French Parliament Fights iTunes, Part 2

Some people commented on my blog about France killing its Golden Goose by saying France is only complying with EU standards, or that its citizens have the right to tell businesses how to make their money. I still stand by my original post: when government steps in to regulate successful big businesses which aren't exploiting workers or breaking any laws, the wealth of the nation and its workers are eventually jeopardized. Let the free markets decide what they want and don't want. Ultimately, this entire topic becomes moot if this new amendment forces Apple to pull iTunes out of France. At that point, discussion stops: the Golden Goose will be dead.

Still not convinced that could happen? In an article from The New York Times, Jonathan Arber—a research analyst in London at the technology consultancy Ovum—said, "My gut feeling is that Apple will simply pull out of France if these amendments get through. Weighed against breaking their business model for all markets, it doesn't make sense for Apple to continue operating with the iPod and iTunes in France."

The article goes on to say:

Apple would not comment on the legislation. Led by Steven P. Jobs, the chief executive, Apple persuaded the world's major record labels in 2003 to sell songs over the Internet at 99 cents each through the iTunes Music Store.

But the price of making it inexpensive, easy and attractive for consumers to buy online—rather than sharing songs on the Internet without compensating record companies or musicians—was the use of Apple's proprietary formats, making song buyers beholden to Apple and its players, which account for more than 70 percent of all devices sold.

Look, there is no free lunch—as a business, you incur costs to provide a service and as a consumer, you must pay a price to the company to access that service. No one holds a gun to your head to use that service. If you don't want it, don't buy it. In a free market, if no one buys the service, the business dies... or the business reinvents their service until they find a situation where you will buy it. iTunes' success shows that Apple has found the sweet spot where businesses can provide online entertainment and consumers will buy it.

So why is the French government trying to kill iTunes when it's just getting off the ground? Because, in my humble opinion, the French and its government live under the mistaken conception that government is the tool by which capitalism should be sculpted, and it's not—the people themselves decide with their wallets. We wouldn't even be talking about this issue if France weren't the third largest buyer of online entertainment in Europe. Government's role in business is to step in when great injustices are being committed in the workplace, like child labor or sexual harassment. Past that, governments are meddlesome.

Finally, this last bit caught my eye:

In addition, the cross-border implications are enormous, he said. "Governments cannot operate in a technology policy vacuum with a global industry," he added, saying that decisions should be made at least on a European level. "You cannot decide overnight to create a nirvana."

And that's it! The French are trying to create a nirvana within France even if that nirvana conflicts with the pace and standards of the rest of the world. Don't get me wrong, I'd love to have a 6 week vacation and a 35 hour work week and job security and free health care and all the rest of it... but sooner or later, there is blowback to consider. Like high unemployment, a stagnant economy, high taxes—and worst of all—a feeling of entitlement: "I deserve to not ever be fired even if I do sloppy work or treat my customers like shit."

After living in France for eight years, there's nothing that got under my skin more than having a business not treat me as if I were the customer with the money. I don't want a salesperson or business owner to be a pushover, but I'm putting food in their children's bellies, so I'm the one with the power in this situation, not they. Now I'm not saying everyone in France is like this—I know it's a generalization which isn't true for a lot of people—but the overall cultural attitude in French business is still, "I am the business owner and I have the service you need. You should be lucky I'm offering it to you and if you don't want it, I really don't care." The only way the French get away with this attitude is that they know customers can't walk across the street and buy from someone else because they'll run into the same attitude at the competing business. Maybe I'm really wrong about this—after all, I do know plenty of really nice, pleasant French businesspeople—but I do know this: you would never ever run into this attitude in America. Ever. If you did, you could bet that business wouldn't stick around for very long.

Back to my point, if there is one...

To allow companies like Apple to fully compete in a global free market system, you have to be prepared that your own country is going to also make sacrifices at a national level. In this case, that means letting Apple call the shots on how the French get to listen to their music. And shit, man, it ain't a bad system! But if you step in and foul up Apple's business model, you're making rules that don't exist anywhere else. And Apple don't jive with that.

Instead, the French would rather have a contained system where everyone within it competes on the terms they dictate. The moment someone suggests that this closed market needs to be more competitive against other nations by working longer hours or having less vacation time, the whole country shuts down with a massive strike. All I'm saying is that if the miners go on strike because they don't like how much they're getting paid, they shouldn't be surprised when the owner of the mine shrugs his shoulders, slips the key underneath the welcome mat and walks off, never to return.