A tale of two statements: Apple and the EU on iTunes pricing

Apple has standardized its iTunes pricing across all of Europe and you'd think harmony would be in the air over the pond. Not so fast.

Let's read between the lines.

First up, is Apple's statement noting that it is leveling iTunes prices across Europe. LONDON—January 9, 2008—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.

Translation: The EU is annoying. As if it's one country.

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.

Translation: Apple isn't going to eat these costs. If the EU wants to be a pain in the Apple's arse the labels have to play along. You want distribution you need to cut pricing. “This is an important step towards a pan-European marketplace for music,” said Steve Jobs, Apple’s CEO. “We hope every major record label will take a pan-European view of pricing.”

Translation: Jobs just has to jab the labels a little more. Why should Apple be singled out?

Then we get the European Commission's statement.

The European Commission welcomes Apple's announcement to equalise prices for downloads of songs from its iTunes online store in Europe within the next six months. This puts an end to the different treatment of UK consumers who currently have to pay higher prices for downloads. The different treatment to UK consumers was a major concern for Which?, a UK consumer protection organisation, who filed a formal complaint with the Commission. The Commission’s antitrust proceedings have also clarified that it is not agreements between Apple and the major record companies which determine how the iTunes store is organised in Europe. Consequently, the Commission does not intend to take further action in this case.

Translation: Apple can't pass on costs that it incurs from record labels because it is Europe after all. Steve Jobs and Co. should just eat these costs so U.K. consumers can benefit. The EU will leave Apple alone for a few minutes as it bickers with record labels. The EC also needs a copy editor (typo alert). Just as an aside: Does anyone have a clue why record labels charge more in the U.K.? Is there some back-end tariff or something?

Commenting on the outcome, Competition Commissioner Neelie Kroes said "The Commission is very much in favour of solutions which allow consumers to benefit from a truly Single Market for music downloads." Translation: Bureaucrats have to say something.

Apple operates an iTunes on-line store with different views in the European Economic Area (EEA) which sells music downloads. EEA consumers can only buy music from the view which is directed to their country of residence and which contains the music that is cleared for sale in that country. iTunes checks the consumer's residence through their credit card details. For example, in order to buy a music download from the UK view a consumer must use a credit card issued by a bank with an address in the UK. Prices for iTunes downloads in the UK are currently nearly 10% more expensive than downloads in the euro-zone.

Translation: Don't ask why this pricing is the way it is. It's clearly Apple's fault.

Following iTunes' announcement, UK consumers will soon pay the same for music downloads from iTunes as customers from the euro-zone countries. The Commission’s antitrust proceedings further allowed the Commission to clarify that there is no agreement between Apple and the major record companies regarding how the iTunes store is organised in Europe. Rather, the structure of the iTunes store is chosen by Apple to take into account the country-specific aspects of copyright laws.

Translation: Again, don't ask us questions about whether these country specific copyright laws make sense. It's all about the consumer. Really. It is.

The Commission is very much in favour of solutions which would allow consumers to buy off the iTunes' online store without restrictions, but it is aware that some record companies, publishers and collecting societies still apply licensing practices which can make it difficult for iTunes to operate stores accessible for a European consumer anywhere in the EU.

Translation: The commission had to throw Apple a bone somewhere.