"Australia Tax" is real: Infrastructure and Communications report

http://www.zdnet.com/the-australia-tax-is-real-geo-blocking-to-stop-7000018644/

by zarify • 13 years ago

112 134 13 years ago

jeza2• 13 years ago

This is particularly telling...

"In relation to games, for example, the committee has not received any evidence which explains why it is almost invariably cheaper for Australian gamers to purchase and ship physical media from the United Kingdom to Australia than it is to purchase a digital copy of the same game."

rustynails• 13 years ago

A while back, the Australian dollar was about US 60c. I would suggest this was the basis for which software was pegged against. When the exchange rate changed, the priced stayed fixed because it maintained status quo for the locals. Over time, it became the norm for others to follow suit. It's actually quite simple: if you think it's too expensive or loaded pricing, don't buy it.

Volpe4• 13 years ago

what if you have a need, and that need can only be filled by a product with a loaded price... you don't really have the option to "not buy it"...

anthonyb3• 13 years ago

Not even that. Even games on Steam are routinely priced at retail and left there for years. Civ V, for example, was still $70 last time I checked.

And no, I didn't buy it :)

Update: Just checked - Released 24 Sep 2010, $69.99

bjz_2• 13 years ago

I live at university accommodation in Australia which houses a large proportion of international exchange students. Every one of them, from France, the UK, Canada, Sweden, the US etc. has been shocked by the prices here. Some of them have even said that if they had known how expensive it was, they wouldn't have come.

(This is in general, not just software.)

beedogs3• 13 years ago

Or continue to import it for half the price. Yay, status quo.

chris_wot8• 13 years ago

Finally! There is widespread anger amongst Australians about geo blocking and market segmentation practices. It's also why content and software is widely pirated.

beedogs3• 13 years ago

There's a culture of piracy here that's pretty interesting; people bring entire TB hard drives and small NAS devices into work to share entire collections among each other. (This has abated somewhat now that internet prices aren't so extortionate.)

Khaine6• 13 years ago

That culture is down to several factors:

* price

* availability

* quality of our TV Networks

inopinatus15• 13 years ago

This is not something worth being angry about.

Volpe4• 13 years ago

What are some of the things worth being angry about?

fungi2• 13 years ago

a) Australians have very high incomes and "CUBs" continue to happily pay for their over priced gizmos. For all his whining about unfair competition Gery Hervey isn't exactly suffering.

b) ALP and Liberal govs have happily voted for measures that entrenched regional distribution monopolies (FTA, draconian copyright regimes, criminalisation of DRM circumvention)

note: in the early days of the Howard government parallel importing of media was legalised, this had a dramatically positive impact on pricing for consumers.

Volpe4• 13 years ago

draconian copyright regimes

What are you refering to?

fungi2• 13 years ago

DRM aside... not an expert by any measure but the tight restrictions on "format-shifting" and limitations of "fair dealing" (as apposed to the broader rights granted under "fair use") come to mind.

interestingly (according to wiki) the act specifically allows "circumvention of region coding." http://en.wikipedia.org/wiki/Modchip#Legality but modchips are still pretty much illegal... thanks FTA... (just fou d this article which lays out a pretty interesting history http://www.gizmodo.com.au/2011/02/mods-vs-lockers-region-cod...).

fnordfnordfnord2• 13 years ago

Copyright schemes (region coding of DVDs for example) exist for the purpose of imposing regional pricing, among other reasons.

anovikov3• 13 years ago

What is wrong about market segmentation? Every product finds it price at the crossing of supply and demand. With incremental costs of delivering digital content approaching zero, supply is almost out of the equation. So naturally on a market with higher purchasing power and higher overall price level (and Australia is a costly place to be), prices will be higher, what's wrong about it?

Nursie2• 13 years ago

Companies operate within a global marketplace, buying resources and employing workers from wherever they want, in the most cost effective way possible for them.

Then they try to deny us the same opportunity. It's hypocritical.

