Fallacy #2: Raising prices isn't Amazon's modus operandi. It never has been. Amazon works on a high volume, low profit system versus Apple's low volume, high profit model.
I wouldn't say Apple is low volume. Yes they make a healthy profit, but that's also because they move a lot of stuff into people's hand. Apple used to be low volume.
Other companies sell with less profit. Well, they sell with loss, actually. Look at how well all the Japanese companies are doing. All are in the red. People scream cheaper is better. Well, if you like companies going bankrupt. Look at all the PC companies that have vanished, all because of competing on price.
Consumer want low price, more choice. In the end, you'll just have one choice.
It's always sad when people have to resort to personal attacks rather than actually commenting on the substance at hand.
My original post also used 'see' instead of 'sell', just to add to my list of typos. I've been waiting for that to be pointed out too.
Letting spelling errors go ... Do you have any connection Amazon by any chance? You seem remarkably focused, in your few posts, in defending their position.
Whether wholesale or agency, it is not the model that is at fault.
Whether Apple or Amazon, they are just doing what is comfortable and better for them long term. Ultimately, Amazon benefits if they can get Wholesale pricing and volumes. What does wholesale pricing mean? Imagine a scenario where Amazon gets a book for $20 if they buy 100 books, $10 if they buy 1000 books and $7 if they sell a 100,000 books. Amazon shoots for selling 100,000 and prices books at $9.99 - but other stores, especially physical stores just cannot compete at that scale. So they have to price books higher.
Amazon has always played volume game, and they use volume for leverage. Apple on the other hand never plays a risky game. They always sell at a profit - but might not make much profits overall because of their operating costs.
It is just 2 different ways of selling. Nothing wrong with either.
The problem here is with publishers. They are trying to keep ebook prices high, so that they can still sell their hardbacks at high prices. If hypothetically, a brand new set of publishers emerged - with no earnings to protect, they could easily price ebooks at $4.99 and still be profitable.
When people make arguments that authors deserve to be compensated, they are missing the big point. Even at $19.99 retail of a hardback, authors don't make much more than $1-2. This is easily possible with eBooks because lot of the costs are zero or low!
DoJ is barking up the wrong tree. They should let the market sort itself out and this will likely happen even before this suit is resolved! And DoJ runs risk that a resolution against Apple and favoring Amazon could actually create a monopoly!
Very good points. I am not sure why Amazon is revered by so many for the lower price issue alone. Their model has bankrupted many local businesses that were turned into showrooms for Amazon lower online costs, and just could not compete. I like low prices as much as anyone, but there are consequences to this. DOJ cases do not take this into consideration I believe. IMO an Amazon eBook monopoly will not be good for consumers in the long term.
The model has nothing to do with the issue. Agency model is perfectly legal.
Its how the publishers colluded to force amazon into this model that is the issue.
Of course it's central to the issue.
1. You said it perfectly. Publishers colluded. It's not the same as Apple colluded..
Apple was added to this case for boombast! If apple wasn't involved you'd see people saying all over that amazon is the bad player here forcing content providers to support their ebook monopoly or else... It just sounds like this is government overreach.
Thank you for making my point for me. Why should apple be on the hook for what other people do? Secondly, publishers are free to set their own prices. Publishers set the pricing model for retailers not pricing for the end consumer. There is a big difference. I have a feeling this is going to the supreme court and apple and publishers will prevail.
I buy my books directly from the publisher and prices are much cheaper. They give me 40% off and free unreleased books etc.... In amazon's world publishers can't make any money from their ebooks. They should just stop doing business with 3rd party ebook sellers and sell their own books themselves. It makes no sense at all to have a retailer under cutting your efforts to sell your books just so you can lose money on them.
Publishers should just make people go to their website to buy books. If the book is popular people will buy them. Ebooks don't cost zero. Marketing and infrastructure is involved in making eBooks. EBooks are made out of HTML, CSS, JavaScript. You need developers for this stuff. It's not just oh eBooks are cheaper because there is not as much manufacturing costs. The costs are different. Not to mention the third party retailers cut.
The problem is people have been taught that intellectual property has no value because it isn't physical. That's simply not true. You aren't just cutting off manufacturing costs. You are exchanging one cost for another cheaper cost. Publishers and authors deserve to be able to make money off of their investment. Retailers should be able to set the prices of their books. They can't do that when amazon can sell at a loss which undercuts them and their efforts to sell their own books on their own website.
