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Has Apple Created a Monopoly with the iPod and iTunes?

In many ways, Apple does a firm grip on the MP3 player and digital music market with its iPod and iTunes empire. Some people believe that Apple has been unfair in these respective markets from a consumer standpoint, saying that Apple overcharges for iPods and also for music at  iTunes.
Apple iPod line-upApple iPod line-up

A recent 24-page class action lawsuit has been filed in a Northern California court, alleging that Apple has created a monopoly with its iPod and iTunes products, and that consumers are paying the price because of it. The lawsuit specifically points out that iPod owners are forced to buy from the iTunes store if they wish to have protected music (FairPlay AAC format). On the flip-side, iTunes customers must purchase an iPod if they want to listen to the same protected music on an MP3 player. It's this "lack of options" that the chief plaintiff, Stacie Somers, says violates California competition laws. She adds that it also violates the Cartwright and Sherman Antitrust Acts. According to the AppleInsider, Somers is asking for a "permanent injunction against the reported behavior in addition to damages."

The lawsuit also goes on to say that Apple ships its products with "crippleware". The plaintiffs claim that the iPod's chipset is compatible with Windows Media Audio (WMA) formatted music, but the included software doesn't support this type of format. They believe that Apple is trying to "force" you to purchase music from iTunes in order to make bigger profits and to gain more of a stronghold over the digital music industry.

Whether these claims have any real merit - I don't know. What I do know, is that the digital music industry should be a level playing field that allows the user to choose whatever type of music format that they wish for their MP3 player. Also, consumers should not have to pay an arm-and-a-leg to fill their MP3 player with music.

I looked at a recent article at ArsTechnica, which stated that it would cost $40,000 to fill a newer iPod with music from iTunes at $0.99 per song. This is the reason that so many people are turning to P2P sharing websites, such as Limewire, to get their music. It is believed that about 36% of people use a P2P website to get their music instead of using a paid service like iTunes or Rhapsody. These numbers are astounding, and it should be a wake-up call for the digital music providers out there - starting with iTunes.

Sources: AppleInsider and ArsTechnica

Joe Eitel's Gadget Blog
InventorSpot

Comments
Jan 6, 2008
by Nathaniel (not verified)

I say, No.

I don't think Apple has a Monopoly with the iPod and iTunes because, well, they don't! They are allowing competitors to compete with them, they just blow the competition away.

Now please stop making articles about this. (to ALL tech blogs)

Jan 6, 2008
by Myk (not verified)

iPod/iTunes monopolistic? NO

So, it would take $40,000 to fill a newer iPod with music. Is that relevant? We fill our iPods with more than just music. Is it your contention that the cost of a track should be 1 cent so filling your iPod with music would only cost us $400. Such a deal!! I wonder if the artists would like that deal?
I agree with Nathaniel - the iPod and iTunes are successful because they are just better than the competition.

Jan 6, 2008
by 4 iPod owner (not verified)

Mp3s and CD Import make it not a monopoly

Most of my music on my numerous iPods doesn't come from the iTunes store.

Most was music I already owned in CD format. Plus, you can load any mp3 on the iPod you want. No music you load from your CDs or generic mp3s is subject to iTunes DRM.

So, monopoly? No. Exclusive? Yes.

Jan 6, 2008
by KillBill (not verified)

Apple has a monopoly?

Fundamental errors in both the lawsuit and this article's write-up.
Apple allows multiple standards based file "formats" to be used on the iPod , but it does not license from Microsoft the single vendor format WMA. Why should they? Will Microsoft give to them for free?
Apple permits DRM systems only from it's store as it is responsible for the content it sells under agreement from the record companies. It is the record companies that insist Apple use a DRM. Apple would be very happy if DRM disappeared, just Read Steve Job's letter on DRM!

Now, why are Universal, Warner and the others allowing DRM free content to be sold on Amazon yet specifically excluding Apple from being allowed to sell DRM free content via the iTunes store? Why are they not allowing Apple to sell the better quality MPEG-4 ACC file format higher bit rates? Why do they insist that Amazon only sell inferior MP3 format files and specifically disallow MPEG4-AAC?

Why don't you address the very clear collusion between the principal controllers of content (the music companies) to exclude both Apple form doing business and allowing consumers to choose the file format & the level of quality of their purchases?

Jan 6, 2008
by Bob DeGrande (not verified)

Don't get it

As an Apple fan coing back to the Apple ][ who does not own an iPod (Sansa E280, woeks fine on a Mac with XNJB software) and who buys his online music from Amazon (cheaper than iTunes, 256KB MP3), I don't see how Apple has a monopoluy.

Jan 6, 2008
by Jose Sanchez (not verified)

Don't think so

I'll admit they have a strong control on the mp3 market, but I wouldn't go as far as saying they are a monopoly yet. There are many companies that could easily beat iTunes.

Jan 6, 2008
by McDave (not verified)

$40,000? What a bargain!

You'll pay:-
More if you buy the CDs then rip them to iTunes
Less if you buy the full albums from iTunes
Much less if you buy the songs from iTunes Plus (as they're twice the size - half as many songs)
Nothing if you stole the music from P2P networks - crime does pay! and stealing music is now a social institution so it has as much chance of going away as prohibition did of succeeding.

The rest of the lawsuit is so factually incorrect it should be kicked out before it wastes anyone's money.

McD

Jan 6, 2008
by Anonymous (not verified)

I think the case holds water

If European Union can penalize microsoft for $600 million for bundling media player with windows while there are many competing players in the market, this case has plenty of merit along the same lines. EU has requested from Apple to open iTunes to all media players or face penalties.

Jan 6, 2008
by Anonymous (not verified)

I think the case holds water

If European Union can penalize microsoft for $600 million for bundling media player with windows while there are many competing players in the market, this case has plenty of merit along the same lines. EU has requested from Apple to open iTunes to all media players or face penalties.

Jan 6, 2008
by Carlos (not verified)

I love my fkn ipod

I love my fkn ipod

Jan 7, 2008
by Anonymous (not verified)

MP3 anyone ...

How are you forced to accept other formats exactly. Why isn't Sony under investigation because their BluRay players don't play HD-DVD? I'm going to sue Pioneer because my car radio tape deck doesn't play 8-Trak ... My iPod plays MP3 just fine ... which is open for all

Jan 7, 2008
by Andy Baird (not verified)

Misleading writeup

As others here have pointed out, all iPods since day one have been able to play the universally supported MP3 format. iPod owners have a choice of millions of tunes to play; they can buy music from major sources such as Amazon. My iPod holds 22 GB of legally obtained MP3s, yet I've never purchased a thing from the iTunes Store. So where's the monopoly?

I have to ask, Joe... how is it that your writeup fails to mention the key fact that iPods have never been locked into either the iTunes Store or the DRM'd AAC format? Is this journalism, or are you just regurgitating what you read on another website?

Jan 16, 2008
by ashri317 (not verified)

iPod

It's not a direct Monopoly, iPod is starting to face competition with products by companies like Creative and Microsoft. However, they still dominant the industry, and do overcharge because people buy from them at the prices they charge. Apple charges the prices it does because it can. Other companies need to look at their products from an aesthetic view since it seems iPods are bought based on their design and brand name.

In terms of iTunes however; I thought there was a way to download the songs in Mp3 format. If you can't, then I am pretty sure that is similar to that old Internet Explorer/Netscape fiasco.