Australian Parliament Subpoenas Microsoft, Apple on Price Hikes

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Therumancer:
I'm not the best typist

You are not even an adequate typist. Walls of text are difficult enough to bear without having to witness a constant flow of poor typography and mangled grammar.

I do find it amusing that someone pushing such stereotypical right-wing views believes that it's okay to charge people more for a product because they're wealthier. Isn't that more than a little bit of a socialist attitude? It's how Cuba's dual-currency system works, after all.

However, let's set aside all of the pointless fluff (fun as it can be) and boil the discussion down to some simple points of fact:

1) It is no more expensive to sell digital goods in Australia than it is to sell them anywhere else. There is, consequently, no practical justification for charging one market more than another for an identical digital product. [this also applies to europe, south america, etc, but for the sake of argument we'll keep the discussion more focused for now]

2) The difference in price (usually in the order of an 80-100% markup) of physical retail electronic goods is nowhere near justified by the costs of shipping and distribution.

3) If one takes (1) and (2) as premises, it is pretty hard to avoid the conclusion that most software and electronics distributors have been engaging in price-gouging in Australia for at least the last six years.

I would normally think it sufficient to leave it at that, but at the risk of stating the obvious I will draw attention to an unstated assumption of mine that Therumancer may choose to disagree with:

0) Price gouging is unethical and generally considered A Bad Thing™, as it runs directly counter to both free markets and social justice - I can't readily think of any political persuasion, left or right, that could consistently defend the practice.

Australians being early adopters really feeds into I think. It's a pretty monopolistically competetive market (though I guess if you were to limit it to the AAA industry you could consider it oligopoly, making my points more salient), and that really allows from companies like EA and Activision to seriously price gouge. It's not simple supply and demand, because AAA titles are so expensive, and people stick to their franchises etc., you've got a bunch of people that are willing to pay much higher than average price.

This kink in the demand curve significantly bumps up the price, and are the sort of thing people refer to when we say that "Aussies are still willing to pay for it". Where the fuck else are we going to get gaming from? It's a staple part of entertainment - our country is not just going to give up on an entire medium just because it's a bit expensive.

So what happens is the companies that can differentiate themselves (people are not going to have a mass exodus from CoD to Battlefield just because CoD is $20 more expensive if that were the case) set their levels of production/export where their marginal revenue equals their marginal cost - then they set the price as high as they can while selling all their stock. This means prices are propped up artificially high so those companies can make bigger profits that diminish the consumer benefit from an economically efficient equilibrium.

So all the economical arguments that are basically pro-business and anti-consumer because 'if the consumer is that unhappy they shouldn't buy it' should really kindly STFU. A completely unregulated market is not efficient or fair in most cases, and sirs and ma'ams, this is one of them.

Dexter S. Bateman:

So all the economical arguments that are basically pro-business and anti-consumer because 'if the consumer is that unhappy they shouldn't buy it' should really kindly STFU. A completely unregulated market is not efficient or fair in most cases, and sirs and ma'ams, this is one of them.

It's not an unregulated market, there is a minimum wage twice as high as the United States. Thus this creates a floor for the labor in all the brick and mortar retail stores. Could you give me the price for these products in the retail store?

Since Adobe is dropping it's prices because the AUD has risen in value, conversely shouldn't the Australian government lower it's minimum wage?

Surely you are joking. Leaving out the fact that the minimum wage doesn't (and shouldn't!) respond to the price of luxuries at all, it's also putting the cart before the horse. Why is someone's labour suddenly worth less simply because a publisher has reduced the price of its goods to bring them into line with the price people are charged elsewhere in the world?

For the record, the price of new 360/PS3 games ranges from $100 to $120; for Wii games it's in the region of $80 to $100. These prices have remained constant since the days of the N64's $100 cartridges, despite the fact that the AUD was worth as little as 50 US cents back in the mid-90s, while since ~2007/2008 it's been at if not above parity with the USD.

If you're going to say that it's unfair to Americans because they'll now be paying the same prices with a lower minimum wage, then I'm going to tell you that it's your own damn fault for being too stupid to regulate your own markets and place more priority on your fellow citizens' quality of life than on corporate profits.

aelreth:

Dexter S. Bateman:

So all the economical arguments that are basically pro-business and anti-consumer because 'if the consumer is that unhappy they shouldn't buy it' should really kindly STFU. A completely unregulated market is not efficient or fair in most cases, and sirs and ma'ams, this is one of them.

It's not an unregulated market, there is a minimum wage twice as high as the United States. Thus this creates a floor for the labor in all the brick and mortar retail stores. Could you give me the price for these products in the retail store?

