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Senator says Apple e-book suit could destroy publishing industry

post #1 of 90
Thread Starter 
In a Wall Street Journal editorial on Wednesday Senator Charles Schumer (D-NY) warned the U.S. Department of Justice that its suit against Apple and two major publishers could "wipe out the publishing industry as we know it" by allowing Amazon to regain a monopoly share of the market.

Sen. Schumer asserts in his opinion piece, titled "Memo to DOJ: Drop the Apple E-Books Suit: Restoring Amazon's monopoly in digital publishing is not in the public interest," that Apple's stake in the e-book industry is vital not only for competitive consumer pricing but for young writers hoping to showcase their work.

"The e-books marketplace provides a perfect example of the challenges traditional industries face in adapting to the Internet economy," Sen. Schumer writes. "Amazon took an early lead in e-book sales, capturing 90% of the retail market. Because of its large product catalog, Amazon could afford to sell e-books below cost."

He goes on to say that publishers were faced with a Hobson's choice between going with Amazon's sales scheme or ignoring the march toward digital content.

"They could allow their books to be sold at the prices Amazon set, thus undercutting their own current hardcopy sales and the future pricing expectations for digital books—or stay out of the e-books market entirely," Sen. Schumer said of major publishing houses. "In an increasingly digital age, the latter was simply not an option."

The senator is referring to the so-called "wholesale model" Amazon adopted when the company first entered the e-book market. Power lies in the hands of resellers in this model as they buy content from publishers wholesale only to price the e-books at or below cost to drum up sales.

On the other end of spectrum is Apple's "agency model" which places the power with publishers that set content prices under a "most favored nations" clause. The DOJ has taken umbrage with the agency model and claims it may infringe on antitrust laws, thus the body took Apple and its publishing partners to court. For its part the iPad maker denies the allegations, saying it broke up a perceived Amazon monopoly.

Sen. Charles Schumer
Senator Charles Schumer speaking in Washington, D.C. | Source: Sen. Schumer's official webpage


Also noted in the WSJ article was the DOJ's apparent focus on new-release book prices which have gone up since Apple's iBookstore was launched. Sen. Schumer writes that the justice body "misses the forest for the trees" and has ignored the overall downward trend of average e-book prices. He qualified the bold statement by saying that while consumers have a short-term interest in new releases, they have "a more pressing long-term interest in the survival of the publishing industry."

Finally the senator voiced concern that the mere filing of the price-fixing suit has empowered monopolists and hurt innovators, positing that it will have a "deterrent effect" to companies in the broader U.S. economy that are trying to adapt to the oncoming digital age.

The DOJ's trial against Apple, Macmillan and Penguin Group is scheduled to begin in 2013.
post #2 of 90
Well if these companies did not break any laws then they have nothing to worry about. If they did, then it should not matter the impact, they broke the law and should pay. If Amazon has a true monopoly, the DOJ can then pursue Amazon and break it.
post #3 of 90

Schumer is an idiot.

 

Publishers have plenty of options, the best one being to sell unencrypted PDF ebooks, which they can do from their own websites if they like.

post #4 of 90
Quote:
Originally Posted by DarkVader View Post

Schumer is an idiot.

That may or may not be true, but I suggest you read the article. It doesn't take much time to do so. He makes some valid points, many that have been made by smart folks in forums like this.

post #5 of 90
Quote:
Originally Posted by anantksundaram View Post

That may or may not be true, but I suggest you read the article. It doesn't take much time to do so. He makes some valid points, many that have been made by smart folks in forums like this.

 

Yes, they should've said, "Schumer is usually an idiot."

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post #6 of 90
Quote:
Originally Posted by DarkVader View Post

Schumer is an idiot.

Publishers have plenty of options, the best one being to sell unencrypted PDF ebooks, which they can do from their own websites if they like.

While I know how to do it, and most readers here would, too, the point is that when you buy an e-reader or iPad, there is one really easy way to get the books. That is his point. Buy a kindle, it is the kindle store, buy an iPad, it is iBooks.
post #7 of 90
I'm agreeing with Schumer? Wow! Excellent points all around.