Your argument is basically like saying it would be fine to charge people different amounts for your product based on what's in their bank account. Maybe you could do this, but people would be just as annoyed about it.

anovikov3• 13 years ago

There are many ways people are charged based on what's on the people's bank account. Look at the airlines for instance, they mastered this skill since 1978. I see nothing wrong here. There are high-price markets and low-price ones, to circumvent it, there are smugglers to run the line - you can buy digital content using a proxy in USA or UK and using a one-off (digital) UK credit card which is easy to buy.

Same thing goes about say, smartphones in Russia. It is an accepted practice to buy iPhones from smugglers where they are 60-70% of the price in a retail store due to Apple price policy for Russia, i am fine with that. There are different prices for different places based on a lot of factors, trying to fight it will only increase price levels EVERYWHERE because the volume will go down.

An ideal-perfect pricing system is where the product is sold to the maximum number of people who want it and can afford to pay at least an equivalent of incremental cost of production and delivery (which is, for digital goods, near zero), yet everyone pays a maximum amount he can afford. One of the criterias for price setting is the country (there must be many others of course, again look at the airlines and learn from them).

inopinatus15• 13 years ago

Your assumption is askance. It is perfectly fine to charge people different amounts for a product based on their wealth.

Khaine6• 13 years ago

You wouldn't say that if you had to put up with higher prices solely because of where you lived.

randyrand2• 13 years ago

If the alternative is price fixing ill take the free market approach any day. Governments should not be meddling with the prices of software.

beedogs3• 13 years ago

People really don't make that much more here; it just costs more to live. You're basically arguing in favor of price-fixing.

inopinatus15• 13 years ago

Nothing is wrong with it. There's no basic human entitlement to a cheap copy of Adobe Photoshop, so the ethical dimension here is extremely limited, and I'm disappointed to see you're being downvoted for making a very salient point.

I have no sympathy for those of my fellow Australians who think they have some valid complaint that the price of digital assets is "too high".

Australians simply do have a higher willingness to pay, and lower price elasticity of demand, for a whole host of economic reasons. Companies charge the price that maximises their returns, and this means price segmentation wherever it is legal.

Moreover it is, of course, also impossible to legislate against: the same laws would effectively peg the Australian dollar. This is just political grandstanding; nothing will change.

justincormack• 13 years ago

Judging from Japan a serious recession and growth slowing will stop it and it will be followed by 20 years of deflation. Australia is probably near the end of the 20 year boom, price elasticity will shift at some point. Good time to start businesses based on this perhaps.

iwwr• 13 years ago

There is no entitlement to it, but we're not talking of a free market. Adobe has a legal privilege to punish retailers who may undercut them via "parallel import" and it's a crime to circumvent DRM. Without those legal privileges, a free market would work by bringing prices of like goods in line.

jacques_chester4• 13 years ago

Moreover it is, of course, also impossible to legislate against: the same laws would effectively peg the Australian dollar.

I don't get to say this often on HN: what utter rot.

When parallel importation of CDs and movies was abolished, the dollar didn't give a damn.

When region encoding was dropped on us via the AUSFTA Chapter 17, the dollar nary stirred.

The AUD is a small rowboat that navigates between the Scyalla of Chinese iron ore demand and the Charybdis of Ben Bernanke's public nut-scratching.

vacri8• 13 years ago

What's wrong with complaining about being forced to pay more and engaging in activities to level the playing field?

I've always found this style of argument to be innately humourous, a sort of "oh no, they're fighting back somehow - only businesses should be able to make things more favourable for themselves!"

vacri8• 13 years ago

Also...

So naturally on a market with higher purchasing power and higher overall price level

Median wage in the US and Australia are equivalent - in the mid- to high- 40k range.

matt_trentini• 13 years ago

Well, the median wage in Australia was A$57,400 [1] and US$50,000 [2], both in 2011.

[1] http://mattcowgill.wordpress.com/2013/05/13/what-is-the-typi...

