iPod Tax Causes Sour Apples

An anonymous reader writes "Apple Computer is stepping up its push to get iPod accessory makers to pay for the right to connect to the popular music player." From the article: "It's not clear what means Apple might employ if companies don't go along, as Apple declined to comment on that. Though many manufacturers have signed up for the program so far, some have complained in private that it's too high a price. But for Apple, the move is a chance to profit further from the empire it has built on the iPod, given that the market for such add-ons is estimated in the hundreds of millions of dollars per year."

Comments

And so it goes

[denissmith]

And so another company that had an emerging monopoly blows all of its accumulated goodwill and demonstrates why monopolies are ALWAYS bad. And, no, there is no such thing as a NATURAL monopoly. Nature abhors monopolies.

Re:And so it goes

[SocietyoftheFist]

ALCOA kept aluminum prices below market level so that the consumer benefitted. Granted this kept anybody from having the ability to enter the market but it provided the best benefit to the consumer.

Re:And so it goes

[Red Flayer]

"Nature abhors monopolies"

Au contraire, mon frere. Over time, any given ecological niche will be dominated by one species only. You only find multiple species occupying a niche when that niche changes somehow.

Re:And so it goes

[eln]

Nature abhors monopolies.

If that were true, there would be no reason to have anti-monopoly laws. Any pure capitalistic system will eventually trend toward monopolies. We've seen it happen many times in this country alone. It then takes intervention from a sufficiently powerful outside source (government) to return the market to a state of competition.

Re:And so it goes

[Arandir]

Nature abhors monopolies.

Please explain. I've never heard this idea before, and I want to know the rationale and reasoning behind it. I can think of several naturally occuring monopolies, and wish to know where the flaw in my thinking is.

Example 1) A monopoly on horses in a one horse town

Example 2) A monopoly on gas stations in a town with only one intersection.

Example 3) Licensing fees for iPod accessories when there are dozens of iPod competitors.

Re:And so it goes

[Blue-Footed Boobie]

Exactly my point, how then is Microsoft considered a monopoly?

Re:And so it goes

[Moofie]

But if you bought a PC, you paid Microsoft, regardless of whether you wished to or not.

Here's the difference between Apple and Microsoft: Microsoft has been found guilty of abusive monopoly practices in a court of law. Apple has not.

Coin has two sides

[DarkBlackFox]

I can see this going two ways.

On the one hand, people will cry out "Monopoly!" and point at Apple. Naturally, Apple's dominance in the MP3 player market makes it a likely target for such a label, and a move like this certainly helps reinforce that image.

But on the other hand, the manufacturers of the third party add-ons are making a mint off the iPod themselves. If their entire industry is based on the existance of the iPod, doesn't Apple have the authority to ask for a cut of the sales? Without the iPod, those accessories wouldn't exist. I'd see it as paying a royalty to use the iPod brand/name/whatever. Items marketed as "For use with iPod" should pay to use the name "iPod." For some reason, a set of speakers marked as "iPod Speakers" sounds better than "Speakers for use with that fruit-named company's music player."

How does Nintendo handle it?

[CyricZ]

How does Nintendo handle the addons for its various handheld gaming systems? How do the addon manufacturers handle it? How do they refer to their compatibility with Nintendo devices? Do they flat out say, "GameBoy-compatible" or do they word it to avoid naming the Nintendo products supported?

The division of labour someone?

[Anthet]

In doing such a thing apple makes it harder for small businesses to use the Ipod for some neat trix. One would think that companies wouldve learned by now that allowing people to use your device to create cool stuff actually increases the profits earned from the sales of the device. Imagine for a second if Valve decided to have everyone pay a fee if they were to mod the original halflife, I would bet that counter strike would have been realeased for some other game instead and valve would have missed out on an extreme amount of cash.

Apple is more liberal than camera makers

[UR30]

The camera makers like Canon don't sell rights to make compatible
lenses. So if you buy a non-Canon lens for your SLR, you are in effect
buying a pirated product. And camera makes change their systems
all the time to make them incompatible with lenses by third parties.

Apple could follow suit - but by licensing Apple allows third-party
innovation. Good for Apple, good for iPod accessories, good for
iPod users.

Re:What's all the fuss

[slavemowgli]

Part of the fuss may be that "made for iPod", even though it uses a trademarked name, could actually reasonably be construed as being purely descriptive in nature - that is, as a mere statement of fact ("this product is compatible with Apple's iPod"). Given that there is pretty much no way to state this fact without actually using the term "iPod", it's easy to see why companies aren't keen on paying for this.

Is there a trademark equivalent of fair use? If this was a copyright issue, this would probably fall under that, but I'm not sure if there is anything equivalent for trademarks. The only thing I can think of would be the freedom of speech guaranteed in the bill of rights - one could argue that freedom of speech is impinged upon when it's not possible to state a fact ("this product is compatible with Apple's iPod") without having to pay royalties for the use of the trademarked term.

