The price isn't right: Aussies get raw digital music deal

24 February 2011

by Eamonn Forde

A new study into digital music pricing suggests that Australian consumers are getting a raw deal compared to others around the world.

It has claimed that a consumer in Australia will pay up to 50% more for a bundle of tracks and apps from iTunes than someone in the US would pay. This all comes from a blog by Australian Graham Spencer on MacStories.net where he dissected the disparity in pricing on iTunes stores around the world.

“I curiously started investigating whether Australians had been getting a progressively worse deal for their iTunes purchases as the Australian dollar rose from USD$0.60 to parity whilst iTunes prices stayed constant,” he wrote.

“The answer is most definitely a yes but it doesn’t just apply to Australians, and the extent of the price disparity is larger than I had thought.”

It appears that Australian music buyers are at the sharp end of international exchange rates and this is something that works on a macro level and is even beyond – yes, really – the control of Apple. Apple’s policy on iTunes is to have uniform price steps (seen much more explicitly on its App Store where there is greater price flexibility than there is for music) and this is mapped across to local stores outside of the US.

Spencer writes: “iTunes uses fixed prices (i.e. $0.99, $1.29 etc.) and for stores outside the US these price levels were converted using a very conservative prediction of the future value of a particular currency.”

He added, however, that “price levels in non-US stores seem not to have been updated in a long time, yet the value of the non-US currencies have mostly appreciated since then”.

Spencer converted the prices in his table (see below) based on the January 2011 international exchange rate. He suggests that it is not a tax issue and he accepts that “currencies change frequently and can do so at a rapid pace”, so it is difficult to create a watertight exchange rate upon which to base currency conversions in the long term.

There are other issues at play here. The UK, for example, recently changed its VAT rate from 17.5% to 20% as part of Government spending measures. The cost of content on iTunes has not been increased, meaning that Apple is having to take the hit. This does not negate Spencer’s arguments, but it does serve to obfuscate them slightly.

While Australians are getting it rough on the global price league table, spare a thought for the Swiss who are paying (in conversion terms) even more. A new study into digital music pricing suggests that Australian consumers are getting a raw deal compared to others around the world.

How other countries compare to the US (based on US$1.29 for a track)

Country         Equivalent price in $US

Mexico              $1.24
US                    $1.29
Canada             $1.30
UK                    $1.56
Norway             $1.71
Eurozone          $1.72
Denmark          $1.79
Japan               $1.81
New Zealand    $1.83
Australia           $2.18
Switzerland       $2.30

Source: MacStories.net