Euro Commission to Probe Apple iTunes price difference

25 February 2005 23:23 GMT / By Kenneth Henry

The fact that UK consumers pay more for goods and services than the rest of the world isn't news. The special detail on this occasion is that The Consumers' Association is supporting disgruntled customers by referring calling in Office of Fair Trading (OFT). In turn, the OFT has sent the case to the European Commission. You might know the EC from such work as the Euro €168million/UK£100million fine handed down to Nintendo and seven distributors for hindering exportation of consoles, and the slightly bigger Euro €497million/UK£345million penalty handed out to Microsoft - plus orders to partially release its source code.

When the EC's unhappy, it doesn't just fine companies - Apple, if the case eventually found them guilty of overcharging, would be forced to harmonise pricing across the EU. Currently it charges what it likes, citing the lack of a European-wide approach to music licensing (which is something the Commission may also choose to impose at a later date, partly to eliminate this reasoning). However that's no reason to forbid UK-based iPod owners from accessing the cheaper continental sites - it's 79p per track here in the UK, but only 68p (Euro €0.99) on the continent - to the layman that's pure profit protection, and after taking a chunk of over UK£100million from the 5.7million legally downloaded tracks in the UK in 2004, you'll see why Apple may want to lock in iPod owners even further. The UK legal download market was only 50,000 tracks behind the 500,000 CD Singles sold in 2004, from a brand new launch- that was iTunes alone, not including all the OD2-backed download sites. Being an American company, the vast home market is best served at 51p per track. America's size and reach (plus a weak dollar) help to explain that one, even if it's of no help to Brits.

The other reason why we're hardly up in arms is the general competition. Napster is the same price as UK iTunes, Virgin and Mycokemusic charge 80p and HMV a whopping 99p (just call it a quid) per track - though the catalogue in tens of thousands of tracks is (hopefully) linked to the price. If you wish to shop around, Wanadoo is 69p and Woolworths 67p. In addition, it's not as if bulk deals on downloading don't exist - some sites like dotmusic.co.uk operate a subscription option for either unlimited downloads instead, or a set number of gigabytes at a time. However, iPod owners naturally gravitate to iTunes if they're not simply ripping their own collections, which is why the case is still important - it's not like Apple is selling its own CDs for less and slapping on higher delivery like a physical American e-tailer- it has its own monopoly for its own players. We'll certainly keep you posted on whether the giant killers in Europe can score another nine-figure fine as well as how long the guaranteed appeal should take. It's nice to write a story where independent and government agencies have joined up the dots and are working together to secure a better deal for UK consumers. Maybe we're seeing the upside of Brussels for a change (but we won't get too comfortable about it…)

Predictably, Apple had no comment. If your company is headed by Steve Jobs though, we're sure it soon will.

Figures: BBC News (historical fines), Evening Standard (rival download prices, not for subscription)

Full tags

Audio, Online, Music downloads, Apple