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UK Newspaper Hammers Apple for UK iTunes & iPhone
Thursday, September 20th, 2007 at 6:15 PM - by
The Times Online, a London newspaper, is heavily criticizing Apple for iPhone pricing in the UK, as well as iTunes pricing and policies in the UK and elsewhere. The comments came from Dan Sabbagh in a Media Analysis column, and focus on a variety of issues, though many of them are not under Apple's direct control.
The first such issue targeted by Mr. Sabbagh is iPhones pricing in the UK, which he said is £69 more in the UK than the device costs in the U.S. At today's exchange rates, the US$399 iPhone would cost £198.58, while the iPhone is priced at £269 in that market. Though he mentions it later in the column regarding iTunes song pricing, he did not note that most of that £69 price difference is VAT taxes, which are added into the advertised price by law in the UK. VAT taxes are higher than U.S. sales taxes.
Mr. Sabbagh next said that Apple was gouging UK customers of the iTunes Store by charging more for each song than Euro-based European customers or U.S. customers pay. He said this is more egregious because Apple controls most of the download market, and won't either license Microsoft's proprietary music format, Windows Media, or license out FairPlay, Apple's own Digital Rights Management scheme.
"Apple, for its part, does not like to say much, but it does blame the record companies for forcing it into country-by-country stores," wrote Mr. Sabbagh. "Jobs accused the world's labels of preventing him selling music without copy-protection, confusing nicely copy-protection with his insistence on proprietary standards that prevent the link between the iPod and other digital music stores. EMI agreed anyway, and it sells music that could be copied by pirates, but is still tied into Apple format standards."
In reality, Apple uses AAC for the iPod and iTunes, a standard Apple licenses from the MPEG Group, and a format that is freely licensable by makers of other digital media devices. Apple also supports the MP3 format for the iPod, and both AAC and MP3 are available to other music download services that wish to make their songs playable on iPods.
The music industry's insistence, however, on crippling music downloads with DRM schemes that limit copying, is well known and documented. Though he made an error in confusing Apple's proprietary FairPlay DRM scheme with the standard music format of AAC (or MP3), he did note in his analysis that it is record companies that insist on limiting music sales on a country-by-country basis, even though he also criticized Apple for this policy.
Mr. Sabbagh closed his analysis by insisting that customers should be able to buy their music anywhere and be able to play it anywhere. "Consumers should be able shop anywhere," he wrote, "and a digital store simply works out which country the person comes from (back to that credit card) and pays the appropriate parties accordingly."
Such issues are much more prominent to European music buyers, who live with neighboring countries much closer and more numerous than U.S. customers. Much of the European Union is an open market from country to country, but IP-related products, like music and video content, for instance, are tied on a country-by-country basis by country-based IP laws. Navigating those legal seas was largely seen as the biggest reason it took so long for Apple to open European iTunes Stores to begin with.
In his final comment on these issues, including the mix of subjective opinion and factual errors, Mr. Sabbagh concluded that Apple owed customers an explanation. "As things stand," he wrote, "it is Apple that should be explaining itself – to customers who should complain using the internet. It is, quite simply, a rip-off."
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