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CMU Beef Of The Week #180: HMV v Apple

By | Published on Friday 25 October 2013

HMV

So the recently rejuvenated Nipper the dog took a bite out of the Apple this week, though it remains to be seen if the fruit was poisoned like the legendary tragic apple Steve Jobs famously didn’t base his company’s logo on. By which I mean, HMV has been beefing with Apple this week. And why the hell not?

The old HMV had reason enough to despise the big bad Apple of course. While HMV bosses and their major label buddies were all enjoying the taste of the sand ten years ago, the tech firm built the iPod, launched the iTunes music store, kick-started a revolution, and kept much of the spoils for itself.

By the time HMV management had successfully scheduled a meeting titled ‘The Massive Opportunities Presented By Digital Music’, Apple and its boss man Steve Jobs had already nailed it, achieved market domination, and rescued their business in the process.

And while Apple celebrated by expanding their digital store, inventing the iPhone and persuading the world we did all need tablet computers after all, HMV marked the occasion by launching one of the shittest digital music stores ever, the original HMV Digital.

Of course the indie labels who had long bemoaned HMV for not stocking their releases, or giving priority racking to cash-rich majors, possibly smiled at this turn of events (well, they possibly did once Apple finally started talking to the indies and opened up the potential of iTunes to all).

But fast track to today, and the all new HMV, bought out of administration by Hilco earlier this year, and feeling much more youthful for it. HMV’s sack of spite towards iTunes wasn’t part of the acquisition; the new guard are all able to admit to their predecessors’ self-inflicted misfortune, and Team Hilco must know they’d never have got to buy a classic British music brand like HMV for the price they paid had the firm not so spectacularly screwed up digital.

So why the new feud? Well, now its Apple who controls a vital route to market, and is busy exploiting that power. Last week the all new HMV launched its download store, a mobile-centric platform that aims to link the firm’s in-store experience with the online world: get out your smart-phone, take a photo of any CD in-store, and download the digital version there and then over that there mobile internet.

The new service centres on proprietary Android and iOS apps which enable customers to browse HMV’s digital store (actually the 7digital store rebadged), buy tracks and download them to their device, all through the app. Well, except with the iOS app the transaction actually occurs via the user’s mobile web browser, which is interesting because that violates one of Apple’s well known app rules, which are designed to ensure that any selling to iPhone owners is done via the tech giant’s own infrastructure, so it can take a cut.

That HMV was able to offer that functionality, despite it contravening Apple’s app rules, was surprising; indeed even HMV bosses seemed surprised they were getting away with it, but the app had been approved by the iPhone-maker they said, so all would be fine, right? Well, no. Apple may have green-lighted HMV’s app, but they hadn’t noticed the rule-breaking transactional element, and their terms and conditions allow approval to be quickly withdrawn if rules are not followed.

And so within 24 hours of HMV going live with its new apps, the call came in from Apple HQ, lose the rule-breaking functionality or we’ll suspend the app for our store. HMV initially seemed to refuse, but as it became clear Apple wasn’t bluffing the retailer instructed its developers to rework its iOS product. Though said work wasn’t complete before Apple’s “unrealistic” (tweeted Hilco chief Paul McGowan) deadline, and so the app was suspended from the tech firm’s store.

Having documented his company’s Apple squabbles on Twitter, McGowan formally hit out at the iPhone company after the HMV app was suspended. “It is disappointing that Apple has chosen to suspend an app that has proven to be very successful in only a few short days despite Apple having already approved the exact same version on 15 Sep”, he said. “We are unable to explain the change in Apple’s position as we have been given no explanation by them as to any difference they view between the approved version and the one suspended this evening”.

Given HMV’s app clearly violated an Apple rule, several developers have since said that the retailer really should have specifically raised the transactional element of their app with Apple before going live, to ensure there would be no issues. That they did not possibly suggests a little naivety on the part of the new Team HMV, just as they try to convince the music industry that this time the company really knows what it’s doing with digital.

Unless they knowingly walked into the field of conflict.

It’s no secret that many digital music retailers resent Apple’s app policies, and see those regarding in-app commercial transactions as a blatant exploitation of the firm’s walled-garden ecosystem in order to protect the iTunes business from its competitors. And some of those digital content sellers wonder whether the practice shouldn’t be causing some concern for competition regulators like the UK’s Competition Commission. Perhaps a high profile dispute on this issue could be a catalyst for some sort of investigation?

Fighting a PR war with Apple is always risky, and there’s nothing to actually suggest that HMV actively wanted to fight such a fight. But the firm’s trade body, the Entertainment Retailer’s Association, which counts numerous digital music operations amongst its membership, but not iTunes, was quick to use the HMV v Apple skirmish as an excuse to bring up the bigger issue.

“The dispute between HMV and iTunes highlights, we believe, serious issues of competition in the digital entertainment world” it said. “iTunes is by far the dominant player in music downloads with a marketshare estimated to be over 70%, but just as importantly it also maintains an iron grip on access to the hugely powerful iPhone/iPad platform, which effectively hinders competitors from reaching millions of consumers and stands in the way of innovation. With market power comes responsibility and we urge iTunes to act responsibly and allow the development of a free market in music online”.

So far Apple has said nothing, which isn’t really in the spirit of the Beef Of The Week, but it will be interesting to see if this dispute just fizzles out, or whether some more serious beefing is upcoming.



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