UK iTMS Violating EU Competition Rules?

[swissmann]

So Apple adjusts it's prices today and tomorrow the euro gains strength compared to the pound or vice versa. Do they adjust prices tomorrow. And as far a being a free trade zone I don't really think that makes much sense - when vacationing there our US dollar went a lot further in Greece which uses the euro than in the UK. If Apple needs to make music cost the same why don't the grocery stores need to make bread cost the same. I know it's a lot more complicated than that - but that's my point. It is complicated so how do you solve it if you are Apple?

 

[Brize]

It will be interesting to see if the justification for the slightly higher price is that the record companies in the UK take more in their cut of each song sold when compared with mainland Europe.

This is really the crux of the matter. Given that Apple had to agree terms with each country individually (evidenced by the lack of a pan-European store at this time), one would assume that the cost per song to Apple is different in each country. This, together with a higher rate of VAT, would likely explain the pricing discrepancy.

If not, and it turns out that Apple are simply overcharging UK customers because they think they can get away with it, their business practices deserve to be scrutinised.

 

[voodoofish]

If Apple needs to make music cost the same why don't the grocery stores need to make bread cost the same. I know it's a lot more complicated than that - but that's my point. It is complicated so how do you solve it if you are Apple?

The complaint is not that the pricing is different, it is that you cannot buy songs from the German or French stores unless you have a German or French credit card. With bread you can buy it from whichever EU country you want, the same way you can buy bread from any state of the US that you want, and the fact that you can't do this with iTMS is what could be illegal about it.

 

[Brize]

The complaint is not that the pricing is different, it is that you cannot buy songs from the German or French stores unless you have a German or French credit card.

Not so. If that were the case, the complaint would be with the record labels, rather than with Apple.

Of course, a pan-European iTMS would be best for consumers, and easier for Apple. Typically, it's the record companies that won't allow this to happen.

 

[donutzeatpeople]

Even though all of this legal jargon with the UK, Apple Corps, etc is annoying. It does mean something to me: that Apple is becoming more of a threat in the business world. It seems like the companies that are doing well are always the ones who are attacked the mose (i.e. Microsoft). Hooray for Apple!

 

[virividox]

if this fiasco results in lower prices for the consumer then great thats all i really care about starving college student here

 

[macridah]

The UK has a high cost of living, so it's no surprise to me that the price of music also cost more. I bet the lease on the land, the wages they have to pay the support people, etc, in the UK cost more then they do in France and Germany.

I use to paying for higher prices since i live in northern cali, but when I went to the UK ... I was like, damn, it's expensive here!

 

[ssamani]

This is really the crux of the matter. Given that Apple had to agree terms with each country individually (evidenced by the lack of a pan-European store at this time), one would assume that the cost per song to Apple is different in each country. This, together with a higher rate of VAT, would likely explain the pricing discrepancy.

If not, and it turns out that Apple are simply overcharging UK customers because they think they can get away with it, their business practices deserve to be scrutinised.

Yeah, I've just clicked over in MacObserver that this may be the issue, not VAT or other taxes or price gouging. It may be about how much royaly payments Apple has to pay the relevant record companies in each country and also avoid the headache of dealing with cross-border distribution rights.

If one company has the rights in France and another in the UK and I buy from the French store, who do they pay? If it were a CD, the French company would get paid, but in theory you could buy a bunch of (potentially) cheaper CD's in France and sell them in the UK. If you are bringing them over for commercial reasons, rather than personal use, you would have to pay some import duties (??? not sure on how this works) but the French record company would have the rights and get paid. The law may not be easily resolvable for Apple on this one - the EU may have to legislate to deal with it.

Sanj

 

[webmatthijs]

i dont mind

i think 79p is a good price so i really dont mind. but are it is nature for men to like things cheap i will go with it. you may come this way cheaper songs, only if you want it apple!!!

 

[Sabbath]

Not so. If that were the case, the complaint would be with the record labels, rather than with Apple.

