iTunes(UK) Targeted By The Office of Fair Trading 145
dreadz1 writes "It seems that Apple is under fire for overpricing it's iTunes music for UK customers. This story from the BBC says that here in the UK we are charged 20% more for music on iTunes than the French and the Germans. Should Apple lower its initial price so that the cost+VAT is equivalent to prices in the EuroZone or should we grow up and get used to the fact that things are priced differently in different places?"
Everything is more expensive in England. (Score:5, Insightful)
Simple economics.
Re:Everything is more expensive in England. (Score:1, Insightful)
Rubbish. Besides, this doesn't make it right. Or are you one of these folks who back Apple no matter what they do?
It doesn't matter anyway, if they keep selling digital downloads for the same price as a real album, i'll carry on downloading. I was looking for a book today on Amazon ('Bringing Down The House'). It was cheaper as a real bona-fide book than as a download. Go figure.
just switch to the bloody euro (Score:3, Funny)
Re:just switch to the bloody euro (Score:1, Interesting)
They would have an argument if they were overcharging on real CDs. However, a digital download costs the same to send to Germany or the UK, so why the discrepancy? It's profiteering isn't it?
Re:just switch to the bloody euro (Score:2)
Re:just switch to the bloody euro (Score:2, Insightful)
I assume the 99 cents/pence thing is probably marketing led, i.e. what they can get away without going over to a gnarly looking 3 digit number. If they can't justify the difference between us and the rest of Europe then they deserve to be penalised. I thought they weren't allowed to restrict trade within Europe due to EU law, hence why can't I buy from the German site?
Re:just switch to the bloody euro (Score:1, Informative)
probably because there isn't one music body that encompasses all of the EU; distribution rights are still country based.
Re:just switch to the bloody euro (Score:5, Funny)
Re:just switch to the bloody euro (Score:5, Insightful)
First off, any form of taxation on the product could very well be different between the German and UK markets.
Second, distribution rights are frequently not 'universal.' It's normal for the rights to distribute some form of IP to be limited in scope to specific regions. It would at least be theoretically possible for Apple to be charged different amounts for the rights in the UK as opposed to Germany...
That said, the article itself doesn't directly address either of those possibilities, however the general impression the article gives(as well as the phrasing of Apple's reply) implies that it is probably a case of Apple pricing relative to the competition by choice. Still, the main point is the costs of sending a digital download to different countries is not always the same since there are significant factors in the price above and beyond the simple case of 'how much does the server/bandwidth cost.'
Re:just switch to the bloody euro (Score:2)
Re:just switch to the bloody euro (Score:1, Insightful)
Ignoring your inane suggestion for a second I don't see anything wrong with Apple's behaviour. They're not a monopoly and they can charge as much as they like for their product. If people find it too expensive they shouldn't buy it. If sales stayed low Apple would soon cut their prices.
Re:just switch to the bloody euro (Score:3, Funny)
Well, it worked for the US.
Re:just switch to the bloody euro (Score:2)
Could you please tell me WTF your independence and especially your freedom has to do with your goddamned currency?! Can you tell any noticeable differences occured in any of the euro zone countries since 1.1.2002 (or since 1.1.1999, for that matter), except that the notes and coins look different and their nominal value differ from the former domestic currencies? No? Well, that's because there isn't any!
Th
Re:Everything is more expensive in England. (Score:2)
Re:Everything is more expensive in England. (Score:2, Informative)
It could be argued that preventing people from other parts of the EU to buy things from say iTunes music store in Germany for no other reason than to charge more in another part of the EU, is in breach of the EU legislation on free trade. Companies within the EU does not have the right to stop people from buying their products in another part of the EU.
To compare differences on pricing between the US and
Re:Everything is more expensive in England. (Score:2)
They should lower thier prices (Score:3, Insightful)
The internet is a difficult place for pricing, I cannot see any justification for this price increase, so it should go. If however thier costs were equally higher for serving to the britpub.crowd then I would say leave it.
Seems to me they just scale thier price to economies.
Rotten blighters. What-ho-chaps.
