Apple today announced that within six months it will lower the prices it charges for music on its UK iTunes Store to match the already standardized pricing on iTunes across Europe in Austria, Belgium, Denmark, Germany, Finland, France, Greece, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Sweden, Switzerland and Spain. Apple currently must pay some record labels more to distribute their music in the UK than it pays them to distribute the same music elsewhere in Europe. Apple will reconsider its continuing relationship in the UK with any record label that does not lower its wholesale prices in the UK to the pan-European level within six months.
“This is an important step towards a pan-European marketplace for music,” said Steve Jobs, Apple’s CEO, in the press release. “We hope every major record label will take a pan-European view of pricing.”
Source: Apple Inc.
Thomson Financial reports, “The European Commission said it will not take further action against Apple Inc and major record companies in an antitrust investigation over the pricing of songs on the US group’s iTunes online music store.”
Full article here.
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“Apple will reconsider its continuing relationship in the UK with any record label that does not lower its wholesale prices…”
The power of iTunes. It’s funny that Apple, once considered as villain for not creating a flat price structure across Europe, is now the hammer that will be nailing that pricing structure down. Steve sees a little farther down the road than most.
This is a serious problem in Europe. In the Euro Zone which comrpises nearly every member bu the UK, prices are relatively stable and uniform, as you’d expect.
In the UK, they have steadfastly refused to adopt the Euro. The basic reason as far as I can see is that everything in the UK is priced at roughly 2X the price of things everywhere else. People also get paid roughly 2X the amount that comparable people get paid in the Euro Zone.
This creates huge disparities between the buying power of Brits in the in the rest of Europe and the locals. For example, Brit buyers of houses throughout the rest of Europe have driven up the cost of housing to the point where entry in to the local housing market is extremely difficult for the locals.
It’s time for the Brits to adopt the Euro and harmonize their prices and salaries. This would have solved the problem that Apple faced in the UK.
It would improve their tourist business too. The last meal I had out in London cost about $100. It was a personal pizza, one glass of house wine, one expresso, and a dish of gelato. When the bill came I was in shock!
This is good news for Apple, and there is something to what grok says above. Something here, however, grates at my sense of fairness. Flat pricing benefits consumers, and I enjoy the 99¢ song model, but the fact is I KNOW some songs are better than others and have more value. A talented artist in any other field is able to sell their creations, original and copies alike, for more money than lesser talents. This corporate/government cabal that is artificially setting a dictated price is troublesome. So, while I am benefitting now from this behavior, I suspect it is a bad model to follow.
What about the TV episodes? They are ridiculously priced in the UK right now (the equivalent of $3.80 each). The press release only mentions music.
They should be doing the same for Canada and the US. We’re tired of paying more for books, music, vidoes, etc.
What annoys me is that the EU Commission said they’d drop action against the record companies. If those charging higher wholesale in the UK had pressure from both Apple and the EU to harmonize pricing it seems that things would be settled much quicker on that front.
@Spark – Hopefully the talented artist will sell more copies of their work than the less desirable songs will sell. Wide appeal seems a better way to establish value in the marketplace than having someone prejudge a song and say “Oh this is a $1.29 song vs this other song which is only worth $.75” Who would be the judge?
@ cptnkirk — just got back from the UK and Amsterdam myself and I know your pain! I saved myself the stress by just thinking of pounds as dollars, but imagining that my travel budget had been halved. I wish the UK used the Euro, but I don’t see them adopting the Euro any time soon — at least as long as the pound is as strong as it is.
For the idiot above who wants Britain in the Eurozone – forget it it. Britain must retain its independence from that mess called the Euro. Half of Europe including Germans French and Spanish want out. In order to encourage some growth they can’t use interest rates now, they have to break all their self imposed fiscal rules.
Joining the Euro would do nothing good for Britain.
And frankly, how the EU can demand flat pricing is beyond me. The costs are different in every Eurozone country let alone the UK. If you say music has to be priced the same what about every other product out there?
Nuts. The little bureacratic apparatchiks in Brussels doing their job as usual.
Way to go, Apple! Europe and running.
cptnkirk…
It’s unusual to find such an eloquent view of how the UK/Euro relationship works from your side of the pond.
However, joining the Euro will not – in and of itself – solve the problems you describe; property values will continue to be inflated in the UK because of any number of factors (being an island, still having a ludicrous amount of existing buildings & homes protected under conservation orders [one of the effects of not having had an invading army trampling across the place for nearly a thousand years], an understandable desire to maintain the countryside particularly in the South-East, a strong bias towards property ownership [not shared in mainland Europe], etc.)
As long as property values are so out of kilter, rents and salaries will remain high and so will the more extreme cases of tourist gouging; by my reckoning, your meal should have been no more than £25.00, even if you went to one of the better chains so how you managed to get ripped off by a factor of two is really a matter of shame.
“The mess that is Euro”???
