Apple responds to Australian 'price gouging' allegations, blames markup on content owners

Posted:
in General Discussion edited January 2014
In a hearing with Australia's Standing Committee on Infrastructure and Communications on Friday, Apple attempted to reconcile the huge price gap between digital goods sold in the country and those sold in the U.S., saying that the blame ultimately falls on content owners.

The Australian Parliamentary inquiry, which included executives from Microsoft and Adobe, was called to address alleged "price gouging" practices by the three companies. As noted by The Sydney Morning Herald, Aussie customers see software and digital content costs sometimes inflated by over 70 percent compared to U.S. pricing.

Tony King
Apple Vice President for Australia, New Zealand and South Asia Tony King. | Source: The Sydney Morning Herald


While targeting Microsoft and Adobe for the companies' software offerings, Apple was singled out for "gouging" the public with marked up movies and music. In response, Apple's Vice President for Australia, New Zealand and South Asia Tony King said content owners demand higher prices in Australia than in other countries like the U.S.

"The pricing of this digital content is based on the wholesale prices which are set through negotiated contracts with the record labels, movie studios and TV networks," King said. "The content industry still runs with perhaps old-fashioned notions of country borders or territories or markets."

He went on to say that Apple's prices as seen in iTunes are comparable to other Australian outlets, suggesting the company wasn't taking advantage of its customers. King noted that Apple has been pushing to lower costs for consumers as it "creates confusion for customers."

As for Microsoft, Australian managing director Pip Marlow said "customers will vote with their wallets," indicating that if the company sets too high a price, sales will suffer. Adobe's Paul Robson was also brought to task over the nearly 75 percent markup for the Adobe CS6 Design and Web Premium Suite, which costs AU$3,175 compared to $1,899 in America.
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Comments

  • Reply 1 of 48
    bemmerbemmer Posts: 10member
    Vote with their wallets?! How exactly can we do that? Not use a computer? Pathetic... Australians are being gouged when it comes to technology. As for Apple, prices here are out of control, especially when it comes to iTunes. For example, a season of The Walking Dead costs 50 cents more per episode and $7 more person season. An album costs 90 cents more per song and $6 more for an album. Why? It's a digital file. Our dollar is better than the US. There's no reason for it. It may not seem like much, but it adds up after many downloads. The amount of people I know who refuses to use iTunes due to the price difference is huge. They seem to avoid the issue.
  • Reply 2 of 48
    saareksaarek Posts: 1,321member
    With regards to content I'd say that Apple has a point. They take a cut and the providers set the price.

    But the markup on their hardware is inexcusable.
  • Reply 3 of 48
    cnocbuicnocbui Posts: 3,613member


    The Australian government should amend their own legislation.  They have been allowing copyright to be used to restrict importing of products and allowing monopoly distributorships.  To blame Apple is disingenuous.


     


     


    Quote:


    In the 19th century, Australian booksellers could import books from anywhere. As a result, they got the best prices and best value for money. However, British colonial publishers pushed through a law that effectively required booksellers to buy directly from British publishers and no one else. In other words, an import monopoly was established.


    This system had nothing to do with protecting Australian culture. It was for the protection of the profits of foreign publishers. To this day, foreign publishers are the main beneficiaries of this archaic import monopoly law. Only one-third of books sold here are Australian, yet all the publishers, foreign and local, hide behind Australian authors, who are sent out to defend the system.


    Since 1989 there have been numerous independent professional studies by our top official agencies. All have concluded that on average our book prices are higher, often a great deal higher, than overseas.


    The latest Productivity Commission report puts the matter beyond any doubt. Regarding ''like'' editions of books - that is, identical books - Australia's prices are on average 35 per cent more expensive than ''like'' editions in the US, even after taking into account GST. In many cases, the price differences were greater than 50 per cent.


     


    Regarding the ''cheapest books'' that are available (even if their format may be different), the gap is even higher between Australian prices and those elsewhere. The recommended retail price of the cheapest Australian edition was on average 13 per cent higher than the recommended retail price of the cheapest edition of the title in Britain. It was 50 per cent higher on a recommended retail price basis than the cheapest edition of the titles in the US.


