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Consumer group calls for probe of `rip-off` iTunes

By Reuters
London, 17 Sept 2004
Apple Computer is charging its British iTunes customers 17% more per download than its European customers, a consumer watchdog group said on Wednesday.

The Consumers` Association, publisher of consumer magazine Which?, said it has asked the UK`s Office of Fair Trading (OFT) to investigate the pricing disparity.

If evidence is found of anti-competitive pricing, the group intends to ask the OFT to compel the computer maker to institute a pricing scheme on par with what it charges consumers in continental Europe.

"There appears to be considerable evidence that the iTunes set-up is prejudiced against the UK public and distorts the very basis of the single market. If the OFT agrees it will be another example of the rip-off culture that the British public are often victims of," the group said in a statement.

When Apple launched the iTunes music store in Europe in June it instituted a set download price of 99 euro cents per track in Germany and France and 79 pence (116 euro cents) per track in the UK. Apple plans to launch the service in other European countries this autumn.

Targeting iTunes is an odd choice. In Britain, Apple`s music service is cheaper -- in some cases more than 20% cheaper -- than rivals Napster and most of the online retailers that resell the catalogue of music download firm OD2.

As a result, iTunes sold over 450 000 downloads in Britain in its debut week, propelling it to what is widely believed to be a substantial market lead over rivals.

The Consumers` Association said it had no plans to investigate the pricier download services.

Graham Vidler, head of policy for the Consumers` Association, said he was not aware of a single complaint from a British consumer about Apple`s pricing scheme. "What we are saying is we believe iTunes could be made cheaper," he added.

Apple dismissed the charge, saying price differences by market is not uncommon in the music industry.

"The underlying economic model in each country has an impact on how we price our track downloads. That is not unusual. Look at the price of CDs in the US versus the UK. We believe the real comparison to be made is with the price of other track downloads in the UK," the computer maker said in a statement.

Still, the price of music downloads has been a contentious issue among music fans who are quick to point out that the per-track pricing scheme often means that downloading a full album costs more than buying the CD.

The piracy-battered recording industry is desperate for music download services to become a consumer hit so as to derail the popularity of free file-swapping services such as Kazaa.