Why Sony 'Accidentally' Tried to Gouge Whitney Houston's U.K. Fans


Let's call this "the greatest flub of all."

This weekend's death of Whitney Houston found nostalgic fans rushing to buy the music icon's catalog of digital works. Houston's I Will Always Love You rose to the top of the singles' chart on Apple's (AAPL) iTunes, just as her Whitney -- The Greatest Hits was the top digital album until Adele's 21 reclaimed that spot after her Grammy-studded night.

After several rough quarters and a CEO shuffle at the top, Sony (SNE) finally has a bittersweet victory. The surge in popularity for Houston's works will serve her label Sony Music well.

Unfortunately, a poorly handled gaffe overseas is making Sony out to be a greedy opportunist.

Didn't We Almost Have It All

Whitney Houston
Whitney Houston

On Sunday, just hours after Houston's tragic death, two of her "best of" compilations were marked up substantially on iTunes in Britain. The Ultimate Collection saw its price marked up a jaw-dropping 60%, going from the dollar equivalent of $7.85 to about $12.50. The Greatest Hits was treated to a 25% increase, jumping from $12.50 to $15.67.

The move was only limited to iTunes in the U.K., but the opportunistic price hike quickly made headlines. Companies don't get away with much these days when any blunder can go viral on Twitter, Facebook, and blogs.

Some may argue that Sony was simply responding to the laws of supply and demand. Houston items spiked in value on eBay and other exchanges, just as Jeremy Lin rookie cards have seen their value skyrocket this month after his fairytale run with the New York Knicks. Prices aren't permanent, and news events can and do change what consumers are willing to pay.

However, we're talking about digital distribution here. Supply is infinite. You didn't see Adele's label trying to push through a digital hike just because her hands were full with Grammy awards earlier this week.

Where Do Broken Hearts Go?

Sony quickly succumbed to the outrage, marking back down the two compilations. However, it took an embarrassing two days -- an eternity these days -- to crank out a public apology and explanation.

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"Whitney Houston product was mistakenly mispriced on the U.K. iTunes store on Sunday," Sony said in a statement on Tuesday. "When discovered, the mistake was immediately corrected. We apologize for any offense caused."

Mistakenly mispriced? That would imply that the move wasn't deliberate, which it clearly was. Some reports indicate that it was a single employee who chose to make the advantageous pricing move, perhaps believing that the opportunistic gesture would result in corporate accolades from his parent company, which is coming off a brutal loss in 2011.

Well, that's not going to happen. The employee blew it, and Sony is blowing it if its digital catalog can be repriced on a whim that way.

Longtime Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of eBay and Apple. Motley Fool newsletter services have recommended writing puts in eBay. Motley Fool newsletter services have recommended creating a bull call spread position in Apple.

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