Again if I were the publisher, I'd terminate the contracts with amazon and sell on my website. The publishers need to take control of their content.
Let us say you were charged with a serious crime that you didn't do.
The prosecutor says you have two choices. The first is to plead guilty to a lessor charge whereby you will see no jail time and maybe pay a small penalty. The second is to fight the matter in court in front of a jury of your peers.
If you are truly innocent you are going to be tempted to go for option two. Than, however, you will consider that if you lose you will face a couple of years in jail; have to pay tons of money to an attorney if you have a job; if you don't have a job you will have to throw yourself at the mercy of a public defender who is underpaid and has a huge work load; go through months of stress before a trial; and if found guilty have the guilty verdict follow you around forever inhibiting your ability to find employment. You will also have to take into consideration that most people, including the jury, think like you. Namely, why would the kind prosecutor try this person if he wasn't guilty? When in reality innocent people get charged of crimes they didn't do all the time.
The prosecutor (in most cases) just wants the statistic of a guilty plea so he can tell the community he is keeping them safe. He is going to trump up the charges to try to get that plea from you. From experience, I can tell you that at the end of the day you are going to go with option one.
Moreover, what the States do is based on economics and politics. So if Holder calls his buddy up the Attorney General in one of these States and says, "Hey will you sign on to this lawsuit? There might be some money in it for your State, and your constituents will support the lawsuit" The State's Attorney General is probably going to say OK. Further, I have no insight into the State's reasons. I will point out, however, that many of the States on Board have Amazon warehouses located within.
Quote:
Originally Posted by realwarder
I think you'll find there's basis for the 16 states making these claims and causing the government to investigate this. If there were no facts or evidence, do you think that some of the companies involved would have now already paid fines to settle this... http://www.theregister.co.uk/2012/04...suit_for_cash/
Rather than letting the market sort itself out, Apple worked with publishers to make book pricing more expensive by denying Amazon the ability to sell books at the prices it wanted to.
Sounds antitrust practice to me. Anyone was free to see books cheaper than Amazon and gain market share. It's not like the publishers were loosing money! They got their price whatever Amazon sold a book for.
Personally I dislike spin.
The people who lost out from this whole shenanigans was us, the consumer. That is why this is being investigated.
Actually, the people who lost out were the booksellers who tried to compete with Amazon and couldn't do so because Amazon was practicing predatory pricing to keep the competition from succeeding.
There's a fallacy that competition will always result in lower prices. While that may be true in the long run, in the short run, it's not and never was. Clearly, Amazon was guilty of predatory pricing to maintain its monopoly. Just as clearly, the agency model might be one way around that.
There's absolutely nothing wrong with the agency model. There are only 2 real questions:
1. Whether the booksellers colluded to create it (and whether Apple participated in the collusion).
2. While most favored nation clauses are clearly legal, the combination of a most favored nation clause with Apple's guaranteed 30% might be problematic.
Quote:
Originally Posted by realwarder
I think you'll find there's basis for the 16 states making these claims and causing the government to investigate this. If there were no facts or evidence, do you think that some of the companies involved would have now already paid fines to settle this... http://www.theregister.co.uk/2012/04...suit_for_cash/
First, politicians love grandstanding. It is quite common for politicians to make issues of things that they have no chance of winning.
Second, the fact that there's evidence worth investigating doesn't mean that a crime has been committed. That's why you investigate.
Third, even if a crime has been committed, Apple may not have been part of it.
There's just not enough evidence available to be sure. However:
That was the problem though. By the publishers changing the model to 'set prices for other outlets' (i.e. define the actual selling price), that prevented Amazon from selling below the publishers price. So prices went up.
Yeah, it's a shame the the new model prevents Amazon from illegal predatory pricing. :roll eyes:
Besides, your description is not correct. There's nothing in the model which prevents Amazon from selling below the publishers' list price. The model only says that if Amazon does so, Apple can do so, as well.
Quote:
Originally Posted by nicolbolas
look at book prices--Amazon charged around $10 per book, if you look at any site that isn't biased towards Apple you realize that.... Apple charged more.
