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Apple's ebook price-fixing court battle spills into Canada

post #1 of 52
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A Canadian class-action lawsuit alleging that Apple and its partner ebook publishers colluded to artificially inflate the price of content offered through the iBookstore was given the go ahead to launch on Friday.

According to Normand Painchaud, the lawyer who first filed the suit in Quebec Superior Court in February, Canadians who purchased an ebook from Apple within the past two years could be partially recompensed if the Cupertino, Calif., company is found guilty of price fixing, reports The Montreal Gazette.

The lawsuit, which is identical to the antitrust suit initiated by the U.S. Department of Justice as well as a corresponding investigation by the European Commission, claims that Apple and five large publishing houses illegally worked together to raise ebook pricing.

?Prices have definitely gone up,? Painchaud said. ?So consumers could be eligible for damages.?

Painchaud went on to say that his lawsuit is the first of three to move forward in Canada, with the other two requests waiting for approval in British Columbia and Ontario. The lawyer notes that if any of the suits are successful, damages would most likely be distributed to all Canadian ebook owners who made purchases on or after Apr. 1, 2010.

At issue is Apple's so-called "agency model" which allows publishers to set ebook pricing under a "most favored nations" clause that contractually obliges the companies to not sell the same content through another reseller at a cheaper price. The "agency model" is far more attractive to publishing houses than the "wholesale model" previously used by Amazon to offer below-cost pricing in order to draw customers.

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The Quebec class-action suit was filed under the name Antoine Pontbriand and reads:

The anti-competitive nature of this conspiracy, and the Publisher Respondents? motivation to control ebook pricing, is also revealed by the fact that the price of an ebook in many cases now approaches ? or even exceeds ? the price of the same book in paper even though there are almost no incremental costs to produce each additional ebook unit.
The publishing houses HarperCollins, Simon & Schuster, Hachette, Macmillan and Penguin are the publishers named alongside Apple in the allegations.


Painchaud warned that the lawsuit could take years to resolve, however HarperCollins, Simon & Schuster and Hachette have already settled out of court in the U.S. which may a sign of willingness to do the same in Canada. Now that the three publishers have settled, they will most likely resume dealings with Amazon based on the "wholesale model."

Apple denies any wrongdoing and is seeking to fight the allegation in U.S. federal court. The company has made no official statement regarding the new Canadian suit.
post #2 of 52

I can't help but wonder if some one is behind this.  Such as the giant amazon.  Lobbying (paying off politicians) to go after Apple.

 

 

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post #3 of 52
I don't see how being accused of something in one country would lead to any finding of liability in another.

This should be thrown out rather quickly.
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post #4 of 52

The fun will really begin if the DoJ case against Apple collapses, given that more than half the US states (and now Canada) have jumped on to the bandwagon.

 

If the DoJ loses, how will the courts in the other cases justify decisions against Apple?

 

PS: Like the new look.

post #5 of 52

 

Quote:
Originally Posted by sip View Post

The fun will really begin if the DoJ case against Apple collapses, given that more than half the US states (and now Canada) have jumped on to the bandwagon.

 

If the DoJ loses, how will the courts in the other cases justify decisions against Apple?

 

PS: Like the new look.

 

 

You are missing a key difference m8y. 

 

The case in Canada is a civl suite, and the one in the USA is the state against Apple; I'm not saying the case has any legs, however you cannot jump the gun and call a lawsuit off so easily in a totally different country with completely different laws that do not conform to kissing the ass of big business.

post #6 of 52

 

Quote:
Originally Posted by hill60 View Post

I don't see how being accused of something in one country would lead to any finding of liability in another.

This should be thrown out rather quickly.

 

Not if the  laws are similar.

post #7 of 52

I still fail to see how a company can be accused of collusion in this case.  This is a new market that they are still trying to develop.  The companies involved determine how they will sell their product.  You would have to say they colluded when they decided to sell the books to Amazon under similar terms. You would  also have to say the record and movie companies colluded with Apple and other stores, because they raised the price from free when the digital files were being stolen by online thieves.  Changing models does not mean price fixing, most markets have minimum advertised prices, there is nothing wrong with Amazon saying for every ebook you buy we will give you a free toaster, the difference is they should not be able to undercut the market and give away someone else's product to destroy the market.  It leaves no competitors and decreases the availability of the product, which means lower sales for the entire market.  

post #8 of 52

 

Quote:
Originally Posted by genovelle View Post

I still fail to see how a company can be accused of collusion in this case.   

