EU Goes After Apple and the Labels…Again…

The EU is preparing to break a nut with a sledgehammer again. Apple and the four majors will now face the EU over allegations that all are restricting consumer choice by only allowing consumers to purchase music in the country in which their credit card is registered. This isnít restrictive practice, this is simply reflecting that the music industry is essentially a collection of local markets which each have varying degrees of limited interaction with international repertoire. Record labels may have global and regional HQs but the bottom line is that the local labels represent the local markets and local repertoire.

If the European Union is really that far in favour of borderless free choice then it should force banks to allow consumers to open accounts in other markets without any proof of address in that market. Similarly it should force, for example French lenders to grant loans and mortgages to consumers in Romania with no links whatsoever to France. Those moves clearly arenít going to happen because there are very good reasons for having border based restrictions in many markets. Thatís not to say that there arenít good arguments for the labels to evolve some greater degree of flexibility into their operating practices such as harmonizing digital music prices. But regulatory authorities should take an even handed approach and not just pick out the high profile targets. This is exactly the same principle of Apple coming under fire for not having interoperable content whilst Sony, Microsoft and Nintendo remain scot-free despite the fact that youíll never play a PS3 game on an Xbox 360 or a Wii etc.

A further twist to this story is that the EU retains the authority to fine Apple 10% of their global revenues if found guiltyÖnot withstanding that digital music accounts a tiny percentage of their revenues and that the entire European digital music market is a tiny fraction of the potential fine.