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Apple, publishers sued over e-book pricing as sales jump

post #1 of 44
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Apple and five of the six largest publishing houses have been sued in a class action suit accusing them of illegal price fixing via the agency model, while a new survey shows e-book sales have risen by more than 1000 percent over the past two years.

Seattle-based law firm Hagens Berman filed a class action law suit against Apple, Hachette, Simon & Schuster, Macmillan, HarperCollins and Penguin on Thursday, PaidContent reports. The companies are accused of conspiring to adopt the agency model in order to boost profits and force e-book rival Amazon to abandon its pro-consumer discount pricing."

Random House, the only "big 6" publisher not included in the suit, resisted the agency model at first, though it has since adopted it. The publisher began offering its books for sale on the iBookstore in March of this year.

The agency model allows publishers to set their own pricing while providing the seller with a portion of the revenue. Apple pushed to adopt the model for its iBookstore, which launched last year alongside the iPad. The company currently receives the same 30 percent cut that it first offered to developers selling software on the App Store.

According to the law suit, Amazon's Kindle had "the potential to massively reduce distribution costs historically associated with brick-and-mortar publishing." However, publishers were allegedly threatened by the new business model and sought to coordinate their activities with Apple in an effort to "restrain trade and retard innovation."

"Being hidebound and lacking innovation for decades, the publishers were particularly concerned that Amazons pro-consumer pricing of eBooks would negatively impact their moribund sales model, and in particular the sale of higher priced physical copies of books, the complaint read.

The suit goes on to claim that Apple facilitated changing the eBook pricing model and conspired with the Publisher Defendants to do so because the Kindle was (and is) a competitive threat to Apples business model.

The complaint alleges that publishers announced the transition to the agency model for e-book sales to coincide with the release of the iPad. The fact that the publishers allowed Apple to use their trademarks in connection with the unveiling of the iPad and iBooks is put forth as evidence of the alleged collusion.

"As a direct result of this anticompetitive conduct as intended by the conspiracy, the price of eBooks has soared. The price of new bestselling eBooks increased to an average of $12 - $15an increase of 33 to 50 percent," the filing continued.

Anthony Petru and Marcus Mathis are listed as plaintiffs in the case.

Last year, Connecticut Attorney General Richard Blumenthal conducted a review of e-book pricing over concerns that matching pricing on Apple's iBooks and Amazon's Kindle platforms reflected anticompetitive deals.

The dispute comes as the e-book industry appears set for explosive growth. According to the new BookStats survey, e-book revenue for trade publishers jumped up by 1274 percent since 2008, reaching $878 million in 2010. E-book net sales increased to 114 million last year, up 1039.6 percent since 2008.

In 2010, e-books grabbed 6.4 percent of the trade book market, up from just 0.6 percent in 2008. Digital books have performed especially well in the adult fiction category, where they held a 13.6 percent revenue share in 2010.

BookStats is published cooperatively by the Association of American Publishers and the Book Industry Study Group. The report includes data from close to 2,000 U.S. publishers. Though the survey only released numbers for 2010, e-books are expected to see even further success throughout this year.
post #2 of 44
This lawsuit misses the obvious fact that you can read kindle / amazon books on an iPad and you cannot read apple books on a kindle. You can also read kobo books. You can also read google books. None of these are available on the kindle. It seems apple is more fair than the closed ebook system of amazon.
post #3 of 44
Is their argument that Apple should be setting the prices the way Amazon used to, rather than allowing the publishers to set their own prices? Weren't there complaints before that Amazon's price setting was unfair for devaluing books?

Or maybe they want Apple to rein in the publishers the way they did with the music industry. They should set up price tiers so if the book is between x and y pages, it costs $a.bc. Textbooks and magazines can have their own schemes separate from novels.
post #4 of 44
This is one litigious society. Amazon is crying over spilt milk. Pathetic.
post #5 of 44
Quote:
Originally Posted by LighteningKid View Post

Is their argument that Apple should be setting the prices the way Amazon used to, rather than allowing the publishers to set their own prices? Weren't there complaints before that Amazon's price setting was unfair for devaluing books?