Modded interesting? (Score:2, Insightful)
Blame
Corporate anti-globalization (Score:4, Interesting)
However, this doesn't really matter in the long term because producers are competing with each other internationally too, driving price down. In fact <waving hands>since capital is freed to seek the most efficient distribution of resources, productivity goes up on one hand, and competition drives prices for goods down even more than wages. This means that while on paper you make less money, your real buying power is increased and everybody wins.</waving hands>
But --- corporations don't want to compete on price internationally, whether it is on prescription drugs, or entertainment like music and moves. Differential pricing allows them to make greater profits. But the whole system of assumptions that resulted in everybody winning falls down if corporations are not forced to compete on price internationally along with labor.
Re:Corporate anti-globalization (Score:3, Insightful)
Re:Corporate anti-globalization (Score:2)
Kick out croonies of big business and rich people from your government and you will either
EC (Score:4, Insightful)
Re:EC (Score:2)
It break
Re:EC (Score:2)
Re:EC (Score:2)
Growing up (Score:2, Interesting)
Eh, that is not growing up. It's the companies that need to realize that people will buy where it is cheapest and will feel cheated if the price is higher where they happen to live.
Re:Growing up (Score:3, Insightful)
I'm unhappy when a DVD costs significantly more in the UK than in the USA. It costs very, very little to ship an inert, imperishable, small and light object across the Atlantic.
I'm utterly livid when a music download costs more in the UK than, well, anywhere. It costs nothing to transfer.
Geographical pricing differences on virtual products like the
blame the UK government (Score:4, Insightful)
I assume that the prices in Germany and France are the same, because they have the same currency.
btw Apple hardware is much cheaper in the US than in Europe - how about complaining on this?
Re:blame the UK government (Score:2)
And the solution I hear from Europeans is to, get ready, increase the taxes in the US! Tsis is the exact argument they make about gas prices being cheaper here, and I would bet a week of your pay that they would make the same argument again. But then I guess those 'free' government services have to be paid somehow ...
Re:blame the UK government (Score:2)
http://www.psr.keele.ac.uk/docs/efaq.htm [keele.ac.uk]
Not that I'm saying switching to the Euro would be a bad th
Re:blame the UK government (Score:2)
I'm sure in 1971 there were people arguing that making 100 pence=1 pound would just be too confusing. I mean, if you knew something cost a shilling and 3 farthings, you'd just be lost trying to figure out if getting the same thing for 6p was a good deal or not after the changeover.
Re:blame the UK government (Score:2)
Adopt the euro, pay the same price... (Score:4, Interesting)
People in the UK have always been gouged on everything. What sells for $1 in the US usually sells for £1 in the UK (and now 1 in most of Europe). Great for foreign companies selling into the UK market. Not so great for UK companies that have to pay inflationary wages to local employees just to survive.
I don't know why the UK puts up with this state of affairs. I wouldn't be surprised to learn those who gain under the present arrangement might manipulate of nationalist sentiment against the euro through media outlets they control.
-Isaac
Re:Adopt the euro, pay the same price... (Score:5, Interesting)
Go to any large supermarket in Calais, France (closest city to England, ferry and Channel tunnel terminal) on any given Saturday, and you'll see about 2 cars out of 3 are from England.
If you go shopping every 2nd week, you'll easily make those 100 pounds back.
The iTMS isn't especially expensive when compared to other goods in England. It's just that about everything is outrageously expensive there.
Re:Adopt the euro, pay the same price... (Score:5, Informative)
Re:Adopt the euro, pay the same price... (Score:1)
At least our politicians are creative about names for the taxes on fuel: its not just sales tax but "Environmental Tax"..
Re:Adopt the euro, pay the same price... (Score:2)
The number of our international problems that have derived from the fact that we drive SUVs and demand massive amounts of cheap oil is just stupid.
Re:Adopt the euro, pay the same price... (Score:1)
Re:Adopt the euro, pay the same price... (Score:3, Insightful)
The number of our international problems that have derived from the fact that we drive SUVs and demand massive amounts of cheap oil is just stupid.
