Apple iTunes 'overcharging in UK'

Keevan_Colton · Post by **Keevan_Colton** » 2004-12-03 02:20pm

The Office of Fair Trading (OFT) has referred Apple's iTunes service to the European Commission on grounds that it overcharges UK customers.

The move follows a complaint from Which? that iTunes charges UK users 20% more than those in France and Germany.

Which?, formerly the Consumer Association, also complained that the UK customers were barred from logging on to the French and German sites.

The OFT is asking the European Commission to rule on the matter.

It said the Commission was better placed to judge on the matter because "Apple iTunes operates in more than three European Union member states".

Free movement

Phil Evans, principal policy adviser at Which?, said it was a freedom of trade issue.

"The online music market is a huge growth area; the Single Market should work the same in this market as in others," he said.

"We're campaigning for free movement of goods and services in Europe and we'll take on any company, or group of companies, that seek to carve up the market to their benefit."

No-one at Apple was immediately available for comment.

'Economic factors'

Whereas iTunes customers in the UK have to pay 79p to download a song, those in Germany and France are only charged 99 cents or 68p.

Back in September Apple defended the price differential, saying that "the underlying economic model in each country has an impact on how we price our track downloads".

"That's not unusual - look at the price of CDs in the US versus the UK," an Apple spokesman said.

"We believe the real comparison to be made is with the price of other track downloads in the UK."

Ed Averdieck, European sales and marketing director for OD2, which runs music download sites for everyone from HMV to Wanadoo, Tiscali and MTV, said there was no reason why firms should charge UK customers anymore than those on the continent.

"Our retailers charge everyone in Europe the same price, and we believe there should be such a unified pricing policy." he said.

"If you look at MSN, for example, it charges 99 cents in the eurozone and 69p in the UK [the same amount].

"We believe this is right and that there is no reason why UK consumers should have to pay any more."

http://news.bbc.co.uk/1/hi/business/4065539.stm

Got to love the corprate mentality. Price the market as heavily as it can bear...even if it's you can manage with it cheaper elsewhere.

Durandal · Post by **Durandal** » 2004-12-03 02:41pm

If the UK doesn't like the price, then they shouldn't buy it. Different countries are different markets, and Apple's internal projections probably showed that they had to charge the UK more in order to sustain a worthwhile business there, while France and Germany were different.

Do you honestly think that, because Apple can sustain a certain price in Germany, that they must, therefore, be able to sustain that price in the UK? Being a part of the EU doesn't mean shit; each country has a completely different culture that impacts any economic models that might be drawn up.

Vendetta · Post by **Vendetta** » 2004-12-03 02:54pm

Do you honestly think that, because Apple can sustain a certain price in Germany, that they must, therefore, be able to sustain that price in the UK? Being a part of the EU doesn't mean shit; each country has a completely different culture that impacts any economic models that might be drawn up.

It's actually possible that they're in breach of European law, because they are not only charging higher prices for UK transactions, but preventing UK residents from accessing stores based in other EU member states, which may contravene legislation which governs the free movement of goods and services between member states. (Essentially, if I don't want to pay the UK price, I should be able to log on to the French iTunes store and pay their price, no matter where in Europe I live)

The European Commission has been asked to rule on the matter, and could force Apple to either set a common price for the common market or allow access to iTunes stores across Europe from any member state.

Durandal · Post by **Durandal** » 2004-12-03 03:42pm

That's certainly possible, and a ruling against Apple in this case would probably set a massive precedent for the distribution of copyrighted materials throughout the EU. Do CDs throughout the EU have different pricing?

Then there's also the possibility that Apple could charge some sort of surcharge (amounting to say ... 20%

) if you want to buy from the French store from outside France or without a French credit card to maintain their margins.

Vendetta · Post by **Vendetta** » 2004-12-03 04:10pm

Durandal wrote:That's certainly possible, and a ruling against Apple in this case would probably set a massive precedent for the distribution of copyrighted materials throughout the EU. Do CDs throughout the EU have different pricing?

Then there's also the possibility that Apple could charge some sort of surcharge (amounting to say ... 20% ) if you want to buy from the French store from outside France or without a French credit card to maintain their margins.

CDs are differently priced, but you can go to other countries to purchase them at the lower price and no-one can stop you or charge you more for them.

Keevan_Colton · Post by **Keevan_Colton** » 2004-12-03 04:37pm

Vendetta wrote:
Durandal wrote:That's certainly possible, and a ruling against Apple in this case would probably set a massive precedent for the distribution of copyrighted materials throughout the EU. Do CDs throughout the EU have different pricing?

Then there's also the possibility that Apple could charge some sort of surcharge (amounting to say ... 20% ) if you want to buy from the French store from outside France or without a French credit card to maintain their margins.
CDs are differently priced, but you can go to other countries to purchase them at the lower price and no-one can stop you or charge you more for them.

