HOST:
That's Paul Resnikoff and he's the founder of Digital Music News in the US and he was ending that report from John Barrington. Now joining us to talk about the extra money that Australians are having to shell out for iTunes is David Bradbury. He's the Federal Secretary, helping the Treasurer for Competition and Consumer policy. David thanks for joining me.
BRADBURY:
Good afternoon Tom how are you?
HOST:
Yeah well thanks David. Now we're paying around 58% more than people in the US for music on iTunes, are you worried that Australians are being ripped off?
BRADBURY:
Yeah, look I think we would all like to see the prices for the songs that we download and the other content that we download to be lower than it is. And certainly when we see comparisons with what's on offer elsewhere in the world that is a source of concern to us all.
I think though and having heard the piece that you've put on air, I think that one of the points that we do need to acknowledge that there are in fact different licensing arrangements that are in place across different countries. And, you know, I don't know the extent to which that is a driving consideration in these price differences but that certainly is a consideration. But I think that at the end of the day one of the biggest factors here is that it does come down to a question of competition within the Australian market. And as your report indicated, there are other alternatives out there and BigPond is the second largest competitor. Have a look at the BigPond site you will see that a whole range of songs and albums are in fact in many cases cheaper than the iTunes alternative, the Australian iTunes price that is, albeit still being higher than the US price. So I think in the end, the challenge for us all is to ensure that there are choices there for consumers and that consumers are aware of those choices and driving change within the market by taking their business to those players within the market now providing a better deal.
HOST:
David you mentioned Telstra there and that's one provider that has a reasonable market share in Australia. In the US they have Amazon which is a much bigger competitor for iTunes. What are you doing to make sure that there's an increase in competition here in Australia?
BRADBURY:
Well look it's not the role of the government to go and invite new competitors into the market. And in fact that's a pretty dangerous thing when you start to get into that sort of business. And the reality is that there's a lot of money to be made in this market. And Apple through iTunes is out there making a fair bit of that. Telstra through BigPond have been moving into the market and I'm certain over time you will see other players perusing opportunities within this market. Now having said that that, I think that there is so much happening across this space and if you just think back ten years ago people didn't really have iPods let alone the penetration that they have today. In large part Apple has been a market leader in putting devices into people's pockets and as a result of having done that there is a significant convenience factor for many people that ultimately leads them with this natural drift towards iTunes as opposed to other products. So I think…
HOST:
That's part of the problem and they've got round that in the US with Amazon but we don't have enough competitors that have been able to do that here in Australia to get around those sort of device issues here.
BRADBURY:
Look that's right but I've got to say, I had a quick look at some prices on the sites today on the BigPond site compared to iTunes and I found a huge number of cases, significant price discounts for BigPond yet …
HOST:
Sorry we've just lost David there. But we've got Lachie on the line on line one. David you're a DJ what do you reckon about these price points?
CALLER:
Well I don't mind the price points, what I'd really like to know is where does the extra money go and what's the value in it for…
HOST:
And we've also just lost Lachie there and we're talking about here on Hack basically the price difference between iTunes here in Australia and iTunes in the US and there's a 58% gap there and we've got David back on the line. David, sorry for losing you there but David where can consumers here get the confidence that new players will come into the market?
BRADBURY:
Well look I think they will but the point I was making just before we got interrupted was that where there's already price differences there, the fact that Apple continues, through iTunes, to continue to have such a large market share in part reflects that there's been a bit of inertia from consumers in not taking their business to the alternative and there are a range of reasons as to why that might be the case. But in the end that is what will drive the emergence of new players and in fact the stronger the competitors to iTunes become then the more pressure there will be on iTunes here in Australia to start to lower their prices to maintain their market share.
HOST:
We've got Lachie back on the line. Lachie are you satisfied with this?
CALLER:
Not at all. I think it's just a classic case of someone else taking another slice of pie and it doesn't make the rest of the pie taste any better. It also comes down to things like not just regional pricing, its regional availability of digital downloads. All my music that I DJ I buy legitimately and certain tracks and certain people you think we can not purchase in this country even digitally, you will get a warning from the website you're shopping at saying this is not available in your region.
HOST:
Yeah right.
CALLER:
It is very much a case of lots of committees lots of labels that control all this stuff, simply setting price points how they feel like, and that's not good enough. And if you take into account all these market statistics and everything like that, and they say this is the size of the Australian market I challenge them to be able to prove that, is it an accurate number? Because of so many people using alternative means.
HOST:
Yeah thanks for the call there Lachie. Now David, there's a big concern that these sort of price discrepancies in the digital downloading market are the cause of a lot of record labels losing a lot of money and that's been a real problem for the music industry. Do you think this is something that needs a lot more focus all across the board?
BRADBURY:
Yeah well look obviously to the extent that these pricing policies are driving people into obtaining their content through means where they're not paying for it or through free downloads or other illegal pathways, to the extent that that's happening then I guess operators such as iTunes do that at their own peril because they will also be losing business not just those who are the owners of the copyright that will ultimately get a cut and in many cases a small cut of the overall price for each download. So look I think that there is a lesson in this for the industry itself and for those participants within the market that where they place barriers that are, let me make the point I'm not condoning people going down the path of illegal downloads.
HOST:
Of course.
BRADBURY:
But where a participant within the market such as iTunes, where their pricing policies lack credibility in the face of the sort of public criticism that we're seeing then ultimately there will be repercussions that they will have to deal with in the market place. So I think that they are factors that will come into play but I'd make this point that if you think that you're going to drive that sort of change through iTunes by illegally downloading then you're actually going to probably put more pressure on iTunes by going to another competitor within the Australian market because that is where they start to see businesses bleed to other competitors, that will show up much more clearly in their statistics, demonstrating that competitive pressure is actually in play and it's that competitive pressure that they need to respond to
HOST:
David Bradbury thanks for joining us on Hack.
BRADBURY:
Thanks very much Tom, good to speak with you.
HOST:
David Bradbury is the Parliamentary Secretary assisting the Treasurer in competition and consumer policy.