US government files antitrust suit against Apple over e-book pricing [u]

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  • tarfungotarfungo Posts: 89member
    Quote:
    Originally Posted by Sandyf View Post


    Many musicians and record labels were against iTunes selling single songs at $0.99.

    They wanted a minimum of $1.29

    And from an artistic effort, one song did not an album make; the whole album was the 'picture'.

    But a bigger problem was the ease of coping & downloading songs for free.

    In the end, the record companies & artists caved because .99 was better than nothing!

    SNIP



    While I agree with your summation of the retail music world offered by iTunes, my experience (albeit maybe compartmentalized to the people I see and know?) is that a lot - if not most - younger folks still steal their music. My daughter and her friends NEVER buy music off of iTunes or any other paid distribution point - they buy videos, movies and TV shows, yes, but never music. They simply RIP the audio to MP3's from YouTube videos using any one of a number of online sourcing websites. And... they don't care about the quality - only that it is free.
  • Quote:
    Originally Posted by mrstep View Post


    What you're outlining is different than Apple saying "we'll let you set the price, but if others sell lower we want the right to price lower as well". The publishers deciding to then push Amazon to the same agency model may be an issue, but Apple asking for the right to lower pricing to compete shouldn't have been.




    would your analysis be different if the outcome, the publishers pushing the same model on the other sellers, was inevitable given Apple's actions?



    What if Apple openly encouraged it?



    What if it were merely the one most likely outcome, and Apple was passive?
  • wizard69wizard69 Posts: 11,670member
    The logic the government appears to be using here is very twisted. Frankly Apple did the right thing in pulling the rug out from under Amazon and their predatory practices.



    The only way of that I know of to deal with this is to elect people that have a clue as to business and sustainablity. As we have it now we have a government that is corrupt with ignorance as far as understanding the needs of business.



    Quote:
    Originally Posted by Maestro64 View Post


    This is the point most people do not realize what Amazon did to Boarders and now putting the squeeze on Barns and Noble, plus all the mom and pop book stores. So it okay for one company to to us VC money to give away product and almost wipe out ever competitor but god forbid a company comes along and changes the model so everyone can make money.



    The government position here boggles the mind. Especially after watch numerous local book sellers go out of business. I really have to believe it is a combination of a few things, these being corruption, ignorance and blindness. Frankly from what I've see over the last couple of years the issue is more a case of #2, the people in office are just plain ignorant.

    Quote:



    There has to more to this, since the government can not be saying it is illegal for a seller of a product to set the selling price they want. If it too high people will stop buying that is how the systems works.



    It does seem strange. Further there are so many publishers in this country that alternatives are easy to come by.

    Quote:



    I personally think the government does not like when one company has too much power, and trust me the government will win some how even if their originally reason is not valid they will do things to apple to force them to change. They did it Microsoft that is why M$ is a mess today, the government tied their hands.



    As to my three issues above, corruption is possible the most valuable one to the likes of Amazon. You only need to lube a few hands to create a travsity like this one. In the end I really don't believe we have that many truly corrupt reps in Washington, but it only takes a few. The bigger problem is just the plain ignorant often populated by extremist from the left and right.
  • jukesjukes Posts: 213member
    Quote:
    Originally Posted by scalpernt View Post


    You're not quite correct. This assumption is flawed: "All other stores must use the price from the iBookStore and never offer it for less"



    There is a very important distinction here. Apple did NOT ask the publishers to set a price for other stores nor did they make a demand that they never sell it for less, the ONLY thing they asked was permission to match any price that undercut the agreed upon agency price. This very clearly puts the responsibility on the publishers as to what terms and conditions they decide to offer other retailers. This is a clearcut case of the publishers being at fault, but Apple negotiating in good faith and within the law.



    Actually, Apple is accused of colluding with publishers to raise e-book prices. It's not about the mechanisms they used to do that, agency pricing and most favored nation clause, which are generally perfectly legal.
  • goodgriefgoodgrief Posts: 137member
    Quote:
    Originally Posted by Asherian View Post


    Many people seem to not comprehend the issue. The issue is not the agency model (setting their "own price").



    The issue is Apple's condition that no one else ever sell it for less than Apple. This eliminates competition by definition. All other stores must use the price from the iBookStore and never offer it for less. This is quite literally price fixing. Price fixing is most definitely illegal.



    I don't know the exact language of the discussions between Apple and publishers (and I suspect nobody here does either), but if this is relatively accurate:



    "...But we also asked for a guarantee that if anybody else is selling the books cheaper than we are, then we can sell them at the lower price too."