I wish i had good things to say about Apple/apple fanboys recently, but i really don't.
Also, did Apple take apps and raise their prices with app makers support so that other app sellers couldn't sell for less? the answer is no.
Raising prices isn't illegal.
Agency model isn't illegal.
Amazon's predatory pricing is.
Apple's actions move the eBook business closer to a free market than what existed before.
There is a question as to whether Apple colluded with the booksellers to determine the price, but I haven't seen any strong evidence that they did.
Quote:
Originally Posted by SolipsismX
So where was the DoJ suit claiming that the music labels and Amazon colluded in bringing DRM-free music at a higher bit rate to a different store to shut Apple out?
I think you know the answer. Apple doesn't run to the DOJ every time someone does something like that - they just respond with better products and services. Amazon, OTOH, apparently isn't capable of doing that so they filed a complaint with the DOJ instead.
I think you know the answer. Apple doesn't run to the DOJ every time someone does something like that - they just respond with better products and services. Amazon, OTOH, apparently isn't capable of doing that so they filed a complaint with the DOJ instead.
I missed the news that the whole case is due to Amazon's complaints. Perhaps it was officially stated somewhere and it just wasn't noticed?
We are asking for the something with regards to Apple. Prosecutors shouldn't get to hold their evidence back so that defendants can't adequately defend themselves.
Actually, using profits from one segment to subsidize another is called predatory pricing.
Amazon sold it's ebooks below cost (at 9.99) achieved about an 80% marketshare and threatened to put physical books out of business. Incidentally, it is also allegedly selling the kindle below cost.
If the DOJ were serious about competition in the book market it would be investigating Amazon.
***
Many readers confuse Apple's most favored nation clause to conclude that it means that other retailers cannot sell books for less. This is wrong. It means that the vendor (in this case the publishers) agree not to sell to other retailers for less. Other Retailers are free to retail books at whatever price they want -- and Amazon may continue to sell them below cost.
This is actually quite common in purchasing contracts. Indeed the US Government frequently includes it in its purchasing contracts.
Fallacy #2: Raising prices isn't Amazon's modus operandi. It never has been. Amazon works on a high volume, low profit system versus Apple's low volume, high profit model.
The Kindle wasn't expensive initially because it had a monopoly on the e-reader market. It was expensive because it was new, the components were expensive, and the fact that Amazon had no way to know whether it would succeed. (Weird, kind of sounds like the initial launch of the iPhone, another product that was "overpriced" originally.)
I have to disagree with the iPhone initially overpriced comparisons to the kindle initial pricing. My first iPhone was $450'ish. Current iPhone 4S (16GB) is $649.00. Both have fairly close gross margins and Apple had no way to know if it would succeed. Isn't Amazon selling the kindle for below estimated BoM cost today?
I don't care about competition. I care about how Amazon competes. Microsoft got into trouble because it used its monopoly position with Windows to gain a competitive advantage in the Internet Browser market, an area where Netscape was king. In part, Microsoft put pressure on PC makers to ditch Netscape or risk not receiving Microsoft's favorable pricing discounts it was giving them. On account of Microsoft's monopoly position that was anti-competitive plain and simple and it was found guilty. Microsoft's actions caused innovation in the browser market to stagnate until big pockets like Apple and Google came around to be able to take on Microsoft by also using money from other operations to fund competing browsers.
Before the Agency model, Amazon undeniably had a dominate position when it came to selling traditional books. Then along came e-Books. Amazon used its dominate position with traditional books to force the publishers to lower their prices so it could solidify its position in the new market. Publishers had to comply or Amazon wouldn't' carry their traditional books. Like with Microsoft, that is anti-competitive plain and simple. When Apple started to sell e-Books, Amazon had 90 percent of the market. Now it still has 60 percent. Apple has 20 percent. Clearly the agency model has fostered more competition, not less.
Here is an example of how Amazon pushes into new markets. Now Amazon doesn't have a monopoly in the App market, so it's action there are not anti-competitive, but they certainly are shady. Apple would never do that.
Quote:
Originally Posted by caliminius
The people attacking Amazon seem to be stuck on the idea that Amazon wants to kill off all competition. Maybe, but don't other businesses want the same? Would there be many sad faces at Apple if Google announced it was killing Android?
