"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."
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.
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.
I'm in Australia from the UK and yes, the prices can be ridiculously high. I have my own version of the McDonald's index, the bread index. In supermarkets in the UK quality organic whole meal fresh bake is £1.10 which is about $1.80 AU. A loaf of white junk bread in Australia costs over $4.00. And so it is with lots of things.
I agree that cost of living in Australia is high, but you can buy a loaf of "baked in store" white or wholemeal bread for AUD $2. Sure its not organic but it is fresh.
Finally! There is widespread anger amongst Australians about geo blocking and market segmentation practices. It's also why content and software is widely pirated.
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.)
In Australia? The neo-racist obsession with excluding asylum seekers would be a great start, although it's just one part of the toxic state of public discourse. Another might be the horrific waste of public money that is the long-dead-but-still-artificially-twitching car manufacturing industry. And don't get me started on transport policy.
And when fuel prices spike up and there is no manufacturing knowledge at the institutional (I mean business here not education) level will Australians have to put up with importing all vehicles at extortionist prices? What will happen when the luxury car import duties apply to all vehicles? Think of the public investment as a hedge against the Australian dollar losing value (which it will do if China tanks) and/or a steep rise in the cost of fuel (i.e. it becomes very expensive to import vehicles manufactured elsewhere).
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.
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?
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.
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).
>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.
Do you have any proof that this will happen exactly as you say?
On the contrary, it's an easy argument by contradiction. If prices should be the same everywhere, then I should pay the same for rice as a rural villager in a developing nation.
But I don't, and I don't expect to, because I am relatively far more wealthy. Therefore differential price levels are acceptable in general: because otherwise our villager could not afford to eat.
And that is for an essential item. To hear fat, comfortable westerners complaining about the price of Photoshop is just revolting.
Given this and your various other fallacious appeals to worse problems, I conclude you are beyond rational discussion. Suffice to say, you are the worst possible kind of hypocrite for arguing with us instead of being out there helping starving children.
It's not free market at all - 'parallel imports' are not allowed. Price fixing is what is currently going on, and free-market competition is what the government wants.
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.
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.
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.
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!"
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?
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?
I think the root of it all comes from our base expectation that humans should be treated equally. We expect that as a base and small deviations from it, especially favorable ones. But anything else has to be tied to very rational reasoning about why the discrimmination is happening.
So we can say insurance for women vs men is generally OK because it is two large groups and the discrimmination is tied to real justifiable costs in the difference of insuring them. We can say students vs others is OK because everybody has the experience of and choice to be a student. Similarly with seniors - we will all get to be seniors one day, with luck :-) So you're not discrimminating between people - everyone will get to experience these benefits at some stage.
The geographical segmentation is difficult because (just like race), it's something beyond our control - we can't help where we live, and it will never change. Suffering a selective negative consequence for something that is beyond your control violates our basic sense of right and wrong about human equality.
The time honored way to segment a customer base is to offer tiers of product. Identify a few special features and sprinkle them into a "professional" version. Then sell that for a higher price. If Australians on average are more affluent, more of them will buy the higher priced version, and you will still be making (some of) your extra money. But the ones who are equally well off compared to those in other countries will not be disadvantaged.
1.
When given a free hand to segment their customers, businesses will generally set a higher price for people who can afford to pay more. This might be less equal but it is more equitable. For example, let's say Paramount Studios releases the latest James Bond film - they will want to charge an Australian cinema more for the right to screen the film than an Indian cinema. My sense of social justice says it is fair for someone whose income is £4/day to be charged less to see a film than someone who earns £100/day. If Paramount was forced to charge the same price then it would mean that Indian cinemas simply cannot afford to buy the rights to screen the film, and Indians would miss out entirely.
The argument is even stronger for medicine. If a pharmaceutical company can be sure there is no arbitrage between two countries, then it will want to sell a medical treatment cheaper in India than in Australia. That is A Good Thing.
2.
If you say to a business, "You must offer your product to Person A and Person B for the same price" then you are restricting the total size of the economic pie in a similar way to saying "You must offer your product for $6". Take Paramount Studios again - if they are prevented from charging different prices in different countries then they will earn less revenue. This means they will be pay their scriptwriters less, have less impressive special effects and pay less tax. (Or quite possibly the film is not made at all).
3.
You are happy for a car insurance company to discriminate on the basis of sex if there is a real difference in accident rates between men and women. Would you allow a car insurance company to discriminate on the basis of race if there is a real difference in accident rates?