I don't drive an SUV (I drive a sport wagon because I have musical instruments that are large), but I still have to fill my gas tank up about once a week for about $30.
High fuel taxes work great in places like Europe where everything's close to everything else and there's mass transit between just about any two points y
Re:Adopt the euro, pay the same price... (Score:1)
Great, so get a fuel efficient car. If you buy a 6,000 lbs SUV, that's basically free anyway if you can use all the deductions, the least you can do is take it up the ass on gas prices.
Re:Adopt the euro, pay the same price... (Score:2)
also, there's the important fact that you choose where you live and work, for the most part. paying more for fuel changes the economic justification of some of those choices. deal with the change. the burd
Re:Adopt the euro, pay the same price... (Score:2)
What a bullshit. I live in Finland, which is much more rural as a whole than the vast majority of the US, and there is no problem whatsoever to reach any town with >5000 or so relatively easily using the combination of trains and buses.
Just plan and build a good public traffic network, and you won't really need a car except for some rare cases when you actually need to go to countryside. Yes, peop
Re:Adopt the euro, pay the same price... (Score:2)
Re:Adopt the euro, pay the same price... (Score:2)
Re:Adopt the euro, pay the same price... (Score:1)
Re:Adopt the euro, pay the same price... (Score:2)
Re:Adopt the euro, pay the same price... (Score:2)
Re:Adopt the euro, pay the same price... (Score:2)
it makes me glad i don't have a car here (not to mention that just seems like a stupid idea, living in the city itself). do i need to pay extra for water if i put it in my batt
Re:Adopt the euro, pay the same price... (Score:2)
One word... (Score:2)
-fred
Re:Adopt the euro, pay the same price... (Score:3, Interesting)
Someone mod that +5 Insightful. It's primarily Rupert Murdoch we have to thank; his news empire is implacably anti-Europe, mainly because the rest of the EU doesn't let him do exactly as he pleases.
As a result, there is much propaganda about, aimed at making sure we keep our currency, which is an ancient and proud symbol of British so
The buyer's location has ceased to matter (Score:4, Insightful)
Of course, content-owners don't like this, 'cause they like having their own little state-sanctioned monopoly on their own content and for some reason can't stomach the fact that someone in another country might want to sell the same stuff.
The way I figure it, if the original rights holders have been compensated, then any and all cross-border traffic in IP goods should be permitted. Why should I care if $$ go to Warner Brothers in the UK or in the US, as long as it goes to WB?
Solve that problem, and pricing disparities between different countries' stores will eventually disappear (or the stores will, 'cause they're not being competitive).
Re:The buyer's location has ceased to matter (Score:2, Interesting)
Copyright laws differ (Score:1)
What if a work is public domain in one country but copyrighted in another? I can see where this would be a problem in relation to 20th century classical music, where the cutoffs for the perpetual copyright regime differ country by country.
Re:Copyright laws differ (Score:3, Insightful)
Well, one problem with that is that, intellectually, that doesn't make any sense. A book isn't less of a book in a country where it's still covered by copyright (or where it's in the public domain). It's still the same story, the same idea.
Look at it this way: If you spend two years working in Germany, and buy a bunch of books and CDs, should you be forced to forfeit those when you return home to the US, simply because the copyri
Sonny Bono (Score:1)
So now we've got WIPO and DMCA (and associated anti-consumer isues), but we're still bound by 18th century notions of nationally-defined copyright controls? How crazy is that?
The Bono Act was supposed to be a step toward solving that for the majority of works, but it takes a few years for the rules of expiration to take effect, especially given that copyright term extensions usually don't remove works from the present public domain.
Comment removed (Score:3, Funny)
Re:An Americans perspective (Score:2, Informative)
The CPI figure (Consumer Price Index) is down to 1.3% from 1.4% in July.
Figures taken from the BBC [bbc.co.uk]
Re:An Americans perspective (Score:5, Informative)
Re:An Americans perspective (Score:2)
Comment removed (Score:4, Funny)
Re:as an American... (Score:3, Funny)
Re:as an American... (Score:3)
The criminals were sent to Georgia and Austalia IIRC.
