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Media (Apple) Businesses Media The Almighty Buck Apple

iPod Tax Causes Sour Apples 388

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."
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iPod Tax Causes Sour Apples

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  • by winkydink ( 650484 ) * <sv.dude@gmail.com> on Tuesday October 18, 2005 @02:55PM (#13819457) Homepage Journal
    If you want to say "Made for iPod", pay the money. If you don't, then say something else.
  • by stevew ( 4845 ) on Tuesday October 18, 2005 @02:56PM (#13819465) Journal
    Doesn't this sound EXACTLY like what Apple is dissing the RIAA for, i.e. trying to make more money off of the IPOD?

    If Apple doesn't do the engineering for accessories or the manufacturing - I see NO reason they should receive the profits?!?

    I have similar feelings about Apple paying RIAA.
  • I don't see why... (Score:5, Insightful)

    by jamesgamble ( 917138 ) on Tuesday October 18, 2005 @02:59PM (#13819507) Homepage
    ...accessory manufacturers are complaining. The cell phone industry has been doing this for years. There will always be cheap knockoffs though, just take a look on EBay for that.
  • by deanj ( 519759 ) on Tuesday October 18, 2005 @02:59PM (#13819509)
    First record companies say that they want a cut of iPod sales, and Apple says "Oooooo, that's bad! Can't do that!"

    Now they're turning around and telling add-on companies they want to do the same thing???

    Geesh
  • uncomfortable (Score:2, Insightful)

    by toQDuj ( 806112 ) on Tuesday October 18, 2005 @02:59PM (#13819511) Homepage Journal
    With the swift turnaround of Jobs to support video iPods (but where's the content?) it is uncomfortable to see companies search for more money in such a way. What will be next?
    I think this will make companies reconsider, that are looking to develop software or hardware for the mac.

    If it's only money for analysis and approval of the item though, it wouldn't bother me that much though.

    B.
  • by Dark Paladin ( 116525 ) * <jhummel.johnhummel@net> on Tuesday October 18, 2005 @03:01PM (#13819526) Homepage
    I may be wrong in my history, but if memory serves me correctly-
    *takes a bite out of a yellow pepper*
    - Atari (or was it Colecovision? It's been so long ago I can't remember) originally had a "no license fee" to their system. Which leads to an overabundance of very crappy games, which lead to death of the system.

    When Nintendo had their NES system, if you wanted the "Gold Sticker" of quality, you had to go through Nintendo's process and give them a cut for the licensing. Which forged a company that is profitable even today.

    So, is Apple being "teh evil" by enforcing a trademark license - if you want to use the words "Made for iPod" on your product, you pay the fee that lets them decide if your item is actually worth it. Or, you can go the Gameshark route and *not* license your product and sell it as "iPod compatible, not licensed by Apple" and still make money anyway.

    Personally, I think that Apple's being a touch overhanded here, but they're working with an existing model, one they hope to bring them enough money to continue to fund new products and new directions.

    Of course, this is all just my opinion - I could be wrong.
  • Steve Jobs...... (Score:2, Insightful)

    by 8127972 ( 73495 ) on Tuesday October 18, 2005 @03:02PM (#13819537)
    ....has just created a huge dis-incentive to people who want to make iPod accessories just so he can make a few extra bucks and keep his shareholders happy. I'd just love to see these companies come out and call Apple out on this. But it won't happen because of Apple's love of using lawyers to keep the "reality distortion field" in full effect.

    IMHO, Jobs is as much of a crook as the two headed monster known as the MPAA/RIAA.
  • No monopoly (Score:5, Insightful)

    by maynard ( 3337 ) on Tuesday October 18, 2005 @03:02PM (#13819538) Journal
    You will know when Apple has gained monopoly marketshare when they leverage MacOS X on Intel by forcing iPod users to drop Windows. Somehow, I think Apple demanding certain manufacturing agreements with industry players doesn't quite measure up to a "portable mp3 music player" monopoly. --M
  • by RapmasterT ( 787426 ) on Tuesday October 18, 2005 @03:02PM (#13819539)
    So basically yet AGAIN Apple is exploring ways to kill the golden goose.