There are other reasons to sell some items below cost. A big one is that it builds good will with customers. If they can get a good price on something, they're more likely to come back and buy from you again. They'll even pay a little extra on some things just knowing how much of a good deal they got on the last item.
When it comes to eBooks, Amazon also had another good reason: building a market. There really wasn't much of a market for eBooks before Amazon created one. (Kind of like the iTunes Store and downloaded music.)
And let's face it, $9.99 was one of those sweet spot prices. It's basically $10, but it lacks that extra decimal so it psychologically feels a lot cheaper. Kind of like $0.99 was a sweet spot for digital tracks.
Let us say you were charged with a serious crime that you didn't do.
The prosecutor says you have two choices. The first is to plead guilty to a lessor charge whereby you will see no jail time and maybe pay a small penalty. The second is to fight the matter in court in front of a jury of your peers.
If you are truly innocent you are going to be tempted to go for option two. Than, however, you will consider that if you lose you will face a couple of years in jail;
Antitrust is about fines. Jail is so very rare, that is not part of a companies concern.
It's about money. Is it cheaper for a company to fight it and potentially tarnish their reputation along the way, or pay up a fine now that will be much cheaper than one a jury would give (but a cost much higher than your lawyer fees in defending you.)
Amazon selling below cost is not illegal. It's call a loss leader. If loss leaders were illegal every retail and grocery store in the country would be shut down.
Many readers confuse Apple's most favored nation clause to conclude that it means that other retailers cannot sell books for less. This is wrong. It means that the vendor (in this case the publishers) agree not to sell to other retailers for less. Other Retailers are free to retail books at whatever price they want -- and Amazon may continue to sell them below cost.
Actually, This is wrong. In the agency model, Amazon, Apple etc. act as an Agent for the publisher, merely selling a book to the public at the price the publisher sets. As an agent Amazon and Apple cannot set the sales price.
This is different from the wholesale model that existed before, where Amazon, B&N, stores, would buy books at a wholesale price and sell to customers at whatever price they wanted to.
Many readers confuse Apple's most favored nation clause to conclude that it means that other retailers cannot sell books for less. This is wrong. It means that the vendor (in this case the publishers) agree not to sell to other retailers for less. Other Retailers are free to retail books at whatever price they want -- and Amazon may continue to sell them below cost.
This is actually quite common in purchasing contracts. Indeed the US Government frequently includes it in its purchasing contracts.
Agreed. You can also see these in action by comparing prices on both iBooks and Amazon. On Amazon they are sometimes cheaper. Further, if Apple had significant power (which anti-trust law is suppose to stop the abuse of) it would have all the publishers Amazon had on Amazon. The reality, however, Amazon had squeezed Apple out of deals with many publishers. Take for instance the Hunger Games. Amazon carries it, but Apple does not. You can bet Apple would like to carry it and Amazon is the reason Apple does not.
Even if the most favor nations clause did require the prices to be the same everywhere, it still wouldn't be anti-competitive because competing publishers are setting the prices. Price isn't the only way to compete.
Amazon selling below cost is not illegal. It's call a loss leader. If loss leaders were illegal every retail and grocery store in the country would be shut down.
This is true. Amazon can sell a book at a loss if it wants. What is illegal is when Amazon tells a publisher they will not carry a traditional book unless the publisher agrees to significantly lower the whole sale cost of an e-Book. It's Amazon's market position that makes it illegal.
I also question whether Amazon actually sells books at a loss. There was a recent story about Amazon publicly telling app developers it would pay them 20 percent of the normal sales price of their apps when giving those Apps away on its free app of the day promotion. Once a developer was asked to be the App of the day, they were given hidden communications that they had to agree to dispense with being paid the 20 percent to be made the app of the day. I suspect Amazon puts the same pressure on publishers, which is why publishers don't like Amazon.
That is not my point. The original poster questioned why the three publishers settled if they were not guilty. It is true jail usually isn't a factor for anti-trust matters, but it illustrates that people settle things all the time when they aren't guilty. Here jail isn't a factor, but time, money, resources, public perception are all factors.
Quote:
Originally Posted by realwarder
Antitrust is about fines. Jail is so very rare, that is not part of a companies concern.
