French iTunes Shutdown May Loom After All; MPs Vote For Open DRM

I was wrong last week about an iTunes France shutdown being out of the realm. While students march in protest about jobs, the French National Assembly was focused on Steve Jobs. The draft copyright bill that passed 296-193 today retains language that mandates interoperability between media services and media devices. The next step is a vote in the Senate; passage there would make it a law if I understand the drill. That means Apple would have to make iTunes and iPods compatible with competitors. The same would be true for competitors, of course, but some of them have already expressed interest in format compatibility with Apple. Sony’s ATRAC format would also be at risk. Should all this come to pass, predictions have Apple leaving the market rather than change its business strategy.

Gene Munster, analyst, Piper Jaffray (via Forbes): told clients Tuesday that ‘While this sounds like a drastic move, we believe it would not materially impact business.’ Part of his reasoning stems from an estimate that 20 percent of Apple’s iTunes business is international with the French market making up less than 2 percent of iPods and iTunes revenues. He sees a negligible impact on iPod sales even if Apple stays in France.

Benjamin A. Reitzes, analyst, UBS (via BW) “We believe it is too early to make conclusions, but note this bill could possibly even help iPod sales in France if Apple were to comply.”

AP: A spokesman for the French cultural minister insists no one company is a target. Paul Rechter said the bill is meant to discourage online piracy: “When this happens, iTunes will have the French government to thank for making it possible to draw so many Internet users toward legal platforms.” (Sounds awfully similar to Jobs’ pricing rationale.) Also, IFRI chairman and CEO John Kennedy says recording companies accept interoperability in principle: “It is important to consumers to have the ability to move songs between their various listening devices.”

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