Colonies were often originally settled by corporations, the settlers being a mix of get-rich-quick types and the more aggressive/optimistic ordinary folk tyring to escape the European economic caste system of the 17th and 18th century. Some colonies were originally settled by groups belonging to persecuted reli
Currency's fluctuate (Score:3, Interesting)
The VAT is an English problem.
The way to prevent this is to have the UK peg the pound to the value of the Euro (China does this to the dollar). This is not easy. Maybe it Euro time.
For what its worth some tourist in europe I've heard complaining about everything in England and Switzerland costing more. It might be becuase its different currency your getting gouged on prices becuase its hard to convert/compair
Re:Currency's fluctuate (Score:1)
Unfortuntely when the UK last tried that (with the pre-euro Exchange Rate Mechanism - ERM) it caused amazing problems, the peg wasn't at the right value (how can you determine the right value?) and the economy really suffered. Finally the UK dropped out of the Exchange Rate Mechanism in September 1992 and the scheme was abandoned.
The problem with pegging is that the real value of the currencies fluctuate and central banks then need to spend reserves to keep the peg in place, which is fantastically expensi
A better question (Score:4, Interesting)
VAT rates are different (Score:5, Informative)
- VAT rates are different for different countries in the Euro-zone. I think it is crap as well, but it is a fact of life. Most of the time you have two or three VAT rates on goods. 0% VAT, a basic rate and a high rate. The zero and basic rate are generally applicable to goods that are considered to be "basic necessities", e.g. food. The high rate is for "luxury items", e.g. electronics, perfume, services,
E.g. the VAT rate of books in Belgium is 6%, in the UK it is 0%. The VAT rate on a computer in Belgium is 21% and in Germany 16%. This causes serious price differences. Some companies decide to absorb the VAT differences and hence charge less excluding VAT in one country than the other, to avoid price differences. Others do not.
I live in Belgium, and it sucks to be in a country where everything execpt food is charged 21% extra... Well, social security is good though...
Local legislation, wages, taxes,
All these factors also causes end user prices to differ between countries.
I don't think that is fair at all, but it is the way it is... We can only strive for more European harmonisation... I for one, would like to have one single (read 'lower') VAT rate, tax rate, etc... but others (like the UK) are more protectionistic, and don't want the EU to take to much power....
The last time I checked the price excluding VAT of Apple harware in the Netherlands is higher than in Belgium, so I suspect Apple tries to harmonise the prices between the Netherlands and Belgium
Exchange rates fluctuate Exchange rates could be the reason for prices differences between the UK and the EU mainland. If the UK wants to avoid that: join the Euro! But, this also means companies like Apple have to hedge against exchange rate differences. (For information on hedging, see google.) Basically you make a contract to buy x amount of EUR in the future at a given exchange rate now. This COULD be safer for a company if it anticipates changing exchange rates correctly, but carries costs as well. These are also factored into the product end price.
And, as I said before, do not underestimate the wage effect...
By the way,
Inter-company trade does not have to pay VAT. VAT is a tax paid by endconsumers (private persons), companies that trade with each other pay VAT on goods they buy, but can redeem this from the tax authority. Companies charge the private persons VAT, and pay it to the government. It is a difficult system, search on google if you want to know more.
Re:VAT rates are different (Score:2, Informative)
That is not entirely true. If a company buys goods for its own use, it has to pay VAT. Only if the goods are intended for resale no VAT has to be paid or the paid VAT can be reclaimed. That way the VAT is only paid once, by the person/entity that uses the product.
The system is not THAT difficult. As a company, you sum up the VAT included in everything you buy(called Vorsteuer in German) and the VAT for everything you sell(Umsatzsteuer). The difference betwee
Re:VAT rates are different (Score:3, Interesting)
The system is easy for trade within a country, or simple goods exchanges across borders.
However, the system is more difficult, because of "triangle-operations" in the EU, and the fact that you have to take care of the 'location' of the service or delivery. In addition to that, every country adopts the same VAT legislation by Europe, but can (within certain boundaries) add or change specific rules. I
Re:VAT rates are different (Score:2)
IMO that too, but as this story (and TFA) is about the UK I'd like to emphasize that UK is one of the EU member states most heavily opposing any tax harmonisation.
