Consumer group Choice has chastised Apple over its Australian iTunes Store pricing after an analysis revealed Australians pay almost 50 per cent more than Americans for a basket of music tracks and apps.

Choice says Apple is using its “market power” to charge users in Australia more but Apple says comparing different countries using currency conversions is not relevant.

A recent analysis by Australian blogger Graham Spencer at MacStories.net found Australian’s paid 69 per cent more for the Bruno Mars song Grenade than those in the US and 30 per cent more for the Angry Birds app than US users.
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The blog conducted the analysis on 11 different iTunes stores around the world using average exchange rates over the month of January. It found that in both apps and music the Australian store is the second most expensive.

It conducted a further analysis by looking at a basket of digital goods, including a new release album, three hit singles, four iPhone apps and Pages for the iPad. The blog found Australians paid $ US52.32, while those in the US paid $ US35.80.

The issue stems from the exchange rate Apple uses to determine fixed price levels in stores outside the US. This has not changed for some time even as the Australian dollar has been sitting around parity with the US dollar for months and today is valued slightly higher than the greenback.

Many app makers set a global price for their apps – for instance 99 US cents – but the exchange rate Apple uses means Australians end up paying more.

“We believe that if you’re buying digital stuff be it software or whatever there should not be outrageous price differentials between similar territories,” said Choice spokesman Christopher Zinn.

“These big guys say there are local licensing, marketing, taxes that explain the difference but we believe that there should be a convergence in terms of prices for digital products because that’s the whole point – it can be delivered around the world at the speed of light at roughly the same cost.”

Zinn said Apple was not the only culprit, with Windows 7 at one point being sold in international markets for twice the price of the US. Further, Sony’s Music unlimited service, launched on Friday, costs Australians .99 a month, while in the US it is $ US10.

Apple Australia said in response that content was not delivered on a global agreement, so converting from USD to AUD “is not relevant”.

“Each iTunes store is relevant to the country within which it resides, i.e content availability and pricing is based on agreements with the relevant content owners in each country,” the Apple spokeswoman said.

Zinn acknowledged that sometimes there are different licensing agreements for different countries but said he believed the disparity in pricing was “much more to do with market power”. Apple earns a 30 per cent cut from sales on its iTunes store.

“It seems hard to believe that publishers in this country are rapacious and have managed to screw much better deals out of iTunes than anywhere else in the world apart from Switzerland,” he said.

One solution is for Apple to list all prices in US dollars and do the conversion on-the-fly when a customer is making a purchase.

This could be preferable to constantly updating international prices to reflect changes in exchange rates, as that method would make App Store prices unstable.

Mexico’s iTunes store was found to be the cheapest place to buy music and apps, with Grenade sold at a price four per cent less than the US and Angry Birds 17 per cent cheaper than the US.

Those in Switzerland, however, pay 78 per cent more than Americans for the music track. With apps, Japanese users appear to have the worst deal, paying 40 per cent more for Angry Birds.

Zinn said the price differentials could push consumers to seek help from friends in setting up accounts with the British and US iTunes stores.

He said Australians traditionally paid more for music and it seemed that this was continuing in the digital age.

“Apple demonstrates a global brand but now they seem to be suggesting that actually we’ve gone back to the days of an incredibly divided up world,” said Zinn.

“Surely the excuses of why we paid more for CDs i.e. small market, distance from England, manufacturing costs – all this kind of stuff – shouldn’t hold water for digital downloads.”

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