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British customers of iTunes will soon be charged up to 10 per cent less for their downloads, after pressure by the European Commission forced Apple into a change of policy.
In what represents a significant change to the downloading site's policies in the UK, Apple announced this morning it was lowering its British prices within six months to see songs and albums brought into line with what customers in the rest of the European Union pay.
This would see UK customers paying 74p instead of 79p per song, matching the EU's current price of 99 euro cents, and an average of £7.48 instead of £7.99 per album, equalling the EU's 9.99 Euros price.
The company made its decision following pressure by the European Commission, which last April launched an investigation into Apple charging customers in Britain up to 10 per cent more to download tunes than the rest of the bloc.
The investigation specifically concerned deals signed by Apple with Vivendi’s Universal Music Group, Sony BMG Music Entertainment, EMI Group and Warner Music Group, and whether they stipulated varying prices within the EU. The case dates back to 2005, following an investigation by the British consumer association Which?
As a result of the price changes announced by Apple today, however, the company raised the possibility that it would "reconsider" its deals with the record companies concerned unless the labels renegotiated their agreements and dropped their prices for UK distribution in line with the price Apple pays for European sales.
If the record companies refuse to comply with the ultimatum, British music consumers may potentially find themselves unable to buy their songs on iTunes.
In a statement indicating its intention to make price changes - and making its demands of the record industry - Apple said: "Apple today announced that within six months it will lower the prices it charges for music on its UK iTunes store to match the already standardised pricing on iTunes across Europe in Austria, Belgium, Denmark, Germany, Finland, France, Greece, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Sweden, Switzerland and Spain."
However, it added: "Apple currently must pay some record labels more to distribute their music in the UK than it pays them to distribute the same music elsewhere in Europe.
"Apple will reconsider its continuing relationship in the UK with any record label that does not lower its wholesale prices in the UK to the pan-European level within six months."
In a statement, Steve Jobs, Apple's CEO, said the moves were part of a bid to create a "pan-European marketplace" for music. "We hope every major record label will take a pan-European view of pricing," he said.
Asked whether the statement could mean fewer tunes available to iTunes customers if deals were renegotiated, an Apple source said negotiations with record companies were ongoing.
In a statement this morning, the European Commission welcomed Apple's decision to drop its prices, and announced that it was ending its action against the company as a result. If it had found Apple guilty of breaching EU rules, the Commission could have fined the company up to 10% of its annual worldwide turnover.
"The Commission is very much in favour of solutions which allow consumers to benefit from a truly single market for music downloads," Neelie Kroes, the EU Competition Commissioner, said.
"Prices for iTunes downloads in the UK are currently nearly 10 per cent more expensive than downloads in the euro zone. Following iTunes’ announcement, UK consumers will soon pay the same for music downloads from iTunes as customers from Euro-zone countries."
Today's announcement represents the latest battle being fought by Apple over its increasingly lucrative site, which has become a household name to millions of Brits downloading their tunes for iPods.
Last month, it was disclosed that Radiohead had ended a dispute with iTunes by agreeing to release their new material on the site. The deal came two months after they shocked the record industry by leaving EMI and asking their fans to pay whatever they wanted to download their long-awaited new record.
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What would have been still better, would have been for the European Comission to force apple to allow consumers to download their itunes from anywhere - currently, for example, there is a block on UK card transactions on american itunes sites.
This way the market would gain full access to itunes, and this would be a natural way of evening out the price. Currently I believe the cheapest place to buy them is the US.
Shane, Guildford, England
And what do the record companies think people will do when they cannot download via iTunes? Go to another legal download site where they'll probably be charged even more? Not likely. What's more likely is that it will drive consumers back towards illegal downloads.
When will the record companies wake up and realise that consumers are voting with their feet (and their wallets)?
Katherine, Reading,
Apple is just Microsoft but smaller. They're not the nice guys any more, if they ever were...
Chris Jackson, London,
why was the price higher in the first place?
Phil Barnes, preston, england
The *origin* of the problem for "disparate pricing" in the various European countries have to do with two things (and neither of them with the Apple iTunes Music Store). It has to do with the varying copyright laws in the various European states. Until those are standardized with one another (as if the European community is *one state*) they will continue to be a problem.
And then secondly, it has to do with the various music labels negotiating different deals (for the various songs and groups) within the various countries of the European community.
As long as the music labels *continue* their disparate pricing schemes with the various countries in the European community, Apple will continue to have those same differing pricing schemes (and thus be saddled with the problems of such). This *originates* from the music labels and not from the Apple iTunes Music Store.
If the music labels persist in this, Apple will "standardize" by raising prices for everyone in Europe... LOL!!
Eliakim, Tulsa, OK, USA
why pay for them when there is lots of sites where you can download 4 free !
kevdoch, bradford,
a great day for consumers.
The European Commission now need to aim their fire on Abercrombie and Fitch who do exactly the same differencial pricing. UK consumers pay double what the rest of Europe do - when you order online.
James Rathburn, Twickneham, England
This is great news for the Chancellor of the Exchequer!
No doubt the drop in the cost of music downloads will cancel out the massive rises in energy costs in the CPI
K Jirackova, Newcastle, Tyne and Wear
How about a refund.
Farrukh, Woking, UK
People often criticise the record companies for the high price of music - I think this is unfair, given that Apple is now a bigger corporation than the "big 4" record labels put together, and given that Apple controls distribution of the labels' music. Apple's statement makes this clear too - they state that Apple will not foot the bill for this, reduced prices will be passed on to his suppliers, the record companies. Looks like the record companies are at most a convenient excuse for Apple's pricing policies.
Andrew, Zurich,
About time too. Once again the European Commission has done something for its UK members!
Peter Koumi, London , UK
It's fine for these big companies to squabble between themselves
to see who gets a bigger cut and how much more they think they can squeeze out of us, but it only pushes people back towards
the illegal downloads , which ultimately apart from being free is a lot easier.
serves em right
i say download free / illegal music until the big companies realise who is actually boss and sort out their prices
scott, London,
The Record companies can not have it both ways. They can not simultaneously rip customers off by charging them differing (but still excessive) amounts for indentical products in different regions, and then cry foul when consumers look to peer-to-peer networks to download music instead.
Dave , Reading, UK
Can someone please explain to me why, in so many ways, the UK is seen as a place where retailers can simply rip the proverbial out of the paying punter. The list of items that cost significantly more here is endless - cars, cd's, audio equipment, electronics and even blooming music downloads.
We always hear about the size of the US market explaining cheaper prices over there, but surely the European market is somewhat larger...so why, for example does an Ipod cost the same in dollars as in pounds?
Does the Government plan to do anything about this anytime soon. As of now, it's sole reaction is to frisk everyone coming off flights from the US in the hope of taxing them more!
Free market economy my bottom!
Johnny Mac, Glasgow,
oh well, maybe something to thank those corrupt bureaucrats in brussels for.....perish the thought!
jorge campos, brussels, belgium
While I own and love my iPod, I would still not buy from iTunes as it is way too expensive, locks you into iTunes using their Digitial Rights Management, iTunes loses those files occasionally after upgrades meaning you have lost your paid for files and uses an Apple version of compression and not standard MP3.
Its still much better to buy from Amazon and others.....
Paul, Toronto, Canada
If the record companies refuse to comply with the ultimatum, British music consumers may potentially find themselves unable to buy their songs on iTunes.
Are you kiding - this is as likely as consumers unable to buy their songs on iTunes because of the quantity of Zunes sold ?!?!
Andrew, Midlands,
Yeay! The first good thing I've ever heard of about Euro bureaucrats!
Thanks EU....
Victoria , London, UK