    The studies confirm what we have all seen when overseas and known for years: Australians pay through the nose for books due to import restrictions. Let me give you a specific example: Dan Brown's The Lost Symbol has an Australian recommended retail price of $49.95, more than 50 per cent higher than the British recommended retail price of $33 and more than 50 per cent higher than the US recommended retail price of $32.87. The cause of these price differences is the import monopoly. If it was removed there would be a price fall, as there was after the 1998 CD reforms.




  • Reply 4 of 48
    zozmanzozman Posts: 393member


    The Australian Dollar is stronger than the US Dollar, yet we pay more....for everything, i'm kind used to it tho. 

  • Reply 5 of 48
    It's defiantly unfair for us Aussies. I think Apple is pretty fair with the prices of their products and Apps in Aus. It's not perfect, but it's far better than other companies.

    It is the 'other' companies that sell Apple their digital content that are %$^&ed!! lol... Apple's apps are priced similary to US prices, alongside their hardware.

    I hope the AUS Government go after movie companies and record labels too.
  • Reply 6 of 48
    plagenplagen Posts: 151member
    According to the Big Mac index, the Australian dollar is overvalued by about 18%
    http://www.economist.com/blogs/graphicdetail/2012/01/daily-chart-3
  • Reply 7 of 48
    Even 'made in Australia' movies are cheaper in America... Go figure?
  • Reply 8 of 48

    Quote:

    Originally Posted by Plagen View Post



    According to the Big Mac index, the Australian dollar is overvalued by about 18%

    http://www.economist.com/blogs/graphicdetail/2012/01/daily-chart-3


    ... and you're saying this, because?

  • Reply 9 of 48
    Minimum wage in Australia in 2013: $15.96

    Minimum wage in the US in 2013: Federal $7.25, by state average is still below $8.

    When you make twice as much per hour, products cost twice as much as well.

  • Reply 10 of 48
    plagenplagen Posts: 151member

    Quote:

    Originally Posted by werdnanotroh View Post


    ... and you're saying this, because?



    The exchange rate imbalance explains, at least partially, why things are more expensive in Australia. .  On the other hand, if you use, say a kangaroo, as a price unit, things will be much cheaper down there.  

  • Reply 11 of 48
    jragostajragosta Posts: 10,473member
    saarek wrote: »
    With regards to content I'd say that Apple has a point. They take a cut and the providers set the price.

    The funny thing is that when someone thinks that Apple sets the prices (books), then Apple gets in trouble. Here, Apple doesn't set the prices and they're still in trouble.

    No matter what Apple does, people are going to attack them. If they stood on the street corner handling out $50 bills, people would complain that they're not giving out $100 bills.
    saarek wrote: »
    But the markup on their hardware is inexcusable.

    Really? EVERYTHING is more expensive in Australia. Their advertising costs more. Retail employees make a lot more. If Apple were the only one charging more, you might be able to call it 'inexcusable', but when everyone charges more, Apple is simply engaging in market pricing.

    However, even if Apple were the only one charging more, 'inexcusable' would be silly. Maybe no one has explained how free markets work. Apple sets a price. The consumer either chooses to buy or not to buy. If the consumer thinks that Apple's price is too high, then they don't buy - and Apple either settles for lower sales or finds a way to lower the price. If the consumer thinks the price is OK, they buy it. No need to excuse anything.
  • Reply 12 of 48
    hill60hill60 Posts: 6,992member

    Quote:

    Originally Posted by Bemmer View Post



    Vote with their wallets?! How exactly can we do that? Not use a computer? Pathetic... Australians are being gouged when it comes to technology. As for Apple, prices here are out of control, especially when it comes to iTunes. For example, a season of The Walking Dead costs 50 cents more per episode and $7 more person season. An album costs 90 cents more per song and $6 more for an album. Why? It's a digital file. Our dollar is better than the US. There's no reason for it. It may not seem like much, but it adds up after many downloads. The amount of people I know who refuses to use iTunes due to the price difference is huge. They seem to avoid the issue.


     


    Why?


     


    ARIA and Australian industries.


     


    Apps from the Appstore reached parity because App prices aren't as strictly controlled as music, movies and books.


     


    Other Australian stores offer similar pricing.


     


    CD's, DVD's and physical books are in exactly the same boat.

  • Reply 13 of 48
    cnocbuicnocbui Posts: 3,613member

    Quote:

    Originally Posted by Plagen View Post


    The exchange rate imbalance explains, at least partially, why things are more expensive in Australia. .  On the other hand, if you use, say a kangaroo, as a price unit, things will be much cheaper down there.  





