Kiwis paying through the nose for digital music

New Zealand and Australia are paying more than other countries for music sold in iTunes, Apple's music store dating back to the original iPods.

New Zealanders are being charged up to 88c more for local artists' work on iTunes than people in the United States.

A consumer advocacy body has slammed the price difference as "very unfair" because the music giant can charge what it wants as it dominates the market.

The criticism came as Apple, Adobe and Microsoft were subpoenaed to appear before a parliamentary inquiry in Australia into why consumers pay a premium for electronic products.

iTunes charges NZ$2.39 for NZ downloads of Gotye's single Somebody that I Used to Know, which features Hamilton-born Kimbra and won two Grammy awards.

In the US, the same single costs just NZ$1.51 - that's 88c less.

But Australia, Gotye's homeland, gets the toughest deal - there, the single costs NZ$2.68 to download.

Consumers Institute chief Sue Chetwin said it was hard to understand why we pay more here, given that the music is an electronic service.

"We are a captive market and they're grinding as much out of us as they can, so it is very unfair."

The strong New Zealand dollar might be one factor.

An iTunes Store spokesman said the amount charged included the price of the product plus any applicable sales tax in effect on the day of the download.

He said iTunes endeavoured to offer "competitive prices on current selections".

Anthony Healey, NZ director of operations for the Australasian Performing Right Association, which represents composers, lyricists and performers, and the Australasian Mechanical Copyright Owners Society, said they played no role in setting the price of online music.

The two groups take 9 per cent of the price of a download in New Zealand, while the record label takes about 60 per cent and the digital seller - for example, Apple iTunes - takes 30 per cent.

The price discrepancy between the United States and New Zealand is not just limited to online music sales.

An Xbox 360 250GB console costs NZ$479 here, but just NZ$353 in the US.

Last week's subpoena to Microsoft, Apple and Adobe to appear before a committee of MPs in Canberra next month was issued after they had refused to publicly respond to the inquiry, which was launched in May last year.

The subpoena seems to have had an impact already: Adobe has announced it is set to cut the price of its Creative Cloud subscription service from A$62.99 a month to A$49.99, in line with the price US customers pay.

The cost of subscriptions to individual applications will also decrease, to NZ$19.99 a month.

Labor MP Ed Husic, who is leading the inquiry, said: "These firms should have co-operated and been prepared to be more open and transparent about their pricing approaches."

Ms Chetwin applauded the Australian Parliament's inquiry and said New Zealand should be watching it very closely.

"They're far better at standing up for their consumers over there."

iTunes prices

For current number one song Harlem Shake by Baauer:

USA: NZ$1.44
New Zealand: $2.39
Australia: NZ$2.69