Of course, a pan-European iTMS would be best for consumers, and easier for Apple. Typically, it's the record companies that won't allow this to happen.

This is actually a substaintial part of the complaint, if we were able to buy from the French and German stores the price would be the same as Apple would know no one would buy on the UK store at the higher prices (unless their credit cards were charging a large premium for Euro transactions etc). Hence the argument of equal pricing is in response to this restriction.

If Apple is telling the truth that their costs are higher in the UK then this can only be due to music labels charging more as all other costs are in luxembourg and split between the stores (these costs is actually probably a bit lower for the UK as more traks are sold and hence and the market size is greater). Apple is just a store here we must remember it does not produce the music (ok it rips and stores it but the cost of that is negilgable compare to the amount sold). Thus this would come back on the music industry who would argue they do face the higher costs in the UK and thus justify the higher price.

 

[Badradio]

I vote with my wallet. All online music stores are overpriced and there is no way I'd pay for an album download when I can get the original in a shop. The best protest is not to purchase.
WRT my earlier comment, companies set prices within a framework of market realities; music is very big in the uk and people will pay to enjoy it. UK bands are doing very well at the moment and the market is strong for growth with new listeners taking notice of music outside of the mainstream manufactured dross. Apple are riding the new wave (quite rightly, since the iPod is one of the main drivers) and are reaping the rewards. You don't like it, you don't buy it.

 

[Brize]

This is actually a substaintial part of the complaint, if we were able to buy from the French and German stores the price would be the same as Apple would know no one would buy on the UK store at the higher prices (unless their credit cards were charging a large premium for Euro transactions etc). Hence the argument of equal pricing is in response to this restriction.

Sure, but I think the original complaint made by the Consumers' Association was about pricing. I would assume that those locality restrictions stem from the record companies, and not from Apple.

 

[mrsebastian]

this really is not apple's fault, but our greedy friends the record industry (as usual). the margins are so slim on music downloads, that if apple charged the same as germany and france they probably wouldn't make any money off itunes uk business. i have a very american point of view on this and that's if you don't like their pricing spend your money somewhere cheaper. if apple starts losing all their itunes uk business, they will change their pricing structure for you.

 

[Brize]

Yeah, I've just clicked over in MacObserver that this may be the issue, not VAT or other taxes or price gouging. It may be about how much royaly payments Apple has to pay the relevant record companies in each country and also avoid the headache of dealing with cross-border distribution rights.

I mentioned in my earlier post that it may be a VAT issue, but that's clearly not the case. VAT on recorded music in Germany is 16% and in France it's 19.6% (compared to 17.5% in the UK). As such, I'm sure it's the financial demands of the UK record companies that accounts for the discrepancy, especially as CDs are generally cheaper in France, despite the higher VAT rate.

If one company has the rights in France and another in the UK and I buy from the French store, who do they pay?

If you were to buy from the French store, the French record company would receive the royalty payment, hence the bar.

 

[The Red Wolf]

Lesser sound quality?

...Personally I havn't downloaded anything from iTunes because for £2 more I can get the full cd with far superior sound quality and can rip it to any format I like.

First thing about the iTMS. You don't have to download the whole CD if you don't want to. Selective track purchasing.

Second you cannot compare an AAC file to an MP3 file at the bit rate listed. 128 AAC is not the same as a 128 MP3. Its twice the quality. So about a 256 MP3. 128 AAC is on par with a CD. Play a 128 MP3 at the same volume on speakers to make any audiophile drool, then play a 128 AAC. Followed by a CD. Set up equipment to test the frequencies being sent out of the sound system. Then compare the results. Field tested rather than just paper numbers. You'll be surprised that AAC quality out performs MP3 and that it is almost identical to the CD. Or is this a Analog Vinyl vs. Digital CD debate? "I don't like ACC, it doesn't have the RPM distortion the drive puts on the CD at -18db." Much like snaps and pops on a record.

