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French legislation designed to give consumers greater interoperability for their copy-protected digital downloads is now set for the statute book. But the loophole designed to soften its impact looks set to send shockwaves throughout the industry.

Known colloquially as the 'iTunes Law' - even though it doesn't mention Apple - the bill was intended to break the vertical lock-in which prevents iPods from playing files locked down with Microsoft DRM, and many other MP3 players from playing files locked with Apple's DRM.

And so it does.

Except that a loophole added this month permits Apple to carry on exactly as they do today, provided they obtain the artists' permission. The wording, at least in translations we've seen, means that Apple must only obey a compulsory technical disclosure order if the DRM is "additional to, or independent of, those explicitly decided by the copyright holders".

But which copyright holders? There are three parties here - holders of the recording copyright, holders of the mechanical copyright, and the composer. The loophole implies that many of the contracts negotiated in recent years may need to be re-negotiated.

And it raises many more questions, which will be rippling down the distribution chain today.

Where does this leave the intermediaries, such as Orchard, from whom many online digital download stores acquire their music? Will artists use the opportunity as a leverage to re-negotiate their own contracts? At the very least, it swings the pendulum back towards the recording industry.

Going back to the table with the major labels may be the last thing Apple wants to do - but that isn't quite true. The last thing Apple really wants is to see its controls of the iPod franchise weakened.

For now, ignore Apple's posturing and righteous indignation: the iTunes Music Store doesn't live or die by the music it sells. It doesn't make much net income anyway, it's doing a busy trade in videos and podcasts, so songs aren't a make or break issue. But it's likely to fight interference on principle, with the same tenacity that Microsoft fought off antitrust challenges.

Barring a constitutional challenge from the Socialists and the Greens, who want a much simpler and fairer blanket license (at which point DRM would cease to become relevant), the bill is heading for the statute book. ®

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