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

 

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"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

 

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post #8 of 90
Quote:
Originally Posted by anantksundaram View Post

That may or may not be true, but I suggest you read the article. It doesn't take much time to do so. He makes some valid points, many that have been made by smart folks in forums like this.

 

 

Agreed. Some people unfortunately  seem to view politics as a sporting event. Root for their team no matter what the conduct of the team. Setting the fact he is a democrat aside,  Schumer's opinion is common sense and right on the money. To engage in illegal anti-competitive behavior Apple would have had to collude with its competition. For example, the LCD manufacturers like Samsung and LG recently  paid hundreds of millions of dollars to settle a government suit for all getting together and agreeing on a price to charge to companies like Apple that bought LCDs. So to be guilty of collusion, Apple would have had to have entered into an agreement with competitor  companies like Amazon. Apple can enter into the same agreement with all the publishers because Apple isn't competing with the publishers. Further, Apple has the same model for music and apps and the government has no objection. 

 

Moreover, in part the purpose of anti-competition law is to prevent companies from using a monopoly to gain an unfair advantage in another market thereby undermining fair competition to the determent of consumers. Here Amazon was the monopoly. Apple wasn't in the publishing business. Since, Apple got publishers to agree to the Agency model Amazon's share has dropped to about 65 percent from over  90 percent with both Barnes and Noble and Apple benefiting. This has only increased competition and  benefited consumers.

 

Further, Amazon wasn't forced to adopt the agency model, but choose to do so so it wouldn't lose some of the books it was carrying. Interestingly enough, there is a lot of ebooks available on Amazon not available on Apple's store. It can't be because Apple's terms are onerous as the publishers set the rate. Instead, it is more likely Amazon pressured publishers for exclusives. For instance, Harry Potter and the Hunger Games. What Amazon is doing is similar to what Microsoft got in trouble for. Microsoft used its Windows' dominance to force its partners to favor Internet Explorer over entrenched Netscape Navigator. If it weren't for Windows, Microsoft would have had a hard time unseating Netscape. The same can be said of Amazon and ebooks. If it weren't for its dominance with hard cover books, it never would have got publishers to agree to selling ebooks below cost. 

 

Amazon used its monopoly status in on-line traditional book sales to force publishers to agree to sell their works below market rates for emerging ebook market sales. Essentially Amazon would tell publishers it isn't going to carry and/or promote their traditional books without them agreeing to allow Amazon to set the price of the e-books. That is traditional anti-competitive behavior. Further, this really hurt consumers because traditional book stores are already at a disadvantage because their customers have to pay a sales tax. Amazon essentially drove sales to ebooks by making them far less expensive then traditional books at the expense of traditional retailers. Borders was a victim of such practices. 

 

The government in an election year is getting caught up in the agency model increasing the price of some books to consumers. However, the books were being sold below cost, and since when can't the owner of a work sell it for what the owner wants. 

post #9 of 90
Quote:
Originally Posted by Hellacool View Post

Well if these companies did not break any laws then they have nothing to worry about. If they did, then it should not matter the impact, they broke the law and should pay. If Amazon has a true monopoly, the DOJ can then pursue Amazon and break it.

That's just about the dumbest possible approach that could be suggested: Firmly establish one company in a monopoly position and by doing so destroy an industry, then break up the only player left after the irreversible damage has already been done.

Schumer is absolutely, 100% correct on this issue. Let's hope that someone at DoJ has the sense to recognize it and that their egos aren't too big for them to alter course before it's too late. Otherwise, this will go down in history as the biggest blunder they have ever made.

The DoJ's actions are completely, and obviously, contrary to the intent of antitrust law.
post #10 of 90
Quote:
Originally Posted by anonymouse View Post

That's just about the dumbest possible approach that could be suggested: Firmly establish one company in a monopoly position and by doing so destroy an industry, then break up the only player left after the irreversible damage has already been done.
Schumer is absolutely, 100% correct on this issue. Let's hope that someone at DoJ has the sense to recognize it and that their egos aren't too big for them to alter course before it's too late. Otherwise, this will go down in history as the biggest blunder they have ever made.
The DoJ's actions are completely, and obviously, contrary to the intent of antitrust law.