It's about money. Is it cheaper for a company to fight it and potentially tarnish their reputation along the way, or pay up a fine now that will be much cheaper than one a jury would give (but a cost much higher than your lawyer fees in defending you.)
Comments
Fallacy #2: Raising prices isn't Amazon's modus operandi. It never has been. Amazon works on a high volume, low profit system versus Apple's low volume, high profit model.
I wouldn't say Apple is low volume. Yes they make a healthy profit, but that's also because they move a lot of stuff into people's hand. Apple used to be low volume.
Other companies sell with less profit. Well, they sell with loss, actually. Look at how well all the Japanese companies are doing. All are in the red. People scream cheaper is better. Well, if you like companies going bankrupt. Look at all the PC companies that have vanished, all because of competing on price.
Consumer want low price, more choice. In the end, you'll just have one choice.
It's always sad when people have to resort to personal attacks rather than actually commenting on the substance at hand.
My original post also used 'see' instead of 'sell', just to add to my list of typos. I've been waiting for that to be pointed out too.
Letting spelling errors go ... Do you have any connection Amazon by any chance? You seem remarkably focused, in your few posts, in defending their position.
Whether wholesale or agency, it is not the model that is at fault.
Whether Apple or Amazon, they are just doing what is comfortable and better for them long term. Ultimately, Amazon benefits if they can get Wholesale pricing and volumes. What does wholesale pricing mean? Imagine a scenario where Amazon gets a book for $20 if they buy 100 books, $10 if they buy 1000 books and $7 if they sell a 100,000 books. Amazon shoots for selling 100,000 and prices books at $9.99 - but other stores, especially physical stores just cannot compete at that scale. So they have to price books higher.
Amazon has always played volume game, and they use volume for leverage. Apple on the other hand never plays a risky game. They always sell at a profit - but might not make much profits overall because of their operating costs.
It is just 2 different ways of selling. Nothing wrong with either.
The problem here is with publishers. They are trying to keep ebook prices high, so that they can still sell their hardbacks at high prices. If hypothetically, a brand new set of publishers emerged - with no earnings to protect, they could easily price ebooks at $4.99 and still be profitable.
When people make arguments that authors deserve to be compensated, they are missing the big point. Even at $19.99 retail of a hardback, authors don't make much more than $1-2. This is easily possible with eBooks because lot of the costs are zero or low!
DoJ is barking up the wrong tree. They should let the market sort itself out and this will likely happen even before this suit is resolved! And DoJ runs risk that a resolution against Apple and favoring Amazon could actually create a monopoly!
Very good points. I am not sure why Amazon is revered by so many for the lower price issue alone. Their model has bankrupted many local businesses that were turned into showrooms for Amazon lower online costs, and just could not compete. I like low prices as much as anyone, but there are consequences to this. DOJ cases do not take this into consideration I believe. IMO an Amazon eBook monopoly will not be good for consumers in the long term.
The model has nothing to do with the issue. Agency model is perfectly legal.
Its how the publishers colluded to force amazon into this model that is the issue.
1. You said it perfectly. Publishers colluded. It's not the same as Apple colluded..
Apple was added to this case for boombast! If apple wasn't involved you'd see people saying all over that amazon is the bad player here forcing content providers to support their ebook monopoly or else... It just sounds like this is government overreach.
Thank you for making my point for me. Why should apple be on the hook for what other people do? Secondly, publishers are free to set their own prices. Publishers set the pricing model for retailers not pricing for the end consumer. There is a big difference. I have a feeling this is going to the supreme court and apple and publishers will prevail.
I buy my books directly from the publisher and prices are much cheaper. They give me 40% off and free unreleased books etc.... In amazon's world publishers can't make any money from their ebooks. They should just stop doing business with 3rd party ebook sellers and sell their own books themselves. It makes no sense at all to have a retailer under cutting your efforts to sell your books just so you can lose money on them.
Publishers should just make people go to their website to buy books. If the book is popular people will buy them. Ebooks don't cost zero. Marketing and infrastructure is involved in making eBooks. EBooks are made out of HTML, CSS, JavaScript. You need developers for this stuff. It's not just oh eBooks are cheaper because there is not as much manufacturing costs. The costs are different. Not to mention the third party retailers cut.
