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Jobs recommits to pan-Euro iTunes pricing

updated 02:15 pm EDT, Wed September 19, 2007

Pan-euro iTunes pricing


Steve Jobs is sticking to his claim that Apple wants to charge the same price for iTunes downloads in all European countries. In a press conference for the German iPhone announcement, Jobs said "We think prices should be the same. We think anybody in Europe should buy off any store." Starting this Wednesday, the European Commission will begin holding hearings on the pricing structure of Apple's online store. The basis of the complaint is this: Apple charges different prices to European consumers dependent on their country of purchase. The consequences for a decision against Apple in this matter could be steep: the regulators have the ability to fine companies up to 10% of their global revenue if they are found to be in violation of antitrust law.

Reuters reports that Apple said there was "nothing in its contract with Universal obliging it to operate national stores or to set a higher price in countries such as Britain."

The EU blames record labels, apparently considering Apple to be more or less a conduit of the record companies' wrongs rather than an active violator. An EU spokesperson said "this is an arrangement imposed on Apple by the record companies [...] The main focus of our attention is the major record companies."


by MacNN Staff

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  1. horvatic

    Fresh-Faced Recruit

    Joined: Apr 2002

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    09/19, 06:16pm | report spam | Reply |

    Major Record labels

    Yes, the major record labels should be investigated, not Apple. Steve Jobs never intended the prices be higher in different countries and would rather have it otherwise. But as always the greedy record labels couldn't leave a good thing alone and always wants more. Apple will gladly sell all songs at 99 cents and all records at $9.99. For one thing it would then be really easy to have those price points for everything rather than what the record labels want. Which is almost $2 a song and $15.95 for an album or more.

  1. Buran

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    Joined: May 2000

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    09/19, 06:53pm | report spam | Reply |

    So just DO it already

    Talk is cheap.

    Act.

  1. urapns

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    09/19, 11:00pm | report spam | Reply |

    Labels

    Apple is a conduit, the labels control the price. Apple is contractually bound to the pricing by the labels. If they depart from the contract price the songs are pulled.

  1. aristotles

    Grizzled Veteran

    Joined: Jul 2004

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    09/19, 11:10pm | report spam | Reply |

    UK must convert to EURO

    The UK is on the pound sterling. As long at they are not using the Euro, no business will commit to the same pricing in the UK. Logistically speaking, it is not feasible to have a floating conversion rate price and even if it was implemented somehow people would complain that it did not match the artificial rates at xe and other websites. Folks, those rates are artificial rates based on taking the raw market rate for bid and ask and averaging them out. There is no way a company would get that exact same rate when dealing with a foreign exchange broker.

    If Apple is serious about having implementing a real time system to accomplish that, I might know of a company that might be able to provide that sort of service for them.

  1. rubaiyat

    Dedicated MacNNer

    Joined: Feb 2006

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    09/20, 12:28am | report spam | Reply |

    @aristotle

    Apple already is up for one exchange rate that of the US$ to UK£ or Euro. Setting a commensurate rate beween the £ and Euro is not insuperable. Given how the Euro has gained against the US$ I am sure they are laughing right now.

    Businesses are used to the vagaries of exchange rates and build them into their overall prices, possibly using currency futures to smooth them out.

    Apple's cash flows are large enough I am sure for them to handle such matters themselves without outside assistance.

  1. aristotles

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    09/20, 01:37am | report spam | Reply |

    @rubaiyat

    I only speak for myself and not my employer which is why I cannot get too detailed here. I'm also aware that MSFT for example, has their own treasury department. However based on Apple pricing differences to date and how they change pricing relative to the US dollar quite infrequently, I would make an educated guess that Apple is relying on a third party to book and execute forward contracts on a quarterly basis to cover most of their foreign sales into USD. I cannot get into much more detail than that here without risking my anonymity or betraying any confidences.

  1. monkeymilk

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    09/20, 04:20am | report spam | Reply |

    Consumer choice

    You are all missing the point. This has got nothing to do with currencies or exchange rate, or (ridiculously aristotles) whether all EU countries should adopt the Euro.

