The Australian government has released its parliamentary inquiry into IT pricing and it confirms what we’ve always known – US companies charge us foreigners more for the same products, regardless of cost of delivery.
Any business owner will tell you, you don’t base your product’s price on how much it costs to make the product but rather on what the market will pay for the product.
In the case of some big-name US brands, they’ve followed that remit to the letter. Goods both physical and digital have been priced according to what they think the local market will pay, and typically that’s meant paying more.
This is a double-edged sword. I know of at least one UK band that refused to tour in New Zealand because they were told that UK rates for concerts converted into New Zealand dollars made the concert too expensive. Better to have a local price point that would mean money would still be made but which wouldn’t result in New Zealand fans mortgaging their houses in order to see the show.
On the other hand, charging locals more for a product because you can has led to some companies coming a cropper. Adidas, you’ll remember, figured out that Kiwis would pay a lot more for an All Black replica jersey than, say, Germans would and so priced its products accordingly.
These days we have the internet and we can compare and contrast pricing. The world of regional variation is all but dead and global prices are the new standard, yet still we find US and European companies in particular willing to engage in dubious pricing practices “because they can”.
I know of at least one New Zealand corporate which buys all its Microsoft licences through a US subsidiary because it saves between 30 and 50% on the price and that’s just the tip of the iceberg.
So what has the Aussie report recommended? Well, the parliament is going to monitor pricing for the foreseeable future to monitor the situation. It’s also looking to aggregate educational institutions’ needs to buy at a better price and will consider introducing an all-of-government model if the educational piece proves useful.
But most interestingly, the report recommends broadening and strengthening Australia’s parallel importation laws “to ensure it is effective in allowing the importation of genuine goods” and to revisit the copyright laws with a view to “clarify and secure consumers’ rights to circumvent technological protection measures that control geographic market segmentation.”
That’s right – government mandated circumvention of DRM protection measures like region locking and the like.
But wait, there’s more. Recommendation six says:
The Committee further recommends that the Australian Government investigate options to educate Australian consumers and businesses as to:
the extent to which they may circumvent geoblocking mechanisms in order to access cheaper legitimate goods;
the tools and techniques which they may use to do so; and
the way in which their rights under the Australian Consumer Law may be affected should they choose to do so.
There are even more recommendations that go a long way towards strengthening the user’s rights, even up to the point of considering outlawing “geoblocking” should it come to that.
If you’re sitting there with your mouth open at the extent of all this then you’re doing so in good company. The idea of a government doing all of this is quite astounding. Here at home we’ve got is NZ Post and its You Shop service (giving customers a US postal address so as to get round shipping restrictions) and Slingshot with its Global Mode allowing “visitors” to access US content as if they were in the US. Ahem.
Sadly, the New Zealand response on all of these points is underwhelming. We’ve decided to push back any decision on parallel importing or the review of copyright laws until after the Trans-Pacific Partnership secret deal is concluded.
Given the US is pushing a hard line on copyright, intellectual property and parallel imports, I doubt that means good things for New Zealand users. Unlike our Australian counterparts, we have no such support at government level beyond Minister Craig Foss telling TUANZ that he has written to the Australian government asking if New Zealand consumers can be tacked on to the side of the Aussie inquiry. I’ll find out if they ever replied and what outcome there has been, if any.
The Australians aren’t too worried about offending the US with their actions. They’ve already secured a free trade agreement and know that it’s not paid dividends to Australia’s economy at all. Far from it – the prevailing consensus appears to be that Australia has given up far more than the US has and gained very little from it.
Well done, Australia. Wellington – have a look at what could be gained for New Zealand users and remember: we get to vote. The Americans don’t.