Class action suit against Apple...

This new development could prove very interesting for the MP3 Powerhouse known as iTunes. Basically we all know how heavily marketed the iPod and its proprietary software iTunes are in the portable entertainment market.

~From eHomeUpgrade
With all the hoopla of the video iPod and speculation that Apple was going to release a media center-style PC and switch to Intel chips, it seems that the media last September inadvertently – or knowingly – forgot to post the news (via Tera Patricks) that Judge James Ware, of the U.S. District Court of Northern California, has found the plaintiff, Thomas Slattery, as having "met all requirements for asserting [Apple's iTunes + iPod] tying claim... noting that the complaint alleges Apple has an 80 percent share of the market for legal digital music files and more than 90 percent of the market for portable hard-drive digital music players." Moreover, Judge Ware has given the green light to Slattery to proceed with his monopolization claim under the federal Sherman Antitrust Act.

As some of you know we've been having some thoughtful discussions on Apple, iPod, and its DRM in the forums (here and here), but I don't think any of us knew that the numbers were as high as the judge found the evidence to be. Also of interest was that Judge Ware specifically rejected Apple's argument that tying doesn't apply since consumers can buy iTunes music for playback on their computers without having to own an iPod. I'm sure some will say that this is not a monopoly, but ask yourself: What other online music services, other than the iTunes Music Store, offers Apple's Fairplay DRM wrapped music for you to purchase for your iPod? That's right, exactly zero. So unless you own a physical CD and have ripped the tracks to MP3 or AAC, there's no other way to add music to the device other than by way of iTunes. (OK, there are two non-traditional exceptions: 1) Services like eMusic that sell DRM-free MP3s, and 2) Real's Harmony software that can convert their copy protected music to a compatible format for the iPod – Note that Apple threatened Real with a lawsuit for providing this feature.)

On the flipside, if you've purchase DRM wrapped music from services like Napster or Yahoo! Music, you will be denied access to those files since Apple doesn't feel compelled to license Windows Media DRM (not that Microsoft hasn't offered). So you see, being the leader of "closed system," even if you're a small company, can get you into trouble when you have the majority of the market locked down and are unwilling to loosen your restrictions on allowing your player to work with other services and codecs.