    For myself, the ONLY reason I own an iPod was the amazing plethora of accessories avaialable for it. It's simpy not a very impressive MP3 player (other than styling), but being able to choose from a bazillion accessories makes it pretty attractive.

    If Apple tries too much of this, they're going to learn that holding a majority share of a market is NOT the same as a monopoly. Piss off the market enough, and Creative is going to sell a LOT more Zens.

    This sounds extrmemly reminiscent of the ill fated "mac clone" fiasco a few years back.

  • by n.wegner ( 613340 ) on Tuesday October 18, 2005 @03:06PM (#13819587)
    >If you want to say "Made for iPod", pay the money.

    IANAL, but that doesn't seem like a good idea in a free market. A company named NA should be safe with something like: ...
    Compatible with Apple's iPod* ...
    *Apple, iPod are trademarks of Apple Computer, Inc
    NA is not associated with Apple Computer, Inc
  • by Moofie ( 22272 ) <lee AT ringofsaturn DOT com> on Tuesday October 18, 2005 @03:12PM (#13819643) Homepage
    Of course. But if you want to use Apple's logo, and Apple's engineering support, and sell through Apple's web site, I think you shouldn't be surprised if Apple wants a cut.

    You're free to not give it, and they're free to not help you. No harm, no foul.
  • by tehwebguy ( 860335 ) on Tuesday October 18, 2005 @03:13PM (#13819654) Homepage
    what a stupid and terrible headline. there have been ipod taxes enacted and talked about in other countries, so a headline like this makes it seem like the story will actually be about taxes imposed on ipods and customers who buy them.

    think.
  • by Anonymous Coward on Tuesday October 18, 2005 @03:19PM (#13819714)
    Nature abhors monopolies.

    How can you say that, look around you!

    - How many websites compete with /.?
    - Humans have a monopoly as far as higher order species.
    - The Earth has a heck of a monopoly on liveable planets (at least in our solar system, at least as far as we can tell)
    - Almost all useable light that shines on the Earth and helps to create/maintain life comes from a single source
    - Much of what is animalistic instinct is to try to attain a monopoly at any stratum.
  • by Moofie ( 22272 ) <lee AT ringofsaturn DOT com> on Tuesday October 18, 2005 @03:20PM (#13819727) Homepage
    Except for the fact that the RIAA already gets more than 70% of iTunes proceeds, you're absolutely right.

    So, in other words, you're absolutely wrong.
  • by cmholm ( 69081 ) <cmholmNO@SPAMmauiholm.org> on Tuesday October 18, 2005 @03:21PM (#13819741) Homepage Journal
    Scenario A & B:

    A: Around about the middle of '90, while Sculley was at the helm, Apple raised prices across the board. Product demand was strong, and Apple shipped more systems per year than anyone. They figured this was an Econ 101 situation, and raised prices with only a fig leaf attempt to bs their way out of it. Obviously someone dropped out before Econ 401, which would have taught the costs of trading on "good will", when they could have been looking at increasing their market share upward from 20%.

    B: Learning from Atari's experience where unmanaged 3rd party game developers flooded the market with crappy product, Nintendo required developers to register with them for the right to see the NES s/w development tools, or get any cooperation in distributing game carts. While some moaned that this was a restraint of trade and raised prices, Nintendo was able to control who traded on Nintendo's good will.

    So, which is it for Apple, this time? Any knowledgeable insider Anon Coward care to comment?

