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.