The not-so-United States of Europe

Stuart%20Smith%20120x120US companies attempting to peddle their wares in Europe are frequently accused of misreading the market. When mistakes occur, they are often wilful ones – say critics – brought on by an unedifying mixture of financial arrogance and cultural naivety.

A typical example, last year, was General Motors’ misguided attempt to launch the Cadillac and Corvette marques over here. Failure so embittered former UK managing director Malcolm Wade that he went on the record with the following all-too-resonant verdict: " The Americans didn’t realise the investment needed to launch a US brand in Europe and they don’t understand that we’re not the United States of Europe. They don’t understand, and they don’t want to understand, the European consumer."

At first sight, Manchester United shirt-sponsor American International Group (AIG) would seem to be learning the same painful lesson. Simply directing a wall of money at something doesn’t make you instantly popular with consumers. We wait to see whether Genworth Financial, which recently appointed McCann Erickson to handle it European launch campaign, will commit similar errors.

But let’s not be prejudiced. There are plenty of US corporations that – despite occasional States-side myopia (McLibel or Dassani, for example) – have shown plenty of adroitness over the years in exploiting the individuality of European markets.

Prime among these, it might be thought, is Apple Media whose tip-top product development and marketing skills have earned it an enviable reputation among the digital cognoscenti in any European ‘territory’ you care to mention.

Ironically, though, Apple has come a cropper with its iTunes platform not because it treated the EU as a single market – but because it did not. The company faces a European Commission probe, which could cost it very dear, into why consumers were only able to buy musical downloads in their country of residence. The effect of this restrictive practice has been to prop up artificial retail price disparities, particularly in more expensive GB.

Apple has defended its conduct by claiming force majeure – the major record companies Universal, Warner, EMI and Sony BMG forced its hand, making assent to the practice a necessary precondition of doing business in Europe. That may be so, but Apple hugely profited by the arrangement, so the argument is unlikely to cut much ice with the regulators (who will also be probing the record companies).

More craftily, Apple has struck a timely deal with EMI over musical downloads that may take a lot of heat out of the situation when, as seems likely, it is rolled out to other music companies.

What the deal boils down to is higher-grade musical downloads minus their former copy protection software retailed to the consumer at a slightly higher price (99p instead of 75p). Oh, and by the way, the new format will, for the first time, be downloadable to most MP3 players and not simply the market-leading Apple iPod.

Apple and presumably EMI have judged that the best way to deal with piracy (which can’t really be avoided so long as the CD is with us) is to ignore it and take a bigger financial cut up front. At the same time the EU consumer will benefit from enhanced quality, freer distribution (one way or the other) and, effectively, greater price parity. Which makes the imminent EC investigation look a little behind the times already.

Not so dumb, for an American company trading in the quagmire of Europe.

Stuart Smith, Editor

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