Apple reluctant to settle e-book pricing probe as antitrust specter looms

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Comments

  • tallest skiltallest skil Posts: 39,480member
    Quote:
    Originally Posted by NasserAE View Post


    Apple.. Settle and sell all ebooks for $0.99 until you drive everyone else out of business. Maybe then the DoJ will be happy.



    I like this idea. I'm for it. This is one of the few instances they actually COULD "make it up in volume".
  • mstonemstone Posts: 11,510member
    Quote:
    Originally Posted by Hellacool View Post


    Don't understand the problem, lower prices, good for consumer. I am a consumer, good for me. This is a digital item, cost ZERO to reproduce so publishers will make the same money if you sell 100 eBooks for 3 dollars or 3 eBooks for 100 dollars. I would rather buy the eBook for 3 dollars.



    That is an interesting situation. Traditionally if a retailer moved a huge amount of product they were entitled to a better wholesale price. I think I remember that three was usually 5 levels of reseller pricing. When you consider the regulations concerning unfair pricing as well as perfered nation pricing it can get very confusing since there is no tangible expense to the product. This will be interesting indeed.
  • tylerk36tylerk36 Posts: 1,037member
    Walking the halls of capitol hill are sinister reps who are out for blood. Apple is in their sights. They are waiting for the time when there will be blood in the water and they will release the sharks. Then they will watch their adversary (people's tech God) be consumed by the almighty Uncle Sam.
  • aaarrrggghaaarrrgggh Posts: 1,512member
    The DOJ should be investigating the publisher's pricing power for ebooks rather than the pricing model. The issue isn't most-favored nation status, it is about any product being used as a loss leader. How did that work for the CD business long-term?



    Agency model makes sense, the prices are just too high right now.
  • marvin2591marvin2591 Posts: 1member
    Let me start by saying I have just about every Apple product on the market today and I love them but that doesn?t mean I always agree with how Apple does business.



    If you were to step back and look at the motivations behind the ?agency model? you would see two distinct rationales?. Apple needed the ?agency model? because they had no intentions of forfeiting their 30% cut and the publishers were not about to loose 30%. Without the ?agency model? the publishers would have provided books at a much higher cost to recoup that fee but Apple knew that wouldn?t work because people would just go to Amazon where it was cheaper and iBooks would fail. Apple needed to level the playing field and instead of looking within for that resolution they looked outside the company. The ?agency model? gave them a way to eliminate competition after which it was just a race of brand loyalty. (Ipads & Iphones vs Kindle)



    The publishers wanted the ?agency model? to control public perception of what an e-book should cost. Their fear was that Amazon would eventually stop undercutting the books and that the rise in pricing would result in a collapse of the e-book market. People would demand the lower prices and in order to sell they would be forced to provide Amazon and Apple books at a much lower cost which would effect their revenue stream not Amazon?s or Apple?s. To be clear when Amazon cut an e-book price the publishers still got the full cost.



    The ?agency model? removes competition. Let Amazon & Apple battle it out, if they want users they can take the short-term hits to their bottom line. As for the publishers, while I?m not naive enough to believe there is no cost behind an e-book, the actual cost is far less then printed books. (No printing, distribution or buy backs) which makes their profit margin larger. They simple need to adjust to the fact that they will never ever be able to command hard cover pricing (Bulk of their profits) for DRM digital e-books.
  • realisticrealistic Posts: 1,099member
    Quote:
    Originally Posted by drobforever View Post


    Would be a disaster to AAPL's price if they can't settle this. People should be worried, especially at this price level.



    ebboks are such a teeny tiny percentage of Apple's sales and profit that no matter how the settlement on this goes the result will be statically insignificant to Apple's numbers.



    If Apple loses I'd hate to be an Amazon competitor like B&N or whoever.
  • adamcadamc Posts: 467member
    Quote:
    Originally Posted by drobforever View Post


    Would be a disaster to AAPL's price if they can't settle this. People should be worried, especially at this price level.



    Apple is facing many lawsuits from men on the street to patents trolls to large corporations so did Apple share price suffers.



    Btw the Apple share price hinges on how well they perform and not in the court, Yes Apple have lost many battles there too just in case you don't know.
  • john f.john f. Posts: 80member
    Quote:
    Originally Posted by AppleInsider View Post




    Some publishers have reportedly offered to compromise and do away with the "most favored nation" agreement with Apple in exchange for retaining the "agency model." The DoJ has said that the solution is not enough and posits that the publishers were only able to reach the model as a result of collusion, according to sources.




    Many said the problem was not the agency model but the provision. Now we see that they even want the agency model gone. So in effect, publishers have no rights whatsoever to set prices of their products and can only sell wholesale. Yet, if they forgo Amazon, Apple, etc, and directly sell to consumers via their own store, what then? Then they can set prices? Some publishers do sell directly. In the Netherlands, book prices are protected by law and publishers do set the prices (for better or for worse). At least, let the market decide. Let Amazon set their prices, let the publishers set their prices when selling through iBookstore and forgo the "most favored nation" agreement. I don't see any problem with the agency model.
  • jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by marvin2591 View Post


    Let me start by saying I have just about every Apple product on the market today and I love them but that doesn?t mean I always agree with how Apple does business.