Basically yes on both counts. Publishers hated the Amazon model, and so when Apple came calling they jumped at a chance to negotiate a deal more to their liking. The accusation here seems to be that in acting together the publishers have unfairly raised prices on consumers. This seems a very odd case, in a lot of ways. What's the legal grounds here? Anti-trust? I didn't think consumers had standing to bring anti-trust complaints directly.

The whole thing is a bit
post #6 of 44
It sounds like they are upset Amazon was given reasonable market competition.
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post #7 of 44
This is another one of those cases where the law-firm gets to pocket all the proceeding should they settle or win. The money collected in this suit does not benefit anyone but this law firm, this action should be made illegal. Law firms did the same thing to the tobacco industry in the late 90's (not that I have any sympathy for that industry), but none of the cancer victims received a single penny, the lawyers got all the dough.
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post #8 of 44
The fact that sales have jumped so much should prove that most people don't care too much about the pricing.

The Amazon model wasn't sustainable. As had been shown a number of times, Amazon was actually selling e-books for less than they paid for them. How can any company, long term, manage with that? Well, they can't.

What publishers were concerned about, at least most of them, was that at some
point, when Amazon had cornered sales on the Kindle, was that they would swing down the hammer, and either raise prices, or, more likely, demand that publishers drastically cut their prices to Amazon.

People who don't understand that, don't understand business.
post #9 of 44
Quote:
Originally Posted by cloudgazer View Post

Basically yes on both counts. Publishers hated the Amazon model, and so when Apple came calling they jumped at a chance to negotiate a deal more to their liking. The accusation here seems to be that in acting together the publishers have unfairly raised prices on consumers. This seems a very odd case, in a lot of ways. What's the legal grounds here? Anti-trust? I didn't think consumers had standing to bring anti-trust complaints directly.

The whole thing is a bit

Of course.

There are something like 6 major publishers. They can set the prices wherever they wish with the Apple model. How would it create more competition if Apple set the prices for all of them?
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post #10 of 44
Quote:
Originally Posted by jragosta View Post

Of course.

There are something like 6 major publishers. They can set the prices wherever they wish with the Apple model. How would it create more competition if Apple set the prices for all of them?

I agree, and I don't see as how Apple agreeing to an agency model with all the major publishers can be considered anti-competitive when lots of things are sold on an agency model from Airline tickets to Condos.

But if the publishers all agreed to force Amazon to accept an agency model, that potentially might be anti-competitive, if they colluded - but even then I'm not sure, because they could make a good case that Amazon approaches being a monopsony and that they need to join together to approach parity in the negotiations. Has that happened or is Amazon still going with the wholesale model?

Honestly this is completely bizarre and kinda fascinating.

Edit: ok, I was right - this is the basis of the complaint

'The complaint claims that the five publishing houses forced Amazon to abandon its discount pricing and adhere to a new agency model, in which publishers set prices. This would prevent retailers such as Amazon from offering lower prices on e-books.'


http://www.hbsslaw.com/cases-and-investigations/ebooks
post #11 of 44
Quote:
Originally Posted by LighteningKid View Post

Is their argument that Apple should be setting the prices the way Amazon used to, rather than allowing the publishers to set their own prices? Weren't there complaints before that Amazon's price setting was unfair for devaluing books?

Or maybe they want Apple to rein in the publishers the way they did with the music industry. They should set up price tiers so if the book is between x and y pages, it costs $a.bc. Textbooks and magazines can have their own schemes separate from novels.



The article does very little to explain the situation. I get the impression that the author doesn't have any deep understanding, because he presents things in a vague, convoluted manner.