    The EU's complaint with Apple is that the iTMS actively restricts customers to only buy from their geographic home store. This contravenes the most basic of EU trade laws, ie of uninhibited, unencumbered intra-EU trade.

    If a UK citizen wishes to buy from the Swedish iTMS where a song costs 9SKr or currently £0.68 (15% cheaper) then that is that consumers choice and it is illegal for Apple to inhibit that choice.

  1. ajhoughton

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    09/20, 07:39am | report spam | Reply |

    @monkeymilk

    Yes, that's the EU's complaint. But it isn't what Steve Jobs was talking about - he was talking about unified pricing, which simply isn't what consumers want (even if they think they do).

    Nor is the price difference as clear cut as you like to make out. If you buy something in SKr from the U.K., your bank will use a weighted exchange rate, not a mid-market rate. They may even charge a fee for spending foreign currency. By the time you've finished, it'll be a lot closer to £0.79, which is what iTMS charges here in the U.K.. You might even find that your bank charges £1 for a foreign currency transaction (it isn't unknown), in which case it will cost a lot more.

    What's more, there's no way to predict exactly how much you *will* pay if you spend foreign currency, because the exchange rates fluctuate all the time and your bank may even change its charges.

    I want:

    1. Prices in *my* currency (GBP).

    2. To know how much I'm actually spending when I click the "buy" button.

    Those are fundamentally incompatible with unified pricing.

    I couldn't care less about being able to buy from the Swedish store. Maybe a 12 year old kid might care about the 11 pence they *think* they're going to save (they aren't, of course), but *I really don't*.

  1. Clive

    Mac Enthusiast

    Joined: Jan 2001

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    09/20, 08:44am | report spam | Reply |

    Unified pricing

    It's nonsense to say that the UK (or Sweden, Denmark…) need to adopt the Euro to have unified pricing. The fact is that the Euro and GBP hardly ever move in opposite directions, and there's been next to no movement between than in the last six months or so (ie around EUR:0.05 difference to the value of GBP:1.00). It's really easy - Apple just decides what its base currency is - Euro seems obvious) and then shift the prices on a daily basis in the other stores.

    Ie, one day the price will be GBP:0.65, the next it will be GBP:0.67. There's no foreign currency charges because Apple will just collect the money in GBP.

    And, apart from anything else, the issue here is not what the prices are, but that if you are resident in the UK you cannot buy from any of the other EU stores - this is illegal.

    It's ok for Jobs to say he'd like it another way, but as someone said above - talk is cheap. If Apple wanted it another way then they should have organised it in that way and paid attention to the legal issues when they set up the EU stores.

    I'm sorry, but I don't have any sympathy for Apple over this, they've engineered this themselves.

  1. monkeymilk

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    09/20, 10:16am | report spam | Reply |

    It's not the Euro

    The Euro exchange argument is nonsense.

    Look at the variation in VAT in the Euro zone between Finland at 22% and Spain at 16%. If Apple can have unified pricing across the Euro zone and eat the 6% VAT difference day after day then it is ridiculous to propose that the UK cannot have the same price because of the Pound Sterling.

    Sterling-Euro exchange rates have never varied more than 3% from the central average for the last 12 months and rarely vary more than 1.5%.

    Consider also that the vast majority of music companies are based either in the UK or the USA and so Apple's remittances for the Euro income will be in Sterling or US Dollars makes the whole exchange rate argument even more specious.

    Pricing does not need to vary every day as clive suggested, it just needs to be a fair middle rate; £0.79 has never been €0.99 and is an outright ripoff. Whereas £0.69 has been an approximate and reasonable rate at the time of the iTMS launch and ever since.

    If Apple did a deal with the record companies that the pricing is different based on geography then that is their problem and they need to deal with that internally or take the labels to the EU court for illegal practice.

    It is clearly illegal to enforce that difference on EU consumers and Apple needs to take the higher moral ground and remove the cross border restriction and unify pricing now before they are forced to.

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