    If you were to step back and look at the motivations behind the ?agency model? you would see two distinct rationales?. Apple needed the ?agency model? because they had no intentions of forfeiting their 30% cut and the publishers were not about to loose 30%. Without the ?agency model? the publishers would have provided books at a much higher cost to recoup that fee but Apple knew that wouldn?t work because people would just go to Amazon where it was cheaper and iBooks would fail. Apple needed to level the playing field and instead of looking within for that resolution they looked outside the company. The ?agency model? gave them a way to eliminate competition after which it was just a race of brand loyalty. (Ipads & Iphones vs Kindle)



    The publishers wanted the ?agency model? to control public perception of what an e-book should cost. Their fear was that Amazon would eventually stop undercutting the books and that the rise in pricing would result in a collapse of the e-book market. People would demand the lower prices and in order to sell they would be forced to provide Amazon and Apple books at a much lower cost which would effect their revenue stream not Amazon?s or Apple?s. To be clear when Amazon cut an e-book price the publishers still got the full cost.



    The ?agency model? removes competition. Let Amazon & Apple battle it out, if they want users they can take the short-term hits to their bottom line. As for the publishers, while I?m not naive enough to believe there is no cost behind an e-book, the actual cost is far less then printed books. (No printing, distribution or buy backs) which makes their profit margin larger. They simple need to adjust to the fact that they will never ever be able to command hard cover pricing (Bulk of their profits) for DRM digital e-books.



    The bolded part is nonsense. There are multiple book publishers. They can compete by selling their books at any price they want using the agency model. The alternative is Amazon setting prices and being willing to use predatory pricing to control the market. How is the agency model bad and turning the entire ebook market over to Amazon good?
  • hellacoolhellacool Posts: 759member
    Quote:
    Originally Posted by jragosta View Post


    The bolded part is nonsense. There are multiple book publishers. They can compete by selling their books at any price they want using the agency model. The alternative is Amazon setting prices and being willing to use predatory pricing to control the market. How is the agency model bad and turning the entire ebook market over to Amazon good?



    It will be good for the consumer. As I stated above, it cost ZERO to produce an eBook so if Amazon can lower prices and sell in volume, the publishers still get the same amount of money since there is no overhead. 3 eBooks for $100 is the same as 100 eBooks for $3. This is not a physical item that has manufacturing costs. I much rather pay the $3 and so would the other 99 people in my equation.
  • mknoppmknopp Posts: 257member
    Quote:
    Originally Posted by mstone View Post


    That can be against the law if the intent is to create a monopoly or harm competitors. Many countries and states outlaw predatory pricing.



    Then why hasn't anyone investigated Amazon? In every single article that I have ever read on this it is always mentioned that Amazon sells e-Books at a loss to gain market share. Isn't this pretty much the very definition of predatory pricing?
  • hellacoolhellacool Posts: 759member
    Quote:
    Originally Posted by mknopp View Post


    Then why hasn't anyone investigated Amazon? In every single article that I have ever read on this it is always mentioned that Amazon sells e-Books at a loss to gain market share. Isn't this pretty much the very definition of predatory pricing?



    Only if they require the publishers, through contract, to sell cheaper to them. Amazon pays full price, then lowers it until they are able to sell in volume. Sometimes at a loss. Apple didnt like that because they knew Amazon could undercut them, especially with Apples 30% tacked on, and no one would buy from them.
  • hill60hill60 Posts: 6,952member
    Quote:
    Originally Posted by Hellacool View Post


    It will be good for the consumer. As I stated above, it cost ZERO to produce an eBook so if Amazon can lower prices and sell in volume, the publishers still get the same amount of money since there is no overhead. 3 eBooks for $100 is the same as 100 eBooks for $3. This is not a physical item that has manufacturing costs. I much rather pay the $3 and so would the other 99 people in my equation.



    So the writer is paid zero?



    The staff at the publishers are paid zero?



    The buildings and equipment the publishers use costs zero?



    The promotion the publishers do costs zero?



    The electricity and equipment needed to create and store ebooks costs zero?



    DIGITAL BOOKS DO NOT COST ZERO NO MATTER HOW MANY TIMES YOU REPEAT IT.
  • hellacoolhellacool Posts: 759member
    Quote:
    Originally Posted by hill60 View Post


    So the writer is paid zero?



    The staff at the publishers are paid zero?



    The buildings and equipment the publishers use costs zero?



    The promotion the publishers do costs zero?



    The electricity and equipment needed to create and store ebooks costs zero?



    DIGITAL BOOKS DO NOT COST ZERO NO MATTER HOW MANY TIMES YOU REPEAT IT.



    Wow, you obviously have no clue. Yes eBooks cost ZERO to reproduce. No the writers will get paid (duh) through volume sales. What buildings and equipment you talking about? Copy paste doesn't require much overhead, Promotions will get paid, again by the sale's. What electricity you talking? You can fit 1,000,000 eBooks on a 32GB thumb drive, someone orders one, you hit copy and paste and send it too them. You need to come out of the 60's and realize these are not REAL books.



