iTunes runs into trouble in Norway

To readers of LWN it is nothing new that DRM (digital rights/restrictions management) systems restrict consumer choice and limit even lawful access to works controlled by them. Now, however there are encouraging signs that some governments are starting to understand this problem.

In Norway (and other Scandinavian countries) there is a "Consumer Ombudsman", his purpose is to ensure that companies act fairly and lawfully toward consumers, and in particular that they adhere to the Marketing Control Act. As it turns out, using DRM may pose problems here, especially when combined with restrictive terms of use (as is typically the case) that prevent the user from bypassing or disabling the DRM. According to the Ombudsman, the terms of service used by the iTunes Music Store (iTMS) are illegal. Furthermore, the DRM used on the downloaded songs further violate the same laws. The situation is similar in Sweden and Denmark as they have nearly-identical consumer-protection laws, and iTMS has nearly-identical terms of use there. The Consumer Ombudsmen in Sweden and Denmark are currently launching similar inquiries.

An 11-page letter of complaint was sent to iTMS on May 30th. The letter became publicly available on the 7th of June and is very encouraging reading. I will summarize the main points of interest for LWN readers as the letter itself [pdf, 11 pages] is available only in Norwegian. There is however a press release available in English.

The main point is that the restrictions imposed by the terms of use and the practical restrictions that arise from the DRM combine to create what is an unbalanced, one-sided and grossly unreasonable agreement for consumers. This is a general impression, conveyed by the agreement as a whole. Additionally to this, the Ombudsman mentions around a dozen points that are individually unreasonable and/or illegal. Many of these points have no relation to DRM, but a few are aimed directly at the DRM and the related terms of use.

iTMS reserves the right to, at any time, even after the sale, retroactively change the terms of use. It is a basic principle of Norwegian contract law that a contract is binding, and that changing a contract after it's been agreed upon requires the consent of both parties. The ombudsman points out that, in its extreme consequence, this term alone removes all rights of the consumer. Even those rights you appear to have at the time of purchase can at any later time be removed by unilateral changes to the terms of use.

Complicating this matter, the terms of use are frequently enforced by the player software and DRM. For example, the software may refuse to burn a CD with certain songs if the terms of use for these songs do not permit that. A concern is that future updates to player software might cause customers to lose functionality that they previously had. Saying that you are free not to upgrade is not an acceptable solution if upgrading is a prerequisite for playing newer songs. This would put undue pressure on the consumer to accept the "upgrade" even if the upgrade will remove many of his previous rights.

The Norwegian iTMS can only be used from Norway. This restriction is enforced by only allowing Norwegian credit cards to be used on the Norwegian iTMS, by the terms of use and by the employed DRM. This is geographical discrimination of consumers, and an artificial barrier to trade. Both are at odds with EU free-competition law. Currently the same song is sold for £0.79 in the UK and $0.99 in the USA, a price-difference of 46% at todays exchange-rate. A customer from the UK is prevented from buying cheaper from the American iTMS.

The DRM on the music ensures that it plays on only a small number of devices, mainly those produced by Apple themselves. Selection of technical protections where licenses are not given to third parties, and where no open source players exist (lack of open source players is explicitly mentioned) can lead to a problematic locking of content and players; in order to listen to your music you might be forced to buy a certain player. Not because it's the one you prefer, but because it's the only one supporting the DRM.

Some content is "iTMS exclusive", which is problematic as long as that means only being playable on a limited number of devices. A result could be that such content is not playable at all in the future, should Apple choose not to cooperate. If it does not generate a profit for Apple to make old content available on the next generation of platforms, the result could be the permanent loss of the content.

"Cultural content has importance to society above and beyond its ability to generate a profit," the Ombudsman writes; he is also critical of developments which might end up limiting access to cultural content that is not profitable. He notes that the lack of licensing of the DRM means that in the future we will either get a monopoly in music distribution, or consumers will be forced to buy two or more playback devices to be able to listen to the music they want. And, for good measure, it is currently easy to remove the iTMS DRM so the restrictions may end up harming lawful consumers while having little or no effect on large-scale illegal copiers.

The next thing that happens is that Apple needs to answer the letter by June 21st. The Ombudsman's first choice is to reach an agreement with Apple and avoid the need to take legal action. It is pretty hard to believe that outcome will be possible in this case. If an agreement is not reached, the Ombudsman will file a formal complaint with the Market Council. The ruling of the Market Council is legally binding unless appealed to the courts within 3 weeks.

It is worth noting that most of the problematic terms of use are not unique to iTMS, neither is the use of DRM. Similar terms and similar technology are used by several of the main competitors to iTMS. According to the Ombudsman, they will demand changes to the terms of use and/or the DRM used also from the other companies if they are successful with iTMS. They choose to start out with iTMS simply because it is the largest actor.

While the issues the Ombudsman raises are valid and important, there is still something missing. The lack of open source players is mentioned, but only in passing as part of the discussion of the DRM used not being widely licensed. It is not stated explicitly, but the impression given by the letter is that removing the possibility of retroactively changing contract terms and licensing the DRM under RAND terms would go a long way toward satisfying the Ombudsman's objections.

The larger good coming from this is thus likely to be the increased awareness of all the issues surrounding DRM. At this stage, increased general knowledge of DRM can only be a good thing.

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