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ITunes Overcharging in the UK
KennyMillar writes "The BBC is reporting that the OFT (Office of Fair Trading) has ruled that Apple is overcharging for iTunes downloads in the UK. They have referred the case to the European Commission for a ruling. One important note is that UK iTunes customers cannot buy from the French or German iTunes Stores, and this goes against European Freedom of Trade rules. A spokesman from OD2 agreed that people in the UK should not be charged more than customers in the Eurozone. I've emailed Apple asking for 20% refund on all my downloads, but I won't hold my breath!"
Wouldn't the same principles forbid use of CSS to charge different prices for DVDs in different regions? Is this why DVD vendors in the UK are free to sell "region free" DVD players without any hassle?
Seriously, if the European Union would get off it's butt and actually make the various European versions of the RIAA offer the same licensing across all of Europe, like they have already ordered them too, then this would not be an issue. Apple charges different prices because they are charged different prices. Now the UK has ruled that Apple is violating a EU law, but obeying it would break the law in any given member of the European Union. This is largely a matter of considering intellectual property to be a good or service, when sold by Apple, but not otherwise considered a good or service across the EU as a whole.
Mostly this is just the UK pissing and moaning because they are getting ripped off more by their RIAA clone than other countries are and they want Apple to do something about it. Apple doesn't really care how much the songs cost, they just want them as cheap as possible. They don't even make any money on the issue, it is just a way to get people to buy computers and mp3 players.
I'm sure this will result in the EU ordering each country to license IP across the EU under the same terms as locally, and in another 10 years most of the countries will actually get around to doing so. In the mean time, Apple will fight things out in the courts, stop selling in the UK, raise prices across all of the EU, or take a loss selling into the UK for the sake of good will. None of which seems like a good deal for anyone involved.
at this moment, the easiest thing to do is to lower the british price to 0.69 pounds, which is consistent with the exchange rate. it may fluctuate - how much of a fluctuation is considered ok? or should apple open up iTMS for the entire european continent and accept credit cards from everywhere? how often will they have to change the prices with the exchange rate? will apple keep 0.99 euros and change the british price or keep 0.69 pounds and change the euro price?
When I was in England in the late 90's there was debate about whether or not the UK should use the Euro. They (the english decided against it.)
The Euro has increased a lot in value relative to other currencies this year so it would make sense that it seems like overcharging. Much like the dollar vs. the canadian dollar. There is no equity in currency values.
The Ecomists big mac index shows that big macs cost different ammounts in different places, even adjusted for currency differences. Why wouldn't music?
Is apple expected to change the cost of songs every couple months due to currency valuations?
How else do you explain that prices in the UK are almost twice steeper than those in the US?
The prices are higher, probably because they are being charged a different price by the UK version of the RIAA. Obviously I don't know that for certain, since the agreement is a trade secret, but I do know that Apple has publicly stated that the iTunes Music Store is a break even proposition for them, and they have told their shareholders that they are operating it to promote ipods. You can find both of those as facts on the record. As to the pricing trying to meet a 99 cent price point, or something equivalent, Apple is just trying to make it an attractive, round number, just like every thing you buy these days. nobody wants to buy something for 1.136 dollars, 1.15 is easier to remember and easier to add.
Basically, I imagine the prices are set mostly to cover whatever cost they have, and be not to strange of a value. Do you really think Apple plans to make it's money by having higher prices in the UK, and thus fleece them for all that extra money? That is pretty unlikely. I'm sure they would be quite happy if the EU would allow licensing across the entire Union for one fee. I'm sure they have already spent more money in legal fees trying to negotiate with every nation's RIAA, and more in technical fees setting up different stores with different music than they will will make for years selling music there.
P.S. as for being an Apple zealot, I don't buy music from the iTunes music store (except for one hard-to-find album).
Couple this with English citizens who give two shits if the EU goes anywhere unless it gives them an advantage and a strange anti-Apple movement the British lawmakers have and you have our current situation.
But thats what you get when you try to make a multi-country standardize economy yet have multiple different laws in the different countries that go against laws put forth by the EU.
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