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)
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...
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.
I believe that in a free market buyers and vendors should both be free to set whatever terms they like and negotiate on whatever basis they choose. Government interference in that (e.g. by regulation of who must set what price or what their T&Cs must be) is therefore, by definition, non-free.
Then why aren't you supporting the government's actions here? The government is suggesting fixing the issue by removing protectionist legislation, and enabling the 'buyer' half of your comment a fairer field. Government isn't talking about setting prices, but by recommending a higher degree of free-market competition.
Well, there's no free-market competition at stake, because Adobe cannot be said to compete with themselves. That is, Photoshop is not a commodity with multiple manufacturers competing for your dollar.
And as for supporting this proposal; I have read it, and in fact I do support part of it: the removal of anti-circumvention clauses in copyright law. I just checked and I don't think I ever said the opposite.
But I'm dead against legislating directly against geographical segmentation. It's a ridiculous notion, on the one hand almost laughably unenforceable, and if you could enforce it, it'd have a terrible effect on the pricing in developing nations with a lower price level than ours.
If you allow parallel importation then you are in most cases obviating the need for a local subsidiary. Service? Sales? Support? Not a problem. Just contract it out.
And the Australian government is not going to take legal action in the US to create border import tariffs.
I continue to be astounded by all the self-righteous outraged people here demanding cheaper Photoshop and cheaper Steam games like it was some basic human right.
> If you allow parallel importation then you are in most cases obviating the need for a local subsidiary. Service? Sales? Support? Not a problem. Just contract it out.
That is not the observed and observable outcome of parallel importation in other goods.
> And the Australian government is not going to take legal action in the US to create border import tariffs.
Your terminology is incorrect. It's not a tariff. Making geo-segmentation harder or illegal is not a tax on imported goods.
> I continue to be astounded by all the self-righteous outraged people here demanding cheaper Photoshop and cheaper Steam games like it was some basic human right.
I'm likewise astounded that people think Australia's quite utilitarian, transactional political culture is going cleave to any particular ideological position.
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.
"That said, she gets paid $95K for a part time job with full benefits. She had a similar job in the states that was full time and it paid $34,000 with minimal benefits."
And there you have it.
If you want to live in a society with high pay, good benefits, free Medicare, compulsory pension contributed to by your employer, etc -- then be prepared to pay.
Also, there is nothing stopping you from importing cheap clothing, goods, books, whatever from overseas.
Not everyone in Australia has the ability to earn $95K. There are the rare exceptions where you can get an unskilled mining job in a remote area, but that's every bogan's dream. Actually landing such a job is another matter.
That said, the minimum wage at $16.37/hr is much hire than other countries. In Melbourne at least, you'd probably gobble that up pretty quickly on living expenses.
Because despite the freighting costs a country like China can still make cheaper cars for our market. Even if the whole chain is here it is likely going to still be more expensive. If this wasn't the case then it wouldn't have been slowly dismantled over time.
My whole point is that this advantage that China has might be illusory, what if in 5 years time the balance of wages in China and the cost of fuel goes up? China moves to robots? Why not have robots in Australian factories with Australian know-how?
It actually depends, I used to live in the melbourne suburb as a grad student, I used to pay 800$/mo for 1 bedroom apartment. Now I am living in the US (in northern VA, DC area) I pay 1200$/mo for the same standard of accommodation. In fact, the melbourne accommodation was better, w.r.t. the condition of the apartment and the degree of accessibility to the public amenities. The suburb where I am living now (in the NVA/DC) is literally a ghost town, where the melbourne suburb was very alive.
74 comments
[ 3.3 ms ] story [ 121 ms ] thread"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."
And no, I didn't buy it :)
Update: Just checked - Released 24 Sep 2010, $69.99
Anno2070 DLC has a 700% markup in Australia.
(This is in general, not just software.)
So many rent seekers.
I agree that cost of living in Australia is high, but you can buy a loaf of "baked in store" white or wholemeal bread for AUD $2. Sure its not organic but it is fresh.
* price
* availability
* quality of our TV Networks
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.
What are you refering to?
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.
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).
Do you have any proof that this will happen exactly as you say?
But I don't, and I don't expect to, because I am relatively far more wealthy. Therefore differential price levels are acceptable in general: because otherwise our villager could not afford to eat.
And that is for an essential item. To hear fat, comfortable westerners complaining about the price of Photoshop is just revolting.