 

It's really very simple. It comes down to what was discussed at the meetings between Apple and the publishers.


If Apple acted as a middleman and brought the publishers together for the purpose of collusion and participated in the discussions, then they could be found guilty. If Apple was not involved in any price-fixing discussions, they should not.

Ultimately, it comes down to whether there's evidence of Apple participating in illegal activities or not. So far, I haven't seen anything that's all that convincing, but it's unlikely that all the relevant evidence has been made public.

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post #9 of 52

Apple has offered to settle similar lawsuits in Europe.

 

 

Apple Offers E-Book Settlement: But Only in Europe

 

http://www.forbes.com/sites/timworstall/2012/04/21/apple-offers-e-book-settlement-but-only-in-europe/

post #10 of 52

 

Quote:
Originally Posted by tylerk36 View Post

I can't help but wonder if some one is behind this.  Such as the giant amazon.  Lobbying (paying off politicians) to go after Apple.

 

Something similar to how BB enterprise users were teased of not using a phone with access to hundreds of thousands of apps (including the productive apps from Zynga, FB, Instagram etc?). Who was behind this negative publicity?

Let us keep the corporate wars aside and look at how much we are made to shell out for someone to make billions in the name of innovation. Each additional Dollar we spend (lose?) is a loss to some other business that could have helped it stay afloat.

btw, you are comparing someone on penny business and making quarterly profit in Millions, vs someone earning in tens of billions. The muscle power is not sanely comparable.

post #11 of 52

 

Quote:
Originally Posted by I am a Zither Zather Zuzz View Post

Apple has offered to settle similar lawsuits in Europe.

 

 

Apple Offers E-Book Settlement: But Only in Europe

 

http://www.forbes.com/sites/timworstall/2012/04/21/apple-offers-e-book-settlement-but-only-in-europe/

 

The author should not be allowed to write articles about subjects that are clearly beyond his intellectual ability. His first paragraph says:
"Apple is offering to settle the e-book case in Europe even as it protests its innocence in the US. Which is a little odd, to simultaneously give in and fight the same accusations at the same time:"

 

I guess it never occurred to him that perhaps the laws are different in Europe than in the U.S. Clearly Apple felt that they did not violate the U.S. laws but that there was a greater chance that they'd lose in Europe.

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post #12 of 52

 

Quote:
Originally Posted by jragosta View Post

 

 

It's really very simple. It comes down to what was discussed at the meetings between Apple and the publishers.


If Apple acted as a middleman and brought the publishers together for the purpose of collusion and participated in the discussions, then they could be found guilty. If Apple was not involved in any price-fixing discussions, they should not.

Ultimately, it comes down to whether there's evidence of Apple participating in illegal activities or not. So far, I haven't seen anything that's all that convincing, but it's unlikely that all the relevant evidence has been made public.

 

Exactly. The DOJ has been leaking out emails between the publishers but if they had proof that Apple did anything other than use the same terms they used for every other kind of media they haven't leaked it. And you would think they would have by now. That lack of proof is why I think Apple won't settle. They know they weren't part of any collusion in any kind of direct way AND they likely want to defend their right to use the terms they want in their own store. Sure they might have to give up the favored nation clause but they will deal with that. So long as the publishers can't be forced to do business on ebooks with groups that offer terms they don't like losing that clause won't really matter. Because the publishers can tell Amazon to take their wholesale model and shove it. And then they will just be on Apple for ebooks and have the pricing they want etc. I'm fairly sure there's no law the DOJ can use to force the publishers to do business with someone at terms they don't like. 

 

The question I have for the DOJ is where have they been for the  years that Amazon had their monopoly and the question of wrongdoing involving it and other Amazon practices was ignored. Why do they only seem to care now that Apple is in the mix. 

post #13 of 52

I hope when those law suits against Apple are dismissed or found not guilty Apple will and should be compensated.