That said, it is good to remember that for an average EU citizen the system is simple: The VAT rate you pay (as a consumer) is the VAT rate of the seller's state; for exampl
Price too high? (Score:5, Funny)
Re:Price too high? (Score:1, Funny)
here's hoping i got the joke (Score:1)
no, you didn't get the joke (Score:1)
Re:no, you didn't get the joke (Score:1)
Euro (Score:1)
Does it go both ways? (Score:3, Funny)
And why look at just France and Germany, btw? Given that 1 euro is currently worth slightly more than 1 US dollar, you can make a solid case that European customers still pay more than Americans. Will the UK Office of Fair Trade again take Apple to task for charging a higher price in the UK than it does in some other country?
If I were Apple, I'd take that deal and then insist that workers in the UK charge more per hour than workers in Indonesia, and landlords charge more per square foot than do landlords in Siberia, and ask them to make sure that I got the same deal in the UK that I can get elsewhere.
Who knows? This could be an end to any problems the UK might currently have with outsourcing. They could call it the "Bring the Third World Home" intiative.
Re:Does it go both ways? (Score:2)
And in other news... (Score:1, Funny)
Two important details (Score:1)
Also, iTunes has not been targeted by the Office of Fair Trading. The OFT has been asked to look at it by the CA (the Consumers' Association, publisher of Which magazine.)
It's just simple revenge... (Score:3, Funny)
That's not the revenge (Score:2)
-fred
Why iTunes Music Store? (Score:5, Insightful)
Consider these 3 paragraphs from a Reuter article [yahoo.com]
- 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.
- Graham Vidler, head of policy for the Consumers' Association, said he was not aware of a single complaint from a British consumer about Apple's pricing scheme. "What we are saying is we believe iTunes could be made cheaper," he added.
- The Consumers' Association said it had no plans to investigate the pricier download services.
Basically, they summarized that consumers did not feel ripped off by iTMS and yet TCA called iTMS a rip-off. There are other music services with much pricier songs, but they are not rip-offs; iTMS is. Instead of praising iTMS lower price, they called for a probe with words such as "rip-off" while ignoring the pricier download services.
TCA totally ignores that Apple licensed the songs from the labels which is different from a country to another. Price difference may be the result of the British labels' greed and judging from other services, that is the case. Tell me I am paranoid, but I bet if you look carefully who's behind the complaint, you'll find Microsoft or Napster or the likes of them.
Same Old Same Old (Score:4, Insightful)
Some here have failed to grasp VAT - I can only assume that these people are communists, unfamiliar with taxation systems and the exchange of money for goods. (And, as an aside, should the HUAC get wind of this - you know, harbouring socialists and what have you - CowboyNeal can expect the FBI on his ass. Metaphorically speaking, of course.)
Others note a strong pound juxtaposed against a weak Euro or dollar, placing their faith in the fluctuation of international currency to balance the situation. I await with some glee the comedown of the pound - in the dollar's case, this necessitates a change of president, I believe, and, alas, in the Euro's case, nothing short of a blue moon.
The thing is, the UK is fundamentally different from the rest of Europe, a state of affairs brought about more by geography than anything else (the Japanese are similarly afflicted). It will not change. To cite two factors - VAT is lower than the French rate of 19.5% or the Italian one of 20% (if memory serves - corrections welcome) and employment legislation is more company-friendly (contrast our 48 hour working week with France's 35 and note that the Netherlands' figure is similar) - and yet British prices still manage to consistently exceed their continental equivalents - cars have always been a stellar example.
None of this matters though. Britain is, perhaps by statute, more expensive than pretty much anywhere else - this cynic includes Japan in that sweeping generalisation having had ample opportunity for comparison. In fact, it is surprising that this has got as far as the OFT - normally the Beeb is only able to whet the skeptic's appetite for feeling hard-done-by with stories of complaints by consumers' rights organisations.
