Well, this was as inevitable as the tides rolling in. The New York Times is reporting that the US Department of Justice is investigating Apple’s tactics in the digital music market. The antitrust probe is still in an early phase, and is said to focus on “the dynamics of selling music online”.
The issue that seems to have triggered the investigation is the one where Apple is said to have pressured record labels into not making any deals with Amazon’s online music store. Amazon asked record labels to allow them to sell some material a day ahead of general availability, and in turn, Amazon would promote these songs on its website in what it called “MP3 Daily Deals”.
Apple wasn’t particularly happy about this. Representatives of Apple’s iTunes Music Store asked record labels not to participate in Amazon’s marketing scheme, or else Apple would cease marketing those songs in the iTunes Music Store.
This would all be innocent corporate competition, were it not for the fact that Apple has a monopoly in digital music sales in the United States, which means they have to play by different rules – similar to Microsoft with Office and Windows. The NPD Group states that the iTunes Music Store has a market share of 69%, with Amazon’s shop being a distant second with a mere 8% market share. If you look at music sales overall (including the right kind of sales, i.e., CDs), iTunes’ share is 26.7%.
“Certainly if the Justice Department is getting involved, it raises the possibility of potential serious problems down the road for Apple,” Daniel L. Brown, an antitrust lawyer at Sheppard Mullin Richter & Hampton, told The New York Times, “Without knowing what acts or practices they are targeting, it’s difficult to say exactly how big a problem this is, but it’s probably something Apple is already concerned about.”
A comment over at AppleInsider really nailed how I feel about this one. “Apple simply has to live with the fact that bigness – and they are now humongous in many segments – brings with it scrutiny that we (as Apple consumers and shareholders) are not used to. Indeed, scrutiny that Apple is not used to,” writes AI reader anantksundaram, “The company has to learn to live with it, and watch its every step, its every action, its every statement. It has to start second-guessing itself constantly. That is the new reality.”
Just as in the Google WiFi collecting case we discussed last weekend, there is no harm in keeping close tabs on large companies like Apple and Google. Intended or no, actions by companies of this size can do serious damage to the marketplace (and thus, consumers), and in the end, consumers’ interests should always be placed above those of companies.
Thus far, I’ve exclusively purchased digital music from Amazon and have never even installed or opened iTunes. Unrestricted music for the win.
Apple hasn’t sold music with DRM for some time now.
But it still persists on videos. job^aEURTMs call to action on DRM was nothing but a marketing stunt to rile up the Internet, just the same with his jabs at Flash.
Not a shred of evidence for that. Apple only does what the content sellers insist on in order to sell their content. Every time the content providers have agreed to remove DRM Apple have gone along with it, in fact embraced it. You misunderstand Apple’s business model.
Except for that whole variable pricing thing, right?
Not true. Apple requires all audio books to have DRM and content providers have no say in it.
A content owner discussed this requirenment in TWIT episode 249, a transcript of the relevant part:
so it seems apple is preventing some publishers of audio books from selling their books without DRM.
You can download and listen to the podcast yourself from here: http://twit.tv/249
The comment was made at around one hour and nineteen minutes into the episode.
Edited 2010-05-26 19:51 UTC
Good gravy, I’d DRM the hell out of Doctorow’s tripe. He’s as smart as a bag of hammers.
Don’t twist things. Audiobook producers cannot sell their audiobooks on iTunes (stupid, imho) Apple goes exclusively through audible.com. Audible are the ones requiring DRM and giving the authors and other providers no say in it. Apple cannot, legally, remove DRM from their audiobooks until audible says they can. Audible refuses, they won’t even allow an author who sells their books directly through audible to have DRM-free files even if said author wishes to do so. You want DRM-free audiobooks on iTunes, go after the real problem: Audible. Either that, or help Apple contracts with another audiobook provider when it comes time.
Because the movie and TV industries haven’t learned the hard lesson the music industry has grudgingly, finally, learned. Apple cannot sell videos without DRM if the content producers do not allow it. If you need proof of the video industry’s love of DRM, just look at what they did to Blu-ray and DVDs before that. If Apple removed the DRM from their videos, they’d be squashed by big media before you could blink.
I get MP3’s from Amazon and I don’t want any other format. MP3’s work with everything I have and I see no reason to change just because another format saves a few more bits of the original recording.
As far as I understand it, I can’t get my music as MP3’s directly from iTunes and I must instead download them in some other format and then convert them to MP3. A hassle I’m not willing to endure repeatedly. If there was some setting that said “always download as MP3” then I’d consider it.
Apple is still selling DRMed music, it’s simply watermarked DRM (your name etc. attached to every song you buy)!!!
