DRM is a part of their strategy, but I think there’s more to it than that. Did you kill the iPod mini so soon after launching it by introducing the nano because of DRM? No, I don’t think so. It’s also about style, culture, usability, and being cool.

And he also gets it wrong when he writes “iTunes music is only playable on an iPod”. You can play iTMS-purchased music on your Mac, on your Windows PC, as well as your iPod.

And finally, does the other (Windows-based) online music stores’ jukeboxes play iTMS-purchased music? I don’t think so.

Update: There was a little notice in Khaleej Times (it was not online, see attached picture).