Apple faces trial for allegedly 'locking in' iPod owners with iTunes Music Store DRM

Posted:
in General Discussion edited November 2014
A U.S. district court judge recently denied Apple's motion for summary judgment in a long-running case involving the use of digital rights management for content sold through the iTunes Store, opening the suit to move to the trial phase.

Lawsuit


The ruling handed down by U.S. District Court Judge Yvonne Gonzales Rogers last week is the latest development in a case dating back to 2004, which accuses Apple of creating a monopoly through iTunes Music Store DRM, reports ArsTechnica.

Plaintiffs are seeking $350 million in damages, part of which will go to a class comprised of customers who purchased iPod classic, iPod shuffle, iPod touch and iPod nano models between Sept. 12, 2006 and March 31, 2009.

According to plaintiffs, Apple allegedly stifled competition in the digital music space by implementing FairPlay DRM protocols that supposedly "locked" iPod users in to the iTunes ecosystem. By making songs purchased through competing services unplayable on iPods at the time, Apple is said to have dissuaded users from switching over to other platforms, specifically those built by RealNetworks.

The case revolves around RealNetworks' "Harmony" technology, a workaround for FairPlay DRM that allowed customers to buy songs through the Real's music store and play them back on iPod. Apple responded by releasing a software update that, among other enhancements, disabled Harmony content.

Following the change, RealNetworks tweaked Harmony to again make songs purchased outside of iTunes compatible with iPod, but Apple again broke the workaround in a 2006 iTunes 7.0 software update. Plaintiffs are basing their case on this second instance of disabling Harmony, saying version 7.0 pushed users to rely on iTunes as their only online music store, resulting in so-called "switching costs." This allegedly incurred discouraged users from switching to iPod competitors when upgrading hardware, as they would have to repurchase the same music, convert tracks to a non-DRM format using iTunes 7.0's built-in CD burning technique, or let go of the protected music altogether.

According to plaintiffs' expert witness testimony from Stanford University economics professor Roger Noll, Apple's tactic "raised the cost of switching from iPods to competing portable digital media players by eliminating the ability of consumers to collect a library of downloads that could be played on all players."

Apple attempted to exclude Noll's testimony, but Judge Gonzales Rogers rejected the motion in her ruling, saying "Noll's opinions alone supplies a triable issue of fact regarding the fact and amount of antitrust damages, as well as the definition of the relevant market."

For its part, Apple argues RealNetworks' less than three percent share of the 2006 digital music market was "insignificant" and "makes it 'implausible' that Harmony could have the effect ascribed to it by plaintiffs." Further, RealNetworks itself admitted to investors in 2005 that Harmony put the company at risk of legal action from Apple.

A trial has been set for Nov. 17, though Apple has the option to settle before that date arrives.

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Comments

  • Reply 1 of 73
    nagrommenagromme Posts: 2,834member
    So, I'm trying to remember... was DRM the music labels' demand, or Apple's demand?

    Hmmm... oh, right! Apple opposed DRM and the music labels demanded it!

    Until they finally gave in (first to Amazon, to snub Apple, and then they let Apple escape the DRM too).

    I'm glad Apple won and we have DRM-free music now. Tracks from iTunes will play on anything that handles an MP4.
  • Reply 2 of 73
    jkichlinejkichline Posts: 1,366member
    What's dumb about this is that DRM is/was required by the music industry and if Apple circumvented that, allowing users to play tracks anywhere, they could not link the track to the purchaser. That would have allowed tracks to be distributed and would have created an issue with copyright.

    So while it may suck for these users who got "locked in", the alternative would be piracy and the continued ripping of CDs.
  • Reply 3 of 73
    solipsismxsolipsismx Posts: 19,566member
    nagromme wrote: »
    So, I'm trying to remember... was DRM the music labels' demand, or Apple's demand?

    Hmmm... oh, right! Apple opposed DRM and the music labels demanded it!

    Until they finally gave in (first to Amazon, to snub Apple, and then they let Apple escape the DRM too).

    I'm glad Apple won and we have DRM-free music now. Tracks from iTunes will play on anything that handles an MP4.

