Stanford CIS

Arbitraging iTunes?

By Stanford Center for Internet and Society on
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Apple's price for downloads varies by region--from $0.83 to $1.52.  This would suggest a possibility of arbitrage, but Apple's technology eliminates the possibility of trading songs (unless the technology is hacked).  The price differential would also suggest the possibility of masquerading as a Canadian even if one is in Britain or the U.S. or Europe to buy a song for cheap, but Apple practises a bit of geolocalization--by requiring that the credit card used for the purchase be registered to someone in Canada.

Apple Computer, which opened the virtual doors on the Canadian store late Wednesday, is selling songs for 99 Canadian cents, which translates to about 83 U.S. cents, 16 percent less than those in the United States pay for their iTunes.

It's an even bigger bargain when compared with Apple's European store, where most tracks cost 99 euro cents, which these days translates to $1.31 U.S. and a whopping $1.56 Canadian. Those in Britain pay even more, 79 pence ($1.52, or $1.81 Canadian).
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