  • From TFA (Score:5, Insightful)

    by monkaduck ( 902823 ) on Tuesday October 18, 2005 @03:25PM (#13819768)
    The article says that this tax isn't for all accessories, only the ones that attach to the connector on the bottom of the device.
    It's also something where they are trying to insure that these devices won't harm them in the long run. TFA states that having the "Made for iPod" seal on these devices ensures that these deviuces will work on current and future iPod versions.
    If I was Apple, I wouldn't want some third-rate speaker system to be designed for the current generations of the iPod, then not work on all future versions, having this burn the buyer into not wanting to buy newer versions of said speakers to continue to enjoy his/her iPod and feeling jaded by the iPod that a certified piece of gear would be gauranteed to do from the box. I think it's a good move for the future.
  • by linumax ( 910946 ) on Tuesday October 18, 2005 @03:27PM (#13819783)
    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?

    Many many software companies based their products on the existance of Windows, does MS have the authority to ask for a cut of the sales?!!
  • by Jumperalex ( 185007 ) on Tuesday October 18, 2005 @03:27PM (#13819785)
    Exactly. by the logic of the previous poster, and Apple, that means FRAM should have to pay [instert name of EVERY car manufacturer] for the right to sell an oil filter that says "fits ..." And yes I know the filter box doesn't say that but their fitment guide does.

    Or Energizer comcorder batteries that say they fit so and so's camcorder. Should they have to pay a fee to say "Fits Panasonic" Cell phone batteries, vacume cleaner bags, air filter replacments, car stereo adaptor kits, car stereo speakers, etc

    There is no argument, legal or economic, that justifies the concept that a company should have to pay a royalty for making a product and marketing it as "compatibale with ..." any other product unless it required the use of some protected IP or Trademark.

    I am ignoring the situations, like the inkjet and garage door opening folks, who create just such scenarios specifically to prevent the aftermarket in an effort to prevent competition.

    So unless the company needed to utilize some Apple owned IP to produce their product Apple has no business asking or demanding royalty fees just because someone made a protective case cover that fits the iPod.

    And those companies who signed up 1) should have a very pissed off share holders and 2) have royally screwed themselves and all other companies by setting a dangerous precedent.
  • More details (Score:5, Insightful)

    by olddotter ( 638430 ) on Tuesday October 18, 2005 @03:32PM (#13819833) Homepage
    If Apple is doing this to keep the standards up, then it could be a good thing. If it is just greed then it will end up being a bad thing.

    I suspect the bigger companies will go along, seeing the fee as away of keeping smaller players from moving into the market.

  • by z80jim ( 923871 ) on Tuesday October 18, 2005 @03:36PM (#13819864)
    Apple is providing technical information and support for accessories that want to electronically interface with the iPod. There are no charges for cases and other types of products. Apple is also standardizing on the iPod connector and including form factor adapters with iPods to allow them to continue working with existing accessories. These services and adapters will cost Apple money. Maybe they are charging too much, maybe not, but it is not unreasonable to charge them. Both parties will benefit. The vendors get to continue to ride the iPod phenomenon and Apple gets to offset some, or maybe all, of the cost of supporting and accomodating these guys.
  • what does.... (Score:3, Insightful)

    by KillShill ( 877105 ) on Tuesday October 18, 2005 @03:37PM (#13819865)
    selling accessories to end users have ANYTHING to do with apple?

    once an ipod is sold to a customer, apple no longer has any say over what happens to that device or how it interacts with any other devices.

    period.

    this is pure bullshit.

    same racket that console manufacturers run.

    getting permission is NOT required by moral law. legal laws are completely obscene. and even there, there might be ways of not bending over to corporate interests.

    that's the definition of property laws. if you own property, you can do just about anything you want, barring things which can cause death or injury.

    no one needs "permission" to make accessories for any device. but that's what DRM is for. now you're getting the hang of it. without DRM and DMCA, it would be a simple matter for people to exercise their property rights.

    now you know, and knowing is half the battle.
  • by harrsk ( 654320 ) on Tuesday October 18, 2005 @03:37PM (#13819879)
    This is the same reason we are saying "empire it has built on the iPod" instead of "empire it has built on the Mac".
  • by mouthbeef ( 35097 ) <doctorow@craphound.com> on Tuesday October 18, 2005 @03:43PM (#13819930) Homepage
    At the end of the day, this screws iPod owners more than anyone else. Like Honda Civic owners, we have enjoyed a rich ecosystem of aftermarket products that pay dividends on our iPod investment. An iPod with the right third-party accessories can be a recorder, a transmitter, a boom box -- even a laser-pointer. Buying an iPod paid out well, because the iPod was a platform for innovation.