Euro has been very useful for people like me who travel a lot. And it works as a barricade agains currency speculators who did a lot of damage to European (and world) economy in late 80’s/early 90’s.
As for costs being different between the euro countries, well, things like this (standardised prices in iTunes) work to dispel those differences. That’s the whole point of it – harmonising the economy of the euro zone.
Time to swallow your nostalgic pride and accept the euro. Long live €! (Kind of ironic that, on my keyboard, you get the $ symbol from Option + €.)
@spark –
I have the same queasy feelings that you do whenever an entity uses its market power to set prices. I think, however, that Apple sees that the digital market value of an artist’s work will be told not in individual song pricing, but in volume sales. A flat price distributor is what the consumer wants, and Apple is responding to that.
Eventually, if iTunes’ competitors ever get their ducks in a row, we’ll see market forces begin to act on this market in a lot of ways. Until then, we’re stuck (happily) with iTunes.
Volume sales certainly reward the more popular artist. I guess that as a patron of that artist, so to speak, shouldn’t I reward better artists by paying more on an individual basis for their work. Don’t get me wrong… I’m talking Hendrix gets the 99¢ and K-Fed gets 15¢ (I’m not pressing for $3 songs like the record companies. Actually, some marginal talents would probably net more with lower song prices. We need the digital bargain bin on iTunes.
Just lowering UK prices is not good enough. They should allow purchasing from any EU country. At the moment some Eu countries can’t use the service at all.
@cptnkirk
You were had mate! unless you were noshing out at somewhere in Belgravia
@ Hollywood North
Are you prepared to pay the price that a North America Common Market Implies? There are a hell of a lot more Americans and Mexicans than there are Canadians. Losing sovereignty for cheaper books hardly seems worth it.
Well, maybe the EU should now investigate Apple Hardware prices… Maybe then Apple would stop totally gouging UK customers. The reason for the gouging: “because we can.”
The claim that UK prices are “double that of Continental Europe” are just unfounded. I come from Spain and have lived in London for the past three years and I can assure you that a lot of things are cheaper (actually a lot cheaper!) than their equivalent in Euros thanks to the increased level of retail competition that exists here. Gadgets and market food come to my mind as the most clear examples. I understand that the tourists may feel aggravated because they do not know the place and therefore, are likely to fall into the wrong hands, but if you know your way, money can go a long way here.
These who do not believe me, check the hardware prices at apple.com stores across Europe.
Also, for those that complain that Apple is “ripping off” UK customers with their hardware prices, they should consider that Apple.com prices in the US come before sales taxes. When you compare these prices with the ex-VAT price in the UK, the difference is not that significant, and in most cases is less than 10%. Here is a quick comparison:
Apple MacBook White 2.2Ghz: US price $1299 equiv. to £661.3
UK price ex-VAT = £705.53 (a mark up of less than 7%)
Apple MacBook Pro 15.4 2.2Ghz: US price $1999 equiv. to £1,017.7
UK price ex-VAT = £1,105.5 (a mark up of 8.6%)
Apple MacPro, basic configuration: US price $2,799 equiv. to £1,424.9
UK price ex-VAT = £1,488.5 (a mark up of less than 5%)
With this decision above, the European Commission has tried and succeeded to remove another barrier to free and equal consumer access to goods and services across Europe, which is simply part of their job. And well done so far. Now as has been said access to the iTMS has to be available beyond the current selection of countries, but again the labels are the problem here. We’ll have to see how this plays out…
Macaday: For the idiot above who wants Britain in the Eurozone – forget it it. Britain must retain its independence from that mess called the Euro. Half of Europe including Germans French and Spanish want out.
You should try looking outside of Rupert Murdoch’s fantasy world. The Euro is an absolute success. The perfectly normal griping and whining after any change has basically died down to a very, very low background noise.
Very few people within the eurozone would actually want to go back to the fractured mess we’ve had before that. The european economies are now firmly and rather successfully based on the Euro and its global weight is progressively increasing.
The advantages have by now convinced both businesses and private citizens alike. That debate is simply over.
Macaday: In order to encourage some growth they can’t use interest rates now, they have to break all their self imposed fiscal rules.
Well, you might want to look at the declining value of the GBP in recent months for reference. It is a natural expression of the deflating real estate bubble in Britain, but it also illustrates how sensitive a small currency can be to the effects of local economic difficulties and speculation.
When that bubble is mostly gone, Britain’s accession to the Euro will be on the agenda again, just at a more realistic rate than the one you would have had before.
A reality check would also tell you that for instance Germany has significantly improved its compliance with the Euro stabilization pact, even though the massive costs incurred by the re-unification are still not completely digested even now.
You should really try to get some proper information instead of believing what those Murdoch rags are attempting to sell you as such. In fact, have you ever wondered if Rupert Murdoch as a native-australian-now-american media mogul with obvious and well-founded fears of anti-trust regulations is really the most reliable witness for what is in your best interest?
I’d select my friends and my information sources a bit more carefully if I was you.
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