 

When this happened those who brought such suits against Apple will think twice before doing so.

post #14 of 52

 

Why should anyone mind that Apple's business intentions caused prices for generic products to go up?  I don't think anyone should mind that the prices at Amazon went up as a result of the change in business model, as long as it helps our beloved Apple compete.

 

 

post #15 of 52

 

Quote:
Originally Posted by entification View Post

 

Why should anyone mind that Apple's business intentions caused prices for generic products to go up?  I don't think anyone should mind that the prices at Amazon went up as a result of the change in business model, as long as it helps our beloved Apple compete.

 

 

 

Funny how the Apple haters seem to be incapable of sticking to legal realities and rather drift off into their delusional fantasies.

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post #16 of 52

There is nothing wrong with the agency model on the Apple side. The problem is Apple put out a rule that publishers could not offer there books somewhere else at a lower cost,this is where Apple will get caught.

post #17 of 52

 

Quote:
Originally Posted by jragosta View Post

 

Quote:
Originally Posted by I am a Zither Zather Zuzz View Post

Apple has offered to settle similar lawsuits in Europe.

 

 

Apple Offers E-Book Settlement: But Only in Europe

 

http://www.forbes.com/sites/timworstall/2012/04/21/apple-offers-e-book-settlement-but-only-in-europe/

 

The author should not be allowed to write articles about subjects that are clearly beyond his intellectual ability. His first paragraph says:
"Apple is offering to settle the e-book case in Europe even as it protests its innocence in the US. Which is a little odd, to simultaneously give in and fight the same accusations at the same time:"

 

I guess it never occurred to him that perhaps the laws are different in Europe than in the U.S. Clearly Apple felt that they did not violate the U.S. laws but that there was a greater chance that they'd lose in Europe.

 

My guess is that he may have thought about it, given that it is fairly straightforward proposition. If he didn't, his editor should have.  

 

I tend to trust Forbes editorial content - their stuff seem well-written at least, so I'd be surprised if they would print something with such a flawed premise.

 

But who knows...

post #18 of 52
Quote:
Originally Posted by herbapou View Post

There is nothing wrong with the agency model on the Apple side. The problem is Apple put out a rule that publishers could not offer there books somewhere else at a lower cost,this is where Apple will get caught.


Maybe I misunderstood the agreement. I thought that Apple only wanted to be able to match the price if a ebook was offered elsewhere at a lower price. In other words, the publishers get to set the price but allows Apple to lower the price if the same product is offered elsewhere at a discount price. If this was the case I don't see a problem - Apple has no advantage over the competition and the selling price is actually set by the discounter - Apple set no prices only adjusted to prices set by others. Also if the publishers agreed to this I can see where they would have to move all other retailers to the agency model so that they could retain control over their profits and their business. I also doubt publishers got together to discuss pricing. It might have happened but I don't see Apple acting as a middleman if it did. Each publisher's pricing probably adjusted rather quickly, if not instantly, by just looking at what price the competition (the other publishers) was charging online and adjust there own pricing accordingly. If the publishers did get together to discuss pricing in specifics, not just generalities, then the publishers would be guilty of price fixing, but again I don't see Apple's involvement here.

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post #19 of 52

Yes, you've misunderstood the agreement as explained by the DoJ.

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post #20 of 52

 

Quote:
Originally Posted by diplication View Post


Maybe I misunderstood the agreement. I thought that Apple only wanted to be able to match the price if a ebook was offered elsewhere at a lower price. In other words, the publishers get to set the price but allows Apple to lower the price if the same product is offered elsewhere at a discount price. If this was the case I don't see a problem - Apple has no advantage over the competition and the selling price is actually set by the discounter - Apple set no prices only adjusted to prices set by others. Also if the publishers agreed to this I can see where they would have to move all other retailers to the agency model so that they could retain control over their profits and their business. I also doubt publishers got together to discuss pricing. It might have happened but I don't see Apple acting as a middleman if it did. Each publisher's pricing probably adjusted rather quickly, if not instantly, by just looking at what price the competition (the other publishers) was charging online and adjust there own pricing accordingly. If the publishers did get together to discuss pricing in specifics, not just generalities, then the publishers would be guilty of price fixing, but again I don't see Apple's involvement here.

