“A complaint that Apple’s music download service is “ripping off” UK customers was referred to the European Commission today. The consumer body “Which?” wrote to the Office of Fair Trading (OFT) in September, asking it to investigate why prices for using the iTunes service are 20% higher in the UK than in France and Germany. The OFT, the competition watchdog in the UK, has now asked the European Commission to look into the matter,” The Evening Standard reports.
“Phil Evans, principal policy adviser at “Which?,” formerly the Consumers’ Association, said: ‘UK consumers are getting a raw deal from Apple.’ It costs UK music fans 79p (120 euro cents) to download one track, yet in France and Germany the price is just 99 euro cents (68p),” The Evening Standard reports.
“The OFT said in a statement: ”Which?’ complained to the OFT under the Competition Act 1998 that Apple’s iTunes service discriminated on price according to the user’s country of residence and that UK users were unable to benefit from cheaper prices charged on other European iTunes sites, as access to sites serving other countries was barred to non-residents. The OFT has decided that the European Commission is better placed to consider this matter, in particular as Apple iTunes operates in more than three EC member states.’ No one from Apple was initially available to comment,” The Evening Standard reports.
Full article here.
Related MacDailyNews articles:
UK’s Office of Fair Trading investigates Apple’s iTunes for ‘anti-competitive practices’ – September 15, 2004
Does this story really have merit ??
Or are there some mitigating circumstances involved here ??
C’mon UK-ers…. shout out on this one !
Here’s the problem. The music labels aren’t a part of the EU (for obvious reasons) and the EU apparently hasn’t dictated licensing terms across the board. Thus, different licensing agreements had to be made in the UK vs. Germany and France. Simple as that. Don’t yell at Apple for this one. Yell at the music labels.
I’m guessing the labels charge different prices in different countries , also VAT levels vary country to country . There is also the exchange rate betweent the sterling and the euro , which varies on a day to day basis .
It will be interesting to see if the european commision will want to open this can of worms .
Afraid it does have merit – Apple charges more in the UK than elsewhere in Europe and blocks UK residents from purchasing songs from the European stores when we have a free market here and you are not supposed to block the free movement of goods and services within the EU.
It would be like Apple telling California residents that the have to pay more for iTunes and that they cannot by from a cheaper iTunes store in say New York, were iTunes local to each state.
Joel , totally agree .
Was typing while you were submitting
I do not live in the UK, but I would bet that the reason it cost more is due to licensing and taxes. It is most likely NOT that Apple is trying to rake its customers over the coals.
The Dude abides.
blame the UK labels for this one folks, not Apple.
Heh, heh, heh…
You said, “Probe.”
Huh, huh, heh. That’s cool.
Benn,
Are the taxes and costs of licensing the same in the UK as they are across Europe? If so, then there is a case…. if not… then it is justifiable. Apple should have a right to claim the same profit in the UK as it does other parts of Europe. If the costs of licensing and taxation are high enough to force Apple to raise the price, then that is what was needed.
I bet that Apple would have liked to have made it the same price across the board in Europe, but then either Apple would lose money (or profit) or they would over-charge the rest of Europe.
The Dude abides.
Joel..
Yours sounds like the voice of reason, here… and I would imagine you are correct…
It seems that whenever someone is the top dog at something… there will always be some “bottom-feeders” trying to take a swipe at them…
I gotta think that when negociations are in progress, everything is taken into consideration, including the price structure… and Im quite sure His Steveness wants to be competitive, and not price himself out of the market..
Of course Apple’s picking on the UK customers now, just because the Brits didn’t wanted to get involved with the euro as their leading currency.
They just wanted to stick with their good ol’ pound and now they are confused about the pricedifferences.
I bet “Which?” was paid by Microsoft or Napster to get the investigation going. Maybe this will get a bigger issue going … price fixing or collusion by the record companies over there.
You gotta love conspiracies.
” width=”19″ height=”19″ alt=”grin” style=”border:0;” />
If iTMS is pan-European, Apple must allow me to either a) buy a song from iTMS France, Spain etc., or b) offer the same pricing across all territories. To win this case, Apple need to prove that iTMS UK is a different company to e.g. iTMS France. Does anyone know the setup of iTMS across the EU? Is it run on a franchise basis, effectively creating individual companies for each country? If so, I don’t see how the EU can have a problem. If not, then Apple will have to cut it’s UK pricing to match that in the Eurozone, which would finish the UK iTMS for good.
