French legislative initiative on online music distribution stifles innovation

French Parliament debates a new digital copyright law that could have major implications for the online music distribution industry, most notably the most innovative company in this industry, Apple.

Not only is the new law confusing, it signals a dangerous development in Europe that once a company is successful in the market, be it Microsoft with its OS and add-ons like Media Player or Office software, or Apple with its very successful on line music retail formula, it gets punishment rather than applause.

There is an alarming tendency in Europe to denounce those who are successful, and thus stifling rather than promoting innovation. This should be of great concern to all who want Europe to be a innovative economic climate (even if Europe already gave up to be “the most competitive economy, also know as the “Lisbon” strategy.

The proposed bill would force change in the business model that sparked the revolution in legal digital music downloads. It seeks, in part, to require Apple’s Computer’s iPod digital music player to be able to play songs purchased from competing online services, not just from Apple’s own iTunes Music Store. French Antitrust agency already cleared Apple from an alleged dominant position in November 2004. Yet, the French Parliament seems to know better what is good for competition.

One should be wary of politicians trying to tell the folks what is good for competition and what not. However, one could think that this is an isolated case, some French politicians who are ill informed, have no clue what sparks innovation (or simply do not care). This would be a dangerously underestimate the potential effects of this type of legislation. It should be of wide concern, as fear is justified that other European legislators will follow suit. This is more likely than ever, taken the current anti IP atmosphere in Europe these days. It is “bon ton” to denounce alleged “market dominators”.

Those voices always seem to stem from parties that are much less successful in the market.
Interoperability issues between portable music players such as the iPod and music download sites have arisen, and Apple has found itself accused of using anti-competitive tactics. Real Networks is a proponent of such allegations to anyone more successful than they are. Is it coincidence that this same company complained against Microsoft and is now taking on Apple as well? Real Networks sponsors a website that campaigns against “the status quo in digital music, which limits healthy, open competition”.

Real Networks obviously means to say they can’t compete and a cry for help seems to get a willing ear from the EU regulator (Competition authorities) and now again, from politicians, most notably French legislators.

It is about time we start thinking how we can enhance our lagging innovation in Europe. Time after time statistics show that Europe is dramatically lagging behind the US and China (Asia I would say). It is now time to act to stimulate not stifle innovation in Europe. The European Commission should warn France that the proposed legislation harms innovation, is contrary to free movement of goods (music), is against consumer interests and harms industry.