And don't some folks think that this author is really Dinger or Dilger or whatever his name is, using a pseudonym? It always seemed to me that Josh was a cub reporter, mistakenly thinking he was learning at the feet of the master by imitating Dilger's style.
post #12 of 44
Quote:
Originally Posted by solipsism View Post

It sounds like they are upset Amazon was given reasonable market competition.

Well, when what you refer to as "reasonable market competition" results in higher, not lower, prices to consumers, should consumers be cheering about it?
The point is that what you have characterized in that way, is seen by the suit as encouragement from Apple for publishers to collude in raising prices, by offering that "agency structure" as an alternative to Amazon's original, more consumer-friendly prices.
But it would be naive to think that, while putting on a frowny face, Amazon wasn't perfectly happy to see prices go up, which they take every opportunity to not-so-subtly blame on publishers.
After all, they had only established the earlier lower pricing model to grow that market in the first place.
post #13 of 44
Quote:
Originally Posted by boredumb View Post

But it would be naive to think that, while putting on a frowny face, Amazon wasn't perfectly happy to see prices go up, which they take every opportunity to not-so-subtly blame on publishers.
After all, they had only established the earlier lower pricing model to grow that market in the first place.

Actually Amazon may well hate the Agency model. Back in the old wholesale model, the key thing was buying power. The more you bought the bigger the discounts you could demand from the publishers. The bigger your discounts the higher your profits and the lower your prices, so the bigger your share. The bigger your share the more you bought so the bigger your discounts.

Buying power is much less relevant when you're just getting a flat 30% same as everybody else.
post #14 of 44
It seems to me that this law suit is actually an illegal conspiracy between Amazon and the law firm concerned to stifle the open competion provided by Apple. How can it be "conspiracy" to provide an open agency market place where sellers can set their own prices independently of all other sellers and buyers can choose to buy or not?
post #15 of 44
What a bunch of hogwash.

Hogwash.

Who are these plaintiffs? If you think the price of digital books is too high, then your recourse is not to buy them. We live in a free market. It's not like ebooks are some critical resource. You're not entitled to them. Plus, you can always get them in a different medium, even a used paperback for a couple bucks.

In a free market, the price something sells for is dictated by the market. Evidentally, based on the explosion of growth, they're priced right. Shouldn't we be happy the publishing industry is doing well in this area? Books are always something worth paying for.
post #16 of 44
I read that three times and I'm only just getting it now!

So the idea is that Apple conspired with publishers to increase the price of eBooks in order to remove one of the major benefits of the Kindle (i.e. the high upfront cost is offset by very cheap eBooks) and hence keep Amazon out of the media tablet market.

Sneaky Apple, very sneaky.
post #17 of 44
Quote:
Originally Posted by boredumb View Post

Well, when what you refer to as "reasonable market competition" results in higher, not lower, prices to consumers, should consumers be cheering about it?
The point is that what you have characterized in that way, is seen by the suit as encouragement from Apple for publishers to collude in raising prices, by offering that "agency structure" as an alternative to Amazon's original, more consumer-friendly prices.
But it would be naive to think that, while putting on a frowny face, Amazon wasn't perfectly happy to see prices go up, which they take every opportunity to not-so-subtly blame on publishers.
After all, they had only established the earlier lower pricing model to grow that market in the first place.

Nothing is stopping Amazon from selling eBooks for less than they pay the content owners. If it was that advantageous to their business they would be and the only reason they did so to begin with was to corner the market.
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post #18 of 44
Quote:
Originally Posted by solipsism View Post

Nothing is stopping Amazon from selling eBooks for less than they pay the content owners. If it was that advantageous to their business they would be and the only reason they did so to begin with was to corner the market.

Uh, no... that's the whole point, and the point nearly everyone in this thread is missing in their rush to defend Apple's virtue. The agency model does *not* allow Amazon to to sell eBooks for less than what the publisher sets the price at. With the traditional wholesale model, Amazon can purchase books from the publisher and sell them at whatever price they want. Until Apple came along with the iPad, much was the same with eBooks.

