In its watered down stance, the French Government has allowed artists and record companies to give Apple permission to restrict downloads to iPods. It is not clear whether the Scandinavian companies will follow suit. However, regardless of whether they do or not, the slightly softer demand of France may not satisfy Apple. The new legislation would force the company into negotiations with recording labels and artists, creating a significant overhead for the company.
Apple's threat to close down its European iTunes sites rather than open up its downloads to players other than iPod is not an idle one. The iPod and not iTunes is where Apple makes its money. Opening up iTunes to the wider MP3 player market could significantly affect its iPod sales. Given that iPod has been largely responsible for the company's turnaround in recent years, it is not likely to agree to anything that could jeopardise iPod sales.
As far as Europe is concerned, the ill-considered and patronising stance taken by some governments in the name of open standards is not likely to be popular with many consumers who are avid iPod fans. There are other sites that consumers can visit where they can legally download generic MP3 files, so it's hard to see the logic in restricting the growth of a company that has won its business in fair competition.