    Stop trying to sensationalize things and being dramatic. As I stated before, and you obviously fail to grasp, an eBook cost ZERO to reproduce, will sell in volume and the publishers will still get paid the same through volume. This is about Apple trying to fix high prices so they can blackmail their 30%. If they didnt, Amazon would simply sell their eBooks for 30% less and no one would buy from Apple. The publishers were trying to protect their old system of selling and charging the same price for a NO COST eBook as they did for a real book but Amazon didn't let them because Amazon sold them for what they wanted to generate volume (publishers were still getting paid). Publishers were not concerned with the cost of the eBook they were concerned that this NO COST eBook would cut into their real book prices. This was never about the writer or not getting paid it was about Apple ensuring their 30% and the publisher protecting an ancient pricing scheme.



    PS:



    TYPING IN CAPS DOES NOT MAKE YOU RIGHT.
  • applecationapplecation Posts: 146member
    Quote:
    Originally Posted by Hellacool View Post


    Wow, you obviously have no clue. .



    http://journal.bookfinder.com/2009/0...ook-costs.html



    The above article shows the cost of producing a new hard cover novel is around $15, with about 1/3 of that related to the cost for a physical book.

    For an ebook, the cost of managing a download system, while not free, is certainly lower than a physical book. Apple says it is close to break-even with their 30% cut, so maybe those costs are greater than I think.

    The remaining 2/3 of the cost for a new book is there, whether it is physical or electronic. So, ebooks are not free.
  • Quote:
    Originally Posted by anantksundaram View Post


    How are you coming up with the assertion that Apple is "bigger than many governments"? Especially the governments that are party to this investigation?




    Nowhere is there any assertion that Apple is bigger than the governments which are party to this investigation.



    As for bigger than many governments, if you compare Apple's annual sales to GDP (an imperfect method, admittedly) Apple would be bigger than around 20 sovereign nations.
  • Quote:
    Originally Posted by Hellacool View Post


    Don't understand the problem, lower prices, good for consumer. I am a consumer, good for me. This is a digital item, cost ZERO to reproduce so publishers will make the same money if you sell 100 eBooks for 3 dollars or 3 eBooks for 100 dollars. I would rather buy the eBook for 3 dollars.



    Lower prices are good for the consumer in the short run. But if the prices are set artificially low by a company with market poser in an attempt to bankrupt the competition, it can be bad in the long run.



    Few things in this world are black or white.
  • Quote:
    Originally Posted by hill60 View Post


    So the writer is paid zero?



    The staff at the publishers are paid zero?



    The buildings and equipment the publishers use costs zero?



    The promotion the publishers do costs zero?



    The electricity and equipment needed to create and store ebooks costs zero?



    DIGITAL BOOKS DO NOT COST ZERO NO MATTER HOW MANY TIMES YOU REPEAT IT.







    He overstated his case. He should have said that the marginal cost of production is very close to zero.



    Had he said that, he would have been correct.
  • hellacoolhellacool Posts: 759member
    Quote:
    Originally Posted by Applecation View Post


    http://journal.bookfinder.com/2009/0...ook-costs.html



    The above article shows the cost of producing a new hard cover novel is around $15, with about 1/3 of that related to the cost for a physical book.

    For an ebook, the cost of managing a download system, while not free, is certainly lower than a physical book. Apple says it is close to break-even with their 30% cut, so maybe those costs are greater than I think.

    The remaining 2/3 of the cost for a new book is there, whether it is physical or electronic. So, ebooks are not free.



    See I never said eBooks are free, I said reproducing them is. Once all the ground work is complete, there will be no "real" additional cost to keep making copies like a real book. If Amazon can sell 1000 eBooks in volume for $3 and another company can only sell 100 for $6, the 1000 books win, the "sunk costs" are the sunk costs, everything after that is gravy and that is where volume eBooks can soar. The main issue is:



    A - Publishers are trying to protect the physical book market and antiquated business model, they do not want the eBook to surpass the physical book because then writers will no longer need them, who needs to pay a publisher when you can quickly and easily generate your own eBook and sell it on Amazon?



    B - Apple is charging 30% on top of everything else. The only way that can succeed is if no one could sell for cheaper. If Apple is selling an eBook for $12.99 and Amazon sells it for $9.99, Apple will lose.
  • hellacoolhellacool Posts: 759member
    Quote:
    Originally Posted by I am a Zither Zather Zuzz View Post


    Lower prices are good for the consumer in the short run. But if the prices are set artificially low by a company with market poser in an attempt to bankrupt the competition, it can be bad in the long run.



    Few things in this world are black or white.



    Amazon was not trying to do that. Amazon was selling at a loss to generate interest and get the eBook business off the ground. Publishers could not stop Amazon because they were the only game in town and were forced to sell cheaper (which is good for us). Apple comes along and offers the publishers an alternative as long as they do not sell cheaper to anyone else (which is bad for us).
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