But I certainly ANAL.

Liscenced by...

[JoeQuaker]

This kind of reminds me of the old deal with the gold "Liscensed by Nintendo" emblems that used to appear on cartridge labels back in the 80's.

As other companies figured out how to zap Nintendos lock-out chip so they could make their owned games without the shiny gold emblem, Tengen just went ahead and used legal action (which they eventually lost their case for miserably) and got the code for it from the copyright office. After that, the Tetris suit, retailers not carring Tengen titles due to threats from Nintendo, they were ultimately strong-armed and shut down by Nintendo.

Now I don't know what ever came of the manufactorer that made the un-Nintendo-liscensed "Chiller" and "Baby Boomer" titles, but something tells me they didn't exactly become a big success.

So in the case of Nintendo... despite Nintendos bullying and Tengens efforts to get things done their way, Nintendo is still a loved company and Tengen is out of business.

Would the same sort of thing happen for Apple with the iPod accessories? Perhaps. As much I despise Apple and would never own an iPod... I know there are plenty of people who think different (as lame as different may be) that will be more than happy to shell out big bucks for their trendy accessories with Apple logos on them.

I'm sure glad they didn't do this...

[Anonymous Coward]

... with the Apple ][+. I'd probably be flipping burgers instead of writing software.

Isn't it about time for another Slashdot interview with Steve Wozniak? I wonder what his thoughts would be on this. What opportunities is Apple missing by nailing their architecture shut?

Re:No monopoly

[d34thm0nk3y]

You will know when Apple has gained monopoly marketshare when they leverage MacOS X on Intel by forcing iPod users to drop Windows.

Whereas leveragin the ipod monopoly to force ipod users to use itunes is ok?

Re:Not buying that

[Mr. Underbridge]

Nobody else was capable of producing aluminum as cheaply as Alcoa. Even the judge basically chastised them for being too good at what they did. They were never found guilty of any wrongdoing other than preemptively outdoing their competitors at every opportunity.

That certainly may be true - but that's not evidence to support the claim that they were selling below market value. If they're the monopoly, whatever they sell it for is market value, and there's no evidence they're "leaving money on the table" by not maximizing profit.

Not surprising

[dskoll]

Apple is just as monopolistic as Microsoft, and always has been. Apple's friendliness with the open-source community is self-serving: Apple just needed a good OS quickly, and a free UNIX-like system was the obvious choice.

At heart, Apple is just another proprietary company, which is saved from being perceived as evil by it's small share of the computer market. (iPod is a different story; the large market share allows the evilness to come out.)

Re:The manufacturers WANT to pay this 'tax'

[Obfuscant]

The gist of this is not that people can't make products for the iPod or can't use the phrase "for the Apple iPod" but rather that there's a special connector with a proprietary protocol. To get the information for interacting with the iPod, you have to pay to be part of the program.

The gist of the original article is that Apple used to charge only for use of the logo, but now wants to charge for the right to connect to the iPod. What they claim they are charging for is a "marketing program" where the docking connector isn't going to go away like the headphone control connector did on the latest version. That's called "blackmail". "Pay me not to change my design on you every six months".

The connector is proprietary -- rights belong to JAE, not Apple, and JAE will apparently sell you the connector.

For info on the pinout, see here. There's a link to a guy who will sell you ones and twos so you don't even have to buy the minimum lots JAE wants to sell.

For Apple to tell people that they have to pay to connect to an iPod is ridiculous. To say they have to pay for using a logo is fine.

Re:First record companies, now apple?

[Cennon]

Probably not. I have no idea. But if Apple hadn't spent money designing and implementing the iPod in the first place, what would those accessories actually connect to? (And you can leave the other players out of this... I'm more interested in things that actually *should* have the logo - accessories that connect to the proprietary iPod port, or are made to fit the dimensions of Apple's products specifically.) Apple created a market for these 3rd parties in the first place.

Another poster had it right - if these 3rd party manufacturers want to take advantage of the millions invested in the iPod brand name, and the marketing that goes with it, pay the fee to use the "Made for iPod" logo. If they instead choose not to sign up, then fine - just don't use that particular logo, or that particular phrase ("M-A-D-E -- F-O-R -- I-P-O-D"),,,say "compatible with", or somesuchlike.

Re:Is this Atari or Nintendo?

[Lord_Dweomer]

Finally someone who understands the REAL motivation behind this. Yes, they are killing two birds with one stone...but the one they're aiming for is the protection of their trademark.

Apple is a brand that relies on its coolness and brand name recognition to sell the amount of product it does (yes, design is part of it, but brand is most of it). If it loses control over its brand name, it loses the primary selling point behind its products.