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France May Force Apple to Open Up iTunes as Bill Moves Ahead

By Rudy Ruitenberg

March 20 (Bloomberg) -- France is set to become the first European nation to force companies including Apple Computer Inc. to enable music downloads to be played on all portable digital players.

French lawmakers are scheduled to vote tomorrow on a new copyright law after approving language last week that may spur Apple to stop offering its iTunes service in France. Apple and Microsoft Corp. promote different standards, and consumers can now listen to iTunes songs only on iPod players or software.

Apple leads the market for legal downloads, and said last month it sold its 1 billionth song. Should the legislative proposal be approved next week, France will push for a European law to make music formats interoperable, said Martin Rogard, an adviser to French Culture Minister Renaud Donnedieu de Vabres.

``Someone who buys a song has to be able to listen to it, no matter which device or the software of choice,'' Rogard said in an interview on Friday. If the interoperability articles are approved, ``we'll see if we can push this on a European level.''

A proprietary format such as Apple's iTunes ``is not in the interest of the consumer, nor the interest of the creator. It only benefits the company and we're there to defend the consumer, our citizens,'' Rogard said.

Apple spokespeople Alan Hely and Natalie Kerris didn't return messages left on their voice mail.

`Difficult for Apple'

If the law means the copyright protection of iTunes songs is compromised, ``it would be very, very difficult for Apple to continue to operate in this environment,'' said Michael Gartenberg, an analyst at Jupiter Research. ``It may mean Apple does not sell their music in France.''

Songs purchased via Cupertino, California-based Apple's iTunes can't be listened to using software such as Microsoft's Windows Media Player. Apple sells about 3 million songs a day via its iTunes Web site for 99 cents each, Chief Executive Steve Jobs said in January.

``The technical measures must not result in the impediment of interoperability,'' one of the articles in the law proposal states, with regards to copyright protection software. ``The technical measures can't be an obstacle for the free use of the oeuvre or protected object within the limits of the rights foreseen by the current code.''

The music industry is in favor of the concept, though it's unclear how the law will be implemented, Olivia Regnier, European regional counsel for the London-based International Federation of the Phonographic Industry.

`Obscure Wording'

``The wording is pretty obscure,'' Regnier said. ``The music industry is in favor of interoperability, it would make music accessible on more platforms. It's quite a technical and complex provision, so it's not quite clear how it's going to work in practice,'' Regnier said.

The industry group is ``relieved'' by the bill after proposals to reduce copyright-protection measures and allow consumers unlimited downloads in exchange for a flat fee and were dropped, according to Regnier.

Consumers can copy iTunes songs to a CD to remove the proprietary formatting and then convert files to the MP3 format, which can be used on most digital players, Gartenberg said.

``How seamless does that mechanism need to be under this law?'' Gartenberg said. ``The devil here is in the detail. It's quite possible that Apple says they're in compliance with this law. No one is locked into Apple's music format.''

Gartenberg said music labels will not sell their music unless it's ``somewhat'' copyright protected.

`` I don't think it is in the interest of Apple to quit France or stop selling iTunes in France,'' the culture ministry's Rogard said. However, should Apple decide to do so, ``there will be plenty of companies who will be delighted'' to offer song downloads, he said.

Digital music sales tripled last year to $1.1 billion as consumers downloaded 420 million tracks, lifting revenue from digitalized songs to 6 percent of the music industry's overall sales, IFPI said Jan. 19.

To contact the reporter on this story: Rudy Ruitenberg in Paris at rruitenberg@bloomberg.net.

Last Updated: March 20, 2006 03:32 EST