The publishers like the agency model because it keeps prices high and they don't have to negotiate with big sellers like Amazon. Apple likes it because they don't have to compete on price against other stores like Amazon. Why so many of you like it is beyond me, but that can be said about a lot of policies people support that are directly against their own best interest.

That being said, even though I don't like it, I think publishers should be allowed to set the price of their products however they want... it's up to consumers whether they want to pay for it (many will just end up "pirating" it if it's too expensive). Just like the record companies and movie studios, ultimately the publishers just end up shooting themselves in the foot.

Now feel free to carry on with your Apple love fest.
post #19 of 44
Quote:
Originally Posted by LighteningKid View Post

Is their argument that Apple should be setting the prices the way Amazon used to, rather than allowing the publishers to set their own prices?

It's hard to follow their whole thing. It seems like they are arguing that Apple's model raises distribution costs of ebooks and therefore there's no reason for publishers to make them. Or something like that.

Quote:
Weren't there complaints before that Amazon's price setting was unfair for devaluing books?

From the publishers yes. THey wanted to be able to set the price but Amazon was the only game so Amazon made it a condition that they, not the publishers, picked the pricing. And then Amazon did it very low to make ebooks a kind of loss leader to get folks to the site. ANd to get folks to buy the hardware.

Then along came the ipad etc and they had a choice and Amazon switched to the agency model rather than risk losing publishers when current contracts ended

Quote:
They should set up price tiers so if the book is between x and y pages, it costs $a.bc.

The trouble with that kind of scheme is that it ignores costs like advances to the author etc. Some novels can sell for more based on the clout of the author, just as in paper some authors got a hardcover and some went straight to paperback.

I suspect that they will not win this suit and things will go on as they have.
post #20 of 44
Quote:
Originally Posted by charlituna View Post

The trouble with that kind of scheme is that it ignores costs like advances to the author etc. Some novels can sell for more based on the clout of the author, just as in paper some authors got a hardcover and some went straight to paperback.

To play the devil's advocate...

While it is true that tiered pricing based on size of book wouldn't account for "author clout", that's exactly how it was done in music. Up until a couple of years ago, every song on iTunes was 99¢, no matter if the singer was Rihanna or Rebecca Black.

Even now that there are different prices, you could argue the price is "controlled" since only a few possible values are allowed. "Premium" songs on iTunes don't get to charge more than 30% over the average. But the difference in average novel prices is certainly more than 30%. And while book prices in the last few years have gone from around $9-10 to $12-13, average song prices didn't go from 99¢ to $1.29 over the same period with premium now being $1.59.

I'm not saying I agree there should be fixed book pricing, but I guess I can see where there's at least some befuddlement. Why does Apple insist on fixing song prices, but refuse to fix book prices? What's the difference in their eyes?
post #21 of 44
I didn't think there was anything wrong with fixed pricing. They are accusing price fixing. They are two entirely different things. I think there is some confusion here. I highly doubt Apple is in a price fixing scandal with the publishers. Sounds like they are just trying to prey on conspiracy theorists to make a quick buck in court... In this situation Amazon is using Apple's pricing to negotiate their own contracts. They are still trying to get the best deal for themselves (and the consumer). No under the table money passing or back room deals here... Although sometimes they negotiate access rights over price (like household sharing and DRM free).

Also... Is there any precedent of the Agency Model being considered price fixing? That seems to be the connection people are making. I don't understand how this could be price fixing. Don't you need more then one party involved in setting the price for it to be price fixing?
post #22 of 44
Quote:
Originally Posted by iru69 View Post

Why so many of you like it is beyond me, but that can be said about a lot of policies people support that are directly against their own best interest.

Because a lot of people around here are not only Apple fans, they are Apple shareholders. THEIR own best interest is for Apple stock to rise to the sky so they could get rich! While I like Apple products, I really don't like many things that Apple does. Apple is sometimes disgustingly greedy!
post #23 of 44
Quote:
Originally Posted by Firefly7475 View Post

I read that three times and I'm only just getting it now!

