Originally Posted by Asherian
Many people seem to not comprehend the issue. The issue is not the agency model (setting their "own price").
The issue is Apple's condition that no one else ever sell it for less than Apple. This eliminates competition by definition. All other stores must use the price from the iBookStore and never offer it for less. This is quite literally price fixing. Price fixing is most definitely illegal.
I don't know the exact language of the discussions between Apple and publishers (and I suspect nobody here does either), but if this is relatively accurate:
"...But we also asked for a guarantee that if anybody else is selling the books cheaper than we are, then we can sell them at the lower price too."
The translation is:
"If Amazon gets to sell it for a lower price, then so do we."
That's hardly Apple dictating a minimum price. That's "we can sell it as cheap as anyone else decides to", not "nobody can sell it cheaper than we decide to". Again, assuming the language from the original post is accurate (or at least representative), then that's the opposite of Apple stipulating the minimum price.
The other wording suggests that regardless of selling price, Apple's agreement meant they would still get a cut of the sale price
, not the sale price less a fixed wholesale price
(which would be negative if the going minimum price was under wholesale) - so Apple wouldn't have to take a loss if they had to lower prices to compete.
The other part of the issue is that after that, the publishers
"...went to Amazon and said, 'You're going to sign an agency contract or we're not going to give you the books."
Which, translated, is this:
"We finally have another viable customer willing to buy our goods on the terms we want, and we can make better profits if we <don't> sell to you on the terms you want, so from now on you can buy books from us on our terms, or not at all - your choice."
That's the publisher(s), not Apple. This is why there <may> be a case against the publisher(s), but frankly, I don't know enough about the legal details to make that assertion. However here's my [uneducated] take:
Apple's agreement with the publisher(s) was that Apple would try to sell at MSRP, but if other retailers pushed the price lower, Apple would sell lower too, and Apple would buy the "books" for 70% of whatever they sold for, not an up-front fixed wholesale cost. I don't see how that implicates Apple as fixing a price, when the language suggests they were willing to go as low as the rest of the retailers in the market would go. Granted, it gives the publisher leverage to try to force other retails to try to sell at MSRP, but that's the publishers, not Apple.
And what I'd like to know is; with Amazon was holding a virtual monopoly on the e-book market, what made it OK for them to be using that dominance position to try to dictate what the publishers could sell to them at? Taking a loss on product is only a viable business strategy if you can monetize on that through secondary sales ("loss leader"). The loss on the e-book reader was justified by saying it was the loss leader for e-books themselves. Amazon was effectively using a position of monopoly to try to manipulate the publisher selling price - taking a loss to deliberately depress the market for the purposes of controlling it. Unless they [Amazon] were planning to raise book prices once they'd decided they'd locked-in enough consumers in their e-book ecosystem, I only see two other possible outcomes from that strategy: 1) the publishers start selling to Amazon at a lower price (proving the monopoly control theory correct), or 2) Amazon hits the wall on funds to subsidize the loss on e-books and has to raise the price (or stop selling them altogether), in which case they could point a finger at the publisher(s) and say to the e-book consumers (of which they have the monopoly on) "we'd like to sell these to you a nice low prices, but the big mean publishers won't let poor little us do that" - manipulating consumer perception to squeeze the publishers (again, asserting an effective control over the market price). That effect could be negated by another reseller taking up the slack, but with Amazon controlling something like 90% of e-book sales and even the big book chains not being able to gain significant traction there, who would that realistically be?