    Apple's closing of the open market can only retard innovation. The space of accessory-makers willing to pay and ask for permission is necessarily smaller than the space of all potential accessory-makers. That means less competition for iPod accessories, which means higher prices and less innovation. That means that The Steve just devalued our investment in iPods.

    One question: once permission is required, mightn't it be withheld? Can we be certain that Apple will allow all comers to buy a license? After all, they already threatened to sue a competitor, Real, that wanted to add new features to the iPod. What other new features -- features that iPod owners can benefit from -- might Apple veto?
  • Re:And so it goes (Score:5, Insightful)

    by nolife ( 233813 ) on Tuesday October 18, 2005 @03:44PM (#13819946) Homepage Journal
    Are you really being serious?
    Step out of the Apple box and think about the millions of products in this world and the millions of additions that you can buy for them without paying a kickback to the parent. The first thing that comes to mind is aftermarket products for cars which is probably a billion dollar industry. I do not have to pay Ford license fee to put a Fram filter, Monroe shocks, Michelin tires, Panasonic stereo, a Midwest Mustang hood scoop, BBS rims, a trailer hitch, a Vortech supercharger, larger after market fuel injectors, and a set of heads from some company in central Florida on my car. To even think that some licensing agreement with Ford should exist before hand 100% is completely insane.
    Even using the iPod for an example, do you think anyone selling headphones with a standard 3.5mm stero plug should have to pay Apple for it?
    Please don't give me that typical poor Apple story about Apple ensuring only quality accessories are available and no junk allowed. The free market will sort that out and has for every other after market product ever made for probably the last hundred years.

    This is nothing more then an attempt by Apple to cash in on others improvements. Almost as bad and very similar to the RIAA wanting a part of the iPod sales money from Apple for the same thing. RIAA thinks Apple owes them money because iPods play their music and profits from their work --> Apple wants money from accessory companies because they use the iPod to make products for and profit from apples work. Wow, change your mind now? Do you consider one bad and one good?
    If anything, a heathly after market of iPod things would HELP overall iPod sales.

    I am sorry to rant if I misunderstand your position on this
  • Re:No monopoly (Score:5, Insightful)

    by oscast ( 653817 ) on Tuesday October 18, 2005 @03:50PM (#13819997) Homepage
    That has to be the most idiotic statement ever said on these forums. How can a company employ monopolistic practices if they don't have a monopoly to exploit. [roll eyes], [shake head]
  • by maynard ( 3337 ) on Tuesday October 18, 2005 @03:51PM (#13820000) Journal
    That's an oxymoron.

    Look, one might disagree with Apple's policy for any number of valid reasons. For example: it's a poor long term policy if one believes in the importance of business relationships; it stifles Apple's secondary manufacturing market and thus impacts the utility of their product line the consumers; the short term gains aren't worth the potential long term losses... blah blah blah. But then you'd be forced to argue the profit potential and long term effects of their policy instead of simply claiming a negative gut reaction. So you don't like it. If it pisses you off enough, buy a competitor's product. But don't claim it is proof of a monopoly. There are plenty of third party portable mp3 and digital music players on the market. Apple can neither force their competitors out of that market, nor can they use the iPod to leverage their other market (computers, Operating Systems, and application software). Deal. --M
  • Re:And so it goes (Score:2, Insightful)

    by deesine ( 722173 ) on Tuesday October 18, 2005 @03:54PM (#13820035)

    Ok, back to basics: a monopoly [wikipedia.org] exists when there is "only one provider of a kind of product or service." That's a "kind" of product or service, not a "particular" or "specific" product or service. Notice the difference here between macro v.s. micro, between general v.s. specific. Apple is not the only manafacturer of computers, only of a specific type of computer.