That's exactly it. It's the MFN (most-favoured nation) clause, which is perfectly legal, as well as the Agency Model. What strikes me as odd about that being an issue is that Apple request by iBook publishers to have the same low-price as other distributers means that Apple's prices are just as low, which goes against the claim that some have made that the Apple is attempting to boost prices with wanting to lower then prices in accordance to other eBook distributors.

 

If Apple was in this well-known yet somehow super-secrey meeting that was about conspiring to raise prices (as logically it would mean they also get more profit from their 30% cut) then they are guilty and should be penalized, but it seems very unlikely that Apple would have taken such a big risk for so little advantage when just the agency model and MFN are more than enough to satisfy their needs and help break up the Amazon eBook monopsony.

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post #21 of 52

 

Quote:
...revealed by the fact that the price of an ebook in many cases now approaches ? or even exceeds ? the price of the same book in paper even though there are almost no incremental costs to produce each additional ebook unit...

 

So should thin people start a class action because they pay the same price for clothing as fat people, even though the incremental costs are different?

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post #22 of 52

 

Quote:
Originally Posted by hill60 View Post
So should thin people start a class action because they pay the same price for clothing as fat people, even though the incremental costs are different?

And why should people who drink regular coffee pay as much as those who drink decaf? After that decaf process requires equipment and labor which will increase its cost, not to mention that it probably sells in less quantity which affects economics of scale.

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post #23 of 52
Quote:
Originally Posted by diplication View Post

Maybe I misunderstood the agreement. I thought that Apple only wanted to be able to match the price if a ebook was offered elsewhere at a lower price. In other words, the publishers get to set the price but allows Apple to lower the price if the same product is offered elsewhere at a discount price. If this was the case I don't see a problem - Apple has no advantage over the competition and the selling price is actually set by the discounter - Apple set no prices only adjusted to prices set by others. Also if the publishers agreed to this I can see where they would have to move all other retailers to the agency model so that they could retain control over their profits and their business. I also doubt publishers got together to discuss pricing. It might have happened but I don't see Apple acting as a middleman if it did. Each publisher's pricing probably adjusted rather quickly, if not instantly, by just looking at what price the competition (the other publishers) was charging online and adjust there own pricing accordingly. If the publishers did get together to discuss pricing in specifics, not just generalities, then the publishers would be guilty of price fixing, but again I don't see Apple's involvement here.

Here's the problem. Lets say the publisher sells the e-book wholesale for $9.99 to Amazon and then Amazon sells it for that same price, the publishers get their asking price regardless of at what price Amazon sells it for. Now with Apple's agency model, in order for the publishers to get $9.99 for the e-book they have to price it at least for $12.99 in order to get at least $9.99, because of the 70/30 split with Apple. There's nothing wrong with either model but its pretty hard to compete with Amazon.
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post #24 of 52
Quote:
Originally Posted by dasanman69 View Post


Here's the problem. Lets say the publisher sells the e-book wholesale for $9.99 to Amazon and then Amazon sells it for that same price, the publishers get their asking price regardless of at what price Amazon sells it for. Now with Apple's agency model, in order for the publishers to get $9.99 for the e-book they have to price it at least for $12.99 in order to get at least $9.99, because of the 70/30 split with Apple. There's nothing wrong with either model but its pretty hard to compete with Amazon.

Or the publishers just put in a rule that Amazon can't sell the title for less that wholesale+whatever. They get to have the books at their pricing and it's not agency.
post #25 of 52

 

Quote:
Originally Posted by charlituna View Post

Quote:
Originally Posted by dasanman69 View Post


Here's the problem. Lets say the publisher sells the e-book wholesale for $9.99 to Amazon and then Amazon sells it for that same price, the publishers get their asking price regardless of at what price Amazon sells it for. Now with Apple's agency model, in order for the publishers to get $9.99 for the e-book they have to price it at least for $12.99 in order to get at least $9.99, because of the 70/30 split with Apple. There's nothing wrong with either model but its pretty hard to compete with Amazon.

Or the publishers just put in a rule that Amazon can't sell the title for less that wholesale+whatever. They get to have the books at their pricing and it's not agency.

 

In general, if none of them have market power, then they are all free to do what ever they individually decide.