With that crystal ball of yours can you throw out some lottery numbers? Get over it, Amazon only had a monopoly because they were first to the market with a killer product. They never used that position to hurt consumers, they used it too break up the monopoly the publishers had and forced them to abandon their antiquated business model. Apple used his fact to conspire against amazon so they can get their foot in the door and they got caught. This politician, ha, lobbying at its best. The fools that keep spouting off about this supposed monopoly that Amazon will have can only speculate and have zero evidence Amazon will harm consumers, they didn't in the past, why would they now? As for the publishers, get in the 21st century, no on wants physical books anymore. The consumer is rapidly moving to digital. I am glad Amazon dismantled the publishers monopoly and I am glad Apple got burned and it has come to light to show Apple cares about one thing, bottom line. If Amazon having a monopoly means I Payless for eBooks, good. I hope the DOJ slaps he crap out of Apple and the other publishers. Forces them back to being competitive and I can go back to $9.99 new releases. If the publishers don't like it, don't sell eBooks.
Edited by Hellacool - 7/18/12 at 8:43pm
post #11 of 90

Yeah, cause these guys have such a great track record when they get involved with industries, especially involving new technology.  New technology always disrupts older ones that address similar needs but it doesn't always eliminate them.  Word processors killed the type writer but we still have pens aplenty.  TV was supposed to kill off Radio, bit it is stronger than ever and has made a tremendous come back with the internet and podcasting.  We have seen countless dramatic changes in technology in the last few years alone and the pace in many areas in increasing.  If you want to kill innovation, competition and growth, bring in the government.

 

Consider this - the government got involved with the corn industry and subsidized it so heavily it became a major source for sugar and now some places want to tax the very high sugar products that are only available so cheaply because of the original interference.  

 

Brilliant.

 

Yeah, more government involvement.  That's exactly what the industry needs.

post #12 of 90
Quote:
Originally Posted by GrumbleGus View Post

Yeah, cause these guys have such a great track record when they get involved with industries, especially involving new technology.  New technology always disrupts older ones that address similar needs but it doesn't always eliminate them.  Word processors killed the type writer but we still have pens aplenty.  TV was supposed to kill off Radio, bit it is stronger than ever and has made a tremendous come back with the internet and podcasting.  We have seen countless dramatic changes in technology in the last few years alone and the pace in many areas in increasing.  If you want to kill innovation, competition and growth, bring in the government.

Consider this - the government got involved with the corn industry and subsidized it so heavily it became a major source for sugar and now some places want to tax the very high sugar products that are only available so cheaply because of the original interference.  

Brilliant.

Yeah, more government involvement.  That's exactly what the industry needs.

Sure, every 10 year old deserves to work 18 hour days in asbestos laden factories. Sure the gov is not perfect but the have their place. If they need to step in when companies the size of Apple conspire to screw the consumer, that is a good thing.
post #13 of 90
Quote:
Originally Posted by AppleInsider View Post

In a Wall Street Journal editorial on Wednesday Senator Charles Schumer (D-NY) warned the U.S. Department of Justice that its suit against Apple and two major publishers could "wipe out the publishing industry as we know it" [...]

queer, because other news outlets are reporting that Senator Charles Schumer (D-NY), himself, single-handedly, could wipe out the united states as we know it. 

 

won't someone please think of the children?

post #14 of 90
Quote:
Originally Posted by Hellacool View Post

<irrelevant crap removed>
If they need to step in when companies the size of Apple conspire to screw the consumer, that is a good thing.

 

So, what has happened to the average price of ebooks since Apple entered the market?

 

Have any studies been done apart from choosing from a limited number of cherry picked examples?

 

btw the current top three books from the NYT best sellers list are still selling for the unpossible amount of $9.99 in Apple's iBooks store.

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post #15 of 90
Quote:
Originally Posted by DarkVader View Post

 

Publishers have plenty of options, the best one being to sell unencrypted PDF ebooks, which they can do from their own websites if they like.


I hope somebody brings up this point in the trial. It will make all of them look bad, on both sides.

