Australian consumer watchdog Choice says locals are paying twice as much as they should for computer hardware, software and digital downloads. In it’s latest research – The Digital Price Divide – the consumer group says Australian prices for products such as music, personal computers, console games and computer software are on average 50 per cent higher than those in the United States.
In a submission to the parliamentary inquiry into IT pricing, the group noted that across 44 software products, Australian prices were 34 per cent more expensive than comparative overseas prices. Choice also found that Australians are paying 51% more for iTunes music, 88% more for Wii games and 41% more for computer hardware than US consumers.
One piece of Microsoft software was nearly $9,000 more expensive in Australia than the United States, Choice said via it’s website that it would be cheaper to pay someone’s wage and fly them to the US and back twice, and get them to buy the software while overseas.
“For this amount, it would be cheaper to employ someone for 46 hours at the price of $21.30 per hour and fly them to the US and back at your expense – twice,” Choice said in its submission.
Choice identified international copyright discrimination as one of the causes for the disparity. But group spokesman Matt Levey says the most likely reason is Australia’s relative affluence ::::
“It’s the practice of these global companies pricing these products at a point where they think people are going to buy it, regardless if that’s at parity with other countries that they fell into,” Mr Levey said. “They use a number of technological barriers to actually prevent Australians from accessing these products from parallel importing them and direct importing them from cheaper markets.”
UPDATE! July 31, 2012: A national inquiry is beginning today into accusations that the international IT industry is ripping off Australian consumers. The industry blames the cost of doing business in Australia, but consumer advocates reject that.
A House of Representatives inquiry is holding its first public hearing into the issue in Sydney today.
There are countless examples of electronic goods, software and entertainment products that cost more in Australia than overseas.
For example, an Arctic Monkeys album costs $17.99 on iTunes in Australia, but according to the Federal Department of Communications, it costs the equivalent of about $13 overseas.
The movie Toy Story costs $24.99 on iTunes in Australia, but buyers overseas pay only $10.
“In Australia you pay on average 52 per cent more than an American consumer for the same top 50 iTunes songs,” said Choice’s head of campaigns, Matt Levy.
He says Australian consumers should not have to pay so much more.
“We’re talking about a product here which doesn’t have the same sorts of overheads that industry often talk about in terms of rent, in terms of logistics and distribution,” he added.
“It’s the same file being downloaded more or less from the same server, but a 52 per cent price difference if you happen to be Australian.”
A spokeswoman for Apple declined to comment on why movies and music are more expensive on iTunes in Australia.
The company’s Australian lobby group, the Australian Information Industry Association, says while downloadable software may have reduced transportation and manufacturing costs, other costs such as marketing, administration and advertising still remain.
The association’s submission to the House of Representatives inquiry looking into the pricing of software, hardware and downloads blames the cost of doing business in Australia for the higher prices.
“Costs associated with product and service sales in Australia include GST, customs duty and regulatory requirements such as consumer guarantees which impose strict warranty requirements on suppliers and which add to business costs,” said the association’s chief executive Suzanne Campbell in a statement.
“Buyers in Australia have a much higher level of protection than consumers in many other markets and this protection has associated costs.”
The Australian Retail Association’s executive director Russell Zimmerman tells a similar story.
“We’ve probably seen some fairly strong price deflation in the hardware side of things but, still, we tend to think that our prices for even hardware are still high here in Australia and overseas,” he said.
“I think there’s a number of reasons. I think you’ve got to look through the supply chain, the supply chain costs are much greater here in Australia, and whether that starts from the warehousing costs through to delivery, through to retail rents or through a lot of other areas that are picking up pricing structures on the way through, those costs are much greater here in Australia than they are overseas.”
However, Choice rejects the assertion that there are higher costs unique to Australia that account for all the price difference.
“We think the most obvious reason and likely reason in fact for these price differences is international price discrimination, so that’s actually the practice of the international businesses who manufacture these products who own the copyright actually charging more in the Australian market,” Matt Levy argued.
“It certainly is their prerogative, but what we would say is that we’ve got an increasingly global marketplace and we have Australians who are able to access products online and actually see the sorts of price differences in a matter of seconds, whereas in the past there’s been barriers if you like erected around our markets to actually, I guess, make this process less transparent.”
He says business practices which make it hard for consumers to buy cheaper products from overseas should be stamped out.
“I think the practice we’ve seen for many years is that the international suppliers and manufacturers of these products have made it as hard as possible for Australian consumers to access them,” he observed.
“We see things like technological measures, whether it’s region coding or even IP address recognition, which often diverts Australians to the most expensive place to buy the exact same product.
“We don’t think it’s justified, we think the more pressure we can put on these businesses to actually stop these anti-competitive practices the better.”
Apple and its rival Microsoft have refused to appear before the inquiry.
image source: choice