Apple is at the core of a music rip-off, despite what Jobs says

Steve Jobs (a.k.a. The Jerkoff) was in London this week promoting the wildly exciting but colossally overpriced iPhone – yours for £900 in the first year – with the phone alone costing £69 more than you would pay in the US. Apparently, the Apple boss believes that the costs of business are much higher in the UK (what do we do??), although this is not news.

A song on iTunes in Britain will set you back 79p, in Europe it is 99 cents, or 69p. In the US, it is 99 cents again, which translated into our money is 50p, although the difference with the States, but not Europe, is that sales tax is excluded and when that is factored in the price is more like 55p. And the pennies add up. Last year the value of music sold at retail in the UK was £1.75 billion, and digital ran at 6 per cent of the total. Let’s assume that Apple dominates digital sales and accounts for 4 per cent of the whole market: that represents roughly £43.9 million.

However, if Jobs’s company had been charging American prices, it would have received only £30.6 million. It would be better still if the consumer had a choice, but Apple’s control over proprietary technology means that potentially cheaper rivals, such as HMV, cannot sell songs for download on to the market-leading Apple iPod. So the market is skewed.

Yet in a digital era, it should be easy to buy songs abroad to take advantage of the cheapest price. Apple, though, ensures that consumers are tied to their home country music store by insisting that purchases be made via a credit card registered to an address in that country – an obstacle that is not insurmountable, but at a quarter past midnight, when that dance track is one click away, it is too much like hard work to make a friend in the US buy it, burn it and send it over.

This is now under investigation by the European Commission. Unfortunately, such inquiries take years, appeals and all – this one dates back to 2005. While they rumble on, Apple can carry on as before, on an innocent until proven guilty basis. More to the point, the word on the boulevards of Brussels is that the Commission is having trouble making its case stick. To do so it has to prove that Apple is dominant, which it may be in the fast-changing world of digital music, but is not in overall music sales. And it is usually a principle of competition that emerging industries do not get thwacked with regulation.

So it is hard to force a price cut.

http://business.timesonline.co.uk/tol/business/industry_sectors/media/article2500469.ece