    The translation is:



    "If Amazon gets to sell it for a lower price, then so do we."



    That's hardly Apple dictating a minimum price. That's "we can sell it as cheap as anyone else decides to", not "nobody can sell it cheaper than we decide to". Again, assuming the language from the original post is accurate (or at least representative), then that's the opposite of Apple stipulating the minimum price.



    The other wording suggests that regardless of selling price, Apple's agreement meant they would still get a cut of the sale price, not the sale price less a fixed wholesale price (which would be negative if the going minimum price was under wholesale) - so Apple wouldn't have to take a loss if they had to lower prices to compete.



    The other part of the issue is that after that, the publishers did this:



    "...went to Amazon and said, 'You're going to sign an agency contract or we're not going to give you the books."



    Which, translated, is this:



    "We finally have another viable customer willing to buy our goods on the terms we want, and we can make better profits if we <don't> sell to you on the terms you want, so from now on you can buy books from us on our terms, or not at all - your choice."



    That's the publisher(s), not Apple. This is why there <may> be a case against the publisher(s), but frankly, I don't know enough about the legal details to make that assertion. However here's my [uneducated] take:



    Apple's agreement with the publisher(s) was that Apple would try to sell at MSRP, but if other retailers pushed the price lower, Apple would sell lower too, and Apple would buy the "books" for 70% of whatever they sold for, not an up-front fixed wholesale cost. I don't see how that implicates Apple as fixing a price, when the language suggests they were willing to go as low as the rest of the retailers in the market would go. Granted, it gives the publisher leverage to try to force other retails to try to sell at MSRP, but that's the publishers, not Apple.



    And what I'd like to know is; with Amazon was holding a virtual monopoly on the e-book market, what made it OK for them to be using that dominance position to try to dictate what the publishers could sell to them at? Taking a loss on product is only a viable business strategy if you can monetize on that through secondary sales ("loss leader"). The loss on the e-book reader was justified by saying it was the loss leader for e-books themselves. Amazon was effectively using a position of monopoly to try to manipulate the publisher selling price - taking a loss to deliberately depress the market for the purposes of controlling it. Unless they [Amazon] were planning to raise book prices once they'd decided they'd locked-in enough consumers in their e-book ecosystem, I only see two other possible outcomes from that strategy: 1) the publishers start selling to Amazon at a lower price (proving the monopoly control theory correct), or 2) Amazon hits the wall on funds to subsidize the loss on e-books and has to raise the price (or stop selling them altogether), in which case they could point a finger at the publisher(s) and say to the e-book consumers (of which they have the monopoly on) "we'd like to sell these to you a nice low prices, but the big mean publishers won't let poor little us do that" - manipulating consumer perception to squeeze the publishers (again, asserting an effective control over the market price). That effect could be negated by another reseller taking up the slack, but with Amazon controlling something like 90% of e-book sales and even the big book chains not being able to gain significant traction there, who would that realistically be?
  • john.bjohn.b Posts: 2,627member
    So the DOJ is protecting Amazon's monopoly?



    Good work guys! /sarcasm
  • island hermitisland hermit Posts: 6,217member
    Quote:
    Originally Posted by scalpernt View Post


    You're not quite correct. This assumption is flawed: "All other stores must use the price from the iBookStore and never offer it for less"



    There is a very important distinction here. Apple did NOT ask the publishers to set a price for other stores nor did they make a demand that they never sell it for less, the ONLY thing they asked was permission to match any price that undercut the agreed upon agency price. This very clearly puts the responsibility on the publishers as to what terms and conditions they decide to offer other retailers. This is a clearcut case of the publishers being at fault, but Apple negotiating in good faith and within the law.



    Thanks for that. That's the distinction that I didn't quite understand.



    If I understand you correctly then this means that Apple only asked, the publishers complied.



    The publishers therefore knew better (and why most if not all have negotiated a settlement) but went along with the agency model anyway. Apple didn't hold a gun to their heads.
  • wizard69wizard69 Posts: 11,670member
    Quote:
    Originally Posted by tarfungo View Post


    While I agree with your summation of the retail music world offered by iTunes, my experience (albeit maybe compartmentalized to the people I see and know?) is that a lot - if not most - younger folks still steal their music. My daughter and her friends NEVER buy music off of iTunes or any other paid distribution point - they buy videos, movies and TV shows, yes, but never music. They simply RIP the audio to MP3's from YouTube videos using any one of a number of online sourcing websites. And... they don't care about the quality - only that it is free.