Nothing will change.
iqu
(If you like my cynical tone, feel free to read my sometimes-updated blog [morisakihe...dustry.net].)
Re:Same Old Same Old (Score:2)
you're not just a cynic, you're horribly uninformed and detached from reality. the EUR is still strong against the pound compared to Jan '01, Jan '02, or Jan '03 level
price is based on demand (Score:2)
Forgive the ignorant American (Score:2)
You've all missed the point! (Score:4, Insightful)
To sell things in the E.U. there are certain rules you have to obey. As it stands, Apple are clearly not obeying those rules, and so they will lose any legal action which arises. The problem is not that the tracks in the U.K. store are too expensive, but that Apple are actively preventing U.K. consumers from buying tracks from the French store or the German store.
A company providing goods or services in one E.U. country is not allowed to prevent purchases from people in another E.U. country. This principle of the Common Market exists in E.U. law, and this applies to all those countries which are members of the EU including those which, like the U.K., have not adopted the Euro currency.
To obey the law, Apple must allow people in the U.K. with a U.K. credit card to purchase songs from the French or German stores (or people in France, should they wish to, to buy from the U.K. store, for example).
They do not need to allow anyone in the E.U. to buy from the U.S.A. store. Any price comparison between Europe and the U.S.A. is bogus as far as this discussion is concerned. It is not at issue here because the E.U. rules do not apply to the U.S.A. sales operation.
Apple are being targeted because they have stores selling to the U.K., France and Germany, where the E.U. internal free trade rules apply.
(My guess is that the record companies are charging more for the rights to distribute the music in the U.K. than elsewhere. This may also be illegal under the same rules. However, I don't suppose Apple want to take the music companies to court, lest they in turn revoke Apple's right to distribute anything... 'tis a sticky situation, and no mistake.)
Re:You've all missed the point! (Score:1)
What on earth are you talking about? Are you saying an agreement between Apple and the BPI (or whoever) allows Apple to flout E.U. trade law? Because it doesn't.
Don't you think it would be much simpler for Apple to say get contracts signed with, say, French labels and stream the songs to all people in the EU? They don't have to pay lots of money to lawyers and they don't have to wait a long time to open it to Spain, Portugal, Italy, et
Re:You've all missed the point! (Score:3, Insightful)
Well exactly, they aren't complying with EU requirements, which is the basis of the complaint. It would seem their choices were:
i) bang the music industry's heads together until they can reach a pan-european licensing agreement.
ii) don't run the iTunes Music Store in Europe.
iii) run the
Different pricing in different regions? (Score:3, Insightful)
I can walk into a store here in Canada and get Simpsons Season 4 for $45 CAD. Or I can take a day trip down to Seattle, and find Simpsons Season 4 for $45 USD. I noticed the same pattern with pretty much all other CDs and DVDs I saw in the US store. The numbers on the price tag in the US are about the same as they'd be back up in Canada - except with the differing dollars, that makes it considerably cheaper in Canada!
So if Apple's in trouble for selling iTMS songs for 20% more in the UK, should American CD and DVD retailers get in trouble for selling their products for 20-30% more than they're sold for in Canada?
Re:Different pricing in different regions? (Score:1)
eh? (Score:2, Offtopic)
overpricing it is iTunes - what does that mean?
Re:WTF (Score:3, Interesting)
VAT law in the UK is ugly, some th
Re:WTF (Score:3, Informative)
Re:WTF (Score:1)
Re:WTF (Score:5, Informative)
You bleeding idiot.
"In the UK, iTunes charges punters 79p (120 euro cents) to download one track. In both France and Germany the cost is just 99 euro cents - about 67p."
Not 20% more numerically in different currencies, 20% more in value, in the same currencies. You really thought people couldn't account for the exchange rate? Shocking.
Re:WTF (Score:1)
Re:WTF (Score:2, Informative)
Also there are EU competition laws about charging different amounts for the same product in different EU states if the product is sold from the same location.
Re:Brits, grow up and join Euroland (Score:1)
I'd love to. Make it happen. Funnily enough, it's outside my control cos I'm not running the country.
Until then, give us cheap stuff.