At an IT pricing inquiry in Canberra, Australia, the Australian bosses of software and hardware companies Microsoft, Adobe and Apple have been taking the stand to justify why Australians have to pay much more than US consumers for identical products.
Apple boss Tony King claimed that the prices of the company’s products were largely comparable with the US, and blamed rights holders for the mark-ups on digital media. “The content industry still runs with perhaps old-fashioned notions of country borders or territories or markets,” he said, adding that it’s Apple’s goal to offer equivalent pricing around the world.
I’ll look forward to buying an iPhone or Mac for the same price as people in India – or even the US – here in the UK, instead of the mark-up we currently experience. Maybe King can tell us when that will be?
I sympathise with Australians’ grumble for having to pay up to 70 percent more for AC/DC’s Back in Black album on iTunes. Apparently the mark-ups on movies, music and films sold by the digital retailer in Australia range between 30-70 percent, which is just crazy – but it’s just as crazy to suggest everything should cost the same in every single country around the world. I also have an issue with deeming the notion of country borders and markets “old fashioned”.
It reminds me of Sergey Brin telling the Guardian: “If we could wave a magic wand and not be subject to US law, that would be great. If we could be in some magical jurisdiction that everyone in the world trusted, that would be great.”
(Yeah, right, a world where Google didn’t need to follow the law would surely be Utopia, Brin.)
But back to the issue of pricing. Surely markets must somewhat reflect the average wage in the country the products are sold. Should we expect a download in India, where the average wage is $981 a year, to cost the same as in the US? If so, music would be a luxury item in India – just as, I’m sure, an iPhone is.
Of course there is, indeed, already a borderless “market”, where the price of a download is $0.
Which is also one of the many flaws with the recently published European Commission study claiming music piracy doesn’t hurt digital music sales. It didn’t take into consideration the effect this borderless shadow market has on the price people expect to pay.
In China, copyright enforcement has been pretty much non-existent up until now. In a country where major music websites such as Baidu allow users to download as much music as they like for free, revenue from physical format sales declined by 95% since 2003.
A couple of years ago, after settling a number of lawsuits, the major labels started licensing some of these sites, but with consumers used to paying nothing the services continue to be free and the per-play and per-download fee they pay the labels is a fraction of what services in the US pay. The local record industry describes its current state as “a great depression”, adding that the result of the rampant piracy is that “capital is reluctant to enter the industry and no good works are coming out”.
This is what a world without “old-fashioned” notions of borders and markets looks like – free products for consumers, but no investment and, eventually, “no good works coming out”.
Perhaps that is why iTunes has not set up shop in China. At least it has a choice.