Since Adobe is dropping it's prices because the AUD has risen in value, conversely shouldn't the Australian government lower it's minimum wage?

Labor isn't an unregulated market, games selling is. One is an operating cost of the company, the other is to do with people buying games - two fairly separate things. Also, the higher Australian dollar doesn't reduce our prices for anything at all - CPI still increases, so lowering the minimum wage would be pure folly.

And why the hell is the minimum wage even relevant? It's been said again and again that digital distribution sales are still ludicrously high, regardless of brick and mortar stores.

You didn't even respond to my argument, just fell straight back to the "BUSINESS IS ALMIGHTY AND UNFLAWED" logic that I alluded to in my first post. Businesses rip people off, in this case, I am saying that they are not producing economically efficient levels of output - they are producing less than a more perfectly competitive market would for a higher price as that maximises their profits (as I said before, by reducing the benefit consumers receive in a perfectly competitive market).

So long as we have our 'two-speed economy' with the mining boom (and living in Central Queensland I can certainly feel it), luxuries are always going to be unfairly priced for the majority so long as businesses can make the same out of money out of the rich few (probably considerably more than 1%, but still).

Terragent:
Surely you are joking. Leaving out the fact that the minimum wage doesn't (and shouldn't!) respond to the price of luxuries at all, it's also putting the cart before the horse. Why is someone's labour suddenly worth less simply because a publisher has reduced the price of its goods to bring them into line with the price people are charged elsewhere in the world?

For the record, the price of new 360/PS3 games ranges from $100 to $120; for Wii games it's in the region of $80 to $100. These prices have remained constant since the days of the N64's $100 cartridges, despite the fact that the AUD was worth as little as 50 US cents back in the mid-90s, while since ~2007/2008 it's been at if not above parity with the USD.

If you're going to say that it's unfair to Americans because they'll now be paying the same prices with a lower minimum wage, then I'm going to tell you that it's your own damn fault for being too stupid to regulate your own markets and place more priority on your fellow citizens' quality of life than on corporate profits.

Retail stores pay entree level employees a wage based on what is the minimum wage. They are only paid by the sales of the products in the stores. Thus if you are forced to pay them more you must reduce the number of employees or increase prices. Your saying that you want reduced prices for products, why can't a business turn around and ask the same thing of an employee?

Thank you, this means that the prices of video games are in parity with AUD of a decade ago. With reference to this weeks escapist podcast, the brick & mortar store prices are in parity with the digital sales (I was under the impression that if someone was willing to buy at that price it would be in the stockholders best interest to get the Apple & Microsoft to sell at those prices). I doubt it will be the same as the US market price for video games. The new price would be reflective of your minimum wage labor cost to the consumers.

Quality of life? The poor in the United States are quite spoiled. Especially if you look at at it from a historical and global view. Attempts to further regulate our fixed markets will only prolong the economic problems in the US.

Given that Australian retailers import their software from the USA, the change in currency strength has inflated their profit per unit by a ludicrous amount; they weren't going out of business paying their workers when it cost them twice as much to get the software from the US back in the '90s, so bringing up relative minimum wages now is a complete furphy. Their cost of business has dropped significantly, as the wholesale price they pay for software and hardware has basically been halved by the exchange rate, and yet they haven't passed any of this saving on to the consumers. How is this not price gouging?

And seriously, you're linking me a hatchet-job from a bunch of polemicists paid to come up with right-wing drivel? They even refute their own claims by bringing up the obvious counter-arguments (amenities have become universally cheaper over the years) and make no pretence of being objective or impartial. If this is what passes for public policy in the USA then I'm not surprised that the bottom's fallen out of your economy.

Dexter S. Bateman:

aelreth:

Dexter S. Bateman:

So all the economical arguments that are basically pro-business and anti-consumer because 'if the consumer is that unhappy they shouldn't buy it' should really kindly STFU. A completely unregulated market is not efficient or fair in most cases, and sirs and ma'ams, this is one of them.

It's not an unregulated market, there is a minimum wage twice as high as the United States. Thus this creates a floor for the labor in all the brick and mortar retail stores. Could you give me the price for these products in the retail store?

Since Adobe is dropping it's prices because the AUD has risen in value, conversely shouldn't the Australian government lower it's minimum wage?

Labor isn't an unregulated market, games selling is. One is an operating cost of the company, the other is to do with people buying games - two fairly separate things. Also, the higher Australian dollar doesn't reduce our prices for anything at all - CPI still increases, so lowering the minimum wage would be pure folly.