    Using your logic, Isuzu is a monopoly because they are the only company producing certain parts for their vehicles.

  • by medeii ( 472309 ) on Tuesday October 18, 2005 @04:00PM (#13820104)

    Yes, if the companies in question want to qualify as "tested and approved" by Microsoft. Using an association with a more trusted brand name costs money.

    As other posters have mentioned, companies aren't prohibited from making iPod-compatible accessories if they don't pay the tax. They just don't get to use Apple's name or logo, and they don't get access to specifications that might help them release products that work better.

  • by CODiNE ( 27417 ) on Tuesday October 18, 2005 @04:02PM (#13820132) Homepage
    When you said trademark you nailed the real modivation here.

    Apple is fighting to prevent iPod from becoming a generic term and losing their TM. Go to Best Buys and you'll hear "Oh no, you don't want these iPods, we have other cheaper iPods over here" as salespeople will direct them to the players they're stuck with.

    Apple is starting to fight to protect the name iPod. You WILL NOT call generic mp3 players "iPods" and they are backing this up legally now to prevent dilution. Remember that if you don't enforce a TM you lose it. They are containing the damage before it gets worse. Of course they'll also make a mint here, but that's what licensing is all about. They're just killing 2 birds with one stone.
  • Not buying that (Score:3, Insightful)

    by Mr. Underbridge ( 666784 ) on Tuesday October 18, 2005 @04:06PM (#13820162)
    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.

    And what's the market price? If there's only one seller, what justification do you have for determining that price? Even if you're right, how do you know that prices wouldn't be even lower given real competition?

  • by corvair2k1 ( 658439 ) on Tuesday October 18, 2005 @04:06PM (#13820167)

    - How many websites compete with /.?

    How about fark? Ars Technica? news.com.com.com.com? What's keeping me from starting my own and competing well? What could Malda do to cause me to not be able to compete?

    - Humans have a monopoly as far as higher order species.

    High order as in what? Insects outnumber us by a huge amount, and they're a huge problem in the continuation of our species.

    - The Earth has a heck of a monopoly on liveable planets (at least in our solar system, at least as far as we can tell)

    Earth didn't 'compete' with another planet to obtain life.

    - Almost all useable light that shines on the Earth and helps to create/maintain life comes from a single source

    Once again, no competition is involved. Stupid analogies don't work.

    - Much of what is animalistic instinct is to try to attain a monopoly at any stratum.

    I thought that instinct was a mechanism for self-preservation. Oh, wait... it is.

  • by Jumperalex ( 185007 ) on Tuesday October 18, 2005 @04:10PM (#13820223)
    Well actually they are the same in market speak. Now if there is some LEGAL specification as to the definitions of those words (kinda like the use of the word SHALL in contracts has a very specific meaning) than I might be convinced.

    Even if there is some specific LEGAL difference all that means is they don't use the word Deisgned for but use the word compatible; iirc Apple wants a royalty even for that, and any use of the word iPod.

    Besides, "Designed for" is still 100% accurate and not misleading. On the other hand if they said "Designed By", "Approved By" or any other language that makes it sound like the company either IS Apple or is somehow affiliated with or sanctioned by Apple ... well now that IS a different story. Not the difference in the use of the word "for" vs. "by"

        But as mentioned by another poster, it is common to add the disclaimer stating that no such affiliations exist and that words like iPod etc are registered tradmarks etc etc etc.
  • by maynard ( 3337 ) on Tuesday October 18, 2005 @04:13PM (#13820256) Journal
    I don't want to defend the policy, because there are plenty of reasons why it might be a mistake for Apple to try to extract revenue with partnering manufacturers like this. However, just to respond to your Ford analogy, if a third party manufacturer wanted to include the line "Made specifically for Ford Bronco" on the packaging of their product, Ford would certainly demand a contractual agreement with the manufacturer in order to deal with trademark issues. They might even demand a payment for use of those terms.