    Even if Apple thought DRM was a good idea (which all evidence points no), to me the most ridiculous argument in all this is that you could use an iPod and iTunes without ever buying a single song from iTunes Music Store or even ever creating an iTunes Music Store account. iTunes had CD ripping capabilities, as well the ability to import MP3, AAC, and ALAC formats.
  • Reply 4 of 73
    boredumbboredumb Posts: 1,418member

    When can we expect the eBook antitrust suit against Amazon for making 

    non-transferable eBooks?  

     

    Hard to see how this suit could have merit, since you can move music in and out of iTunes...

    Haven't I always been able to rip cd's into iTunes, and burn cd's from iTunes purchases?

  • Reply 5 of 73
    Get Real.
  • Reply 6 of 73
    When the iTunes business started, everyone was worried about Napster and rampant Internet piracy.

    Now history has been rewritten to make Apple into the big bad DRM wolf.
  • Reply 7 of 73
    mpantonempantone Posts: 1,939member
    Quote:
    Originally Posted by SolipsismX View Post



    Even if Apple thought DRM was a good idea (which all evidence points no), to me the most ridiculous argument in all this is that you could use an iPod and iTunes without ever buying a single song from iTunes Music Store or even ever creating an iTunes Music Store account. iTunes had CD ripping capabilities, as well the ability to import MP3, AAC, and ALAC formats.



    It goes beyond that. iTunes came first and always had ripping capability. 

     

    Remember, iTunes was a third-party music jukebox that Apple acquired and modified to sync with iPods. The iTunes Music Store came much later.

  • Reply 8 of 73
    Antitrust? iPod users are not forced to buy their music through iTunes. They can rip CDs or download illegal music and play it on iPods. I don't get the merits of the case, but I'm sure our resident contrarian and armchair expert on everything will post a hand waving argument soon and save me from my ignorance.
  • Reply 9 of 73
    Antitrust? iPod users are not forced to buy their music through iTunes. They can rip CDs or download illegal music and play it on iPods. I don't get the merits of the case, but I'm sure our resident contrarian and armchair expert on everything will post a hand waving argument soon and save me from my ignorance.

    Goodness. I can't imagine which Guy here would want to try and make an issue out of DRMGate-or some other name…
  • Reply 10 of 73
    This has to have been filed in California.
  • Reply 11 of 73
    stourquestourque Posts: 360member
    Antitrust? iPod users are not forced to buy their music through iTunes. They can rip CDs or download illegal music and play it on iPods. I don't get the merits of the case, but I'm sure our resident contrarian and armchair expert on everything will post a hand waving argument soon and save me from my ignorance.

    I don't think I'm the expert you're referring to, but believe they are claiming songs purchased from the iTunes store could not be played on other devices. I think you could put whatever music you had into iTunes and then an iPod, but if you switched to another player, your purchased music wouldn't work. And they want $350 million for this.

    Simple way to end this case would be to ask them to provide someone who this actually happened to. Get them to provide someone who actually bought a different device after owning an iPod. Probably easier to find Jimmy Hoffa.
  • Reply 12 of 73
    tmaytmay Posts: 5,825member

    I couldn't remember exactly why I hated Real Player, but a little perusing on the internet came up with this:

     

    People HATED the spam ware, hostage ware, and Real Player surreptitiously replacing MIME's and the difficulty with uninstalling it, and the oft encountered story of Real Networks charging for subscriptions because poor souls thought they were downloading a free player.

     

    I run into this every now and then with Windows attempting to download a small and "free" utility, and inevitably ending up with PUP's (Probably Unwanted Programs) and adware. Thankfully, I don't have to worry about that with the App Store, nor with the iTunes Store.

     

    Real Networks was a parasitic entity, and I'm surprised that they haven't died.

     

    Sucks to be them, but Apple was right protecting its users from those potential headaches by breaking Harmony, even if their motives were profit. At the time, Apple was selling more music downloads than all the other services combined, driven by the popularity of the iPod. 

     

    I hope that the court sees this for what it was and awards Real Netorks nothing.

