iTrust: Millions of iPod users can’t be wrong…

Media | Familiarity

When life gives you apples…

Sunday’s Times amplified the story of one Melanie Tucker, whose suit against Apple Computer, Inc. last year must now be updated to reflect that the defendent has shed the "Computer" appellation from its corporate name. Apple is now quite solidly in the media business, and it is for this Ms. Tucker complains in her suit. To wit: the Apple iPod can play music from only one electronic music store, Apple’s itTunes (as well as, it should be noted, music files from the owner’s collection). And music from Apple iTunes can only be played on an Apple iPod and not any other device. What is fairly convenient for the Apple, Inc., and to millions of users, is apparently some gross inconvenience to a few. To Tucker, this is "crippleware" a product tie-in which violates United States and California antitrust laws.

I comment on this to no one in particular for a few of reasons. First, there’s now an odd precedent for California courts to read what I have to say in lawsuits involving Apple. Second, to bust a metaphor, there’s tastier lower-hanging fruit to pick. Lastly, I wanted to dig a little further than everyone else on this esoteric subject as a fun little research effort to get back into writing.

Melanie Tucker joins Thomas Slattery (who since handed it off to plaintiffs Charoensak and Rosen) in suing Apple over the iPod/iTunes linkage. Strangely, none of these individuals have any Internet presence: no blog, no nothing; Ms. Tucker was apparently not findable to the Times reporter. And that’s too bad: like any intended class-action suit, this is a matter of public policy that should be discussed in the open.

Our legal system generally requires plaintiff to demonstrate harm; the type of harm the antitrust laws protect against are regarding competition. Granted that market competition is not a exercise for the meek, the courts have affirmed that a plaintiff must meet several conditions to bring a successful suit. The Microsoft decision by the D.C. circuit court of 5 years ago provides a helpful resource. Notably, any alleged anti-competitive efforts must be demonstrated to outweigh pro-competitive effects, one of them being "enhanced consumer appeal." Many of Microsoft’s anti-competitive efforts were inscrutable to most consumers; they involved tinkerings at the operating system level. Apple’s iPod has a different genesis.

In January 2003, Steve Jobs told the Macworld Expo that 600,000 iPods had been sold. A few months later iTunes was launched, and in the ensuing years an additional 67 million units were sold. That means that iTunes is responsible for 99% of the historical purchases of iPods. I’m not sure there’s a better demonstration of "enhanced consumer appeal." Those numbers defy the proposition that the mass block of consumers were gulled into locking in to Apple. Nor can those customers be completely ignorant of the lock-in at the time; Andy Orlowski at the Register reported in October 2003 of Microsoft’s press bleatings regarding the iPod/iTunes fix.

If Tucker et al felt any harm to competition, they have the power within themselves to fix that in a way that Adam Smith would have approved: they could buy from the competitors.

That’s what I did. I have a Creative Labs MuVo– and yes, if the brand manager who thought up that name is still working there, that may explain why Creative Labs has relinquished the top spot in digital music players for good. My phone is an LG Verizon Chocolate, which conspiciously co-opted the iPod’s design and all but dared Apple to sue them.

That wasn’t so easy with Microsoft and Windows of course. The district court found enormous switching costs from ditching Microsoft to go to Macintosh (which ironically have since been dispatched by later MacOS releases). The tie-in which nailed Microsoft was that buying a computer from major manufacturer required you to also pay for the Microsoft operating system. In each of those cases, Microsoft demonstratably applied pressure to the OEM manufacturers, who passed on the "cost" of the operating sysem as part of the total bill to a customer. There was a larger philosophical issue here: what made Microsoft the software king was that it preached an open system– hence it attracted many third party software and hardware vendors– yet it knifed a fair number of them in the back. By contrast, Apple colluded with itself. It never pretended that you needed to buy from anyone else. iPods went with iTunes.

Alone among computer companies, Apple built a success around its cult image. It’s a culture I want no part of. Some see purity in the seamlessness of Apple’s case designs; I see sterility. As Marc Hedlund of O’Reilly Radar wrote today, "expandability is not a 1.0 feature for Steve Jobs." Apple’s appropriation of the images of historical icons like Martin Luther King and Albert Einstein for the "Think Different" campaign was notoriously arrogant; it revealed what they really felt of intellectual property (we borrow; you steal!) Steve Jobs’s role in the backdating scandal– and the likelihood that he’ll emerge unscathed— merely confirms my distaste. The corporate message: trust us, we’re cool.

That’s how I feel about Apple, so I choose to buy from the competitor. And that’s fair competition.

If people really cared about anti-trust in media, they’d turn their attention to cable TV pricing (see Worth publicizing: À la carte pricing for cable, 3/7/2004).

I don’t want to pay more than $20 a month for cable. It’s not that I can’t afford it; it’s simply a matter of customer choice in a free market. Other people should have that choice as well. I wrote my analysis in the wake of the "wardrobe malfunction" fiasco on CBS. If viewers wanted to punish the CBS family (which includes Viacom) through the market, they well could well have done so if they had an a la carte pricing plan. But under the bundled-channel regime, customers are denied such choices.

Currently I pay $9/month for TV. I get the four networks, the two minors, 3 public television channels, 2 C-SPANs, New England Cable News, Spike, MSNBC, CNBC, and assorted local access / home shopping / religious broadcasting channels.

I harbor no elitist pretension about the vast wasteland; I find Spike TV’s "Most Elimination Challenge" to be the funniest twenty-two minutes on television. I used to watch "Mythbusters" when I had the Discovery Channel. Until very recently, I was able to the USA network– I like to watch the U.S. Tennis Open, and never get tired of Law & Order reruns. The USA network (and their advertisers) would like me to watch them. Could pay them a few bucks a month for the privilege? No, because Comcast won’t let me; they require me to get bundles of channels at the next tier.

Now, I’d be comfortable with these anti-competitive practices if there were, as we call it, competition. While there is an alternative cable provider in my neighborhood, as well as a couple of satellite providers, all of them participate in the charade in denying choice. Or, as antitrust law calls it, collusion.

When I checked three years ago, there was a way to pay for channels a la carte with Comcast: but it simply wasn’t advertised, and it has since been discontinued. Also, when I asked, I learned it was impossible to get ESPN unbundled from the general package. There can be no other explanation other than collusion between the content providers and the distribution networks. It would be illegal– as it was in the film industry– if ever someone got around to prosecuting it.

The mystery I’m stuck at is why the Apple consumer is a little more litigious.

Two words: Think Different. Maybe Apple customers really do. Once the Mac devotees took a bite from the fruit of the tree of knowledge, they got scared of now Thinking Same.

Another twist: By selecting icons like Mahatma Gandhi and Martin Luther King, Apple conveyed that civil disobedience are among its core values. "One has a moral responsibility to disobey unjust laws," King wrote in his letter from a Birmingham jail. "A law is unjust if it is inflicted on a minority that, as a result of being denied the right to vote, had no part in enacting or devising the law."

Today we are in as much of a contract with media companies (Apple, Comcast, or anyone) as we are with our governments. Such companies do not control us via statutes, but by code. It doesn’t bother most of us most of the time, but some of us some of the time wonder how it was the code was enacted and whether it was fairly done.

But is it the case that tens of millions of iPod/iTunes users have been gulled into supporting a corrupt architecture, just as a hundred million American households don’t question that they are handing over money for cable channels that they never watch? Perhaps, but somebody’s going to have to a better job demonstrating harm. In 2007 I’ll be fighting my battles elsewhere.