So what about your rights of second-hand selling your iTunes song or passing on your collection to someone else (e.g. heritage)…? iTunes = still DRM but hidden!
http://techcrunch.com/2010/04/06/how-dirty-mp3-files-are-a-back-doo…
Edited 2010-05-27 07:56 UTC
It turns out the hammer was a boom-a-rang.
I seriously hope Apple learns that a single product can create a market in which anti-trust laws govern activity.
They need that lesson after what they did to Psystar.
–The loon
Well this is a surprise. According to Slashdot and numerous other technology analysts, iTunes could never become a monopoly because there were so many better competitors out there like Creative, Real and Microsoft.
And I suppose the iPhone will be dead before Christmas? Two years ago. However could they have got that one wrong?
The iPad will be next to go because Courier and NVidia^aEURTMs Tegra are clearly superior.
P.S. OSAlert v5 will be entirely Flash, with Silverlight for fallback. The special effects are really amazing. Flash is unquestionably the best technology for the future.
You forgot about recent versions of Winamp, sir
They’ve got a music store, too !
(Someday, I’ll understand why so much people love that playlist+library mess, and what this model puts on the table except proprietary database that doesn’t work with competiting software. In meantime, I just can observe how good software from the past can die through bloat and attempt to implement that messy model…)
Edited 2010-05-26 20:40 UTC
That “proprietary” database is XML and can work quite happily with other software, which is why there are a number of such products available.
I find this whole thing rather interesting. Apple were responsible for building the online music market to what it is today. DRM was NOT their doing – and I say this as someone who’s been involved in a project selling downloadable audio products for quite some years now. The idiotic position on this of the recording companies has to be experienced to be believed.
Apple are in fact one of our main competitors, and we don’t think anything they are doing is in any way forcing the hand of the labels. Audible, the company who’s been at the back end of Audio Books on the iTunes store has long been into forcing exclusivity deals – especially on product releases – and dictating pricing, and it’s our understanding that Apple is in the process of shedding this contract partly because of the level of dissatisfaction amongst the vendors because of Audible’s actions and policies.
While I agree that they need to be kept under scrutiny I really don’t think they have anything much to worry about at the moment.
You guys got a v5 site up we can sample?
Not yet. It^aEURTMs still early and I^aEURTMm building it in spare time. I^aEURTMm working towards getting the core basics working and then we could consider a small alpha testing group. All I can say (and Thom will back me up) is that it looks gorgeous, it^aEURTMs not overdone in any way and it will be awesome.
Oh god, I’d love so much to check it, just for the sake of seeing if some nasty areas of low usability have been successfully redone, and if the “gorgeous” factor is some usual shiny design (that may look good, don’t get me wrong) or something more original like the current titlebar design…
…
…
Remember me, how much did you say to be part of that “small group” ?
Edited 2010-05-26 21:52 UTC
I resent Silverlight taking a backseat to Flash, but that’s my resident fanboy talking. =).
Correct, the whole thing should be wrapped in XAML, AIR and then JavaFX. Then everybody^aEURTMs covered! And we only had to develop the same content 10 times over!
You’re forgetting the galloping unicorn .gif animations I demanded.
Yep, sounds like slashdot.
It will be best if people educate themselves in anti-trust fundamentals before starting discussing this issue. The wikipedia entry is a good place to start: http://en.wikipedia.org/wiki/Competition_law
All companies naturally do what is best for themselves. What is best for a company is usually what is best for the whole market place is there is a true competition in that market place.
Usually more harm than good occurs when one company gets too large because the market place will fail to “push them back in line” when their best interest fall off the best interest of the market place and here is where anti trust laws come into play, to protect the interest of the market place as a whole.
A company does not have to be a monopoly first before it get accused of violating anti-trust laws, it just have to be too big in a market place and start acting in ways other places cant successfully counter act it.
The question here is not if apple if a monopoly or not in this market, it is if its size is large enough to raise anti-trust concerns.
I have to admit: I’m experience schadenfreude right now. This is purely emotional, not rational, etc. I’d love it if the OSX (or even Windows) version of iTunes was forced to support other players.
Again, I’ll admit – I’m not being rational right now.
…That Apple has a few powerful enemies at the moment: Google, the US Department of Justice, maybe Nokia…
I can’t feel sorry for them. If I want to use OS X I have only two options: a Hackintosh (probably illegal) or spending about 1000 Euro more than I’d spend for a PC. That because I like only the Mac Pro and the 17″ Macbook Pro.
This seems a little odd. In my eyes Apple have helped the online music business by trying to prevent Amazon having a monopoly on certain tracks. By ensuring competition surely the consumer wins. This is of course ignoring the fact that Apple would probably like to lock up the whole market for themselves but that is another issue.
