By LAURENCE FROST, AP Business Writer
French lawmakers approved an online copyright bill Tuesday that would
require Apple to break open the exclusive format behind its
market-leading iTunes music store and iPod players.
The draft law -- which also sets new penalties for music pirates -
would force Apple Computer Inc., Sony Corp. and others to share
proprietary copy-protection technologies so that rivals can offer
compatible services and players.
Lawmakers in the National Assembly, France's lower house, voted
296-193 to approve the bill. The legislation now has to be debated and
voted by the Senate -- a process expected to begin in May.
Breaking days of silence late Tuesday, Apple said such a law would
"result in state-sponsored piracy."
"If this happens, legal music sales will plummet just when legitimate
alternatives to piracy are winning over customers," the company said
in a statement e-mailed to reporters. "IPod sales will likely increase
as users freely load their iPods with 'interoperable' music which
cannot be adequately protected. Free movies for iPods should not be
far behind in what will rapidly become a state-sponsored culture of
piracy."
The Cupertino, Calif. company did not address the issue of whether it
might withdraw from the French online music market, and refused
further comment.
Under the bill, companies would be required to reveal the secrets of
hitherto-exclusive copy-protection technologies such as Apple's
FairPlay format and the ATRAC3 code used by Sony's Connect store and
Walkman players.
That could permit consumers for the first time to download music
directly to their iPods from stores other than iTunes, or to rival
music players from iTunes France.
Apple has most to lose because of its phenomenal penetration of the
digital music market, according to analysts. Critics of the French
move say legislators have no business forcing Apple to share its
proprietary format -- arguing that customers know its limitations when
they choose to buy an iPod.
A spokesman for Culture Minister Renaud Donnedieu de Vabres, who
backed the crucial amendments, dismissed suggestions that the bill
would unfairly damage Apple.
"We're targeting absolutely no one with this bill," Paul Rechter said.
Rather, he said, the legislation is designed to discourage online
piracy by offering additional legal ways for music players and online
stores to work together.
"When this happens, iTunes will have the French government to thank
for making it possible to draw so many Internet users toward legal
platforms," Rechter added.
The new interoperability rules were welcomed in principle by recording
companies, which have often complained that iTunes has deprived them
of any control over music pricing.
"It is important to consumers to have the ability to move songs
between their various listening devices," said John Kennedy, chairman
and CEO of the International Federation of the Recording Industry.
IFPI also said it is seeking clarification on the penalties set out in
the new law for music pirates.
The bill reduces penalties for file-sharing -- currently classed as
criminal counterfeiting, with a theoretical but rarely applied
euro300,000 ($365,000) maximum fine and jail term.
Instead it promises tighter enforcement, and fines of euro38 to
euro150 ($50 to $180) for those caught pirating music or movies for
personal use.
Hackers who disable copy-protection systems can be ordered to pay
euro3,750 ($4,600), while the full counterfeiting charge and sanctions
are reserved for people who distribute software used for piracy.
Under France's fast-track parliamentary procedure, the Senate debate
is likely to be the last full reading of the new legislation. If the
Senate passes any amendments, a committee of lawmakers from both
houses will be convened to thrash out a compromise text, which must
then be formally approved in two final votes by senators and deputies
from the lower house.
Associated Press Writers Nathalie Schuck in Paris and May Wong in San Jose,
Calif. contributed to this report.
Copyright 2006 The Associated Press.
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