So the idea is that Apple conspired with publishers to increase the price of eBooks in order to remove one of the major benefits of the Kindle (i.e. the high upfront cost is offset by very cheap eBooks) and hence keep Amazon out of the media tablet market.

Sneaky Apple, very sneaky.

Quote:
Originally Posted by NelsonX View Post

Because a lot of people around here are not only Apple fans, they are Apple shareholders. THEIR own best interest is for Apple stock to rise to the sky so they could get rich! While I like Apple products, I really don't like many things that Apple does. Apple is sometimes disgustingly greedy!

The idea that Apple was colluding with the publishers is laughable. That they were colluding with publishers to keep Amazon out of the tablet market is a nice conspiracy theory, but nonetheless wishful thinking.

Now, that the publishers were colluding among themselves to raise e-Book prices for iPad and iPhone... that I could very well believe.

Call be an Apple fanboy, but Steve has said before and it remains in Apple's best interest for publishers and app makers to "price low, and go for volume". In some cases, Apple is then accused for "eroding the value of the gaming market" for example.

I could be wrong, of course, maybe Apple is responsible.

But what I think happened was this. Publishers got wind of iBookStore, thought, yippee-ki-yay let's make our eBooks even more expensive! Yay! Amazon got wind, saw iBookStore grow, and now is pissed.

The irony is paid iBooks is available in an extremely limited number of countries.

I think Amazon made a wrong move by dragging Apple into this one. They're playing dirty. By involving Apple sure they get to wage some kind of tablet offensive against the iPad juggernaut but it's somewhat futile at this stage.

If they just sued the publishers for price-fixing then they have a better chance. But now with Apple involved, that brings Apple's growing legal strength to the game. It's like throwing a rock at a bear when you're fighting with wolves.
post #24 of 44
Quote:
Originally Posted by solipsism View Post

Nothing is stopping Amazon from selling eBooks for less than they pay the content owners. If it was that advantageous to their business they would be and the only reason they did so to begin with was to corner the market.

If you read the passage I quoted from the suit, or go to the lawyers website you'll see that the crux of this case is that after getting Apple to agree to the Agency Model the publishers demanded successfully that Amazon do so too.

As a result Amazon no longer has control of retail pricing for books from those publishers.
post #25 of 44
Quote:
Originally Posted by Pendergast View Post

We live in a free market.

That's kind of the point. If I understand correctly, the plaintiffs claim that the collusive retail price maintenance scheme makes the market less free.
post #26 of 44
Quote:
Originally Posted by solipsism View Post

Nothing is stopping Amazon from selling eBooks for less than they pay the content owners. If it was that advantageous to their business they would be and the only reason they did so to begin with was to corner the market.

In general, it is illegal for a player with market power to sell at a loss if the intention is to put competitors out of business and corner the market.

Imagine, for example, Mall*Wart coming into a small town with a small grocery and a hardware store. Imagine that they sell at a loss until the local businesses go under. That reduces competition.
post #27 of 44
and if Apple had announced their own pricing model without any negotiated contract pricing etc - or used the publishers' trademarked names in their press releases without permission - then Apple would have been sued by the publishers.

Seems like they don't really know why they lost in the free market so they are grasping at straws.
post #28 of 44
Quote:
Originally Posted by cloudgazer View Post

I agree, and I don't see as how Apple agreeing to an agency model with all the major publishers can be considered anti-competitive when lots of things are sold on an agency model from Airline tickets to Condos.

But if the publishers all agreed to force Amazon to accept an agency model, that potentially might be anti-competitive, if they colluded - but even then I'm not sure, because they could make a good case that Amazon approaches being a monopsony and that they need to join together to approach parity in the negotiations. Has that happened or is Amazon still going with the wholesale model?

Honestly this is completely bizarre and kinda fascinating.