We pay more for everything, not just music. And it’s completely ridiculous to single Apple out for this… what about the cost of CD’s from brick & mortar stores? �14.99 for a new album – what a rip-off. Yet the average British customer just accepts it, because we are powerless to do anything about it.
It costs more to live in England, end of story.
Fuel, food, energy, music, practically everything costs more in the UK.
UK speaking.. 1) agree with joel on licensing issues. Music producers/distributors might have the real problem if it turns out they are charging Apple differently within the EU.. and 2) funny that the Times recently said Apple only got its UK iTMS market share by undercutting its competitors – as has REAL over the Bandaid song..
In the UK we normally expect to pay a sterling price that is close to the $ price in the US. Our 79 pence price is the equivalent now of $1.53…!! Which is a welcome change.
If they just want to clobber Apple they have a problem and should save their efforts. Fine if the want to get deeper in to the morass that is music distribution…
JadisOne
This is a test case to sound out how the digital economy is going to work across Europe. Apple are the first company to try and achieve a digital media service within the EU. Once a legal precedent is set, everyone will know where we stand. No conspiracy here, just a need to set a standard.
F(r)ank u very much,
It would be interesting to see a Global Monetary Unit (GMU for short) that EVERY country used. Might take away from the money conversion headaches. But I am sure it would cause some other headaches in the process.
Dave H
“then Apple will have to cut it’s UK pricing to match that in the Eurozone, which would finish the UK iTMS for good.”
Apple will not cut thier price, the rest of Europe iTMS will raise there price. Even if Apple did cut UK price, it would still raise Europe prices to make up the difference, play the numbers game and figure out how much to raise to make the profits same as before. So everyone will pay the same price… it will just be more for some because some whiney bloke got his knickers is a ruffle. Typical, one person (or group) screws up a good deal for the rest.
The Dude abides.
Dude
Unfortunately though, the Euro and Pound are not pegged to each other, so the pricing would have to change on a daily basis to meet the law. Much easier (but less profitable) for Apple to cut away the UK, or even sell the UK iTMS to a franchisee.
Crazy, I know, but the issue needs to be sorted, not least because it is also keeping iTMS out of Denmark, Sweden and the ten new EU members.
Hey, guess what folks? Since the UK so far has steadfastly refused to commit to full EU membership, then they don’t get the full benefits thereof.
A better analogy to this situation would be a pricing structure difference between the US and Puerto Rico, rather than say New York and California.
If you don’t like the price you don’t have to buy it. You can always get a WiMP (Windoze Media Player) and buy your music somewhere else.
http://www-hoover.stanford.edu/bios/friedman.html
Then move to Canada, they have the lowest prices yet!
Otter
there is a price differrence in Puerto Rico also though I can buy songs from iTMS I am not allowed to buy from the apple store or have access to educational pricing. Dell has a price difference also (in their ads look for “offer not available in PR”) though IBM does not.
Benn said, “It would be like Apple telling California residents that the have to pay more for iTunes and that they cannot by from a cheaper iTunes store in say New York, were iTunes local to each state.”
Not really, because Californians and New Yorkers use the same currency. A better comparison would be the US and Canada, and guess what? Because of the exchange rate, Canadians get their songs cheaper too. It seems that this is merely a matter of exchange rates, no? That’s just the way it works. Tough luck. That’s like me complaining that houses are less expensive in Roy, NM than they are here in Albuquerque and suing to lower the cost of housing here because of it. I don’t think there’s any case here.
This is probably good news for consumers, Apple and the industry.
The primary reason for price differentials is the music business’ fragmented structure.
Tax rates and the cost of doing business varies from country to country.
Exchange rates vary, sometimes quite widely, like 20% in a matter of months.
Want to blame Apple for something? their desire to have easy to remember fixed prices, 99�, 79p etc.
I can’t see any decision arising that will censure Apple to any significant extent, they have done the best they could under the circumstances. What I do see is the EU knocking some sense in to the record companies. It will take a while, the music business will surely fight to keep their revenue stream.
Napster had big problems in negotiations to sell music around Europe, they gave up and only opened in the UK (have they other EU stores now?).
Apple has done pretty well getting the music industry to rationalise, it’s now up to the EU.