February 8, 2006

Is Apple a Monopoly?

In my last entry I noted that the record labels would like to see price dispersion emerge in the online downloadable music industry, yet Apple resists. With the market power they have, the labels have had to wait and hope for the best.

Now we see that a judge in California has cleared the way for a suit to be brought against Apple alledging that Apple/iTunes is a monopoly and engages in anticompetitive behavior.


If such a suit is successful we will indeed see major changes in the digital music industry. That is, major changes happening faster than we've already seen them happen in recent months. Forcing Apple to break their proprietary format regarding digital rights management (DRM) and allowing more competition into the downloadable digital goods space would likely result in price dispersion in the market at the unbundled song level, more business for competing online storefronts such as MSN Music or Google Video, and more content flowing onto the sales floor at lower prices. Despite the wide popularity of the iPod, if Apple's is shown to be a monopoly in this space, then the consumer is likely to benefit from such a ruling. On the other hand, some believe that iTunes has saved the recording industry. Perhaps, but the dominance of one player may be beneficial to get the downloadable music industry on it's feet, but can't be good for the consumer in the long run. Stay tuned for more ...

Posted by at 2:51 PM