Apple Lowers UK iTunes Prices For EU Harmony; Demands Labels Follow Suit
By Robert Andrews - Wed 09 Jan 2008 02:38 AM PST
You can taste the reluctance in this move. Apple (NSDQ: AAPL) just announced it will lower UK iTunes Store prices (£0.79 per track) by the summer to harmonise rates with those in the Eurozone (0.99 euros, or £0.67).
But it’s not doing so without protest - this explanation from the emailed announcement: “Apple currently must pay some record labels more to distribute their music in the UK than it pays them to distribute the same music elsewhere in Europe.” So look out, labels: ”Apple will reconsider its continuing relationship in the UK with any record label that does not lower its wholesale prices in the UK to the pan-European level within six months.” US track prices are $0.99 (£0.50).
Apple had passed the buck to the labels throughout this process, protesting in hearings that the price differential was not its fault but that of its suppliers. For Apple itself, though, Steve Jobs in September complained it is ”more expensive to do business in the UK” than the US - the rationale for a higher iPhone price tag. Apple’s threat to axe labels that don’t lower prices cold affect indies in particular, who may be less able to withstand lowering their fees. A rocky road ahead for iTunes.
Jobs today said this is “an important step towards a pan-European marketplace for music”, despite it being a step Apple is forced to take: “We hope every major record label will take a pan-European view of pricing.”
It’s the result of an agreement Apple has hit with the European Commission, which had been threatening a fine of 10 percent of Apple’s global turnover for breaking article 18 of the EC Treaty governing restrictive business practices. Despite iTunes Store being accessible across Europe, customers can only make purchases in the store corresponding to the country where their credit card is registered, breaching the spirit of a single economic market. Apple’s announcement did not say it would be taking similar action action elsewhere in Europe, but it’s expected it will have to do the same in other EU countries that aren’t euro currency members.
Update: The EC’s competition commissioner Neelie Kroes published a statement here sympathising that “some record companies, publishers and collecting societies still apply licensing practices which can make it difficult for iTunes to operate stores accessible for a European consumer anywhere in the EU”. The EC’s current attempts to create a single market for digital content propose harmonising the rights environment across the continent (see our coverage from last week).
Posted in: Companies, Apple, Entertainment, Music, Legal, Regulatory, EC
