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Wednesday, 05 October 2011 21:54

iTunes price gouging: Apple not to blame

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It is ironic in a week when the Australian Federation Against Copyright Theft (AFACT) is going into battle yet again with ISP iiNet that the NSW Minister for Fair Trading Anthony Roberts has accused Apple of price gouging through its Australian iTunes online store. Could Mr Roberts be whipping the wrong horse and should instead focus his attention on the members of AFACT?

 

It may come as a shock to most Aussie consumers but Australian retailers, whether they be online or bricks and mortar, are not necessarily making bigger margins on imported products than their US counterparts. The retail price they charge simply reflects the wholesale price they pay to the multinational vendor, whoever that may be.

If we were discussing an Australian Apple store charging 60% more for computers, iPhones or iPads than the US then Apple would have a case to answer because Apple is the manufacturer and thus controls the prices it charges in all of its global markets. In fact, Apple has already been forced to address this issue at least to some extent.

In the case of iTunes, however, Apple's Australian online store like its US store, is merely a retailer of the products supplied by the digital media industry, including music, movies, games, e-books and so on. For music, movies and games, the prices iTunes charges in Australia reflect the prices it has to pay to sell products in the Australian market.

Those who doubt that this is the case should take a look at what has happened to the books market in Australia since the advent of Amazon. Bookstores are fast becoming extinct in this country.

In the old days, Australian bookstores were often forced to charge double the price for the same books as US bookstores. Now Australians can buy books through Amazon and other online stores for the same price as anyone else in the world, leaving aside higher shopping costs, and e-books are exactly the same price.

Australians who happen to be regular Amazon shoppers will notice that the same thing does not hold true for music, movies or games. If you try to buy a DVD or CD from Amazon, you'll be told that they can't ship that product to this market.

This not because Amazon doesn't want to sell everything it can to Australian customers, including movies and music, at the same price as it sells to its US customers.

Amazon in effect has been told by its entertainment industry suppliers that Australians, heaven forbid, simply cannot get access to music and movies at reasonable prices because they've been used to paying unreasonable prices for so long and Australians are a bunch of bunnies ripe for the taking.

This outrageous state of affairs has nothing to do with Apple. The sad truth is that Apple should not have had to set up an Australian iTunes store at all if the global entertainment industry that sets the outrageous prices we get charged here were forced to behave like the books industry.

We could just as easily be downloading music, movies and games from iTunes in the US, as well as Amazon and a plethora of other global stores for exactly the same prices as US consumers pay.

So if the NSW Minister for Fair Trading Anthony Roberts wants to go after anyone for price gouging Australians in the digital entertainment business perhaps he should be talking to the big movie studios and recording companies. In fact, perhaps he could pay some of them a visit and sit in on the hearing between AFACT and iiNet tomorrow.

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Stan Beer

 

Stan Beer co-founded iTWire in 2005. With 30 plus years of experience working in IT and Australian technology media, Beer has published articles in most of the IT publications that have mattered, including the AFR, The Australian, SMH, The Age, as well as a multitude of trade publications.

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