[2] https://en.wikipedia.org/wiki/Household_income_in_the_United...

zmmmmm2• 13 years ago

So a thought experiment ...

Is it ok to charge different prices to black people vs white people? For the sake of argument, assume there is a genuine difference in demand between races (I would imagine it is true, but let's not debate that).

If it is not OK, why is it OK to charge Australians differently to other people, beyond the genuine differences in actual costs to deliver software here?

gtCameron• 13 years ago

There is not different pricing for Australians, there is different pricing for people who are located in Australia. Big difference.

Comparing regional pricing schemes to racial discrimination is quite a leap.

MarkMc2• 13 years ago

That's a very good question - I have just spent half an hour trying to answer it to myself. Here's my answer:

Racial discrimination is a special case because it has a very long history which is rooted in bigotry and prejudice. Due to this history any current policy of racial discrimination - even one based on a rational profit motive - would foster bigotry in some people and deeply-felt resentment and hostility in many other people. Other forms of discrimination don't have this problem, at least to the same degree.

For this reason all race-based discrimination should be illegal, but other types of profit-based discrimination should be legal: (a) Senior citizens pay less than other people for cinema tickets; (b) Women pay less for car insurance than men; (c) Students pay less for drinks at the bar; (d) US citizens pay less than Australians for software licences.

By the way, it sounds like you want to see both race-based and country-based discrimination banned. If so, do you think that (a), (b) and (c) above should also be banned? If not, by what principal are you allowing businesses to segment their customer base?

Volpe4• 13 years ago

Nothing wrong with that, just as there is nothing wrong with me taking my copy and distributing it for a lower cost/free. (That's called arbitrage).

Or are we talking about using Copyright to be limited to geographic location? (i.e your U.S Licensed Photoshop can't be used in Australia)... Because that would be a serious misuse of laws. (in my opinion)

jacques_chester4• 13 years ago

Nothing's wrong with it.

Just as there's nothing wrong with the various Parliaments in Australia legislating to modify consumer laws.

If that doesn't suit sellers, they may withdraw their products from sale.

(Given that the marginal gross on software is basically infinity ... they won't).

JonnieCache• 13 years ago

Back in the day I used to buy games imported from australia to the UK (n64, gameboy) because they had PAL tvs yet were on the japanese release schedule. Me and my brother had completed pokemon several times over before any of our friends in school had even heard of it. Obviously this all changed at some point...

chunkyslink• 13 years ago

I've just returned to the UK after living in Western Australia for 3 years. I'm a runner and was absolutely shocked at the markup on running shoes.

Many high street shops selling shoes for $200 + dollars when you could get them for $80 dollars delivered to Australia from the UK, by buying online.

I have no idea why people would shop these high street stores.

chris_wot8• 13 years ago

I have no idea why people would shop these high street stores.

Warranty.

PeterisP5• 13 years ago

Well, in EU&UK the online stores have all the same warranty requirements as high street and some extra; so that shouldn't be the reason.

mathattack• 13 years ago

Indeed, I went shopping at a "Going out of business" sale for a high end children's toy store this weekend. They said, "We're going online to compete with Amazon, can't afford retail space any more."

Their so called clearance price for a toy car was the same every day price at Duane Reade.

prawn• 13 years ago

The inquiry recommends bypassing geo-blocks, which is quite telling.

Khaine6• 13 years ago

Unless your an american with their head up the 'free markets' arse

ryan-allen• 13 years ago

Haha, arse. Spoken like a true Aussie.

For some people the 'don't buy' is one thing, but if you need Photoshop, there is no competition. There is no other choice.

randyrand2• 13 years ago

It's not really a tax - it's Econ 101 price discrimination. which works as long as it can't be easily debased by arbitrage.