    The problem is that you tolerate this and frankly that is pathetic. It would do you well to show a little backbone and try to instill a a little morality in your daughter before her thieving turns to shop lifting or worst. Just because it is easy doesn't make it right.
  • tallest skiltallest skil Posts: 40,274member
    Quote:
    Originally Posted by wizard69 View Post


    The problem is that you tolerate this and frankly that is pathetic. It would do you well to show a little backbone and try to instill a a little morality in your daughter before her thieving turns to shop lifting or worst. Just because it is easy doesn't make it right.



    Completely agreed. It sickens me that people do that.
  • boeyc15boeyc15 Posts: 944member
    In my un-informed opinion-



    With the agency model, essentially its a monopoly by the publisher. You want James Pattersons last literary masaterpiece, its this price. Essentially its a that price +- the 30% the retailers can play with. And you can only get it from me(the publisher)



    With the other model, the retail can flood the market(nokia 900 anyone?) and sell at a loss. Driving out competitors.



    In both models the publisher gets paid. Its the latter that the publisher has a 'fear' that the Amazon types will drive out other competitors and dictate price back to the publishers.



    But this is not the real world... far as I can tell there are lots of retailers... for now.



    Pick your poison I guess
  • solipsismxsolipsismx Posts: 19,566member
    Quote:
    Originally Posted by Gatorguy View Post


    Not correct as I understand it. Of course Apple had the right to match Amazon's pricing or not before the agency model was put into effect. The change now is that Amazon cannot sell for less that Apple, which is being construed as price-fixing.



    According to the DoJ, Apple conspired with the 5 largest publishers to make sure Amazon could not buy books from them unless Amazon agreed that Apple's prices were the minimum acceptable.



    That's the issue, not that Apple wanted the right to match Amazon pricing. You have it backwards.



    You have it backwards. Apple never said that their prices dictate what others could minimally sell at, as you claim, all they requested is that if another vendors sells it for less they would sell it for no more than that price on iBookstore.



    Show me proof where Apple said that iBookstore prices are lowest and Amazon could not set the prices lower.
  • jukesjukes Posts: 213member
    Quote:
    Originally Posted by island hermit View Post


    Thanks for that. That's the distinction that I didn't quite understand.



    If I understand you correctly then this means that Apple only asked, the publishers complied.



    The publishers therefore knew better (and why most if not all have negotiated a settlement) but went along with the agency model anyway. Apple didn't hold a gun to their heads.



    The lawsuit is because they allegedly colluded to raise e-book prices during negotiation, not the mechanisms (agency model, most favored nation status) in the contract itself.
  • solipsismxsolipsismx Posts: 19,566member
    Quote:
    Originally Posted by boeyc15 View Post


    WSJ take a month ago...





    http://online.wsj.com/article/SB1000...767489216.html



    This is sound...
    Publishers also worried that retailers such as Barnes & Noble Inc. would be unable to compete with Amazon's steep discounting, leaving just one big buyer able to dictate prices in the industry.

    This isn't...
    In essence, they feared suffering the same fate as record companies at Apple's hands, when the computer maker's iTunes service became the dominant player by selling songs for 99 cents.
    Apple isn't selling an album for 99¢, they are selling a single song with a different bitrate which makes the content inherently different. Furthermore, remember all the bitching about how the iTMS was more expensive than buying a CD? Finally, when Amazon and Wal-Mart started selling songs they sold them for less money than Apple so you can't say that Apple had the same model as Amazon (who also got a higher bit rate and DRM-free songs before Apple, thus making their product 3x as attractive).
  • echosonicechosonic Posts: 440member
    Quote:
    Originally Posted by Fake_William_Shatner View Post


    Apple isn't fixing prices lower.



    IN fact, John Stossel's book; "No, They Can't" is $12.99

    http://itunes.apple.com/us/book/no-t...55695148?mt=11 Act NOW before they run out!



    That's about $9 more than what I'd pay for brand new kitty litter lining. How can I use a Stossel book to keep the cat pee and poop from getting on the plastic tray at that price?



    "Stossel, a self-described skeptic, he has dismantled society's sacred cows with unerring common sense. Now he debunks the most sacred of them all: our intuition and belief that government can solve our problems."



    Wow. Stossel is man enough to do exactly what Oil Companies, the NRA, and finger wagging Arizona governors have done. He joins the ranks of every asshole on TV in showing how tough they can be talking crap about big G. Apparently, he's a skeptic about Democratic elections of representatives. Perhaps he's suggesting massive bake sales and pot lucks at churches, coupled with a meeting of elders as a way for people to organize and build things like electric grids and bridges -- who can say what goes on in the mind of a champion?