The problem is people have been taught that intellectual property has no value because it isn't physical. That's simply not true. You aren't just cutting off manufacturing costs. You are exchanging one cost for another cheaper cost. Publishers and authors deserve to be able to make money off of their investment. Retailers should be able to set the prices of their books. They can't do that when amazon can sell at a loss which undercuts them and their efforts to sell their own books on their own website.
Again if I were the publisher, I'd terminate the contracts with amazon and sell on my website. The publishers need to take control of their content.
The prosecutor says you have two choices. The first is to plead guilty to a lessor charge whereby you will see no jail time and maybe pay a small penalty. The second is to fight the matter in court in front of a jury of your peers.
If you are truly innocent you are going to be tempted to go for option two. Than, however, you will consider that if you lose you will face a couple of years in jail; have to pay tons of money to an attorney if you have a job; if you don't have a job you will have to throw yourself at the mercy of a public defender who is underpaid and has a huge work load; go through months of stress before a trial; and if found guilty have the guilty verdict follow you around forever inhibiting your ability to find employment. You will also have to take into consideration that most people, including the jury, think like you. Namely, why would the kind prosecutor try this person if he wasn't guilty? When in reality innocent people get charged of crimes they didn't do all the time.
The prosecutor (in most cases) just wants the statistic of a guilty plea so he can tell the community he is keeping them safe. He is going to trump up the charges to try to get that plea from you. From experience, I can tell you that at the end of the day you are going to go with option one.
Moreover, what the States do is based on economics and politics. So if Holder calls his buddy up the Attorney General in one of these States and says, "Hey will you sign on to this lawsuit? There might be some money in it for your State, and your constituents will support the lawsuit" The State's Attorney General is probably going to say OK. Further, I have no insight into the State's reasons. I will point out, however, that many of the States on Board have Amazon warehouses located within.
I think you'll find there's basis for the 16 states making these claims and causing the government to investigate this. If there were no facts or evidence, do you think that some of the companies involved would have now already paid fines to settle this... http://www.theregister.co.uk/2012/04...suit_for_cash/
Rather than letting the market sort itself out, Apple worked with publishers to make book pricing more expensive by denying Amazon the ability to sell books at the prices it wanted to.
Sounds antitrust practice to me. Anyone was free to see books cheaper than Amazon and gain market share. It's not like the publishers were loosing money! They got their price whatever Amazon sold a book for.
Personally I dislike spin.
The people who lost out from this whole shenanigans was us, the consumer. That is why this is being investigated.
Actually, the people who lost out were the booksellers who tried to compete with Amazon and couldn't do so because Amazon was practicing predatory pricing to keep the competition from succeeding.
There's a fallacy that competition will always result in lower prices. While that may be true in the long run, in the short run, it's not and never was. Clearly, Amazon was guilty of predatory pricing to maintain its monopoly. Just as clearly, the agency model might be one way around that.
There's absolutely nothing wrong with the agency model. There are only 2 real questions:
1. Whether the booksellers colluded to create it (and whether Apple participated in the collusion).
2. While most favored nation clauses are clearly legal, the combination of a most favored nation clause with Apple's guaranteed 30% might be problematic.
I think you'll find there's basis for the 16 states making these claims and causing the government to investigate this. If there were no facts or evidence, do you think that some of the companies involved would have now already paid fines to settle this... http://www.theregister.co.uk/2012/04...suit_for_cash/
First, politicians love grandstanding. It is quite common for politicians to make issues of things that they have no chance of winning.
Second, the fact that there's evidence worth investigating doesn't mean that a crime has been committed. That's why you investigate.
Third, even if a crime has been committed, Apple may not have been part of it.
There's just not enough evidence available to be sure. However:
http://www.appleinsider.com/articles...nst_apple.html
That was the problem though. By the publishers changing the model to 'set prices for other outlets' (i.e. define the actual selling price), that prevented Amazon from selling below the publishers price. So prices went up.
Yeah, it's a shame the the new model prevents Amazon from illegal predatory pricing. :roll eyes:
Besides, your description is not correct. There's nothing in the model which prevents Amazon from selling below the publishers' list price. The model only says that if Amazon does so, Apple can do so, as well.
look at book prices--Amazon charged around $10 per book, if you look at any site that isn't biased towards Apple you realize that.... Apple charged more.
read the first paragraph of the first section of this
=.=...