Edit: ok, I was right - this is the basis of the complaint

'The complaint claims that the five publishing houses forced Amazon to abandon its discount pricing and adhere to a new agency model, in which publishers set prices. This would prevent retailers such as Amazon from offering lower prices on e-books.'


http://www.hbsslaw.com/cases-and-investigations/ebooks

If the publishers are trying to force an agency model on Amazon, then Amazon might possibly have grounds for a suit.

But how in the world do they justify suing Apple? The fact that Apple was successful with an agency model doesn't make Apple liable if the publishers try to force that model on someone else.
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post #29 of 44
Quote:
Originally Posted by jragosta View Post

If the publishers are trying to force an agency model on Amazon, then Amazon might possibly have grounds for a suit. But how in the world do they justify suing Apple?

They're saying Apple "conspired with the Publisher Defendants" to introduce that model.
post #30 of 44
Quote:
Originally Posted by jragosta View Post

But how in the world do they justify suing Apple?.

Amazon is not suing Apple.

Consumers are suing Apple, and are claiming that Apple's deal with most every big publisher is anti-competative.
post #31 of 44
Quote:
Originally Posted by Firefly7475 View Post

They're saying Apple "conspired with the Publisher Defendants" to introduce that model.

Then it hasn't got an ice cube's chance. The model is perfectly legal and has been used in a wide range of industries. "We don't like the way you sell books" isn't a legitimate legal argument.

Quote:
Originally Posted by AppleLover2 View Post

Amazon is not suing Apple.

Consumers are suing Apple, and are claiming that Apple's deal with most every big publisher is anti-competative.

So sue Walmart for having a deal with every major manufacturer. Or sue Sears for advertising that they carry the top 10 appliance brands. Or sue Fidelity because they're able to sell you any of the top 5,000 stocks.

The entire premise is absurd. "We'll let you set whatever price you want and we'll take a commission off the top" isn't even remotely illegal.
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post #32 of 44
Quote:
Originally Posted by jragosta View Post

If the publishers are trying to force an agency model on Amazon, then Amazon might possibly have grounds for a suit.

Not trying, they succeeded in the US and the UK. But this suit isn't from Amazon, it's a class action suit by some Seattle lawyers representing ebook consumers. Amazon could be behind it, and trying to conceal the fact, but why use a seattle law firm? Bizarre double bluff? Very odd, very odd indeed.

Quote:
But how in the world do they justify suing Apple? The fact that Apple was successful with an agency model doesn't make Apple liable if the publishers try to force that model on someone else.

Their claim is essentially that Apple colluded with the publishers by providing them with an alternate distribution channel - I agree it's an odd one. I imagine the lawyers are hoping that they can include Apple in the discovery process and try to dig up some sort of vaguely incriminating email. If in the end they can't get anything on Apple they can always narrow the suit later to just the publishers, can't they?

Seems like a fishing expedition to me.

Quote:
Then it hasn't got an ice cube's chance. The model is perfectly legal and has been used in a wide range of industries. "We don't like the way you sell books" isn't a legitimate legal argument.

Maybe a bit more than an ice-cube.
<Hypothetical>
Suppose Apple is included on an email with the publishers which explicitly discusses forcing the entire eBook industry to an agency model, and where the publishers all agree to deny future titles to any firm that doesn't play ball. In that instance Apple might be implicated.
</Hypothetical>

Now even then I'm not convinced that this contravenes the Sherman Act, because it's not actually price fixing - it's model fixing, and as you say that's common. The RIAA does it, the MPAA does it, content owners often club together to agree on an industry wide model. But it's one of the grey areas in competition law, the old british 'Net Book Agreement' stood for years but was finally struck down on competition grounds.
post #33 of 44
Quote:
Originally Posted by iru69 View Post

Uh, no... that's the whole point, and the point nearly everyone in this thread is missing in their rush to defend Apple's virtue. The agency model does *not* allow Amazon to to sell eBooks for less than what the publisher sets the price at. With the traditional wholesale model, Amazon can purchase books from the publisher and sell them at whatever price they want. Until Apple came along with the iPad, much was the same with eBooks.

