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Did Apple use its online music monopoly to prevent much smaller competitor Amazon from landing music deals? The U.S. Department of Justice is investigating.  (Source: Dave's Whiteboard)
Apple's anti-Amazon moves may cost it some big fines

When it comes to the digital music sales market, services like Amazon or Zune Pass have made a minor splash, but Apple has long dominated the market.  Over the last two decades, antitrust regulators in the U.S. and Europe have imposed fines and restrictions on Microsoft and Intel to try to prevent them from abusing their dominant position in several markets.  However, they have cast a largely blind eye on Apple's iTunes -- until now.

Antitrust investigators with the U.S. Department of Justice are conducting an extensive inquiry into Apple's online music business, interviewing Apple employees, internet music company employees, and music label employees according to the
New York Times.  At the core of the investigation is the allegation that Apple applied pressure to force music labels not to grant access to exclusive tracks to help grow the online retailer's fledgling music market.

A previous investigation was conducted several years back in the European Union, examining Apple's iTunes pricing practices.  The investigation's conclusions were highly critical of Apple, but did not levy any fines -- unlike recent EU investigations into Microsoft and Intel.

In March, it was reported in 
Billboard magazine that would be getting certain songs a day before they were widely released.  It would put these songs in a special promotional section dubbed "MP3 Daily Deal."  According to the article, Apple hated the idea and threatened music labels that participated.  Specifically, it vowed not to sell the songs featured in the promotion on iTunes -- a much bigger marketplace.

ITunes reportedly owns 69 percent of the online music market, according to the NPD group. The next closest competitor in the online market is Amazon, which holds an 8 percent share. The remaining 23 percent are split up among smaller players.

In 2007 Apple had a mere 12 percent of the total music market (both online and offline), but it recently became the largest single seller of music in the world, with 26.7 percent of the overall market.

Daniel L. Brown, an antitrust lawyer at Sheppard Mullin Richter & Hampton states, "Certainly if the Justice Department is getting involved, it raises the possibility of potential serious problems down the road for Apple.  Without knowing what acts or practices they are targeting, it’s difficult to say exactly how big a problem this is, but it’s probably something Apple is already concerned about."

Apple now has dominant positions in several markets -- tablet computing (iPad), portable music players (iPod), smart phone applications (iTunes App Store), and online music (iTunes Music Store).  Thus it has leverage to use its position to damage competitors, if it should so choose.

The new investigation is at least the fourth antitrust inquiry into Apple.  The U.S. government is also investigating Apple, Palm and others to see whether the companies illegally agreed not poach each others' employees (Apple's CEO Steven P. Jobs secretly suggested such a truce, which appears to be illegal).  The government is also investigating Apple's ban on Flash for the iPhone or iPad and its decision to block out ports of Flash titles to native iPhone code.  And there's also a pending investigation about whether board members serving on both Apple's and Google's boards violated antitrust laws.

ITunes first launched in 2001 and has long been on the forefront of the push for legal online music downloads.  Apple has sold over 10 billion tracks on iTunes to date, and has become one of the biggest revenue sources for the struggling music industry.  Apple also has supported a number of smaller independent artists by promoting them and giving them tools to expose their work to a broader audience.  Apple also has recently made some steps to increase competition, such as allowing streaming music services such as Pandora and Rhapsody onto Apple devices.

Spokespeople for Apple and Amazon would not comment on the inquiry.  Gina Talamona, a deputy director at the Justice Department, also had no comment.

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RE: Digital Music
By dukeofoil on 5/26/2010 3:27:45 PM , Rating: 2
Sorry if I wasn't clear by being non-specific about "native" formats". I was deliberately not citing one format over another (audiophiles for the last 60 years have been falling all over themselves arguing nit-picky nuances), just that highly oversampled digital audio can be faithfully excellent in the extreme. Faithful reproduction (way beyond vinyl) is possible with proper sample rates and recording techniques... and there will be (note I did not say TODAY) no reason for any form of audio compression, lossy, lossless or otherwise, when inexpensive storage capacities can hold more "native format" audio than you can listen to in a liftime. All of these storage techniques arose from the need to maximize available storage. When that is no longer necessary, then whatever new "native format" emerges can be shared among portable and non-portable devices without the need for separate mercantile streams to the end-user. This makes the Apple ITunes business model seem somwhat questionable in the long term.

I find it humorous how much time and energy is expended discussing sampling methods with audio when the weak link is the audio transducer. I remember in the 1950's when the HiFI magazines were touting how wonderful it will be when electostatic and plasma speaker systems replace the magnetic voice coil. Oh, well....

RE: Digital Music
By afkrotch on 5/27/2010 1:50:42 AM , Rating: 2
For me, I prefer to keep my music at a smaller size, as I put more than just music on my mp3 player. The music on my mp3 player takes up a little over 4 gigs. That's 320k mp3s. The rest of the 32 gigs is storing pictures and videos. It also has a mini-SD slot on it, which has another 16 gig card with videos.

Course, I use my player to listen to music, watch movies, and temporary portable storage.

RE: Digital Music
By gralex on 5/27/2010 5:13:53 AM , Rating: 2
Like I said, I'm with you. As for your reply, even more so:)

We really DO need far better audio to share between our portables and non-portables. Make a track 20 or even 50MB (and 200MB in the near future), I honestly don't care (you already mentioned all the reasons why this makes sense). Online music stores should be flexible enough to provide such service, though. I might be wrong but I think what you are really trying to get at is that we should be able to "upgrade" our old media with some sort of discount, when a new format comes along. I'm with you on that one too.

My only objection is a trivial one. You can listen to an analogue source all day long (no problem), whereas digital gives you something of a mild headache after a few hours. No matter what the sampling rate, it's somehow exhausting in the long run.

But since speakers are your pet peeve and (I'm happy to say) you enjoy being a black sheep among audiophiles, have you heard of Genelec? Give 'em an audition, I promise it won't be a waste of time.

"Folks that want porn can buy an Android phone." -- Steve Jobs

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