Apple: Music Prices Not Our Fault, And Please Don’t Compare Us To Woolworths

Apple: Music Prices Not Our Fault, And Please Don’t Compare Us To Woolworths

Apple is the first big name off the rank to appear before the IT pricing inquiry in Federal Parliament today. Apple’s local MD Tony King blames the pricing difference on what Apple gets charged by record companies, but he’s not comfortable with acknowledging Apple’s dominant role in music and doesn’t seem to want to do anything about it.

MORE: How Bad Is The Apple Tax In Australia?

We’ve pointed out before that Apple’s hardware prices aren’t hugely different to the US. Where there is a visible difference is in the prices of music, TV and entertainment, and that’s what King needed to defend.

Apple must pay the rights holders to distribute content in each of the territories in which the iTunes store exist. The pricing of this digital content is based on the wholesale prices. They have often set a higher wholesale price than the price of similar content in the US . . . The retail pricing of digital content is based on many factors and foreign exchange is not a major factor The main differentiator is the wholesale price . . . We would urge the committee to discuss this with the folks that own the content.

King says Apple would be happy to lower those costs: “We would love to see lower content prices available for Australian consumers, for songs, movies or TV shows. That would drive a wonderful use of our products within the Australian market.”

However, King wouldn’t be drawn on whether Apple would prefer a single, global market, which would ensure identical pricing and access (and which would keep most local buyers happier). “It’s really a question for the rights holders. We’re a retailer of the music, and so the conditions we have to respect are the current IP conditions. Speculating on what may or may not exist in the future is not something that I’m qualified to do.”

King was less happy with the suggestion that Apple occupies a similar position to Woolworths: as the dominant player in the sector, it must have some influence on pricing when it negotiates with music labels. I’d be surprised if music wholesalers aren’t in a similar position when it comes to Apple,” member for Throsby Stephen Jones suggested. “If you’re not selling to Apple, you’re not in the game.”

“Mr Jones, we’re not Woolworths,” was King’s ultimate response. (The fact the two companies have been involved in a trademark dispute over the Woolworths logo won’t have helped, I suspect.)

The lesson for consumers. Apple is blaming higher music prices on music labels, but doesn’t seem keen to negotiate for change. I suspect that means local pricing will stay high for quite a while.


  • Even for Apple, which litigates about moronic things as quick as blink, that trademark dispute is insane.

    And given Apple gets a percentage of the sales, why would they want to get the price down? There’s no guarantee that will increase sales.

  • I call BS apple. I’ve followed the iTunes story over the years and one of the major reasons record companies were reluctant to sign with apple is because apple set prices and dictated terms. BTW I am a regular purchaser on iTunes, but given the structure apple have created i find it hard to beleive they claim they have no control over setting the price.

    • Why would you buy a product from a company you think is unreasonable and is deliberately ripping you off? Do you expect them to charge you less while you pay them?

      • Sucked into the locked down apple Eco system years ago. Besides I challenge you to find a company in Australia that doesn’t charge more for the same products available, say, in the US. I pay it, you pay it, we all pay and by the looks of it we will unfortunatly have to continue to pay it on virtually every piece of consumer electronics, music, movies, cars… The list goes on. It’s a simple handball by apple to the record lables. Call the record lables in and they’ll handball it back to apple. Aussies will never get a straight answer and the whole enquiry will a achieve nothing. Nothing came of the fuel enquiry so we’d be kidding ourselves if we think we might get lower prices from this one.

      • Doe I expect them to charge me less? Not really. I’d like equal charging and an explanation as to why data stored and marketed from a US server costs me more in AU$ than data stored and marketed from a US server and charged in US$

        • I don’t mean they should make it cheaper for us than them, I mean that they will continue to charge as much as possible until consumers wont pay it – just like Microsoft have said above.

  • Two issues:
    They have often set a higher wholesale price than the price of similar content in the US
    So King is saying we don’t just rip people off in Australia, we do it in the US too
    Time and time again, I hear we people need to not pirate because artist barely get anything from the sales of their work. Really? So who is getting all the money? Is Apple’s refusal to negotiate prices with artist because the artist already get hardly anything? Could it be that Apple doesn’t want to cut anything from their own profits? After all, they do bring it quite a bit of revenue from their iTunes sales….

    Or I could just be wrong.

    • Check out the 2009 legal battle between Cher and her music company. They funneled millions through one of their international companies to give Cher the impression that she hadn’t made any money.

      Also check out a few Facebook posts made by isoHunt about shady financial practices. Basically record companies give a band $1,000,000 to record and promote the album. But this isn’t “free money”, it’s a loan that has to be repaired, plus they slap extra money on top of that for promotional materials, tour costs and even stupid things like pizza dinners. If you sell 1 million songs at $1 each, you’ve paid your recording debt, but not the tour debt, or the pizza debt, and if you do, you get to keep what’s left over (which is never enough for a band to live on).

      I’d support Apple far more if they ditched the record companies and just sold tracks with profits going to the artist. Then I could handle a price hike or two.

  • Bull. Sheer utter bull.

    Latest Dave Days album (independent unsigned artist) $9.99 in the USA $17.99 in Australia. If it were just GST (there is no record company on that one, it’s independent) it should be $10.98

    What’s the other $7.00 for Apple?

    • Nice. You didnt even read the article did you?

      The content owner sets the price – they decide who to screw over. And they decided to screw us over. This is why we cant have nice things – even when theres already an article or two outlining the differences and the pain points – people still gloss over the facts and blame Apple or whoever.

      • Do you honestly think Dave has any control over the price difference apple sell his product at in Aus? It’s more likely he has no idea of the difference and Apple is just trying to squeeze every dollar it can.

  • This is starting to smell of the classic blame game scenario, its not us (Apple) pushing the high prices its the record companies. Put any record exec in the hot seat and I am sure they will blame Apple for the high prices. Ultimately the people that suffer are the artists, why? because people like me wont buy music from iTunes because its so overpriced.

  • So he just said that Apple would be happy to lower prices if the wholesalers do it. So Apple can still keep its margins but the wholesalers suffer. But then Apple look like heroes to the consumer.
    This is why people will continue to pirate movies / music, because they will always be ripped off here.

  • We’ve pointed out before that Apple’s hardware prices aren’t hugely different to the US.

    True, and I’m grateful. Wind the clock back five years or more, though, and it’s a very different story.

    I hate to say it, but Apple’s call is fair on this (except for the Woolies thing). They have battled music publishers on behalf of users – that’s why much of the music you buy on iTunes now is DRM-free. It’s the music companies and movie studios that force content prices up. They’ve made it clear before that where they have control – such as app prices – the discrepancy is much smaller.

  • Why would Apple use their might to get lower costs in a small market like Australia? If we stopped buying Apple overnight, it would just be a small blip in their data.

  • Huh. Does nobody see the irony in the Woolworths mention? I find it astonishing that they are suggesting that a multinational company use its dominant market position to force suppliers to lower prices. I hear it’s working out great for Australian farmers and dairy producers…

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