EU probe into Apple music pricing

Whoops, sorry, I apparently trimmed that URL I sent too hard (though
I could have sworn it worked).

<http://www.marketwatch.com/news/story/apple-probe-shake-up-whole/story.aspx?guid=%7B13C61718-B575-4E03-A92B-37BEF80AF1B5%7D>

cheers... -Adam

On Apr 6, 2007, at 10:45 AM, Jochen Wolters wrote:
> It is perfectly legal to offer the exact same product in different
> European Countries at different prices; it's refusing to sell
> products across intra-European borders that is illegal, and iTunes
> Stores -- not only the European ones -- generally implement just
> such a restriction on their sales.
>
> In other words, the EU Commission does not expect Apple to offer
> iTunes tracks at the exact same price in all European iTunes
> Stores, but they do request that Apple sell tracks from an iTunes
> Store to customers anywhere in Europe, and not just to those with
> legal residency inside the country targeted by a specific iTunes
> Store. Obviously, this will also allow customers to shop at the
> cheapest prices, too. But, again, that is not the key motivation
> for the Commission to investigate.

Of course, when you're delivering items over the Internet, it is the
same as selling the item for the same price across all of Europe. For
example, if the price in Germany is 1 Euro, and the price in Italy
is .95 Euros, then why not simply register on the Italian iTunes
website? Pretty soon, the iTunes store with the lowest prices will be
swamped, and no one will use the other iTunes store.

The problem is that Apple is under contract with the record industry
in each European country, but it is also under the EU jurisdiction.
EU regulations allow separate pricing for each country, yet the
regulations don't recognize the difference between buying something
in the physical world where distance becomes an issue and the virtual
world that practically has no distance. It's one thing to say a
consumer in England has a right to purchase a CD in France for a
cheaper price if that person either has to pay for the shipping from
France, or has to physically visit the store. It is much easier for
an iTunes listener in England to simply log onto the iTunes store in
France and get the cheaper price.

David Weintraub

> Of course, when you're delivering items over the Internet, it is
> the same as selling the item for the same price across all of Europe.

 From the point of view of a customer making a purchase, you're
perfectly right. However, the EU Commission has been accused of
behaving like a communist organization by commentators who tought
that Apple were to be forced to sell iTunes tracks in all European
stores at the exact same price, and that's simply not true.


> EU regulations allow separate pricing for each country, ...

My point exactly. ;)


> ... yet the regulations don't recognize the difference between
> buying something
> in the physical world where distance becomes an issue and the
> virtual world that practically has no distance.

I'd agree that, in the virtual world, the concept of "territory"
doesn't make much sense, but do you suggest different regulations for
sales of "real" goods and sales of "virtual" goods? If so, why?


Regards,

Jochen.


--
Jochen Wolters || jochenpolytropia.com | http://polytropia.com |
jochenwolters (Skype)

On 8 Apr 2007, at 17:29, David Weintraub wrote:

> Of course, when you're delivering items over the Internet, it is the
> same as selling the item for the same price across all of Europe. For
> example, if the price in Germany is 1 Euro, and the price in Italy
> is .95 Euros, then why not simply register on the Italian iTunes
> website?

You can only register on an iTunes site if you have a billing address
in the appropriate country. Otherwise most people would just register
in the US to get access to the wider range of cheaper content.

        f

> On 8 Apr 2007, at 17:29, David Weintraub wrote:
> Of course, when you're delivering items over the Internet, it is the
> same as selling the item for the same price across all of Europe. For
> example, if the price in Germany is 1 Euro, and the price in Italy
> is .95 Euros, then why not simply register on the Italian iTunes
> website?
>
On Apr 9, 2007, at 3:55 PM, Fearghas McKay wrote:
> You can only register on an iTunes site if you have a billing address
> in the appropriate country. Otherwise most people would just register
> in the US to get access to the wider range of cheaper content.

But, that's exactly the problem! Apple is in a catch 22 situation:
They can follow their record contracts (and force users in various
countries to register only for their iTunes site), or they can follow
EU regulations (which is allow all users to register at the cheapest
iTunes site in the EU area, thus violating their contracts with the
record companies.

--
David Weintraub
davidweintraubworld.net
davidweintraub.name

At 7:45 AM -0700 2007/04/06, Jochen Wolters wrote:

>It is perfectly legal to offer the exact same product in different
>European Countries at different prices; it's refusing to sell
>products across intra-European borders that is illegal, and iTunes
>Stores -- not only the European ones -- generally implement just
>such a restriction on their sales.
>
>In other words, the EU Commission does not expect Apple to offer
>iTunes tracks at the exact same price in all European iTunes Stores,
>but they do request that Apple sell tracks from an iTunes Store to
>customers anywhere in Europe, and not just to those with legal
>residency inside the country targeted by a specific iTunes Store.
>Obviously, this will also allow customers to shop at the cheapest
>prices, too. But, again, that is not the key motivation for the
>Commission to investigate.

        But they're not selling the same products! If I 'buy' a Clash
track from the US iTunes store, I get 2 things: a file and a license
to listen to it for the US. If you buy the same track from the UK
iTunes store, you get your personal encrypted or watermarked version
of the same file (presuming Apple doesn't have a separate set of
source files with British spellings; in cases where the "import"
album is different, they really are different files), and a
*different* license for UK 'purchasers'.

        Fortunately, the RIAA hasn't yet tried to sue a British
citizen for bringing their iPod into the US, but perhaps some day,
once they've run out of US citizens, they'll branch out a bit.

        Apple would probably be happy to sell the same AAC audio
(whether encrypted or merely watermarked) everywhere -- a worldwide
iTunes store would get them new customers and save a lot on overhead
-- but the licences are all local, and I don't want to pay extra for
licenses covering England, France, China, etc.

        I don't see Apple holding any responsibility here. They
simply don't have the leverage to make EMI, Sony-BMG, Warner Music,
and Universal sell worldwide licenses (at comparable pricing).


                                                Chris
--
Chris Pepper: <http://www.reppep.com/~pepper/>
                              <http://www.extrapepperoni.com/>
The Rockefeller University: <http://www.rockefeller.edu/>

>I don't see Apple holding any responsibility here.

Ultimately, it may not be their fault, but they are still the
ones violating the law.

Hopefully, something good will come out of it. Maybe the EU can
(by proxy) force the music publishers to figure out a way to
license the music the same way all over the EU. That would be
good for Apple (as they would have to maintain less stores) and
good for customers (who could buy more music in their store).

On 4/15/07, Chris Pepper <pepperreppep.com> wrote:
> At 7:45 AM -0700 2007/04/06, Jochen Wolters wrote:

> But they're not selling the same products! If I 'buy' a Clash
> track from the US iTunes store, I get 2 things: a file and a license
> to listen to it for the US. If you buy the same track from the UK
> iTunes store, you get your personal encrypted or watermarked version
> of the same file (presuming Apple doesn't have a separate set of
> source files with British spellings; in cases where the "import"
> album is different, they really are different files), and a
> *different* license for UK 'purchasers'.

You can go into a record store and legally buy an import version of
the Clash album. iTunes Store won't let you buy import versions.

--On 4/16/2007 2:18 PM -0700 Mike Cohen wrote:

> You can go into a record store and legally buy an import version of
> the Clash album. iTunes Store won't let you buy import versions.

For that matter, you can go to Amazon.co.uk and "import" the CD yourself.
I find it quite annoying that I can't do the equivalent in the iTunes
store, particularly when the issue is not variable pricing but rather that
the song is "out of print" in the US but not abroad. (Or was never
released in the US to begin with.)

Dave