And why the hell is the minimum wage even relevant? It's been said again and again that digital distribution sales are still ludicrously high, regardless of brick and mortar stores.

You didn't even respond to my argument, just fell straight back to the "BUSINESS IS ALMIGHTY AND UNFLAWED" logic that I alluded to in my first post. Businesses rip people off, in this case, I am saying that they are not producing economically efficient levels of output - they are producing less than a more perfectly competitive market would for a higher price as that maximises their profits (as I said before, by reducing the benefit consumers receive in a perfectly competitive market).

So long as we have our 'two-speed economy' with the mining boom (and living in Central Queensland I can certainly feel it), luxuries are always going to be unfairly priced for the majority so long as businesses can make the same out of money out of the rich few (probably considerably more than 1%, but still).

If you artificially increase the price of labor, the price of all goods created by labor would increase. If you tie the former mechanism to it, you have created a mathematical certainty of an ever ratcheting higher cost of living. This will only make the banks and the government happy.

If businesses are flawed and ripping you off go make games for yourself or create an alternative medium to distribute digital goods in Australia. If you do you corner the market, if you can't you'll find that high barriers to market entry have been put in place. Only a highly regulated market can put those barriers there.

You're just not reading these, are you?

>Cost of labour has basically held steady with inflation over the last twenty years
>Cost of importing goods has been drastically reduced over the same period
>Prices have stayed the same

I wonder where all of those savings have gone?

aelreth:
If you artificially increase the price of labor, the price of all goods created by labor would increase. If you tie the former mechanism to it, you have created a mathematical certainty of an ever ratcheting higher cost of living. This will only make the banks and the government happy.

But the cost of labour involved in selling games at retail is almost insignificant - it is certainly not in line with the increased price of goods. A single retail employee can sell a lot of games. Small increases in the cost of those employees isn't gong to increase the cost of a game by 80-100%.

And this highlights an even more fundamental flaw with this line of thinking - selling games via online distribution involves less labour cost than selling in a bricks-and mortar store. Yes the copies bought at a bricks-and-mortar stores are typically lower than those sold by online distribution. If minimum wage and labour costs were a factor, then wouldn't the copy bought online be cheaper?

We're also not talking about the cost of creating games, but the cost of selling them. Software developers don't work for minimum wage, and they are often from teams distributed across the world. The game companies are usually looking for talent, and willing to pay for it. It's going to cost about the same to develop a game of similar quality in one country as any other.

Try applying some logic and facts, please. Blaming minimum-wage employees for the cost of luxury goods in highly vertical markets just makes no sense.

aelreth:

If you artificially increase the price of labor, the price of all goods created by labor would increase. If you tie the former mechanism to it, you have created a mathematical certainty of an ever ratcheting higher cost of living. This will only make the banks and the government happy.

If businesses are flawed and ripping you off go make games for yourself or create an alternative medium to distribute digital goods in Australia. If you do you corner the market, if you can't you'll find that high barriers to market entry have been put in place. Only a highly regulated market can put those barriers there.

That is stupid. There is a very high barrier to entry into that business - you might get a couple successful one man indie products on digital distribution - but your AAA titles have HUGE natural barriers to entry, i.e. games now cost MILLIONS to make. That is what enables them to price gouge the way they do.

Aardvaarkman:

aelreth:
If you artificially increase the price of labor, the price of all goods created by labor would increase. If you tie the former mechanism to it, you have created a mathematical certainty of an ever ratcheting higher cost of living. This will only make the banks and the government happy.

But the cost of labour involved in selling games at retail is almost insignificant - it is certainly not in line with the increased price of goods. A single retail employee can sell a lot of games. Small increases in the cost of those employees isn't gong to increase the cost of a game by 80-100%.

And this highlights an even more fundamental flaw with this line of thinking - selling games via online distribution involves less labour cost than selling in a bricks-and mortar store. Yes the copies bought at a bricks-and-mortar stores are typically lower than those sold by online distribution. If minimum wage and labour costs were a factor, then wouldn't the copy bought online be cheaper?

We're also not talking about the cost of creating games, but the cost of selling them. Software developers don't work for minimum wage, and they are often from teams distributed across the world. The game companies are usually looking for talent, and willing to pay for it. It's going to cost about the same to develop a game of similar quality in one country as any other.

Try applying some logic and facts, please. Blaming minimum-wage employees for the cost of luxury goods in highly vertical markets just makes no sense.