    You don't seem to understand about exchange rates.  Actual exchange rates have a real bearing on the cost of items in the real world, notional values don't.  Currently, and as has been the case for some time, the Australian Dollar has had a higher value vs the US dollar in real terms, so all else being equal, a digitally conveyed item should be cheaper in Oz than in the US.

  • Reply 14 of 48
    cnocbuicnocbui Posts: 3,613member

    Quote:

    Originally Posted by oddmyth View Post



    Minimum wage in Australia in 2013: $15.96



    Minimum wage in the US in 2013: Federal $7.25, by state average is still below $8.



    When you make twice as much per hour, products cost twice as much as well.

     




    Only if the goods you are buying were manufactured using Australian labour, which in this case they were not.  We are talking about goods imported into Australia that were manufactured where labour costs are lower.

  • Reply 15 of 48
    charlitunacharlituna Posts: 7,217member
    Seems like the comments missed the point. Apple is being dissed for pricing on something they don't set the prices for. They should be going after the Studios etc to drop geographic restrictions and pricing and just release everything same day/date world wide and same price. Then the only issue is adjusting for currency value which Apple would likely then control cause they could out that control in the contracts. Do it say every three months for the moment with a deadline set for having a system up that can do it no less than once a week if not daily.
  • Reply 16 of 48
    gazoobeegazoobee Posts: 3,754member


    It all comes down to two words.  


     


    Monopoly & Capitalism.  


     


    Capitalist ideology says that you should "get as much as you can" for a product instead of trying to figure out a "fair" price, and and that morals are of no consequence.  The Monopoly they enjoy says that they can charge anything they want and no one can stop them.  The mistake this guy is making is in assuming that they should be "fair."  Fairness goes against everything Capitalism stands for.  

  • Reply 17 of 48
    hill60hill60 Posts: 6,992member

    Quote:

    Originally Posted by cnocbui View Post




    Only if the goods you are buying were manufactured using Australian labour, which in this case they were not.  We are talking about goods imported into Australia that were manufactured where labour costs are lower.



     


    Unless you follow the "Big Mac" index, where McDonalds uses Australian child labour to cut costs.*


     


    *Child labour - 14 years and 9 months to 17 year olds, which is acceptable in Australia but causes an outcry when said children are in China.

  • Reply 18 of 48

    Quote:

    Originally Posted by Bemmer View Post



    Vote with their wallets?! How exactly can we do that? Not use a computer? Pathetic... Australians are being gouged when it comes to technology. As for Apple, prices here are out of control, especially when it comes to iTunes. For example, a season of The Walking Dead costs 50 cents more per episode and $7 more person season. An album costs 90 cents more per song and $6 more for an album. Why? It's a digital file. Our dollar is better than the US. There's no reason for it. It may not seem like much, but it adds up after many downloads. The amount of people I know who refuses to use iTunes due to the price difference is huge. They seem to avoid the issue.


     


     


    People have twisted views of what is fair. The price of goods only take into account one aspect. Apple's prices are closely aligned to the cost of living differences between the u.s. and australia.


     


    Or are you also blaming Apple for the high cost of food and housing in your country?


     

  • Reply 19 of 48
    cnocbuicnocbui Posts: 3,613member

    Quote:

    Originally Posted by Tenfingers View Post


     


     


    People have twisted views of what is fair. The price of goods only take into account one aspect. Apple's prices are closely aligned to the cost of living differences between the u.s. and australia.


     


    Or are you also blaming Apple for the high cost of food and housing in your country?


     






    What a very polite way to describe gouging.

  • Reply 20 of 48
    plagenplagen Posts: 151member

    Quote:

    Originally Posted by cnocbui View Post




    You don't seem to understand about exchange rates.  Actual exchange rates have a real bearing on the cost of items in the real world, notional values don't.  Currently, and as has been the case for some time, the Australian Dollar has had a higher value vs the US dollar in real terms, so all else being equal, a digitally conveyed item should be cheaper in Oz than in the US.


     



    What part of 'overvalued  " don't you understand?


     


    See here: "The Australian dollar is the most overvalued currency in the world, but there is little will to intervene, according to a global valuation"




    http://www.smh.com.au/business/markets/dollar-the-most-overvalued-currency-20130215-2eho2.html

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