Australian Government Committee Suggests Circumventing Geo-blocking To Combat High Software Prices
from the a-premium-on-ones-and-zeroes dept
Living in Australia means paying more for many things, most specifically software and digital goods. It's common enough that it's known colloquially as the "Australian Tax," an informal system where one country's citizens are asked to pay more -- around 50% more for software from companies like Microsoft and Adobe. This pricing disparity extends to purely digital products, like iTunes downloads and ebooks as well.
In order to prevent Australians from bypassing the high prices by purchasing from another country, software companies have implemented geo-blocking. The normal justifications are in place for utilizing these restrictions in order to maintain the higher prices.
Among the reasons given by company managers to the inquiry to explain price differences were: relative market size, exchange rates, wages, freight charges, local sales taxes, levies, import duties and the need to maintain separate websites and servers for Australian customers.While these may all factor into the pricing, Australians have had their doubts for years as to whether these justify such extreme price hikes. And if all of this supports price bumps that double the price of software, you'd think Microsoft, Apple and Adobe would have made more of an effort to attend the parliamentary inquiry into their prices. But this wasn't the case.
They also said they were charged higher costs by the entertainment industry for content destined for the Australian market.
Just getting three of the tech industry's heavyweights to the parliamentary inquiry was a feat in itself. Adobe, Apple and Microsoft were all invited to attend the inquiry's earlier public hearings voluntarily. In the end it took a summons to compel the companies to appear. Each had a different reason to explain the pricing disparities.So, even the companies who feel the price hikes are justified can't agree on their justifications. With nothing further to go on, there's a strong feeling that these companies are happy with the larger profit margin and uninterested in seeing that diminished. Normally, this would have left Australians at an impasse, but this time a government committee took a decidedly pro-consumer stance with its recommendations (following closely with consumer advocate recommendations on IP spoofing from late last year).
Adobe said it offered a specialised "bespoke" experience for Australian customers.
Apple blamed local copyright holders for higher prices on its local iTunes store.
Microsoft said its prices were set and customers could vote with their wallets.
Except customers couldn't exactly do that because of geo-blocking.
"Particularly when it comes to digitally delivered content, the committee concluded that many IT products are more expensive in Australia because of regional pricing strategies implemented by major vendors and copyright holders," said the report by committee chair and Labor MP for Wakefield, Nick Champion.The report also suggests that the government should begin looking at options to educate its citizens on circumventing geoblocking and inform them on how "their rights under Australian Consumer Law may be affected by such actions." Another proposal suggested voiding contracts or terms of service that include geoblocking.
"While the committee acknowledges that in some cases, geo-blocking is a necessary business practice, it also notes that many IT vendors appear to use geo-blocking as a means to raise prices by restricting consumers' ability to access the global marketplace," the report said.
"The committee considers this form of geo-blocking to be a significant constraint on consumer choice.
The report advised that the Australian government amend the Copyright Act's anti-circumvention provisions to "clarify and secure consumers' rights to circumvent technological protection measures that control geographic market segmentation".
Actually implementing these suggestions would require a rewrite of some areas of Australian copyright laws, which would be no small feat. This may also encourage the affected companies to take more drastic actions to preserve their pricing structures, including the possibility of refusing to provide support to the Australian market. Whether these recommendations will ever go into effect is still doubtful, but at minimum, it forces the issue. Microsoft suggested Australians could vote with their wallets and now it appears the government is moving towards granting permission to its citizens to do exactly that. We'll have to see how these "justified" prices fluctuate in response to Australians "exiting" the market by routing around geo-blocking.
[H/T to velox, who was the first of many to send this news in.]
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Filed Under: australia, copyright, digital goods, geo blocking, price discrimination, region locking, software prices
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Way to undermine everything else they say.
While we acknowledge that an unnecessary practice is a necessary practice...
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It's only a necessary business practice because the business has decided to do such a thing by replicating physical distribution networks online.
As such, not necessary, and not legal. It's an option chosen by the various businesses.
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Generally speaking, if it's just a business model thing they should join the 21st century, but it's also often beyond the direct control of the actual seller (e.g Apple don't have the choice of licensing music from the US and selling it in Australia - they have to abide by the local licence holder's rules).
It's about time these things were sorted out, but retailers still have to abide by the suppliers' conditions even if they belong somewhere in 1994.
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Acually no.. Bad example there.. While we did (until very recently) have a max R15 rating on games, there was no geo-blocking of foreign stores which sold the R18 versions.. We could easily get them sent over.. They were illegal in so far as shops couldn't import and sell them here.. They were not illegal to own :)
Which at the end of the day was a bonus anyway as the foreign price always beats the local 'Australia Tax' market price, even after you factor in shipping costs..
Even now with R18's legal to buy, it's still cheaper to self-import
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I take your point on legal restrictions on certain content though - at the risk of invoking Godwin's law, I know various continental Europe countries such as Germany ban Nazi/swastika/Hitler references a lot.
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e.g. iTunes has to geo-block because they license the copyright from a third party, who may only own/have rights to that copyright in some locations.
If they didn't block it, then the copyright holder/licensee elsewhere would not be happy.
The iTunes resale model isn't the same as people like Adobe or MS who sell their own products directly to resellers/consumers, so while for some it's necessary as they don't own the rights, for the underlying rights holders it's not. Except to protect margins/profits.
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Theft
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Re: Theft
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Re: Theft
A form of price gouging maybe, but not theft.
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How did I do on non-sequiturs?
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DVD region encoding in OZ
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Re: DVD region encoding in OZ
A multi-region player is quite legal to sell here (has been for nearly a decade now) and also it is highly legal to modify any pre-existing region coded devices (cd/dvd/blu-ray) to play any regions products..