    The situation with Apple is no different. Apple demands payment for allowing third party manufacturers to use the term "Designed for iPod", almost certainly a trademarked term. With this agreement they also provide some technical specs to properly interface with their product. There is nothing improper with Apple's demands here. Maybe it's bad business sense - or maybe not. *shrug* --M
  • by Anonymous Coward on Tuesday October 18, 2005 @04:32PM (#13820484)
    Nonsense. Do you think generic inkjet cartridge manufacturers get HP's or Epson's permission before telling consumers exactly which make and model printer a specific generic inkjet cartridge works in?
  • Re:And so it goes (Score:4, Insightful)

    by standards ( 461431 ) on Tuesday October 18, 2005 @04:37PM (#13820576)
    I do not have to pay Ford license fee to put a Fram filter, Monroe shocks, Michelin tires, Panasonic stereo, a Midwest Mustang hood scoop, BBS rims, a trailer hitch, a Vortech supercharger, larger after market fuel injectors, and a set of heads from some company in central Florida on my car. To even think that some licensing agreement with Ford should exist before hand 100% is completely insane.


    Whoa, so you think that a company doesn't pay to put a Ford logo on it's retail box in order to say that it is "factory blessed"? You've GOT to be kidding. Of course there are licensing fees involved.

    Some product companies don't want to pay a license fee, and so they can't use the official logo. Fram is a good case - they have a good reputation, so they don't NEED to license anything from Ford. On the flip side, Ford won't bless just any crap product for logo use.

    The decision to buy a license strictly depends on if the seller thinks it's profitable to use the logo (giving customers comfort, and therefore increasing sales) at the expense of the licensing fees.

    These licensing deals happen all the time. Most customers don't realize it. If you see a product box with an MS-Windows or MacOS logo on it anywhere, you can bet that there is a license involved.
  • by Gruneun ( 261463 ) on Tuesday October 18, 2005 @04:39PM (#13820608)
    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. Car stereo manufacturers have been doing this for years (Alpine's Ai-net or Sony's S-Link). Most third-party groups might complain about the price, but paying it puts them in a position to have few competitors. The complaint isn't about the 'tax'. Rather, they're annoyed by the bump in price. An open protocol would make the iPod more popular with end users, but saturate the market with alternative accessories. If the accessory manufacturers can afford to buy in, it's in their best interest to do so and hope the other guy doesn't.

    Nobody is telling the manufacturers that they can't develop and sell products for the iPod. Apple just won't help them without compensation. Besides, while popular, Apple hardly has a monopoly on mp3 players.
  • by geekee ( 591277 ) on Tuesday October 18, 2005 @05:05PM (#13820928)
    "You will know when Apple has gained monopoly marketshare when they leverage MacOS X on Intel by forcing iPod users to drop Windows. Somehow, I think Apple demanding certain manufacturing agreements with industry players doesn't quite measure up to a "portable mp3 music player" monopoly. --M"

    Add these to your list:
    proprietary closed DRM format that no one can license who wants to make a compatible player
    no support for DRM formats supplied by competitors who sell music online.

    Trying to leverage iPod to cause people to switch from windows is a ridiculous benchmark to determine whether they're a monopoly. In reality, their behavior clearly indicates they're leveraging their mnopolies in online music and mp3 players.
  • by Anonymous Coward on Tuesday October 18, 2005 @05:33PM (#13821235)
    Steve Jobs greatest flaw strikes again. In the early to mid-1980s, he refused to make Apples & Macs cheaper and saw his market share erode to almost nothing. This time he's a little better. He's continuing to innovate iPods and keeping the price within range of his competitors.

    But one of the pluses of iPods are all the add-on gadgets that make a somewhat stripped down product more useful. And there he is falling into his old trap--Greed. It could be his downfall again. Jobs has yet to learn the importance of sharing the wealth.

  • by PCheese ( 810782 ) on Tuesday October 18, 2005 @10:14PM (#13823488) Homepage
    iPod has become a synonym for MP3 player where I went to high school. It happens in the teen world.

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