[Ecommerce] Digital download markets: cut up and segregated

[Michelle Childs]

Below is a link to a good article on market segmentation in the OZ market
, which is also happening in the EU. Its a long article so I have only
highlighted an excerpt. You can read the whole thing at

http://www.theregister.co.uk/2005/11/16/parallel_imports_australia/

Michelle

Digital download markets: cut up and segregated
How Australian digital download providers turned back the clock
By Alex Malik
Published Wednesday 16th November 2005 08:09 GMT

<SNIP>

Given the past behaviour of the Australian branches of multinational
record companies towards the parallel import of physical CDs, it=92s not
surprising that these record companies and digital content re-sellers have
allowed the market for digital downloads to by-pass Australia's parallel
import laws.

So what does this mean to consumers?

To look at one digital download provider, instead of iTunes having a
single service selling all of its sound recordings from a single server to
the entire world for a single price, there are 21 iTunes services in
different markets. These services charge different prices and have
different products available. As a result, after adjusting for currency
differences, UK iTunes consumers pay more for downloads than Australian
iTunes consumers, who in turn pay more than US iTunes consumers. Why offer
different prices for different markets? Isn=92t this simply artificial
market segregation to maximise profits? The Australian iTunes service
launched without Sony/BMG repertoire. So, why should Australian iTunes
consumers be locked out of Sony/BMG repertoire when UK and US consumers
can obtain these tracks? Why should US iTunes customers be able to buy
digital downloads by Australian artists Delta Goodrem and INXS when
Australians can=92t buy these same tracks from the local iTunes service?

Consumers are typically locked out of international services unless they
have a locally issued credit card. This =93lock out=94 takes place because =
the
world has been divided into different territories or music markets. In
this way the digital download market operates the same way as the
Australian market for physical CDs in the 1990s, which was prior to the
introduction of parallel CD imports


--
Michelle Childs -Head of European Affairs
Consumer Project on Technology in London
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