I'm not too sure what Dickies minions were smoking that day but they were idiots
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poor excuses!
- relative market size. Australian population = 22m, Alaska and Hawaii each around 1m. Are they being charged much more than Australia? In fact only Texas and California have more people than Australia.
- exchange rates. The 50% comparison is done on USD terms, so there's no exchange rate effect. Maybe a cost of converting currency but between AUD/ASD and on large amounts of money that should be negligible
- wages. What wages? Most of the software/entertainment is created elsewhere so not impacted by Aus wages, and if it was created locally then an Aus wage effect would hit the price wherever it was sold. Plus I doubt Australians are paid 50% more than Americans ...
- freight charges. For downloadable software? Plus for physicals ordered online, that should be covered in the shipping cost not the cost of the item. Also it doesn't cost USD20 to ship an individual game costing USD40 to Australia, much less cost that much when you're shipping a crate of them.
- local sales taxes. Maybe, but sales tax in the US is around 10% say. This would mean sales tax in Aus is around 60%?
- levies. Unclear what this is?
- import duties. I think if there was an import duty of 50% on US entertainment, the MPAA and friends would be screaming blue murder by now.
- maintain separate websites and servers. Really? You don't need to translate anything from the US version. As such it should be much easier to do for Aus than for, say, France where there is a different language. Hell, even the currency has the same name in Aus. For multiplayer games I can see you may want to have local servers to keep ping times down, but that's specialist - plus how about other far flung territories?
Plus Apple's excluse about local copyright holders - how does that impact the price of the same good in US and Aus?
To my mind MS is the most honest one there. Consumers can vote with their wallets by buying elsewhere, for example by buying Apple or Linux machines (the "can't because of geoblocking" is missing the point - you don't vote with your wallet by going to a different branch of the same store, you vote by going to a different store)
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And if any company wants to somehow sue the Aust Government I would draw there attention to the failure of the Tobacco companies (who have deeper pockets than most) in suing over the removal of there brandings from ALL tobacco products and tell em to go and "suck on a sav" (A purely aussie expression)
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Software is more expensive in Australia because the developers need to flip the bits upside down, otherwise the program wouldn't work.
Geez...is this so hard to understand.
/sarcasm
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You live in a den of filthy, immoral pirates and thieves, living a code supported by your government that shuts down and censors dissenters.
Breaks your solar panel heart and dick, doesn't it.
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If you buy Microsoft, Apple or Adobe products...
The energy that's going into whining about their pricing practices should be going into dumping them forever. Kudos to those who were intelligent enough never to get sucked into this rathole in the first place; the rest of you need to get a clue and follow their example.
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Re: If you buy Microsoft, Apple or Adobe products...
This has long term impact on the openness, market competitiveness and lower cost of software.
Simply favor vendors that sell and support software that is open source.
It is like weening yourself off of an addictive drug. Many common software tasks can be performed with open source. New government software projects can be developed with open source.
The encourages the development of local talent in your economy that has the skills and knowledge of major open source software projects.
It lessens dependence upon closed, proprietary solutions, which is the source of the high prices. Simply put: they are the only vendor in town, and they can charge and set whatever terms they want.
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Sure, that must be why M$ products are among the most pirated. That's your customers retributing your middle finger =)
Be an asshole and your potential customers will act accordingly.
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The iTunes excuse
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Why don't any of the agreements actually cover something useful like this.. Ain't this the sort of things they're meant to cover? you know, like free trade between two countries so one doesn't gouge the other??
Idk..
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Delivery Charge for a Digitial Book
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I know this becuase I had to put such software on my web site to lock out one persistent user who would not get them message that he was not welcome on my web site.
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http://www.businessspectator.com.au/news/2013/7/31/technology/content-industry-rallies-agai nst-it-price-inquiry-findings
Australian online media companies have labelled the IT price inquiry’s goal of abolishing geoblocking as naïve, implying that the bipartisan committee tabling the report has failed to understand how the practice impacts the content industry.
“The idea that Australia would unilaterally decide to change the way in which intellectual property rights are managed globally seems quite ridiculous to us,” Foxtel’s director of corporate affairs Bruce Meagher told The Australian Financial Review.
“We think it’s a very naive view that the committee has taken and we’ll certainly be talking to both the government and the opposition to encourage them to take a more sophisticated view of the way these things work,” he said.
nb: Foxtel is the oz version of Murdochs pay tv, co owned with a few of the other big media content duopolists, and desperately railing against any freeing up of geo blocking... for their massively overpriced, late delivered content...
This time they may get a frosty reception from the pollies who are a trifle pissed off at the big tech sector and may feel a visit from Murdochs down under toads should be greeted with the contempt it deserves... or maybe not...
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FOSS extra charges
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Set up an office in the USA...
After a year of trading, the bank asked the same question again. US HSBC asked for their pricing, and the USA pricing was quoted back on Microsofts own systems at SELECT Level D (USA pricing), discounted by 30%.
Microsofts response was to tell LARs that they couldn't buy from each other across continental borders unless you were a LAR in both, so only 1-2 resellers could broker these sort of International deals for multinational clients.
Adobe refuse point blank to license across Continental borders; as an end user, they split the user populations accordingly and discount each continent separately.
As far as Microsofts own internal accounting is concerned, they attribute 20% of the financials they land to the country of order, and 80% to the Microsoft subsidiary where the end users actually reside. Resellers only get rebates where the licenses are present in the geography they are authorised to sell into... hence their margins are extremely small on these deals (routinely less than 1% GM).
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