 

However, if they all get together and form a powerful combination which imposes the agency model to drive up prices, it is illegal.  And if Apple is necessary to kick things off, by colluding with them and forming a necessary piece of the scheme, then Apple too is culpable.

 

The publishers seem more culpable than  Apple, but their scheme needed Apple, because without Apple asceding to the plan, Amazon would not have budged.

post #26 of 52
Quote:
Originally Posted by I am a Zither Zather Zuzz View Post



In general, if none of them have market power, then they are all free to do what ever they individually decide.

However, if they all get together and form a powerful combination which imposes the agency model to drive up prices, it is illegal.  And if Apple is necessary to kick things off, by colluding with them and forming a necessary piece of the scheme, then Apple too is culpable.

The publishers seem more culpable than  Apple, but their scheme needed Apple, because without Apple asceding to the plan, Amazon would not have budged.

They formed a "union" in order to "collectively bargin" with Amazon. I'm gonna assume Apple wasn't in on the collusion but their presence in the e-book market certainly got things going.
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post #27 of 52

What really concerns me is if Amazon's attempt to protect its wholesale model of selling existing eBooks succeeds, will it mean that Apple's agency model for selling new eBooks and software be declared illegal as well. This would be an absolute tragedy, because there is no need whatsoever for wholesalers and retailers for goods that can be distributed electronically. All one needs is an author, maybe a publisher, a globally available online retail store, and customers who can connect to the Internet. That is now possible for a vast number of potential new authors with tools that Apple has developed.

 

Amazon's attempt to nobble Apple's agency model for selling eBooks must NOT be allowed to succeed. If it does then one thing is certain - the cost of new eBooks and software will be far higher than is necessary. If the Law wants to prove yet again that it is completely out of touch with evolving technology and business practices by supporting Amazon against Apple, then let the Law face the consequences.

post #28 of 52

 

So why is collusion OK with almost all major online store today. You want to buy something and before you get to know the price, you have to enter your mailing zip code to get the price. Isn't that price fixing buy economic region. Someone who lives in affluent places like Fairfield Connecticut gets a higher price than someone from a low income region for the same item.

 

It wasn't always like this. When the Internet started selling things, this was considered price fixing. Online buyers complained and the sellers stopped that practice but few people today seem to notice the online stores are doing this again today covertly. Apple's online store doesn't need to ask for your zip code because they know who and where the buyer lives automatically. Not every online seller does this but all major car dealerships do it all the time. Ever look to buy a new car online? You won't get a price or even enter the site until you put in a zip code.

 

Many online buyers stopped complaining because they don't realize what is going on with this model. This price fixing business model has been around now for at least 5 years since savvy Internet buyers got deluded by the masses today. I suspect the online stores started doing this so buyers wouldn't notice the price differences because it's done covertly. The sellers were right. It's harder for the consumer to know that they are being price fixed. If this law suit bring this practice to light, then all consumers will benefit, not just iTune Store book buyers.

post #29 of 52

By the way, this new forum program is OK but will take some getting use to, and it doesn't work properly. It thinks I'm offline even as I post this, and the browsers back button doesn't work properly. The button won't take you back to the place you came from. AI should fix it (pun intended). lol.gif

 

So where are all the smileys we use to have? The one I used here with the quick reply was the only one available. Well at least it has one smiley because the previous format had none at all in the quick reply section. So it's an half-hearted improvement.


Edited by ljocampo - 4/21/12 at 7:30pm
post #30 of 52

 

Quote:
Originally Posted by ljocampo View Post
So why is collusion OK with almost all major online store today. You want to buy something and before you get to know the price, you have to enter your mailing zip code to get the price. Isn't that price fixing buy economic region. Someone who lives in affluent places like Fairfield Connecticut gets a higher price than someone from a low income region for the same item.

That's different. Pricing fixing is when they get together to adjust prices. They certainly have the right to adjust them on their own because of cost associations for different areas or even because there is more or less competition in an area they are competing. They just can't collude otherwise it's no longer a free market.

