France votes for bill to end iTunes exclusivity

The French National Assembly has passed a copyright bill that will force companies to make all music downloads playable on any portable digital player.

The law would affect companies such as Apple Computer Inc., whose iTunes downloading service incorporates technology that makes it impossible to play the songs on any MP3 player other than an iPod.

Apple and rivals such as Microsoft use copy protection software to avoid piracy and to ensure consumers use their digital players exclusively.

The law, which passed 296 to 193 in France's lower house, makes such copy protection legal for the first time and outlaws peer-to-peer file sharing, imposing finesup to 300,000 euros ($422,000)or three years in prison for copying protected material.

Knowingly distributing illegally copied works would be punishable by six months of prison and 30,000 euros ($42,200)in fines.

The recording and filmindustries had lobbied for higher fines and for a clear law against illegal downloading.

Butthe lawposes a dilemma for Apple and Microsoft, who will be required to create interoperable formats for downloaded music or answer to a French judge.

France will push for European adoption of a similar law, Martin Rogard, an advisor to French Culture Minister Renaud Donnedieu de Vabres, said on Friday.

Apple's iTunes store currently dominates legal online music sales. Microsoft is selling its Windows Media format to telecom firms that are hoping to sell copy-protected music, TV and videos to subscribers and is introducing a line of digital music players.

In its amendment to the bill that demands interoperability, France accused digital music providers of using "anti-competitive" tactics.

The interoperability clause may be a sop to consumers, who had hoped for a low flat fee for file-sharing rights, a clause introduced to the bill in December but dropped earlier this month. But France also may fear that one or two proprietary U.S. standards will dominate the market for legal downloading.

The use of proprietary systems also tends to discourage new companies with content to sell or distribute, since songs or videos purchased from one store will often not play on systems from another store.

Part of the copyright bill is a corporate tax credit of 20 per cent on the costs of recording and promoting of new talent and European composers and instrumentalists whose previous two albums sold less than 100,000 copies.

Thecredit is capped at 350,000 euros ($492,000) in costs per recording and 2.3 million euros ($3.2 million)per company.