Ask LH: Why Do Digital Music Companies Keep Ripping Off Australians?

Dear Lifehacker, It just so happened that I had my US proxy on while looking at Google Music. The Ultimate Santana album price read $6.99. Meanwhile, the Australian region price was $16.99 from the same exact service. This is same for whole long list of great albums. What gives? Tamborine Man

Image: David Gans

Dear TM,

Broadly speaking, the sides of your wallet are what gives in this case. It's no particular secret that the prices paid by Australians for digital services are significantly higher than in other areas around the globe. The US is the classic case where a lot of material is either available there but not here, or even when it is available it's priced significantly higher than the stateside price.

So why does this happen? In one sense, it's classic market economics. The digital music companies do it because by and large, the market will bear that kind of cost. Business exist to make profits, and if someone will pay more for your goods, you charge that for as long as you can. It's worth bearing in mind that there's also a significant quantity of buck-passing when it comes to who's entirely responsible for pricing schemes, with sellers such as Google and Apple often pointing out that the prices are ultimately set by the record labels themselves.

The market pricing issue is an economic argument, but is there much behind it to support it? There are some small scale issues to deal with -- for example, different tax regimes in differing countries, so in the US, for example, online prices are never listed with sales tax included because it varies state by state, whereas in Australia everything is covered by a blanket GST that's apparently going to drop to the level where it could hit digital music sales as well.

There are also some arguments about the relative value of currency, not just in terms of exchange rates, but also the level of average wages, which are higher in Australia than in the States, so a US wage doesn't go as "far" as one in Australia for the same numerical money value.

Still, in a digital world, those arguments should only go so far. Justifying a 243 per cent price hike shouldn't be amongst them, given that the costs of distribution for digital bits are significantly lower than with any physical goods.

The short answer is that they rip off Australians because they can.

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Comments

    As is the same for Microsoft, Adobe and Apple when questioned at that hearing/inquiry. Didn't Microsoft actually say, "We charge those prices because we can"?

      Perfectly said. We do it because we can.

      If aussies stopped buying en masse perhaps they would reconsider... but that's not going to happen.

        It will happen. Geo blockers will become the norm and distributors will be pushed kicking and screaming to one price for homogenous products.

    Wait, I thought we were all so busy pirating stuff that no one was buying digital content anyway?

      I think the price difference is one of the reasons pirates justify their actions.

    To the person who asked that question, and anyone from now on who wants to ask a question about "how industry/company X can do Y to Z consumer?"

    The answer is simple: Because they can, and they know governments will not only bend over and take it. Governments will force everybody within its sphere of influence to bend over as well. And once they're done and you're lying on the ground wondering why? The government will explain to you that what happened is ultimately good for you. (Now that I think about it, there's not much difference between our government and some sections of the catholic church...)

    [I sincerely apologise for the sexual assault analogy, but let's face it thats basically what these companies are doing to us...]

      Gonna have to say that no, it isn't. We are being financially disadvantaged by greed. We are not being raped. Don't call it that. It's disrespectful to people who have had to deal with sexual assault and it's kinda gross.

        Suggest you familiarise yourself with all the definitions of a word before you ask someone to stop using it. But yes, the term you refer to is gross.

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