When Congress spends time doing stupid things it shouldn’t be doing, it is not doing even stupider things it shouldn’t be doing.
Inform everyone when the Govt starts an anti-trust investigation on the Federal Reserve, that’s something I could view as a serious effort.
The gov’t should really be spending their time taking out the RIAA and their bully tactics on their customers.
Apple wanted to make sure they get the same music Amazon gets on the same day. They weren’t using their market position to try and get the reverse, nor were they using it to keep the record companies from offering the same music on Amazon. This is much kinder than what MS did to Netscape back in the day. Should record companies offer music to Amazon sooner just to help the underdog, or should they offer it to all retailers (online and retail) at the same time to ensure fairness?
There has to be more going on that has sparked this inquiry.
The probe doesn’t go further enough into the industry and doesn’t address the underlying problems as so far as competition, interoperability and third party support.
What is required is for a industry standard to be developed that all phone and media device companies conform to and can be implemented royalty and NDA free without exceptions. That by itself would break the tripoly between the operating system, the software sitting on top and the proprietary protocol that binds the hardware to the software to the operating system. Each part of the equation supporting the other thus limiting the end users choice about the software they use to synchronise with the device, limiting the operating system they can run on their computer and limiting the sources in which one can obtain music and applications from.
They also need to look at the way in which the music and movie companies operate and force both industries that when they release an product it must be made availably globally at the same price (within reason of course because of currency fluctuations) at the same time. I’m sick and tired of waiting a year for something that has been out in the United States for months – and it is nothing more than cartel like behaviour.
Sort those two problems out and you’ll go along way to addressing the problems that exist in the IT industry – btw, it isn’t an ‘Apple issue’, it is an industry wide issue that needs to be addressed across the board rather than just focusing in on one company. Yes that includes Amazon and their scumbag policy of only selling music to select markets and refuse to sell a kindle to me living in New Zealand – so yes Jeff Bezos, go suck a tail pipe along with your cartel friends.
Who hurts consumers and artists? The recording companies. Who is keeping most of the iTunes profits? The recording companies.
Why aren’t they ever the subject of an inquiry? They collude constantly.
In this case, Apple try to dictate some sensible terms but the recording companies can pull the music if they don’t like it, though some have found that to be just hurting themselves.
I still buy CDs so I’m not a customer of any download service. The quality isn’t there yet. I just don’t see how Apple should be the target of this inquiry especially when they, after expenses, don’t really make anything on music. It’s not even tied to an iPod, iPhone, iPad, or iTunes anymore.
Sigh, firstly RIAA isn’t company it’s organization. Secondly many people that RIAA represents are artists thru companies that either artists own or where they work. Thirdly, RIAA never has tried to tackle non-RIAA music for been saled. Fourthly, RIAA doesn’t negociate with Apple or any other sales company of prices nor anything else. Spend more than 5 mins on there site to actually know what some organization does before flaming shit!
http://www.riaa.com/
I know who the RIAA is since my dad worked for one of the member companies.
All of the member companies are in agreement (implicitly or explicitly) to collude against the consumer and against the artists. Most of the small companies have been consumed by larger companies and the artists don’t control much of anything now.
It’s an organisation to protect their businesses. Sometimes, they protect their business from people who don’t hurt their business, something like the mob extorts money from store owners. I still the remember the case against the woman who didn’t own a computer. That takes real skill to download music.
Well. Anytime you buy one of those, you are forced to install and use iTunes. So iTMS has a considerable advantage over other music stores : iThings’ market share. This might rightly be labeled as unfair competition.
(Though I agree with you, Sony and Universal definitely deserve an investigation too. But not an antitrust one)
The individual companies can’t be held accountable in an anti-trust sense, but we’re seeing fines against flash memory manufacturers for collusion and price fixing. It’s not really much different.
As far as iTunes goes, it’s loaded and it works and I use it to transfer everything but I’ve yet to buy any music from the store. There are other ways to buy/sell music for other devices and anyone is welcome to do it. Apple just happens to make it easier.
What surprises me is that I haven’t seen anything written about the “sheep” that unconsciously contribute to Apple’s success by buying whatever Apple sell.
I’m getting a sense that this is just beginning to change.
In the last few weeks I’ve managed to purchase three albums I was looking for as FLAC.
Overall, I still prefer to have the physical CD if for nothing other than archive purposes, but FLAC downloads seem to be just turning the corner toward mainstream. Not there yet, but [hopefully] headed there.
That’s amazingly good. I don’t use the format but until one format is accepted, we should be able to download 100 % of the quality, not just a good replica.
good. all that content should be available on other stores as well. including the video content. right now they have a monopoly on online video. and for some music they also have a monopoly.