    Stossel gets the endorsement of NYT and Fox news commentator -- it really doesn't matter which one -- as they are ALL glorious, brave, mavericks who dismantle society's sacred cows; like Teacher's Unions, wages, benefits, promoting 401ks that lose half their value in an "oops year" versus Pensions, and of course, making fun of Urban hi-jinx.



    ? do I hate and loath John Stossel? Yes I do.



    Is Apple charging too much for their Fox News friendly kitty liner for protofascists who are working to undermine this country? No. No they are not. I'd prefer it to be $30 and self destruct after 10 hours.



    OK, but for actual books of value -- I think a price of $3.99 is about right. Let's get real; there is no issue with scale nor printing nor shipping. The cost to deliver is only a few pennies more than a song track. Giving the author $1.20 would be way above the average contract, but 66% of that would be awesome as well.



    Obviously, Apple was trying to avoid the mighty fist of the Justice Department by being evil, since apparently, them being the only one raising wages and worker conditions in China was pissing off everybody quietly getting their microwaves built for $.99.





    the best part about the interwebs is that when some socialist liberal know-nothing spouts off on an anti capitalist rant that is not only off topic but intellectually retarded, they can now be met head-on, revealed for the neo communist they are, and refuted with the same simplicity reserved for most belligerent third graders.
  • stelligentstelligent Posts: 2,680member
    If Google instead of Apple was the target here, I wonder how people's views would change even if not a single fact deviates.
  • island hermitisland hermit Posts: 6,217member
    Quote:
    Originally Posted by jukes View Post


    The lawsuit is because they allegedly colluded to raise e-book prices during negotiation, not the mechanisms (agency model, most favored nation status) in the contract itself.



    Oh, yes, absolutely... Apple could still be guilty of colluding to raise e-book prices. Just being a part of the negotiations adds Apple to the list; whether or not you could ultimately change the outcome (Apple couldn't make the publishers change to the Agency model) doesn't exclude you from the alleged crime that was committed.
  • msimpsonmsimpson Posts: 452member
    Quote:
    Originally Posted by Asherian View Post


    I know many people here are Apple fans...but look at this objectively.



    Since Apple's price fixing with publishers (and make no mistake, that's what the "minimum book price" is exactly), the cost of new novels for eBooks has gone up from $9.99 to nearly $20. It is literally cheaper for me to go to the local brick & mortar store and buy a brand new hardcover than to download an eBook.



    There's nothing wrong with Apple's agency model. The problem is with them mandating a minimum (high) book price that no one can undercut. That, quite literally, eliminates competition.



    If Google or Amazon did this, the lot of you would be screaming bloody murder. Time for some objectivity, no?



    OK, being objective - factor in Amazon selling books at a loss. That could qualify as unfair business practices - an attempt to knock other companies out of the e-book market and obtain a monopoly position for themselves - then they control the prices.



    The US government is currently battling with the Chinese over the Chinese selling solar panels at below cost in attempt to take control of the market and drive competition out.



    So it works both ways. Competition is needed to keep markets open and fair.
  • goodgriefgoodgrief Posts: 137member
    Quote:
    Originally Posted by Hellacool View Post


    Funny thing is this has nothing to do with Amazon right now, why bring it up? It may in the future, but this is about Apple and Apple's collusion with publishers.



    Seriously? Nothing to do with Amazon? Did you miss all the references to Amazon in the statements from virtually <everyone> involved with this issue? It's Amazon's dominance in e-book retailing that made this whole thing an issue in the first place. Here's an open letter from the CEO of one of the involved book publishers. Note the explicit to Amazon (emphasis mine):



    Quote:

    After careful consideration, we came to the conclusion that the terms could have allowed Amazon to recover the monopoly position it had been building before our switch to the agency model. We also felt the settlement the DOJ wanted to impose would have a very negative and long term impact on those who sell books for a living, from the largest chain stores to the smallest independents.



  • mrstylzmrstylz Posts: 4member
    I'm not sure why Amazon is being brought up so often in this discussion. There are other book sellers...large or small, they are affected by Apple/Publisher price fixing



    To name a few that I can think of, but there will definitely be more:

    Barnes & Noble

    Google

    Amazon

    Apple

    Samsung even has one



    So why the focus on Amazon? The settlement will recreate competition amongst all ebook vendors...large and small. We, the consumers, will be back in charge...
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