Opening up iPod

French parliamentarians finished drafting a law on Friday that would open up Apple’s market-leading iTunes online music store to portable music players other than its popular iPods.

The new law, now set for a vote on Tuesday, would allow consumers to
circumvent software that protects copyrighted material — known as
digital rights management (DRM) — if it is done to convert digital
content from one format to another. Using such software is currently
illegal in much of the world.

This is expected to pass, here is the article.

My take: The French are probably still at the point where the songs aren’t making money but rather serve as loss leaders for the hardware.  A legally forced unbundling could induce Apple to leave the market, if only to send other governments a message.

More generally, song prices are relatively low early on to induce people to lock into the technology.  If you forbid lock-in, early period song prices and indeed hardware prices will be higher than otherwise (think of market exit as the limiting case).  But will forced unbundling make prices lower in the long run, due to the growing competitiveness of the market?  My guess is no.  Something better than iPod will come along within five or ten years, so the relevant form of future lower prices is "higher quality."  Allowing monopoly profits, rather than confiscating them, is the way to get there more quickly and more decisively.  By enforcing interchangeability at such an early stage in the process, the French will more likely get a lame rather than a cool version of a universal access platform.  How’s that for lock-in?


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