Apple: Ask record labels, movie studios why iTunes pricing is higher in Australia

Apple: Ask record labels, movie studios why iTunes pricing is higher in Australia

Summary: Apple said it is merely a retailer of the digital content sold on iTunes, and pointed the finger at content owners for charging higher licensing costs in Australia for songs, movies, and TV shows.

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TOPICS: Apple, Government AU
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Apple is not accountable for the higher prices of songs, movies, and TV shows sold through Australia's iTunes Store, because the owners of those intellectual properties are the ones to blame, according to Apple's vice president in Australia and New Zealand, Tony King.

The technology juggernaut often charges different prices for content on its digital media store in Australia, compared to the pricing on the same content in the US. At times, Australian consumers have had to pay more than double the prices for the same content that is available in the US.

Speaking at the IT pricing inquiry parliamentary hearing, King said Apple's hands are tied in relation to the pricing disparity because the company does not own the content, and currency exchange rates factor very little into the equation. Content owners charge different costs for licensing fees for the distribution of their intellectual property from region to region, and the costs are higher in Australia, he said.

"When the asset is licensed to iTunes for distribution, the condition we agree to is to make it available to specified markets," King said. "Many rights today, in the digital ages, are still by a territory-to-territory or market-to-market basis.

"Very few rights are truly global and that creates confusion for the customer."

Simply put, according to King, Apple is a retailer, and content owners are charging a higher wholesale price in Australia.

"The content owners are still, perhaps, running on old-fashioned notions," he said.

King urged the government to talk to record labels and studios that own digital content about why they charge a higher wholesale cost for the content in Australia. The Australasian Performing Right Association (APRA) has already attended an earlier hearing, and said that rights costs make up a relatively small portion of the final retail pricing for music, but King suggested that the IT pricing inquiry parliamentary committee call in content owners directly to explain themselves.

Despite being a big buyer of content distribution rights, Apple said it does not have any clout in negotiating wholesale pricing with intellectual property owners.

"We would love to see lower content prices for consumers in Australia," King said. "It would drive use of our products in the Australian market, and that is within our best interest to see take place."

King pointed out that the pricing for its latest hardware products, when factoring in US sales taxes, are close to being on par with the US. Indeed, this was the case with the Apple iPad mini released last year.

In the US, advertised retail pricing may not include sales taxes, unlike in Australia, where prices include the GST, and this leads to consumer misconceptions, King said.

Unlike iTunes, Apple products are influenced by currency exchange rates, along with a number of factors, including sales charges, competition within a given region, and logistics costs, he said.

King pointed out that moving products around Australia does cost more than in countries like Singapore.

While currency rates do affect pricing, Apple's standard policy is to not change the cost of its products to keep up with fluctuating exchange rates until replacement products are introduced. According to King, this will be less disruptive to local customers and channel partners.

King said that the company's software pricing is similar between Australia and the US.

Topics: Apple, Government AU

Spandas Lui

About Spandas Lui

Spandas forayed into tech journalism in 2009 as a fresh university graduate spurring her passion for all things tech. Based in Australia, Spandas covers enterprise and business IT.

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7 comments
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  • Wrong Apple.

    Apple charges commission of 30% on apps its sells. So they will charge for use of the itunes store for music. Even if it is lower than 30% commission it is still a charge and Apple are profiting from the sales.
    Eminem took Apple to court as they were selling his music with out permission on itunes, however did they refund to him the illegal sales they made?
    Funny how these companies all point to other factors like record labels for the price. I was unaware Apple and the like started selling white wash paint. Hence I never use Apple or other smartphone companies app stores to buy music or apps.
    Mudrat1263
    • Who put Eminem's music on the store?

      Apple does not decide what goes on the store. Someone supposedly licenced to sell the music places it into the store.

      Apple got sued because legally they had to be to sue whoever was selling it through the store.

      in Eminem's case it was Universal Music that was selling Eminem's work, Eminem & Eight Mile Style LLC claimed the agreement with Universal did not cover downloads.

      Apple in the US sells songs for 99 cents per track. Universal would have got 70 cents and probably given Eight Mile Style LLC 9.1 cents.
      richardw66
      • to richardw66: you can not trust a word to Apple:

        to richardw66: you can not trust a word to Apple:
        bit [dot] ly/RYzOPP
        anywherehome
      • Re: Who put Eminem's music on the store?

        Eminem has been arguing with Universal over the right payment rate for downloads. If the files are "licensed" rather than "sold", then he qualifies for a higher "licensing" royalty rate. So Universal are arguing that these downloads are "sold", not "licensed".

        But at the same time, Universal is fighting to stop people who want to resell their Itunes downloads. After all, if they're "sold", then they can be resold, right? Just like anything else you can buy and sell. Only in this case the label is arguing that these same downloads are now actually "licensed", not "sold".

        So that's a record label for you: able to argue out of both sides of its mouth at once.
        ldo17
  • What? Wrong how?

    Apple is a sales channel - as such they take a cut which at most is 30%.

    This is profiting from the sales - Yes sure - wrong?

    The cut they take is the same in every market.

    What happens when you go to a CD store and purchase a CD? The store takes a cut and profits from the sale.

    The record labels set the price that the item will sell for on iTunes on a country by country basis. 70% of the price goes to the record label. The record label is in total control of the sell price in each country.

    In reality this can mean that one record label offers a song for sale in the US and the same song is offered for sale by a different label in Australia. As some artists are licenced to a different label here.

    Certainly with TV shows the company putting the show up for sale here is often not the same as that offering the item for sale in the US. Apple cannot control the price if it is adding 30% margin.

    If you put an item up for sale in iTunes or the App Store and you choose to make it free then Apple gets exactly nothing.

    If you purchase an iTunes card from a retailler then the retailer gets a cut of the cost of the card. This cut comes out of the 30% that Apple charges, and costs the record label nothing extra.

    iTunes cards are often available for 20% off. So Apple gets the cost of the card minus 20% minus the retailer margin. All of this coming out of 30% total.

    So yes Apple profits for running the store but no they don't set the price. THey don't make it higher here and this is normal.

    Do you think record shops are charities? Do you think Apple should run stores that make no margin? Why?
    richardw66
  • Apple's every word is a lie

    apple, even judge can not trust you a single word, you rotten, see:
    bit [dot] ly/RYzOPP
    anywherehome
  • Apple-rotten to core...

    I am confused. Apple uses mostly American owned companies for their products so why is the price different? Am still confused.
    susanaii