This should happen here

Sydney Morning Herald

Big name tech companies are coming under the microscope in Australia for their price gouging activities:

Apple and Microsoft will be among technology companies asked to explain to Parliament why Australians pay much more for music and game downloads from iTunes, for example, than overseas customers.

Federal Labor politicians are hoping the publicity generated by calling the companies to account for their pricing policies will result in prices dropping.

The Minister for Communications, Stephen Conroy, has signed off on the parliamentary inquiry, which will also consider pricing of software and other IT-related material and could have big implications for businesses.

”There is evidence to suggest that the innovative use of technology is not always matched with innovative new business models in the case of products and services distributed online,” Mr Conroy said in a letter to Sydney MP Ed Husic.

”I agree that Australian businesses and households should have access to IT software and hardware that is fairly priced relative to other jurisdictions … the global digital economy is likely to make it increasingly difficult to sustain business models that are based on a geographic carve-up of markets.”

The terms of reference for the inquiry are being finalised by Mr Conroy but it will begin later this year and be conducted by the House of Representatives standing committee on infrastructure and communications.

It is ridiculous that territorial arrangements still exist for most products, especially in the technology area. However the problem is not confined solely to that area.

Take sporting goods….You can buy a pair of Irish Setter boots from Cabelas for $119 USD, the same pair of boots here will set you back $475 USD. The problem is that the distributors and agents are marking up and then the retailers are marking up meaning that the consumer is getting tucked. Ultimately though the retailer is getting tucked because people just go an buy online.

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  • A-random-reader

    Yes – many goods are more expensive here in NZ than the US.

    But government inquiries and/or regulation are not the answer.

    Unlike Australia, we have a legal framework that permits parallel importing. This provides a self-regulating mechanism that helps restrain excessive pricing.

  • Mully

    I bought a set of golf clubs in the States for US$300 when the exact same set here was on “special” for NZ$1999,
    We do get taken the piss of a little bit, I think.

  • John Q Public

    The same song being $US.99 on iTunes.com versus $NZ1.79 in iTunes.co.nz is simply criminal.  

  • Neil

    And you wonder why tech pirating occurs?

  • Horace the Grump

    Oh I know….  how about companies charge the prices they think the market will bear…  maybe things are more expensive here because of the lack of economies of scale in distribution and marketing…  WE LIVE IN A SMALL COUNTRY…..

    Oh and lets now forget that US prices are almost always shown excluding sales tax, which varies across the US, whereas NZ prices are shown including GST….  

    So taking the example above, US$0.99 for an iTune song = NZ$$1.20 at today’s exchange rate + GST = $1.38, a difference of $0.41 – and given how prices are set only occasionally vs daily changes in exchange rates there is bound to be a margin built into the NZ pricing for exchange rate fluctuations – lets say 5% – so a price of $1.45

    Is $1.79 higher than $1.45…  sure, but lets not forget the Apple maintains a NZ store for a maximum of 4.5 million people, vs the US store for over 300 million people – so the cost of the store infrastructure is a lot higher per customer/transaction in NZ than the US…  so maybe the difference of $0.34 is the cost of living in a small country because of the lack of economies of scale in supporting such a small on line store….

    Ever thought of that?

    • Bunswalla

      Horace that’s horse-shit I’m afraid, no matter how well thought out. The beauty of the new business model, and the point of the enquiry in Australia, is that it costs no more to distribute an iTunes purchase to New Zealand or Australia than it does to the US.

      You can’t add 5% for exchange rate fluctuations without taking it off if the rate goes down, so working on $1.38 vs $1.79 that means NZ consumers pay 30% more than in the US.

      If you compare the average wage in the US wth the average wage in NZ the comparison distorts even more. In short, Americans need a much smaller percentage of their income to purchase something from iTunes than a kiwi does, and the only reason is price-gouging by the corporates.

      • Dave

        Buns:   Agree 100% with reference to media etc where the distribution is digital.   The retailer has the same costs in USA as they do in NZ (per track), with the exception of any specific taxes or duties that might apply.     I use Amazon a lot for Kindle, its main advantage is I save huge physical freight costs.   But their price is their price – worldwide.    

        iTunes also use a discriminatory model, to accommodate local marketing and promotion.   Not fair, but they can get away with it, as they don’t have the competition here.  Their only extra costs, are data from servers in USA to NZ, and that is likely to be less than a cent per track. They also do not keep a separate NZ store as such, its driven on one main database, and a “country” is selected, so a track/album can be included or rejected for various countries. (e.g. some songs are rejected for religious or political views for specific countries or just release dates to coincide with a movie etc).    

        The answer, have a friend in the US purchase it, export it and send it to you via MegaUPload.com :)   Oops, FBI fixed that one!!

  • kehua

    Yep Wrangler 13mwz jeans $US19.99 selling at  $142NZ daylight bloody robbery. Interested? check out Sheplers.com, you can bring in 4 pair at that price before risking duty. 

  • Scanner

    After trying to claim repairs under a so called “lifetime Warranty” to a Gerber multi tool from the US manufacturer I was referred to the NZ agents who promptly tried to charge me nearly 40% of the tools value for the broken part, nearly $50 for a part sold in the US for $15, they need to find a better freight broker.

    Needless to say I now import tools and parts via EBAY from the US and the smart arse NZ agent can go and fuck themselves, all this serves to prove that today consumers have choice in spite of protests from NZ agents, gouging bastards, the world marches on.

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