EU, Apple reach iTunes pricing deal
BRUSSELS, Belgium (AP) - January 9, 2008 Apple charges about 9 cents more per song in Britain compared
with prices in nations that use the euro. The company said it has
to pay more to record companies in Britain for distribution rights.
The maker of the popular iPod media players had been under
investigation since April by EU authorities after a British
consumer group complained that Apple and major record companies
were unfairly restricting choice and ramping up the cost of
downloads.
The European Commission said it had closed an antitrust probe
into Apple's iTunes operation after finding no evidence that EU
laws were broken. However, the EU said some copyright issues
involving Apple remain.
EU Competition Commissioner Neelie Kroes welcomed the agreement,
saying it would "allow consumers to benefit from a truly single
market for music downloads" across the 27-nation bloc.
Apple said it will lower prices for music on its British iTunes
site "within six months" to match prices charged at 16 iTunes
stores across Europe and "reconsider" ties with companies if they
do not lower wholesale prices in the UK during that same period.
"This is an important step toward a pan-European marketplace
for music," said Apple Chief Executive Steve Jobs in a statement.
EU regulators said Apple's distribution agreements contained
territorial restrictions which violate EU competition rules because
consumers can only download music from the iTunes store in their
country of residence. Music buyers must provide a credit card
issued by a bank with an address in the country where they live.
Downloading a single in Britain costs 79 pence compared with 99
euro cents in Europe, a difference of about 9 cents allowing for
currency conversion. The new price in Britain would be in line with
prices paid in the United States.
The European Commission said it would not address other
complaints over copyright restrictions which Apple says it is
forced to abide with.
The EU executive office said there is "no agreement" between
Apple and major record companies on how iTunes stores are organized
in Europe, notably on allowing consumers to download music from an
iTunes store outside their country of residence.
The commission said consumers should be allowed to make
purchases from iTunes "without restrictions." But it said it was
aware that the licensing practices of some record companies and
publishers make it "difficult for iTunes to operate stores
accessible for a European consumer anywhere in the EU."
Steve Jobs said Wednesday he would continue to try to convince
record companies to lift restrictions so Apple can set up a single
iTunes store for all of Europe.
"We hope every major record label will take a pan-European view
of pricing," Jobs said.
Online music downloads in Europe still lag behind the United
States, pulling in just a fraction of revenues the record industry
is losing from falling CD sales.
A report published this week by technology consultancy
JupiterResearch said digital music spending last year was 401.2
million euros ($590 million), up 63 percent from 2006, but only 13
percent of lost CD sales throughout the year.
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Associated Press business writer Aoife White contributed to this
report.