Why does Apple mistrust Asia?

Dear Steve,

Maybe you can explain something to me, because your folks here in Asia sure can’t.

Every time somebody asks them why the iTunes Store won’t sell songs or movies to consumers in Asia, all we hear are vague and mumbled remarks about “the issues that still need to be resolved.” This is invariably followed by another sentence saying they are not authorized to say more.

Here is what your marketing director for Asia told the Agence France-Presse in Hong Kong when you launched your movie service in the United States in September.

“We cannot comment on the specifics but it is true that iTunes is not available in Asia. That goes for music and movies.”

Is that any way to talk to your customers?

I asked your company’s visiting fireman from Singapore—we only see him whenever Apple introduces new products here in the Philippines—how long it’s been since the iTunes Store opened for business in the United States.

Five years, he said. Does that mean that a company as innovative as Apple has been unable to resolve those issues in half a decade?

So I asked the guy: Where are Asian iPod buyers supposed to get their music? Limewire? Other file-sharing sites?

“For Asia, we recommend that consumers rip their music from their audio CDs or download any of the thousands of free podcasts,” he said.

So, I asked, we can do anything with our iPods except buy songs and movies from the iTunes Store? That’s correct, he said.

Now Apple will not say how many of the 60 million iPods out there are in Asia, but officials have told the Mac News Network (http://www.macnn.com/) that the iPod doesn’t enjoy the same market leadership here as it does in the US, Japan or Australia. Yet in the same article, your chief financial officer, Peter Oppenheimer, is quoted as saying that Apple sees the rest of Asia as an opportunity to increase market penetration.

Here’s an idea. Start treating buyers here with the same respect that you give your customers elsewhere in the world. Stop redlining Asia with vague talk about piracy. If you have a piracy problem in this region, why not at least say so and level with us?

Let’s speak plainly.

Intended or not, Apple’s decision to withhold the online sale of music and movies in this part of the world is an insult to people who buy its products. The red line tells us you think of us all as digital pirates, unworthy of trust. This is the stark truth that your people dance around whenever we ask them why Apple doesn’t sell music here.

So, is Apple worried that piracy syndicates in this part of the world will start downloading songs for 99 cents apiece and start selling them for 10 cents or burn them on CDs to sell in Third World markets? But that’s happening already, even without iTunes.

Or maybe it’s the music publishers who won’t let you sell their songs in Asia for the same reasons. But if this is so, why not just say so instead of taking the heat for their fears?

Let’s look at some figures.  Apple claims to have sold 1.5 billion songs to date through its iTunes Stores, with its online catalog of 3.5 million songs. Sales in Europe, a market Apple opened in 2004, have shot up from 50 million to 200 million songs. Not bad.

But the International Federation of the Phonographic Industry (IFPI) estimates that almost 20 billion songs were illegally downloaded in 2005 alone—and this was based on consumer research in 10 music markets including the United States, the United Kingdom and Germany, countries where the iTunes Stores already operate. Canada, where iTunes operates, was estimated to account for 1 billion of the songs illegally downloaded last year.

So, when your folks here tell us they can’t sell us songs because of piracy, something just doesn’t wash.

Ironically, by not selling to large swaths of Asia, Apple is indirectly encouraging piracy because iPod owners wouldn’t be able to buy songs online even if they wanted to.
What consumer wouldn’t want to own a legitimate product over a pirated one, as long as the price is right? When the prices of legitimate VCD and DVD movies dropped here, sales went up, despite the availability of cheaper pirated versions.

Oh, one more thing. Why take our word for it? Even the IFPI says one way to fight piracy is to promote legal services.

Of course, I understand that in the end, the operation of an online store is a business decision. Maybe it’s just not worth Apple’s while to sell music and movies in this part of the world. But the least you can do is to level with your customers here. How about it?

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