 

When I can buy e-books for less than paperback books shipped to my home I'll start buying them. Until then they all seem like tremendous rip-offs. It is profiteering at its worst in plain sight. The convenience of having a few thousand books in a tiny device is valuable for somebody living in a submarine, but it isn't really worth it anywhere else.

 

Amazon isn't a monopoly anymore. Barnes & Noble is online, so is Sony. There are probably other places too selling digital books. When one of these online companies finally begins pricing their e-books below the prices of paperbacks AND does some big time advertising to let people everywhere know about it, they will take over the market. It is the price fixing of the publishers that are causing these problems, not the book sellers. I'll spend fifty cents to two dollars for some electrons to be sent to my computer. If I can spend $27.50 to have ten books shipped to my door with shipping included, you can bet that companies would make much more profit selling those same ten books to me via the internet for $1.00 each.

 

Apple's problem began not because it wanted to use the agency model. It was because they got the publishers together and told them that they all must agree with the pricing model or that Apple wouldn't move forward.

post #16 of 90
Quote:
Originally Posted by DarkVader View Post

Schumer is an idiot.

 

Publishers have plenty of options, the best one being to sell unencrypted PDF ebooks, which they can do from their own websites if they like.

Name-calling is for morons, and it shows you don't understand the issue, much less have a valid point to make.

post #17 of 90
Quote:
Originally Posted by GrumbleGus View Post

Yeah, cause these guys have such a great track record when they get involved with industries, especially involving new technology.  New technology always disrupts older ones that address similar needs but it doesn't always eliminate them.  Word processors killed the type writer but we still have pens aplenty.  TV was supposed to kill off Radio, bit it is stronger than ever and has made a tremendous come back with the internet and podcasting.  We have seen countless dramatic changes in technology in the last few years alone and the pace in many areas in increasing.  If you want to kill innovation, competition and growth, bring in the government.

 

Consider this - the government got involved with the corn industry and subsidized it so heavily it became a major source for sugar and now some places want to tax the very high sugar products that are only available so cheaply because of the original interference.  

 

Brilliant.

 

Yeah, more government involvement.  That's exactly what the industry needs.

 

From the content of your brain fart I can't tell you are referring to as "These guys." However, just in case your reading skills suffer as badly as your writing skills, let me tell you that Schumer is telling the DOJ to butt out. 

 

Amazon was using predatory pricing, because of their dominance to further reduce competition. The next step after elimination the competition is to increase prices back to above cost. THAT, in itself, is what the DOJ should be focusing on, hence Schumer's reference to the DOJ not seeing the forest for the tree.

post #18 of 90
Quote:
Originally Posted by Smallwheels View Post

Apple's problem began not because it wanted to use the agency model. It was because they got the publishers together and told them that they all must agree with the pricing model or that Apple wouldn't move forward.

 

There is a small matter of supporting evidence, which you appear to have overlooked with that claim, seeing as how there is none this farce by the DoJ will go nowhere, there hasn't even been any evidence on the overall effect on pricing of Apple's entry into the eBooks market.

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post #19 of 90
Quote:
Originally Posted by Smallwheels View Post


I hope somebody brings up this point in the trial. It will make all of them look bad, on both sides.

 

When I can buy e-books for less than paperback books shipped to my home I'll start buying them. Until then they all seem like tremendous rip-offs. It is profiteering at its worst in plain sight. The convenience of having a few thousand books in a tiny device is valuable for somebody living in a submarine, but it isn't really worth it anywhere else.

 

Amazon isn't a monopoly anymore. Barnes & Noble is online, so is Sony. There are probably other places too selling digital books. When one of these online companies finally begins pricing their e-books below the prices of paperbacks AND does some big time advertising to let people everywhere know about it, they will take over the market. It is the price fixing of the publishers that are causing these problems, not the book sellers. I'll spend fifty cents to two dollars for some electrons to be sent to my computer. If I can spend $27.50 to have ten books shipped to my door with shipping included, you can bet that companies would make much more profit selling those same ten books to me via the internet for $1.00 each.

 

Apple's problem began not because it wanted to use the agency model. It was because they got the publishers together and told them that they all must agree with the pricing model or that Apple wouldn't move forward.