Australians have very high standards of living and the prices reflect that. This is just supply and demand and I don't see a problem with that.

chris_wot8• 13 years ago

Not every Australian. Perhaps it's time for a little less free market and a little more government intervention. Nobody likes being taken advantage of.

dwightgunning2• 13 years ago

Calling it a 'tax' is indeed inaccurate and misleading. The purpose of the inquiry was to look at regional price discrimination against Australian consumers.

"The Treasury’s submission to the inquiry defined international price discrimination in these terms: Geographic price discrimination occurs when a business charges different prices for the same product in two or more different locations. International price discrimination is when geographic price discrimination occurs across country borders. To maximise profit, many businesses do not sell based simply on a mark-up of what the product cost to produce, but rather price according to what they consider the market can bear, that is, according to the consumers’ marginal willingness to pay."

http://www.aph.gov.au/Parliamentary_Business/Committees/Hous...

To my mind it's just smart business for software makers to price their products at what the market will bare. However I think it crosses a line when sellers of "digital goods" build in technical geoblocking (e.g. regional website redirects, region-specific app stores) and licensing agreements which enforce consumers purchase in a specific reason.

The parliamentary committee was the result of certain sections of the market saying their not willing to bare this pricing tactic and looking to raise awareness amongst those who aren't aware that it is happening.

Also interesting and was this earlier article from mid-way through the inquiry with a focus on Adobe:

"At the parliamentary hearing, he said that customers can buy Adobe boxed products overseas, but that those products would not be covered by the company's local warranty policies." - Adobe managing director for Australia and New Zealand Paul Robson

http://www.zdnet.com/au/adobe-to-australia-higher-pricing-is...

Kurtz792• 13 years ago

"Calling it a 'tax' is indeed inaccurate and misleading. The purpose of the inquiry was to look at regional price discrimination against Australian consumers."

I think the name, in quotation marks, is spot on.

It's just like saying "the Apple tax", a substantial upmark in the final price of a product compared to similar ones, due to reasons that have nothing to to with taxes, but having basically the same effect.

adaml_623• 13 years ago

The phrase 'Australia Tax' is in quote marks because we all know it is not a tax. It is an economic phenomena caused by all the factors listed in the article.

Those factors have combined to make it very noticeable that there is a non free market operating.

It's very Australian to refer to something by a nickname and that is what's happening here.

inopinatus15• 13 years ago

But there is a free market happening. Free markets are defined by the absence of regulation and government intervention.

Adobe are using their market power in a free market to do price segmentation across national boundaries. If you try to regulate that (which you can't in practice anyway) the price of Photoshop will go up everywhere.

PeterisP5• 13 years ago

And if the Australians don't like the price discrimination, they can facilitate arbitrage - which is exactly what is proposed. In a free market, nobody should have the right to an artificial protection from arbitrage.

dwightgunning2• 13 years ago

It gets tricky when some software companies include licensing terms that effectively force the consumer to buy from within Australia at elevated prices in order to access their warranty/support.

I guess in the purest sense this is still something the buyer can factor into their decision. Market forces will dictate an overall adjustment, etc.

Still seems fairly shady to me and like others have said I'm glad it's being brought to the public's attention.

robryan4• 13 years ago

Internet shopping from overseas is massive here now. The days of price discrimination are fast coming to an end if business wants to stay competitive.

girvo2• 13 years ago

Of course it is. I've worked in sales in Consumer Electronics and boxed Software for about 7 years now, and I know the actual cost prices of most things. It's good to have proper confirmation, at least.

rmc5• 13 years ago

There s a nuclear option that Australia (or other countries) could use. Declare copyrighted goods that are too expensive lose copyright. That film that you won't sell for the same price as the USA? it's now public domain, a local market of people pressing DVDs will spring up.

nahname• 13 years ago

You have to mod your console to play burned games. In the case of the xbox, they change their checking techniques every year and you would have to upgrade accordingly.

rmc5• 13 years ago

Then make pirating the XBox legal. Make the term "XBox" be not a trademark.

I know it's a nuclear option and will never be done.

"Australia Tax" is real: Infrastructure and Communications report

Related Stories