September 30, 2007
ITunes Gift Card’s Resale Phenomenon Revealed
In the previous posting on Sept. 14, 2007, we first noticed a strange distribution in ITunes gift card’s resale value. Examination of the resale value distribution graph indicated that there was a significant split between the average and median resale value. In addition, over 27% of the ITunes gift cards were resold at over 100% of the cards’ face value. After some extensive investigation we have uncovered why this is occurring.
The phenomenon behind this occurrence is due to consumers outside the United States willing to pay more for US ITunes gift card, because it is cheaper than what they would pay for in their home country. This is especially true for people living in the UK and European Union (Germany, France, etc). For example, in the US it costs $0.99 USD to download a song. The current exchange rate for $1 USD is £0.49 GBP (or £0.48 GBP for $0.99 USD). In comparison, ITunes’ UK price is £0.79 GBP. This is a difference of £0.31 or a 40% savings. Even if someone in England pays 50% over the face value of a US ITunes gift card, each download song would cost them £0.67 GBP, which is less than the £0.79 that Apple charges them.
Now you would think that Apple would put a system in place to prevent European consumers from using US ITunes gift cards. Actually, Apple does have a mechanism in place that prevents this from happening. However, the mechanism can easily be circumvented by registering ITunes with a physical US address. Due to this loophole, there is an active and healthy gray market for US ITunes gift cards.
Therefore, the odd distribution of ITunes gift card’s resale value is a direct result of the weak US dollar. British and European consumers can buy more US goods, including US ITunes gift cards, for less. If you look at the latest ITunes gift card resale value distribution graph from GiftCardNexus.com, you’ll see that there are actually two distributions. The left hand side of the graph up to the first peak and down to the 100% resale percentage indicates the main US secondary market. While the hand drawn green distribution (approximation) indicates the foreign secondary (gray) market for the gift cards. This is only an assumption.
∙ Strange Distribution of ITunes Gift Card’s Resale Value [AllThingsGiftCard.com]
Readers' Comment (4) | Posted by Alex | Filed under: Analysis
You probably mean “50% over face value”, because “150% over face value” means 2.5 times the value. There is a difference between “150% of face value” and “150% over face value”.
Posted by: wrong percentage on August 21st, 2008 at 9:24 am
Thanks for pointing this out. We’ve updated the article to reflect this.
Posted by: gcnadmin on June 9th, 2009 at 3:00 pm
this article was very well written, great .. Keep up the good work! by the way, check out http://www.iTunesGiftsCards.com People from all over the world are looking for iTunes gift cards to buy in the iTunes USA Store, but they cannot buy them since they are not from USA and Apple dont allow it, this store offer iTunes gift cards worldwide,they deliver by email within 24 hours,and are Fast & Reliable service.
Posted by: Steve G on April 22nd, 2010 at 1:55 pm
I would like to share a tip I just found about a discount gift card exchange called abcgiftcards.com . You can buy sell and trade gift cards at discounted prices from all National retailers.
Posted by: John on June 10th, 2010 at 9:44 pm