Small increases in the cost of labor will mean less employees, a lower rate of wage increase due to time served (delaying raises), it could also come out at a higher markup for used game sales. Small things would adjust until the employer has no other choice than to increase the price. They would watch their competitors and await the first one to increase prices and when one does, unless they aim to drive their competitors out of the market they too will increase prices.

I completely agree, digital sales from the publisher (or even better directly from the developer) should cost the least because you are cutting through every barrier to entry. Digital sales costs less, however retailers are the primary medium for selling games, not online sales. Thus retail prices would drive digital sales. The market share for digital sales isn't large enough to start the price war.

I will admit this is primarily currency driven, my theory on that side is that the AUD stayed at the same value ever since the mid 90s, while the USD cut it's value in half. On subject again, the brick and mortar stores drive prices, those that work at retail stores are entree level employees.

I don't blame the employees they have no control over this I blame the governments and central banks (especially the ones that destroy the currency).

Dexter S. Bateman:

aelreth:

If you artificially increase the price of labor, the price of all goods created by labor would increase. If you tie the former mechanism to it, you have created a mathematical certainty of an ever ratcheting higher cost of living. This will only make the banks and the government happy.

If businesses are flawed and ripping you off go make games for yourself or create an alternative medium to distribute digital goods in Australia. If you do you corner the market, if you can't you'll find that high barriers to market entry have been put in place. Only a highly regulated market can put those barriers there.

That is stupid. There is a very high barrier to entry into that business - you might get a couple successful one man indie products on digital distribution - but your AAA titles have HUGE natural barriers to entry, i.e. games now cost MILLIONS to make. That is what enables them to price gouge the way they do.

I'm referring to a digital sale entity that sells at a lower rate than the others. Not a publisher, it would involve talking to every publisher about what the real price to export the digital title to Australia.

I like being ignored - it's very validating to know that you're unable to come up with a satisfactory answer to any of my rebuttals.

(incidentally, used games are cheap as anything over here)

Well, economically speaking there isn't much incentive to reduce their prices. If any single firm reduces their prices then their competitors will also do the same, so that they can avoid losing customers, the effect is that they will end up losing money for the pricing change.

If we assume that there is normally a kinked demand curve in such markets then individual companies increasing their prices will also result in lower profits. Yet if I am to understand the situation correctly, and I may not, we have these companies apparently all putting their prices up together.

It may also be some kind of price differentiation between markets. In any case it will be interesting to see the results of this inquiry.

Terragent:
Given that Australian retailers import their software from the USA, the change in currency strength has inflated their profit per unit by a ludicrous amount; they weren't going out of business paying their workers when it cost them twice as much to get the software from the US back in the '90s, so bringing up relative minimum wages now is a complete furphy. Their cost of business has dropped significantly, as the wholesale price they pay for software and hardware has basically been halved by the exchange rate, and yet they haven't passed any of this saving on to the consumers. How is this not price gouging?

And seriously, you're linking me a hatchet-job from a bunch of polemicists paid to come up with right-wing drivel? They even refute their own claims by bringing up the obvious counter-arguments (amenities have become universally cheaper over the years) and make no pretence of being objective or impartial. If this is what passes for public policy in the USA then I'm not surprised that the bottom's fallen out of your economy.

So how much does it cost off the boat?
Is the boat an Australian flagged vessel? If so, minimum wage applies.
The port employees are their contracts based on the minimum wage?
The person that loads it on the truck, is his salary based on the new minimum wage?
Then the driver that gets it to the distribution facility, what about his contract?
Then finally from the distribution facility to the retail store?

If the port and warehouses are run by robots however I would be in full agreement.

The poor in the US are buying luxuries instead of capital. They are content with their station. The bottom fell out because of low interest rates back in 2001, followed by a series of credit booms and busts.

Terragent:
You're just not reading these, are you?

>Cost of labour has basically held steady with inflation over the last twenty years
>Cost of importing goods has been drastically reduced over the same period
>Prices have stayed the same

I wonder where all of those savings have gone?

Paying dividends to shareholders.

Terragent:
I like being ignored - it's very validating to know that you're unable to come up with a satisfactory answer to any of my rebuttals.

(incidentally, used games are cheap as anything over here)

So the workers are paid through the prices of the new video games. Then let's wait until the US companies lower their prices to reflect the price of the AUD changing. Then we can compare.

I've stopped being an early adopter of tech hardware. It' just way too expensive when it first launches here. EVGA doesn't even have a storefront in this country.

As a New Zealander, I don't get it. Aren't companies allowed to charge whatever they please for their products, especially that given the products in question are entirely luxuries?

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