As for price? In British Colombia people pay twice the tax people do their neighboring province. Canada is the next target for an iTMS. If the iTMS in England were in Euro there would be an issue. Its not, its in sterling. A currency which is the most powerful in the world. Free trade based on exchange rate? Unless its live and always changing there is no way to handle that. A set price based on the financial conditions in the country makes sense

 

[swissmann]

The complaint is not that the pricing is different, it is that you cannot buy songs from the German or French stores unless you have a German or French credit card. With bread you can buy it from whichever EU country you want, the same way you can buy bread from any state of the US that you want, and the fact that you can't do this with iTMS is what could be illegal about it.

Is there a EU credit card?

 

[JDOG_]

Good for them (consumer group). Good for us (well consumers in general..).

I understand Apple is trying to stay in touch with the differing economic models of the U.K. and the rest of the E.U., but if they could have provided it a bit cheaper it would have been nice.

One could make the same argument that an iPod should cost less over there as well. I have fond memories of spending $44 on a brand-x 20-disc CD-R spindle at a curry's in London and thinking "there's something very wrong with this."

 

[takao]

Is there a EU credit card?

normally it shouldn't matter if a credit card is from germany or france or austria or somewhere else....

my guess greedy music industry (guess why music is more expensive in the UK ..because UK customers are buying a lot more music...)

 

[isaacc7]

If not, and it turns out that Apple are simply overcharging UK customers because they think they can get away with it, their business practices deserve to be scrutinised.

Err, that sounds like a perfect business model to me. What exactly is "overcharging"? If a sufficent number of people are willing to pay the price, who are you to tell them it isn't worth it? Companies are there to make money, not be nice guys. Apple is already lower priced than the competitors in Britian. If people are complaining that the price in Britian is more than it is in France or Germany, they need to understand that they are differnet markets. If they were the same market, Apple wouldn't have to go through all the silliness of different stores. You can't have it both ways, Either it is one market (with one price) or there are different markets with different prices.

Isaac

 

[Brize]

Naturally, in respect of overcharging, I meant relative to the French and German markets.

France and Germany may be different markets to the UK, but there are still EU regulations that have to be observed. I was simply saying that Apple should be scrutinised if it turns out that they've failed to observe those regulations. In any event, I'm sure the record companies are the issue here, rather than Apple.

 

[rdowns]

This from Reuters:

"Targeting iTunes is an odd choice. In Britain, Apple's music service is cheaper -- in some cases more than 20 percent cheaper -- than rivals Napster and most of the online retailers that resell the catalog of music download firm OD2.

As a result, iTunes sold over 450,000 downloads in Britain in its debut week, propelling it to what is widely believed to be a substantial market lead over rivals.

The Consumers' Association said it had no plans to investigate the pricier download services."

Conspiracy anyone??

OK, let's run with the conspiracy theory.

Reports of a huge Apple Computer settlement with Apple Corps. are wrong and the OTC are singling out Apple/iTMS because of it.

 

[Surreal]

Unfair?

WTF?

UNFAIR?

i won't even expand on the statement. the government...deciding what is UNFAIR? not...unjust...not...illegal...but..unFAIR?

 

[g4cubed]

I agree with a lot of people here that it's the record labels. Didn't Apple have to negociate separate deals with the major Labels in each country? Plus the Indies.
This, plus the cost differences from country to country has to be accounted for as well.

 

[broken_keyboard]

News flash: Apple engineers work hard in to the night to bring their music store to the UK. Wiping the sweat from their brow they proudly unveil the product and their reward is? The UK govt starts prosecuting them.

 

[chrisblore]

The main problem is that prices everywhere in Britain are so much higher than on the continent. This is because of high taxation and higher costs to companies with bases here because land is in short supply with Britain being the small island that it is and I suspect this is what is happening with iTMS (through higher costs for record labels who then have to pass this on to Apple's customers). Therefore, the real people to blame are the ones who are making the complaint, the UK authorities who, in typical British political style, are trying to shift the blame onto someone else instead of facing up to the fact that they are in the wrong (Kelly fiasco, 'dodgy dossier' etc. ).