Let’s go shopping

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.

 

2 replies
  1. Paul Brislen
    Paul Brislen says:

    Apple’s pricing model was well explained to the Aussie inquiry. The other multinationals did not do so well. They struggled to explain why a digital good can and should be priced differently in different parts of the world.

    It’s the WORLD Wide Web, as I keep saying, not the America Wide Web.

    Reply
  2. Paul W
    Paul W says:

    Interesting article. I recently discovered the joys of YouShop when the other week I bought my wife a Nexus 7 from Amazon. The new one came out a week later 🙁 Landed I should save well over $200 off the NZ retail price.
    The other area of rippoff I discovered recently was Apple iTunes movies. NZ purchase price for a popular movies $29.99 US price after exchange rate and GST added about NZ$15. Same ratio for movie rentals..

    Reply

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