eMusic Rails Against Apple Subscription Plan

David M Ross

"I only know what I've read but the plan sounds very similar to the tying practices Microsoft used with Windows/Explorer. And Microsoft is still paying the penalties for that one,” says eMusic CEO David Pakman.

Pakman is raising a challenge to rumors that Apple might be planning a subscription-based, music plan that would offer hardware with preloaded music. As described in numerous publications, consumers would purchase an iPod or iPhone loaded with a large quantity of DRM-controlled music. After a free-usage period of time, consumers would then begin paying a monthly subscription fee in order to continue enjoying the songs.

Apple’s 70% digital music device market share could be used to restrict music sales by smaller entities, competitors argue. The tech giant has already faced challenges in European courts on a number of similar “unfair competition” complaints. “It smells like classic Sherman Antitrust Act to me,” Pakman said. Observers will recall that in 1998 the US. Department of Justice accused Microsoft’s Windows operating system of monopolistic practices because it was bundled with the company’s Explorer Internet browser. The case was settled in 2001.

“Apple is going to argue that they compete with lots of other similar devices,” says Maxwell Blecher of L.A.-based Blecher & Collins. “You have to look at whether there are exclusionary aspects or conduct. In that debate lays the outcome of any lawsuit.”