 

Unfortunately, by rewriting history doesn't make it so. When the largest player in any market begins to sell below cost because of their large scale, it is solely to eliminate their smaller competitors. For example, Apple is the big player in the phone and tablet markets. Were Apple to sell their products below cost, they could dominate those markets. Once they have total dominance, they could raise their prices to whatever the market will bear. This is against the law. 

 

Apple sells their products well over their costs, and dominate the market by having a worthy product for the money. This is legal. 

 

Apple wanted to enter the e-book market. There was no economic way to do so while the dominate player was selling below cost. The power in the publishing business had swung too far toward one outlet due to predatory pricing. The "agency model" rebalances the power and makes it possible for the publishers to have multiple outlets for their wares who are in competition with each other. The old model no longer works in the new electronic media.

post #20 of 90
Quote:
Originally Posted by Smallwheels View Post


I hope somebody brings up this point in the trial. It will make all of them look bad, on both sides.

 

When I can buy e-books for less than paperback books shipped to my home I'll start buying them. Until then they all seem like tremendous rip-offs. It is profiteering at its worst in plain sight. The convenience of having a few thousand books in a tiny device is valuable for somebody living in a submarine, but it isn't really worth it anywhere else.

 

 

If you produced books and other media, you might feel differently. When we produce physical books and DVDs we have a fairly high amount of overhead. For printed materials, it's the cost of compiling the information, a large amount to graphic artists for multiple illustrations, and then editors. For DVDs the cost of a camera crew and editors is significant. 

 

When we go to sell the items the physical cost of the items is a very small part of the cost. For this reason we charge the same for the printed and the digital versions. For our market, the digital version can be of more benefit than the physical version, so there is no way that we'd sell them at a deep cost compared to the physical items. The value in the goods is the content contained within, and not the media. And, in our case, our products sell for many multiples of what would be considered "normal" pricing at a bookstore.

post #21 of 90

.

post #22 of 90
Quote:
Originally Posted by Macky the Macky View Post

 

From the content of your brain fart I can't tell you are referring to as "These guys." However, just in case your reading skills suffer as badly as your writing skills, let me tell you that Schumer is telling the DOJ to butt out. 

 

Amazon was using predatory pricing, because of their dominance to further reduce competition. The next step after elimination the competition is to increase prices back to above cost. THAT, in itself, is what the DOJ should be focusing on, hence Schumer's reference to the DOJ not seeing the forest for the tree.

 

Being a condescending jerk doesn't make you look any smarter and doesn't validate anything you write.  It's a forum, not a college thesis. Get off your high horse.

 

And why would you assume "these guys" refers to Schumer and not the DOJ.

post #23 of 90

Apple is changing the way we read books. As Steve Jobs said: "we want to change the world". Let the innovation changing the game! 

post #24 of 90
Quote:
Originally Posted by chudq View Post

Apple is changing the way we read books. As Steve Jobs said: "we want to change the world". Let the innovation changing the game! 

by ripping off consumers

"Apple people have no objectivity when it comes to criticism of Apple.." Lenovo X1 Carbon is out..bye bye MBAir

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post #25 of 90

glad to see he is distracted by from his satellite map nonsense. This is about the only smart thing the NY Senator has said in the last year. I'm a liberal Dem and even I find what has come out his and Franken's office on technology this year absurd. I would rather they focus on just about anything else, as it has to matter more than this, and in this year.

post #26 of 90
Quote:
Originally Posted by GrumbleGus View Post

 

Being a condescending jerk doesn't make you look any smarter and doesn't validate anything you write.  It's a forum, not a college thesis. Get off your high horse.

 

And why would you assume "these guys" refers to Schumer and not the DOJ.

I DIDN'T assume who he was referring to one way or the other. In fact I said I couldn't tell who he was referring to by saying "these guys." Apparently reading comprehension isn't your strong suit either. 

post #27 of 90

I wonder whose pocket he's in.

post #28 of 90

Wow, Apple and/or Google lobbies a senator with who knows what gifts/lunches/all expense paid trips to see their operations and nearby golfcourses, donates a bunch of money to his campaign. In turn, he stands up and expresses the carefully worded statements about the "public's best interests" which were crafted by Apple and/or Google's lawyers and PR people.