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post #31 of 52

 

Quote:
Originally Posted by dasanman69 View Post


Here's the problem. Lets say the publisher sells the e-book wholesale for $9.99 to Amazon and then Amazon sells it for that same price, the publishers get their asking price regardless of at what price Amazon sells it for. Now with Apple's agency model, in order for the publishers to get $9.99 for the e-book they have to price it at least for $12.99 in order to get at least $9.99, because of the 70/30 split with Apple. There's nothing wrong with either model but its pretty hard to compete with Amazon.

 

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What I read from various sources, Amazon is asking 55% discount (45/55 split), or even more 70% discount (30/70 split). For example suggested price is $12.99, with 45/55 split, Amazon only need to pay $5.85 to publisher. If Amazon sell at $9.99, there is still $3.14 margin, still much more to cover operating cost (server, etc). Actually the operating cost is lower than iTunes, because Amazon ask the publisher to pay the ebook transfer cost to buyer, per megabyte of book size.

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post #32 of 52

 

Quote:
Originally Posted by SolipsismX View Post

 

That's different. Pricing fixing is when they get together to adjust prices. They certainly have the right to adjust them on their own because of cost associations for different areas or even because there is more or less competition in an area they are competing. They just can't collude otherwise it's no longer a free market.

 

I disagree, although I'm not a lawyer, just an average Joe. Do you really think they didn't get together with the stores to use this system. It was collusion when Sony tried it in the past and was accused of price fixing because you couldn't go in any other retail store to buy Sony products at a lower or discounted price. The collusion is where they all agree to use a commercial shopping cart program with this feature, and both parties have to maintain the zip code price list. There really isn't any difference. It's been easier to get away with online because it's now done covertly, and no one with any muscle has called them on it like they did to Sony.


Edited by ljocampo - 4/21/12 at 7:56pm
post #33 of 52

 

Quote:
Originally Posted by ljocampo View Post
I disagree, although I'm not a lawyer, just an average Joe. Do you really think they didn't get together with the stores to use this system. It was collusion when Sony tried it in the past and was accused of price fixing because you couldn't go in any other retail store to buy Sony products at a lower or discounted price. The collusion is where they all agree to use a commercial shopping cart program with this feature, and both parties have to maintain the zip code price list. There really isn't any difference. It's been easier to get away with online because it's now done covertly, and no one with any muscle has called them on it like they did to Sony.

But where is the proof they are all getting together to set prices? Setting a price based on your general location could just be these online stores doing their due diligence to check other online store prices, local store prices, and local competition and then pricing their products accordingly for optimal sales and profit. That isn't colluding, that's business.

 

What you say may be happening every time a store asks for your zip code but that's a huge hurdle to jump without any proof. I'm sure there are analytic companies that do nothing but catalog this data to sell to other companies. Even if it's the same data that isn't colluding unless the stores are directly in contact with each other.


Edited by SolipsismX - 4/22/12 at 6:37am

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post #34 of 52
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Originally Posted by dasanman69 View Post

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Originally Posted by diplication View Post

Maybe I misunderstood the agreement. I thought that Apple only wanted to be able to match the price if a ebook was offered elsewhere at a lower price. In other words, the publishers get to set the price but allows Apple to lower the price if the same product is offered elsewhere at a discount price. If this was the case I don't see a problem - Apple has no advantage over the competition and the selling price is actually set by the discounter - Apple set no prices only adjusted to prices set by others. Also if the publishers agreed to this I can see where they would have to move all other retailers to the agency model so that they could retain control over their profits and their business. I also doubt publishers got together to discuss pricing. It might have happened but I don't see Apple acting as a middleman if it did. Each publisher's pricing probably adjusted rather quickly, if not instantly, by just looking at what price the competition (the other publishers) was charging online and adjust there own pricing accordingly. If the publishers did get together to discuss pricing in specifics, not just generalities, then the publishers would be guilty of price fixing, but again I don't see Apple's involvement here.

Here's the problem. Lets say the publisher sells the e-book wholesale for $9.99 to Amazon and then Amazon sells it for that same price, the publishers get their asking price regardless of at what price Amazon sells it for. Now with Apple's agency model, in order for the publishers to get $9.99 for the e-book they have to price it at least for $12.99 in order to get at least $9.99, because of the 70/30 split with Apple. There's nothing wrong with either model but its pretty hard to compete with Amazon.