I wish i had good things to say about Apple/apple fanboys recently, but i really don't.
Also, did Apple take apps and raise their prices with app makers support so that other app sellers couldn't sell for less? the answer is no.
Raising prices isn't illegal.
Agency model isn't illegal.
Amazon's predatory pricing is.
Apple's actions move the eBook business closer to a free market than what existed before.
There is a question as to whether Apple colluded with the booksellers to determine the price, but I haven't seen any strong evidence that they did.
So where was the DoJ suit claiming that the music labels and Amazon colluded in bringing DRM-free music at a higher bit rate to a different store to shut Apple out?
I think you know the answer. Apple doesn't run to the DOJ every time someone does something like that - they just respond with better products and services. Amazon, OTOH, apparently isn't capable of doing that so they filed a complaint with the DOJ instead.
I think you know the answer. Apple doesn't run to the DOJ every time someone does something like that - they just respond with better products and services. Amazon, OTOH, apparently isn't capable of doing that so they filed a complaint with the DOJ instead.
I missed the news that the whole case is due to Amazon's complaints. Perhaps it was officially stated somewhere and it just wasn't noticed?
Evidence of collusion?
We are asking for the something with regards to Apple. Prosecutors shouldn't get to hold their evidence back so that defendants can't adequately defend themselves.
I missed the news that the whole case is due to Amazon's complaints. Perhaps it was officially stated somewhere and it just wasn't noticed?
It has everything to do with Amazon. If you can't see that it's best you don't comment on this matter until you inform yourself.
I'm not attacking you personally ...
and.......speak intelligently.
Please learn the meaning of the word hypocrite.
Amazon sold it's ebooks below cost (at 9.99) achieved about an 80% marketshare and threatened to put physical books out of business. Incidentally, it is also allegedly selling the kindle below cost.
If the DOJ were serious about competition in the book market it would be investigating Amazon.
***
Many readers confuse Apple's most favored nation clause to conclude that it means that other retailers cannot sell books for less. This is wrong. It means that the vendor (in this case the publishers) agree not to sell to other retailers for less. Other Retailers are free to retail books at whatever price they want -- and Amazon may continue to sell them below cost.
This is actually quite common in purchasing contracts. Indeed the US Government frequently includes it in its purchasing contracts.
Fallacy #2: Raising prices isn't Amazon's modus operandi. It never has been. Amazon works on a high volume, low profit system versus Apple's low volume, high profit model.
The Kindle wasn't expensive initially because it had a monopoly on the e-reader market. It was expensive because it was new, the components were expensive, and the fact that Amazon had no way to know whether it would succeed. (Weird, kind of sounds like the initial launch of the iPhone, another product that was "overpriced" originally.)
I have to disagree with the iPhone initially overpriced comparisons to the kindle initial pricing. My first iPhone was $450'ish. Current iPhone 4S (16GB) is $649.00. Both have fairly close gross margins and Apple had no way to know if it would succeed. Isn't Amazon selling the kindle for below estimated BoM cost today?
Before the Agency model, Amazon undeniably had a dominate position when it came to selling traditional books. Then along came e-Books. Amazon used its dominate position with traditional books to force the publishers to lower their prices so it could solidify its position in the new market. Publishers had to comply or Amazon wouldn't' carry their traditional books. Like with Microsoft, that is anti-competitive plain and simple. When Apple started to sell e-Books, Amazon had 90 percent of the market. Now it still has 60 percent. Apple has 20 percent. Clearly the agency model has fostered more competition, not less.
Here is an example of how Amazon pushes into new markets. Now Amazon doesn't have a monopoly in the App market, so it's action there are not anti-competitive, but they certainly are shady. Apple would never do that.
The people attacking Amazon seem to be stuck on the idea that Amazon wants to kill off all competition. Maybe, but don't other businesses want the same? Would there be many sad faces at Apple if Google announced it was killing Android?
There are other reasons to sell some items below cost. A big one is that it builds good will with customers. If they can get a good price on something, they're more likely to come back and buy from you again. They'll even pay a little extra on some things just knowing how much of a good deal they got on the last item.
When it comes to eBooks, Amazon also had another good reason: building a market. There really wasn't much of a market for eBooks before Amazon created one. (Kind of like the iTunes Store and downloaded music.)
