But It's The Labels' Fault (12/3/04)
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Outbreak! Call in a containment unit, stat! Remember back when the UK's Consumer Association (now operating under the arguably snazzier but far more confusing name "Which?"-- remember, kids, just say no to punctuation in proper names) complained to the Office of Fair Trading about Apple's pricing and sales policies at the UK iTunes Music Store? Specifically, they had a beef with the way in which UK residents had to pay 79p per track, roughly 11p more than the 99 cents that other European Union countries had to pay at their respective iTMSeseses. More to the point, UK tune junkies couldn't just choose to buy their songs from, say, the French or German stores instead, since the iTMS limits purchases to folks with a credit card billing address in the same country as the store. This, claims Which?, is a clear violation of EU "free movement" rules.

Well, the situation has just escalated; it's spread from the UK to Brussels. As reported by a BBC News article pointed out by faithful viewer John Blackburne, the OFT has decided that since "iTunes operates in more than three European Union member states," it's going to sidestep the whole mess by passing the buck to the European Commission. So now the Commission is going to have to determine whether Apple is doing something unjustifiably naughty by gouging UK customers for an extra 11p per song.

To be fair, it's getting increasingly hard to back Apple's stance on the pricing discrepancy. Its only comment on the situation thus far is to insist that it prices its songs based on "the underlying economic model in each country," comparing the situation to the discrepancy between "the price of CDs in the US versus the UK." And sure, that makes perfect sense... except that if UK shoppers really wanted to, they're perfectly free to order a CD from the US instead of buying it locally. (We, ourselves, just went the reverse route; it's not out in the U.S., but the new Hitchhiker's Guide to the Galaxy Tertiary Phase radio show-- you know, the brand new one based on Life, The Universe, And Everything-- is available on CD from Amazon.co.uk, complete with 20 minutes of material that wasn't broadcast this fall, so we gladly snapped it up and paid a ton for shipping.)

In other words, Amazon.com doesn't lock out orders from UK customers, but Europeans can't buy from the European iTMS of their choice, which we're told is a pretty clear no-no from an EU trade standpoint. Not that we're saying that Apple has much choice in the matter, at least in terms of "free movement" rules; the record labels dictate to which countries Apple can sell a song, so until they come on board and license their songs EU-wide (and why haven't they? Someone sic the EC on those guys!), the per-country sales restriction will probably have to stand.

Given that reality, though, Apple's "stuff costs different in different countries" argument looks a little weak, particularly in light of the fact that other European download services charge UK customers roughly the same price as those in other European countries; MSN Music, for example, charges "99 cents in the eurozone and 69p in the UK." We suppose that Apple might get off on a technicality by claiming that the same song offered in two different countries actually constitutes two different products, since each one is licensed by the "manufacturer" for sale only in a particular region. Still, though, unless Apple can say that it pays more wholesale for UK-licensed songs than for ones licensed for sale elsewhere in Europe (which may indeed be the case; only Steve Jobs knows for sure), we imagine there may be an EC-mandated discount coming to UK customers sometime next year...

 
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The above scene was taken from the 12/3/04 episode:

December 3, 2004: The UK complaint about unfair iTunes Music Store pricing has been passed on to the European Commission. Meanwhile, another analyst downgrade nukes Apple's stock price even amid predictions of higher market share in 2005, and Microsoft CEO Steve Ballmer "misspoke" when he reported Bill Gates's spam rate 365 times too high...

Other scenes from that episode:

  • 5079: Down With Downgrades (12/3/04)   Accursed analysts! They've dealt Apple's stock another downgrade-- this time from Charles Wolf of Needham & Co.-- which lopped another $2.53 off the share price, erasing all of the gains from... er... well, okay, from analyst upgrades made a few days before. But still, it seems mighty rude...

  • 5080: "What I Meant To Say Was..." (12/3/04)   What with a steady stream of anticompetitive behavior, bug-ridden software, security compromises, virus epidemics, etc., there's always plenty of perfectly valid reasons to criticize the Redmond Beast on Wildly Off-Topic Microsoft-Bashing Day...

Or view the entire episode as originally broadcast...

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