When you have the most popular digital music player on the planet, the largest digital music store, and billions of cash on hand, you tend to attract outsiders who want a piece of the action. Apple, meet Stacie Somers.
On December 31st, 2007, Stacie Somers filed a class action lawsuit against Apple for violation of the Sherman Antitrust Act among other things. You can view the entire 24 page filing here. So what nuggets of information can we find within?
Page 2 # 6: “Online Video make it superior to DVDs purchased from traditional retail outlets.”
If you think video hobbled with DRM, a lower picture quality than DVD, and no special features makes it “superior”, the I’ve got some great beach property in Kansas to sell you Stacie.
Page 4 # 13: “Apple has repeatedly acted to foreclose even the possibility ofcompetition by using its market power to force consumers to choose its products based not on their merits, but on the fact that technological restrictions and incompatibilities prevent them from buying its competitors’ products.”
So you’re saying that it’s not because the iPod looks amazing, easily works with the music management software (iTunes), or is so very easy to use? What you’re saying is that when you go to pay for your Zune the credit card machine breaks down because Apple remotely disabled the connection to the credit card processor? Makes perfect sense to me.
Page 4 # 14: “Apple deliberately makes digital music purchased at the Music Store inoperable with its competitors’ Digital Music Players. Thus, in order to play music from Apple’s Music Store, the dominant Online Music retailer, the consumer’s only option in the Digital Music Player market is Apple’s iPod. Given that other companies’ products cannot even begin to compete for the business ofmost consumers, Apple can and does sell the iPod at prices far above those that would prevail in a competitive market.”
Unless you’ve been under a rock lately, Steve Jobs himself called for the abolishment of DRMs in his famous Thoughts On Music letter. Why can’t Apple just sell their music without DRM? It’s not their music to sell and the record labels won’t let them sell it without DRM (except EMI).
You say music you buy on iTunes can’t be played on other digital music players? A quick search will tell you that the SandDisk Sansa Connect, along with other players that support the AAC format, will in fact play the iTunes Plus tracks that you can purchase from iTunes. Sure, you can’t play DRM’ed songs on other players but there is always the analog hole of burning them to a disc and then reimporting them. In fact you can play all music purchased in iTunes on other players if you want to do a little bit of work.
No one is forcing you to buy an iPod Stacie. In fact, you can buy a Zune for the exact same prices as an iPod. Oh wait, “Apple can and does sell the iPod at prices far above those that would prevail in a competitive market.” Wait, the Zune and the iPod are the same price? I thought you said…oh never mind.
Page 4 # 15: “Conversely, Apple also makes the iPod unable to play music sold at its rivals’ Online Music stores. Consumers who have iPods can play only the Online Music they purchase from Apple’s Music Store, allowing Apple to further entrench its nearly complete monopoly in both of these markets.”
So those tracks from eMusic, Amie St, and Amazon
Page 4 # 16: “In the past year, as improved hard drive and video compression technology have made it possible to play video content such as television shows on Digital Musie Players, Apple has begun using these same illegal tactics to block consumers from purchasing and playing Online Video from its rivals’ online stores and video-enabled Digital Music Players.”
How many times do I have to say it? It’s not Apple mandating the use of DRM. The content owners set the policy and most want DRM on their product. Online digital video distribution is a much less mature market so don’t expect non DRM video anytime soon.
The rest of the filing rehashes some of the same statements above and goes into some detail about the European Union’s lawsuits against Apple. From what I’ve read (in bold below “Apple’s Response”), it’s again the music labels and publishers that seem to be the stumbling block related to some of those EU lawsuits.
The suit includes a lengthly section about the iPods inability to play WMA files. WMA files are songs encoded with Microsoft’s DRM technology. Using that same logic, I think I’ll sue Nikon because my D40X used SD memory instead of Compact Flash.
While the lawsuit is pretty typical of many lawsuits these days (full of crap), it does bring up one interesting question. Why hasn’t Apple licensed FairPlay (Apple’s DRM technology)? The licensing fee and additional revenue from music/video purchases could be substantial. Of course that would mean working with outside vendors in ensuring their players work well with iTunes. Apple isn’t know for playing well with others so that’s likely the main reason why they haven’t licensed FairPlay. Would the revenue be worth it though? Share your thoughts about the lawsuit or the licensing of FairPlay below.
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February 19th, 2008 at 5:04 am
did she win this lawsuit or get a settlement?
February 21st, 2008 at 11:53 am
Tom, the case has yet to go to court. I’d imagine it could take years to decide if appeals are filed.