Sunday, July 1, 2012

iTunes in Asia - IP trumps Apple's entry

The iTunes Store has just opened to consumers with credit cards in Brunei, Cambodia, Hong Kong, Laos, Macau, Malaysia, Philippines, Singapore, Taiwan, Thailand, Sri Lanka and Vietnam. That's most of ASEAN. But not in the biggest market, Indonesia or newly opening Myanmar. The latter is understandable given the lack of development. But Indonesia is a clear snub.

In fact China and India were also ignored - which along with Indonesia are the most populous Asian countries — nearly a third of the world's population. Apple doesn't make public comments but experts say Apple looks at uptake of Apple devices, consumer demand for digital content, whether local content partnerships are easy and the threat of IP violation and specifically whether the enforcement system works. We know that IP violation is a problem and worse the legal system is very poor, but there are also market entry barriers in the economy and a powerful entrenched music industry.

IP Komodo's view is that China and to a degree India face a size problem, they are simply too large to build an effective IPR enforcement system quickly. Sure their governments could do more. China is blatantly biased in some areas and refuses to put in place effective deterrent penalties. But enforcement is possible and commonplace. India's court system is comically antiquated but does eventually deliver justice. The criminal system however has problems. Indonesia has a thoroughly broken legal system after its 30 years of previous dictatorship. At civil level it is just starting to function, but the criminal system is riddled with corruption and IP enforcement rarely happens.

At some point Apple will probably concede these issues and launch anyway. IPR problems are rarely an absolute block. But such messages are needed to the government of Indonesia and its parliamentarians.   

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