Apart from the top three books on the NYT best sellers list selling for $9.99 in iBooks, right now, which tends to show the agency model is competitive and works, it also demonstrates that publishers ARE free to set their own prices independently of Apple, which absolves Apple of any wrong doing.

I still have not seen ANY figures comparing average prices of ebooks before and after iBooks launched indicating a trend of rising prices, which you'd think they'd need as evidence in a case like this.

You'd think cherrypicking examples would not hold much merit in a court case.
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post #35 of 52

It looks to me like Apple is guilty of collusion.  I'm a big Apple fan and own quite a bit of their stock, but com'on.  If we were talking about Microsoft...There would be a lot of screams of "guilty" coming from the forums.  I would have hoped Apple would have settled this before it even made it into the news.  Can't go back in time... 

 

 

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post #36 of 52

 

Quote:
Originally Posted by bottleworks View Post
It looks to me like Apple is guilty of collusion.  I'm a big Apple fan and own quite a bit of their stock, but com'on.  If we were talking about Microsoft...There would be a lot of screams of "guilty" coming from the forums.  I would have hoped Apple would have settled this before it even made it into the news.  Can't go back in time... 

Where do you see proof that Apple conspired with all the major publishers and held a super secret meeting to get them to raise the prices on consumers?

 

To me that seems like the least likely scenario seeing as Apple was just a distributer, like Amazon and Barns & Noble, it's hard to imagine that even if the 5 publishers did get together they would have included Apple in this pow wow. It's even more unlikely that Apple was spearheading this meeting after openly creating the agency model and MFN clause.

 

As for your other comments NO ONE CARES ABOUT MICROSOFT! Apple has the dominate mindshare so every little thing becomes a huge fiasco. Case in point, you accusing Apple of colluding despite having no proof.

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post #37 of 52
Quote:
Originally Posted by dasanman69 View Post

Quote:
Originally Posted by diplication View Post

Maybe I misunderstood the agreement. I thought that Apple only wanted to be able to match the price if a ebook was offered elsewhere at a lower price. In other words, the publishers get to set the price but allows Apple to lower the price if the same product is offered elsewhere at a discount price. If this was the case I don't see a problem - Apple has no advantage over the competition and the selling price is actually set by the discounter - Apple set no prices only adjusted to prices set by others. Also if the publishers agreed to this I can see where they would have to move all other retailers to the agency model so that they could retain control over their profits and their business. I also doubt publishers got together to discuss pricing. It might have happened but I don't see Apple acting as a middleman if it did. Each publisher's pricing probably adjusted rather quickly, if not instantly, by just looking at what price the competition (the other publishers) was charging online and adjust there own pricing accordingly. If the publishers did get together to discuss pricing in specifics, not just generalities, then the publishers would be guilty of price fixing, but again I don't see Apple's involvement here.

Here's the problem. Lets say the publisher sells the e-book wholesale for $9.99 to Amazon and then Amazon sells it for that same price, the publishers get their asking price regardless of at what price Amazon sells it for. Now with Apple's agency model, in order for the publishers to get $9.99 for the e-book they have to price it at least for $12.99 in order to get at least $9.99, because of the 70/30 split with Apple. There's nothing wrong with either model but its pretty hard to compete with Amazon.

I understand what you think you see, but the error here is that it's not a zero sum game. It's quite possible to sell more units at a lower price which could actually result in more profits overall from a lower price. Yes, on a per unit basis you have to increase the selling price to increase profits, but when total sales are considered this is not the case. In other words if I sell twice as many units at a cheaper price point, I have still increased profits.

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post #38 of 52

 

Quote:
Originally Posted by I am a Zither Zather Zuzz View Post

 

 

In general, if none of them have market power, then they are all free to do what ever they individually decide.

 

However, if they all get together and form a powerful combination which imposes the agency model to drive up prices, it is illegal.  And if Apple is necessary to kick things off, by colluding with them and forming a necessary piece of the scheme, then Apple too is culpable.

 

The publishers seem more culpable than  Apple, but their scheme needed Apple, because without Apple asceding to the plan, Amazon would not have budged.