Also the physical costs of shipping, handling, warehouse storage etc affect the cost of CD's at a given location. Selling non-physical products via the web run into none of these concerns.

Charging a higher amount because you think you can get away with it is simply fucking with the consumer.

Praxis · Post by **Praxis** » 2004-12-03 05:03pm

Durandal wrote:That's certainly possible, and a ruling against Apple in this case would probably set a massive precedent for the distribution of copyrighted materials throughout the EU. Do CDs throughout the EU have different pricing?

Then there's also the possibility that Apple could charge some sort of surcharge (amounting to say ... 20% ) if you want to buy from the French store from outside France or without a French credit card to maintain their margins.

Oh yeah. Even a donut in the UK costs nearly twice as much as in the US. At least in London.

I think this is ridiculously stupid. You don't like the price, you don't buy it, simple. Apple is charging based on economic conditions.

Slartibartfast · Post by **Slartibartfast** » 2004-12-03 05:25pm

Honestly, this is how it should work, since the reason NOBODY ever buys original games/cds here is because they aren't correctly DOWNpriced for the local economy.

So I agree that they need to charge what people can afford (less in poorer countries, for example), even if it's electronic info and not a physical CD.

Praxis · Post by **Praxis** » 2004-12-03 05:36pm

Keevan_Colton wrote:
Vendetta wrote:
Durandal wrote:That's certainly possible, and a ruling against Apple in this case would probably set a massive precedent for the distribution of copyrighted materials throughout the EU. Do CDs throughout the EU have different pricing?

Then there's also the possibility that Apple could charge some sort of surcharge (amounting to say ... 20% ) if you want to buy from the French store from outside France or without a French credit card to maintain their margins.
CDs are differently priced, but you can go to other countries to purchase them at the lower price and no-one can stop you or charge you more for them.
Also the physical costs of shipping, handling, warehouse storage etc affect the cost of CD's at a given location. Selling non-physical products via the web run into none of these concerns.

Charging a higher amount because you think you can get away with it is simply fucking with the consumer.

Setting up and running servers transferring multiple gigabytes (if not terabytes) a day with massive amounts of bandiwidth isn't the cheapest thing to maintain, either...

Keevan_Colton · Post by **Keevan_Colton** » 2004-12-03 07:15pm

Praxis wrote:Setting up and running servers transferring multiple gigabytes (if not terabytes) a day with massive amounts of bandiwidth isn't the cheapest thing to maintain, either...

Except if those servers can offer the files to france for 20% less than they can less than 50 miles away in the UK...some questions about what the hell you are doing need to be asked.

Why does it cost them more to offer a file for download to the UK?

Vohu Manah · Post by **Vohu Manah** » 2004-12-03 08:48pm

Could it have more to do with the music companies themselves than Apple? Music distributers can vary from country to country, even neighboring nations.

Master of Ossus · Post by **Master of Ossus** » 2004-12-03 08:51pm

Aw. Poor babies. Apple is charging market price for something. What ever will they do? Businesses charging at equilibrium? Can't possibly have that!

Praxis · Post by **Praxis** » 2004-12-03 09:38pm

Vohu Manah wrote:Could it have more to do with the music companies themselves than Apple? Music distributers can vary from country to country, even neighboring nations.

That's very true. Apple has to pay a sort of 'tax' on every song they sell. It could be more in the UK. Or it could just be market price.

Durandal · Post by **Durandal** » 2004-12-03 11:34pm

Praxis wrote:
Vohu Manah wrote:Could it have more to do with the music companies themselves than Apple? Music distributers can vary from country to country, even neighboring nations.
That's very true. Apple has to pay a sort of 'tax' on every song they sell. It could be more in the UK. Or it could just be market price.

Possible. The article does state that MSN charges the same amount across all countries, but then again, they have different contracts with the distributors in those countries, and MSN's contracts include subscriptions. Apple's do not. It's likely that it's a combination of the contracts with the recording companies and economic conditions in the countries.

BabelHuber · Post by **BabelHuber** » 2004-12-05 12:19pm

I think this is ridiculously stupid. You don't like the price, you don't buy it, simple. Apple is charging based on economic conditions.

This is not the point. A few years back Volkswagen had to pay 200 Million Euros (IIRC) for trying to prevent that German customers buy Volkswagen cars in Italy, where they were sold much cheaper.

The court decided that any European can buy a car wherever he/she wants. Companies can set different prices for different markets, but they must not create artficial local markets for their products by preventing people from other regions to buy them.

The case is a little bit more complicated with the Apple music store, though: If you are a German buying a car in Italy, you don't pay the Italien sales tax, but the German. I don't know how this is handled if you download content from a server.