The publishers like the agency model because it keeps prices high and they don't have to negotiate with big sellers like Amazon. Apple likes it because they don't have to compete on price against other stores like Amazon. Why so many of you like it is beyond me, but that can be said about a lot of policies people support that are directly against their own best interest.

That being said, even though I don't like it, I think publishers should be allowed to set the price of their products however they want... it's up to consumers whether they want to pay for it (many will just end up "pirating" it if it's too expensive). Just like the record companies and movie studios, ultimately the publishers just end up shooting themselves in the foot.

Now feel free to carry on with your Apple love fest.

A few things:
- contrary to popular hype, sellers such as Amazon do not get better pricing because of what they buy overall - they can only get better pricing based upon the number of copies of a single title placed in a single order. There was a lawsuit against the publishers about 10-15 years ago by independent booksellers objecting to discounts given to the chains and the independent booksellers won. But how this applies to ebook (non-agency model), I'm not sure, since that pricing is probably based upon number of downloads and I don't know if Amazon's pricing structure (pre-agency model) was originally tiered.

- you don't need the Agency model to control pricing, because the Supreme Court ruled several years ago that manufacturers can indeed set not only "minimum advertised price", but "minimum selling price" although few have elected to do so. So you don't need an agency model to force everyone to sell at list price. (Apple gets everyone to sell at their list price by making the margins so short, you don't really have a choice.)

- the publishers objected to Amazon's discount pricing because Amazon was selling e-book titles at a loss in order to gain a market for the Kindle and to gain overall market share. They were afraid that this discounting would decrease the value of books in the customers' minds. What they probably should have done was compromised and let the backlist sell for less than the frontlist.

- in many cases, publishers did not have automatic ebook rights from authors. And under the wholesale model, where Amazon could sell an ebook at any price, even below their cost, authors would receive minimum royalties and therefore, would not give the publishers the rights. That's one of the reasons some publishers also pushed for the agency model - it was the only way to get the ebook rights.

- while low selling prices might benefit consumers in the short run, they don't necessarily benefit consumers in the long run because if the publishers (in this case) can't make a fair profit, they stop publishing and trade publishing has never been very profitable in the first place, which is why the largest U.S. publishing companies have been bought and sold numerous times in the last five decades. Bertelsmann, a German conglomerate, owns Random House (which was owned by RCA from 1965 to 1970) and Bantam-Doubleday-Dell, comprising over 20% of U.S. trade publishing and CBS now owns Simon & Schuster. (CBS used to own Holt, Rinehart & Winston, part of which was sold to Harcourt around 1986. Harcourt was sold to General Cinema in 1991, to Reed-Elsevier in 2001 and most pieces to Houghton-Mifflin in 2007).

- And for those who think that a decline in major print trade pubishing will never happen, look at the recording industry, which is now less than half the size it was at its peak. While the recording industry shares some of the blame, the main factor in its destruction aside from the fragmentation of the market and the demise of decent radio is that the download market is primarily a singles market, which is economically unfeasible both from a cost perspective and from the standpoint that music prices have in no way kept place with inflation. In the mid-1960s, a 45-rpm single (albeit a 2-sided single) listed for $1 and generally sold for 64 to 66 cents. That 64 cents in 1965 is the equivalent of $4.46 today. The labels are dumping back-catalog CD albums (with up to 20 tracks) for $5.

- So it's a mixed bag: there are advantages and disadvantages to both the traditional wholesale model and the agency model. But the lawsuit is completely bogus and should be dismissed. There's nothing illegal about the agency model and it's certainly not price-fixing. What would be price fixing is if the big publishers got together and said, 'let's charge $22.95 for all front list ebook titles from major authors." But they would never do that. I've been at negotiations with distributors and the FIRST thing that's always said in the meetings is that "we cannot talk about retail price in any way."
post #34 of 44
I simply don't understand why an eBook should cost more than the paperback equivalent??? I would think that an eBook should cost the same as a paperback if not significantly less. I mean, there is no physical book to print and distribute. Electronic distribution is obviously MUCH more cost effective.

