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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!"
This is a case of the other side of the coin of globalism. Big companies like to be able to move their operations around wherever they want to minimize expenses, but consumers also want to be able to shop wherever they want to minimize prices. The infrastructure that supports one also supports the other. We need to keep vigilant to make sure the laws equally support both.
Of course, in this case, Apple is probably just passing on the policies set by the recording companies in their contracts. If my guess is right, then hopefully they can use this ruling to get more equitable terms in their contracts.
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?
It's not the fact that the prices differ, it the fact that a customer with a credit card in one EU country can't buy songs from the itunes store of a diffirent country. EU law says that EU citizens are free to buy goods or services from anywhere in the EU without any any rescrictions. To be fair it's not apples fault it the record companies who won't allow the tracks to be distributed under the same liecence through out the EU. Cases like this will push through laws requiring the harmonising of EU IP laws.
Now certainly you have a right to complain and say it's unfair that they charge difference prices in different countries. But I certainly don't think there's a valid argument for getting a even a partial refund.
If the IP providers object, they can be easily taken to court, everybody's happy.
If only it were that easy. There is no actual law that says IP providers have to offer the same price as IP providers in other EU countries. (There is an EU directive for each country to pass laws to that effect.) And a license to music is contingent upon your location under laws in most EU member states (Thanks to pressure from the U.S.). The problem is that the UK council is not seeing is that according to EU law, Apple is offering different services in each country, even though the end result for the user, is the same song. This is further complicated by the fact that although their end user license says you can only buy from the country in which you reside, their only control is through the address listed for the credit card, so the UK authorities are seeing it as credit card based.
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).
The problem is not that Apple charges more in the UK than in the EU - they are absolutely allowed to do that. What they are not allowed to do is ban people in the UK from buying things from the various EU stores (and as a by product, that means that we in the UK may be able to get cheaper songs from the EU store).
Bob
Who are apple to come along and say whats what in the EU?
Umm, Apple is just caught between conflicting laws. It's the EU and the UK who is saying what is what. Apple negotiated a price with the BPI, added their expenses, then picked a round number close to it. If the EU can't license music for the same price across all it's member countries, why should Apple be tasked with sorting it out? If you have to sell for the same price, fine charge Apple the same price, if not, fine don't complain when Apple sells different things for different prices. Guess what, the BPI won't sell music across it's borders at all, that is because it is illegal. Apple is just running a whole series of stores selling different products (different due to the fact that the laws on pricing and sales are differnt) in different countries. Consumers may see a song as being the same, but until the law reflects that fact, Apple can't be expected to pass laws and change it.
You need to pay a visit to the grammar nazi thread. Pronto.
The thing is not that they charge different prices really, but that they won't allow someone from the UK to shop from France. Hence, the result is that they end up having to pay more. That in itself is not the problem, is it a result of it. If the ones supplying Apple won't allow it, then Apple simply can't make a deal with them.
I can go and order a book from a French bookshop over the net, I then pay what someone in France would (possibly higher postage). The French shop can't say I must go to their Swedish shop (regardless of if it costs more or less). Nothing actually prevent them from having a shop in Sweden charging more of course, it is another issue.