And let's face it, $9.99 was one of those sweet spot prices. It's basically $10, but it lacks that extra decimal so it psychologically feels a lot cheaper. Kind of like $0.99 was a sweet spot for digital tracks.
Let us say you were charged with a serious crime that you didn't do.
The prosecutor says you have two choices. The first is to plead guilty to a lessor charge whereby you will see no jail time and maybe pay a small penalty. The second is to fight the matter in court in front of a jury of your peers.
If you are truly innocent you are going to be tempted to go for option two. Than, however, you will consider that if you lose you will face a couple of years in jail;
Antitrust is about fines. Jail is so very rare, that is not part of a companies concern.
It's about money. Is it cheaper for a company to fight it and potentially tarnish their reputation along the way, or pay up a fine now that will be much cheaper than one a jury would give (but a cost much higher than your lawyer fees in defending you.)
Raising prices isn't illegal.
Agency model isn't illegal.
Amazon's predatory pricing is.
Amazon selling below cost is not illegal. It's call a loss leader. If loss leaders were illegal every retail and grocery store in the country would be shut down.
Many readers confuse Apple's most favored nation clause to conclude that it means that other retailers cannot sell books for less. This is wrong. It means that the vendor (in this case the publishers) agree not to sell to other retailers for less. Other Retailers are free to retail books at whatever price they want -- and Amazon may continue to sell them below cost.
Actually, This is wrong. In the agency model, Amazon, Apple etc. act as an Agent for the publisher, merely selling a book to the public at the price the publisher sets. As an agent Amazon and Apple cannot set the sales price.
This is different from the wholesale model that existed before, where Amazon, B&N, stores, would buy books at a wholesale price and sell to customers at whatever price they wanted to.
Many readers confuse Apple's most favored nation clause to conclude that it means that other retailers cannot sell books for less. This is wrong. It means that the vendor (in this case the publishers) agree not to sell to other retailers for less. Other Retailers are free to retail books at whatever price they want -- and Amazon may continue to sell them below cost.
This is actually quite common in purchasing contracts. Indeed the US Government frequently includes it in its purchasing contracts.
Agreed. You can also see these in action by comparing prices on both iBooks and Amazon. On Amazon they are sometimes cheaper. Further, if Apple had significant power (which anti-trust law is suppose to stop the abuse of) it would have all the publishers Amazon had on Amazon. The reality, however, Amazon had squeezed Apple out of deals with many publishers. Take for instance the Hunger Games. Amazon carries it, but Apple does not. You can bet Apple would like to carry it and Amazon is the reason Apple does not.
Even if the most favor nations clause did require the prices to be the same everywhere, it still wouldn't be anti-competitive because competing publishers are setting the prices. Price isn't the only way to compete.
Amazon selling below cost is not illegal. It's call a loss leader. If loss leaders were illegal every retail and grocery store in the country would be shut down.
This is true. Amazon can sell a book at a loss if it wants. What is illegal is when Amazon tells a publisher they will not carry a traditional book unless the publisher agrees to significantly lower the whole sale cost of an e-Book. It's Amazon's market position that makes it illegal.
I also question whether Amazon actually sells books at a loss. There was a recent story about Amazon publicly telling app developers it would pay them 20 percent of the normal sales price of their apps when giving those Apps away on its free app of the day promotion. Once a developer was asked to be the App of the day, they were given hidden communications that they had to agree to dispense with being paid the 20 percent to be made the app of the day. I suspect Amazon puts the same pressure on publishers, which is why publishers don't like Amazon.
Antitrust is about fines. Jail is so very rare, that is not part of a companies concern.
It's about money. Is it cheaper for a company to fight it and potentially tarnish their reputation along the way, or pay up a fine now that will be much cheaper than one a jury would give (but a cost much higher than your lawyer fees in defending you.)
That's a pretty big accusation your presenting as fact without a single shred of evidence to back it up.
Maybe the DoJ should also investigate the same agency model Apple used for their App Store because those App Store apps are so expensive¡
Well according to some recent report, apps on App Store's are cheaper than those of Android, so this doesn't even make much sense to begin with.
If Apple colludes with Android (or any of its competitors) and artificially raise the price for apps, then, now, we have a case.