I am not allowed to buy songs from the US iTunes Store, or the US Steam Store.
DVD's are region locked, and parallel importation is illegal.
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.
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.
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!"
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.
[1] http://mattcowgill.wordpress.com/2013/05/13/what-is-the-typi...
[2] https://en.wikipedia.org/wiki/Household_income_in_the_United...
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?
Comparing regional pricing schemes to racial discrimination is quite a leap.
[1]: http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?artic...
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?
I think the root of it all comes from our base expectation that humans should be treated equally. We expect that as a base and small deviations from it, especially favorable ones. But anything else has to be tied to very rational reasoning about why the discrimmination is happening.
So we can say insurance for women vs men is generally OK because it is two large groups and the discrimmination is tied to real justifiable costs in the difference of insuring them. We can say students vs others is OK because everybody has the experience of and choice to be a student. Similarly with seniors - we will all get to be seniors one day, with luck :-) So you're not discrimminating between people - everyone will get to experience these benefits at some stage.
The geographical segmentation is difficult because (just like race), it's something beyond our control - we can't help where we live, and it will never change. Suffering a selective negative consequence for something that is beyond your control violates our basic sense of right and wrong about human equality.
The time honored way to segment a customer base is to offer tiers of product. Identify a few special features and sprinkle them into a "professional" version. Then sell that for a higher price. If Australians on average are more affluent, more of them will buy the higher priced version, and you will still be making (some of) your extra money. But the ones who are equally well off compared to those in other countries will not be disadvantaged.
But:
1. When given a free hand to segment their customers, businesses will generally set a higher price for people who can afford to pay more. This might be less equal but it is more equitable. For example, let's say Paramount Studios releases the latest James Bond film - they will want to charge an Australian cinema more for the right to screen the film than an Indian cinema. My sense of social justice says it is fair for someone whose income is £4/day to be charged less to see a film than someone who earns £100/day. If Paramount was forced to charge the same price then it would mean that Indian cinemas simply cannot afford to buy the rights to screen the film, and Indians would miss out entirely.
The argument is even stronger for medicine. If a pharmaceutical company can be sure there is no arbitrage between two countries, then it will want to sell a medical treatment cheaper in India than in Australia. That is A Good Thing.
2. If you say to a business, "You must offer your product to Person A and Person B for the same price" then you are restricting the total size of the economic pie in a similar way to saying "You must offer your product for $6". Take Paramount Studios again - if they are prevented from charging different prices in different countries then they will earn less revenue. This means they will be pay their scriptwriters less, have less impressive special effects and pay less tax. (Or quite possibly the film is not made at all).
3. You are happy for a car insurance company to discriminate on the basis of sex if there is a real difference in accident rates between men and women. Would you allow a car insurance company to discriminate on the basis of race if there is a real difference in accident rates?
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)
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).
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.
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.
I know it's a nuclear option and will never be done.
And as for supporting this proposal; I have read it, and in fact I do support part of it: the removal of anti-circumvention clauses in copyright law. I just checked and I don't think I ever said the opposite.
But I'm dead against legislating directly against geographical segmentation. It's a ridiculous notion, on the one hand almost laughably unenforceable, and if you could enforce it, it'd have a terrible effect on the pricing in developing nations with a lower price level than ours.
And the Australian government is not going to take legal action in the US to create border import tariffs.
I continue to be astounded by all the self-righteous outraged people here demanding cheaper Photoshop and cheaper Steam games like it was some basic human right.
That is not the observed and observable outcome of parallel importation in other goods.
> And the Australian government is not going to take legal action in the US to create border import tariffs.
Your terminology is incorrect. It's not a tariff. Making geo-segmentation harder or illegal is not a tax on imported goods.
> I continue to be astounded by all the self-righteous outraged people here demanding cheaper Photoshop and cheaper Steam games like it was some basic human right.
I'm likewise astounded that people think Australia's quite utilitarian, transactional political culture is going cleave to any particular ideological position.
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.
http://www2.woolworthsonline.com.au/Shop/Department/1%3Fname...
And there you have it.
If you want to live in a society with high pay, good benefits, free Medicare, compulsory pension contributed to by your employer, etc -- then be prepared to pay.
Also, there is nothing stopping you from importing cheap clothing, goods, books, whatever from overseas.
That said, the minimum wage at $16.37/hr is much hire than other countries. In Melbourne at least, you'd probably gobble that up pretty quickly on living expenses.