I would love to buy eBooks, but there are very few instances when I would be willing to pay the upcharge just to have a specific novel on my phone or tablet.
post #35 of 44
Quote:
Originally Posted by svnipp View Post

I simply don't understand why an eBook should cost more than the paperback equivalent??? I would think that an eBook should cost the same as a paperback if not significantly less. I mean, there is no physical book to print and distribute. Electronic distribution is obviously MUCH more cost effective.

I would love to buy eBooks, but there are very few instances when I would be willing to pay the upcharge just to have a specific novel on my phone or tablet.

While everything you say is true about eBooks being easier, it's also easier to steal an eBook. You also have to factor in potential shrinking rom copying to come to a price point.
Dick Applebaum on whether the iPad is a personal computer: "BTW, I am posting this from my iPad pc while sitting on the throne... personal enough for you?"
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post #36 of 44
Quote:
Originally Posted by solipsism View Post

While everything you say is true about eBooks being easier, it's also easier to steal an eBook. You also have to factor in potential shrinking rom copying to come to a price point.

How does that work? If you estimate sales of 100,000, why would it matter if many more or none more are copied?
post #37 of 44
Quote:
Originally Posted by bloggerblog View Post

This is another one of those cases where the law-firm gets to pocket all the proceeding should they settle or win. The money collected in this suit does not benefit anyone but this law firm, this action should be made illegal. Law firms did the same thing to the tobacco industry in the late 90's (not that I have any sympathy for that industry), but none of the cancer victims received a single penny, the lawyers got all the dough.

That's not exactly true. A lot of the money went to individual states to help with health-care costs and to set up anti-smoking programs. Hundreds of millions of dollars, actually.
post #38 of 44
Quote:
Originally Posted by cloudgazer View Post

I agree, and I don't see as how Apple agreeing to an agency model with all the major publishers can be considered anti-competitive when lots of things are sold on an agency model from Airline tickets to Condos.

But if the publishers all agreed to force Amazon to accept an agency model, that potentially might be anti-competitive, if they colluded - but even then I'm not sure, because they could make a good case that Amazon approaches being a monopsony and that they need to join together to approach parity in the negotiations. Has that happened or is Amazon still going with the wholesale model?

Honestly this is completely bizarre and kinda fascinating.

Edit: ok, I was right - this is the basis of the complaint

'The complaint claims that the five publishing houses forced Amazon to abandon its discount pricing and adhere to a new agency model, in which publishers set prices. This would prevent retailers such as Amazon from offering lower prices on e-books.'


http://www.hbsslaw.com/cases-and-investigations/ebooks

I don't see how Apple is responsible for the publishers demanding that Amazon change its model. Apple set up a system that worked best for Apple.

Nice word, by the way - monopsony.
post #39 of 44
apple could charge 1/half of what it charges today and still make a profit .

except the other concerned parties don't want apple to under cut them .

get it

borders just went under

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post #40 of 44
Quote:
Originally Posted by elroth View Post

I don't see how Apple is responsible for the publishers demanding that Amazon change its model. Apple set up a system that worked best for Apple.

Nice word, by the way - monopsony.

Well I'd agree that I think that Apple isn't responsible for any such thing, but the law is a strange beast at times. In this instance the law is the Sherman Act which says

"Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal."

So if Apple conspired with the publishers in order to do something which entailed a restraint on trade then that would be illegal. The key here seems to be conspiracy. As I said in a previous posting the law firm behind this suit is probably hoping that they can survive attempts at summary dismissal and get into a full discovery process.

Then they're hoping that they can find something in an email that demonstrates a conspiracy, or at least can be made to bear the interpretation. If they can find something suggestive enough then a jury may go their way, or the defendants may be concerned enough that they'll settle.
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