Apple reluctant to settle e-book pricing probe as antitrust specter looms - Page 2

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).

In traditional trade book deals, authors are paid royalties based upon the list price of the book, so it makes no difference to them what the books sell for. E-books can be treated either as a trade book, as a specially negotiated deal or as a subright. If a subright, the authors actually get more: they tend to get about 40%-50% of net revenue (as opposed to about 12% of cover price on a hardcover).

Amazon could be accused of predatory pricing when they sell below their wholesale cost. I'm surprised no one has done it yet.

Frankly, I don't see why the FTC has a problem with the Agency Model. Even the most-favored-nation clause shouldn't be a problem: independent bookstores sued the major publishers many years ago because they were giving the big chains bigger discounts than they were giving the independents. The publishers lost that lawsuit and the courts ruled that everyone had to get the same discount for the same size book order. That essentially is most-favored-nation.

Also, an agreement by multiple publishers to use the agency model is not price fixing. Only if they had decided together that all ebooks were going to be $19.95 (for example) would they have violated the law. And they didn't do that.

I don't understand what the FTC is trying to do here. The publishing industry, even though there has been consolidation over the years, is still an industry with tens of thousands of publishers and that doesn't even count all the people who self-publish. There are many other industries, including the phone industry, where there are just a few players. Why don't they go after those?

No. Amazon was trying to gain a dominant level of market share to keep other people from even entering the business.

The poster you responded to was correct. If you create an unhealthy business, eventually that business goes away. That's why physical retail is fast disappearing. Were we better off when Borders and Barnes & Noble came in with huge stores and frequent discounts and killed the independent booksellers? Now Borders is gone and Barnes & Noble is closing many stores at the end of each lease because Amazon is dominating the online market. In the end, when you kill the competition, prices go up, not down.

I just do not agree. Amazon brought the ereader to the masses. They were the only game in town when it came to eBooks. The other reatailers ignored the phenomenon until it was too late. Amazon was already in the position of power and had no need to drive out competition because there was none, yet they lowered prices. Not to say if Apple had not changed the game Amazon would not have driven prices up but their track record does not suggest hey would have.