 

If Apple simply went to the publishers and offered an agency model, then Apple is not guilty of anything. The fact that the publishers needed another outlet for their wares doesn't make Apple guilty. Basically, all you're saying is that Apple provided competition for Amazon. Without evidence of collusion, all your anti-Apple diatribes are useless.

 

Quote:
Originally Posted by ljocampo View Post

 

So why is collusion OK with almost all major online store today. You want to buy something and before you get to know the price, you have to enter your mailing zip code to get the price. Isn't that price fixing buy economic region. Someone who lives in affluent places like Fairfield Connecticut gets a higher price than someone from a low income region for the same item.

 

First, many places do that just to determine local availability, taxes, and shipping cost - and there's nothing wrong with that.


More importantly, even if a store charges different prices in different areas, that's no collusion unless they met with the competition and agreed to charge more in some areas. If the stores independently decided to charge more in Connecticut, that's perfectly legal. As a store owner, I can decide that I don't like people in Nebraska and double the price for anything shipped to that state if I wish - and there's nothing illegal about it.


Look at the airline industry. For decades, their pricing model LOOOKS like collusion, but it's not. Airline A sets a price in a market. Airline B is monitoring prices and matches the price. Then, when Airline A wants to increase the price in the market, they don't collude with Airline B. Instead, they announce a $10 increase for that market. If Airline B follows, then that becomes the new price. If Airline B doesn't follow, then Airline A withdraws the increase. You may not like that, but it's perfectly legal.

 

Quote:
Originally Posted by bottleworks View Post

It looks to me like Apple is guilty of collusion.  I'm a big Apple fan and own quite a bit of their stock, but com'on.  If we were talking about Microsoft...There would be a lot of screams of "guilty" coming from the forums.  I would have hoped Apple would have settled this before it even made it into the news.  Can't go back in time... 

 

 

 

If Apple is guilty of collusion, where is the evidence? If you have real evidence, you'd better get it over to the DOJ because there's no smoking gun in their complaint.

 

Quote:
Originally Posted by diplication View Post


I understand what you think you see, but the error here is that it's not a zero sum game. It's quite possible to sell more units at a lower price which could actually result in more profits overall from a lower price. Yes, on a per unit basis you have to increase the selling price to increase profits, but when total sales are considered this is not the case. In other words if I sell twice as many units at a cheaper price point, I have still increased profits.

 

Yes, but if you can sell more units at a lower price and you're the publisher, wouldn't you rather sell more units at a lower price where the distributor keeps 30% rather than having the distributor keep 55% or 70%?

There's nothing in the agency model which precludes a distributor from dropping price to sell more units. It's simply up to the publisher to set the price rather than leaving it to the distributor. And since the publisher is more likely to have their own interests in mind than the distributor, it's not surprising that publishers like the agency model.

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post #39 of 52

 

 

Quote: SolipsismX wrote:
But where is the proof they are all getting together to set prices? Setting a price based on your general location could just be these online stores doing their due diligence to check other online store prices, local store prices, and local competition and then pricing there products accordingly for optimal sales and profit. That isn't colluding, that's business.

 

With this interpretation there is no such thing as collusion in pricing since it's just good business practice. I still disagree with you and I have to add that it's people like you that keep the practice going. Apple should make sure you are sitting on the jury. As a consumer, I believe a major retail outlet, online or not, should set a price for a product that they believe the whole market will bear. If they want to discount the item, fine, but raising the price just because of economic status in different regions should be illegal. Would you be so agreeable to this pricing scheme if the federal government set their income tax rate higher in different regions of the country? I don't need proof to know this is happening. I've purchased enough items online to know it is, even when cynical people like you try play the confrontational game.

 


Edited by ljocampo - 4/22/12 at 6:47am
post #40 of 52

 

Quote:
Originally Posted by SolipsismX View Post

 

 

But where is the proof they are all getting together to set prices? Setting a price based on your general location could just be these online stores doing their due diligence to check other online store prices, local store prices, and local competition and then pricing there products accordingly for optimal sales and profit. That isn't colluding, that's business.

 

 

you're right.  That is competition.  Companies checking out each other's prices and trying to beat the other guy.


Edited by I am a Zither Zather Zuzz - 4/22/12 at 6:32am
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