  • Reply 13 of 73
    asciiascii Posts: 5,936member

    Wow, an old lawsuit. Apple hasn't used DRM on music for ages. Even back then iPods could play MP3s, so those other services could have sold music to people with iPods. I would prefer that Apple didn't use DRM on movies or books today (especially books) but I recognise the right of content owners to set the terms by which people consume their content. It should be legal for content producers to use DRM if they want, and then in terms of removing it, that's up to customer pressure, not the law.

  • Reply 14 of 73
    Quote:

    Originally Posted by tmay View Post

     

    I couldn't remember exactly why I hated Real Player, but a little perusing on the internet came up with this:

     

    People HATED the spam ware, hostage ware, and Real Player surreptitiously replacing MIME's and the difficulty with uninstalling it, and the oft encountered story of Real Networks charging for subscriptions because poor souls thought they were downloading a free player.

     

    I run into this every now and then with Windows attempting to download a small and "free" utility, and inevitably ending up with PUP's (Probably Unwanted Programs) and adware. Thankfully, I don't have to worry about that with the App Store, nor with the iTunes Store.

     

    Real Networks was a parasitic entity, and I'm surprised that they haven't died.

     

    Sucks to be them, but Apple was right protecting its users from those potential headaches by breaking Harmony, even if their motives were profit. At the time, Apple was selling more music downloads than all the other services combined, driven by the popularity of the iPod. 

     

    I hope that the court sees this for what it was and awards Real Netorks nothing.


    The court has already chosen to NOT see this for what it was. Otherwise, this case would have been halted instead of being allowed to proceed.

  • Reply 15 of 73
    this is unbelievable. the music industry had been insisting on drm and for the longest of time, was fixated on music *rental* and was using a price structure that only a schizoid could make sense of. then comes steve jobs who says (iirc) "people don't want to rent their music, they want to own it", insists on a less restrictive drm scheme and more importantly, on a "one size fits all" sale price of 0.99$. the music labels, sure that jobs and co. would crash and burn, agrees to jobs' terms. the rest is history.

    but one very important detail remains: the music industry would have never agreed to anything if there was no drm. it was not apple that came up with that concept.

    and yet, there are some idiots out there would are trying to push this idea. do people really have the attention span of a gnat? how can this case not have been thrown out right away, as it was based on a false premise? how can it be on-going?

    this is as idiotic as all those nitwits who say "i don't like ipod because they don't support mp3" or "i don't like apple because there are no free apps for the iphone" -- i'm not making this up. i wish i was.
  • Reply 16 of 73
    slurpyslurpy Posts: 5,362member
    Ridiculous! Fire Tim Cook!

    Am I doing this right?
  • Reply 17 of 73

    Real continues to be terrible, what a surprise.

  • Reply 18 of 73
    charlitunacharlituna Posts: 7,217member

    I won't be shocked if this is found in favor of Apple. There's been tons of complaints claiming anti trust over Apple's vertical integration and they have already ended up in Apple's favor. Also there is no proof that Apple did anything foul to get the iPod to the level of the market that it had. Or anything foul with that power. They didn't stop folks from ripping CDs for example.They also didn't restrict iTunes to just the Mac (for long) to force folks to buy said hardware and raise its power. These are the things that would be anti trust violations

  • Reply 19 of 73
    what part of "Create an MP3 Version" don't they understand ?
  • Reply 20 of 73
    davidwdavidw Posts: 1,742member
    Quote:

    Originally Posted by Stourque View Post





    I don't think I'm the expert you're referring to, but believe they are claiming songs purchased from the iTunes store could not be played on other devices. I think you could put whatever music you had into iTunes and then an iPod, but if you switched to another player, your purchased music wouldn't work. And they want $350 million for this.



    Simple way to end this case would be to ask them to provide someone who this actually happened to. Get them to provide someone who actually bought a different device after owning an iPod. Probably easier to find Jimmy Hoffa.

     

    Since iTunes only works with an iPod music player, any other MP3 player would have to use its own jukebox software. In which case, backing up your iTunes library to disc would strip out the DRM from any iTunes Store music purchases and could be imported into any other jukebox software as though it was a physical CD.

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