 

Hurray for american politics and the $100 billion lobbying industry that turns elected officials into corporate shills!!

post #29 of 90

Impossible. WSJ only posts anti-Apple pieces, Apple Insider knows that :p
 

Social Capitalist, dreamer and wise enough to know I'm never going to grow up anyway... so not trying anymore.

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post #30 of 90
Quote:
Originally Posted by Superbass View Post

Wow, Apple and/or Google lobbies a senator with who knows what gifts/lunches/all expense paid trips to see their operations and nearby golfcourses, donates a bunch of money to his campaign. In turn, he stands up and expresses the carefully worded statements about the "public's best interests" which were crafted by Apple and/or Google's lawyers and PR people.

 

Hurray for american politics and the $100 billion lobbying industry that turns elected officials into corporate shills!!


Well, it is a hard question. What's worse, politics done by clueless gits who don't understand anything, or politics done by people who've been shown the golden side of the industry, but don't have a clue about the less-than-golden side? You won't get (except a few heroes of the Political World who should be decorated ;) ) politics who have a clue, aren't bought, and have the courage to make decisions/stands. Or they'll be destroyed by some sex scandal, as soon as they utter the dangerous sentences that sends some industry into a fear-spin... example: "gun rights cause deaths and guns should be more regulated" --> sends arms industry into political spin... Note: I'm not saying whether gun rights are good or bad, just that this sentence has that effect in the mouth of a political person...

Social Capitalist, dreamer and wise enough to know I'm never going to grow up anyway... so not trying anymore.

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post #31 of 90
The DOJ has of course NOT "taken umbrage with the agency model" but rather with the e-books price fixing....
post #32 of 90
Quote:
Originally Posted by DarkVader View Post

Schumer is an idiot.

 

Publishers have plenty of options, the best one being to sell unencrypted PDF ebooks, which they can do from their own websites if they like.

That is the dumbest idea I have ever heard.  Lets see.  Sell unencrypted PDF ebooks in a market where idiots want something for nothing and are willing to go out of their way to get it.  Thats one of the problems with Amazon's monopoly.  Authors can't sell their books for a reasonable profit because Amazon undercuts them below cost many times to sell other items.  So doing so makes no sense if you have a predator competing with you. The biggest problem is that Amazon had 90% of the market and kept other would be competitors out because the market was completely unprofitable. I don't use Amazon, so this means if you had a ebook there would be a 10% chance I would buy it.  Before Apple's entry there were a handful of ebook stores.  Usually other huge chains trying to do the same thing, like Barnes and Noble.  Now there are many places to buy them.  People are so cheap the do miss the forest for the trees.  Stupid something for nothing people nearly killed the music industry. The book industry was heading down the same path. When was the last time you were in a music store?  Book stores are nearly all gone now too.  If authors and publishers can't make money they disappear. The quality of what you can buy goes down, because the artist and authors who value themselves are not working for free, just like you don't.  If the company you worked for couldn't make a profit in your business they would just fire you and shut down.

post #33 of 90
Quote:
Originally Posted by Hellacool View Post


With that crystal ball of yours can you throw out some lottery numbers? Get over it, Amazon only had a monopoly because they were first to the market with a killer product. They never used that position to hurt consumers, they used it too break up the monopoly the publishers had

 

As pointed out by others, Amazon used their monopoly to put competitors out of business, not to benefit consumers. That's how consolidation of a monopoly works: once you get big enough you leverage your position and profits from other sources to destroy the market for everyone else and eliminate them from the field. That's the phase that Amazon was in, and the state of affairs the DoJ is attempting to not only restore, but to make the law. Of course, the next phase, after you've eliminated the competition, is to reap the rewards of one's monopoly by raising prices. Any argument that attempts to show that Amazon was benefiting consumers has to account for the fact that when a company is eliminating competition through product dumping, prices will be artificially low, but only till that phase is complete. And, in this case, it appears that these artificially low prices only really exist on a few high volume titles, like the ones that the competition might have been able to generate a little revenue from. You don't need a "crystal ball" to know the harm is coming, it's entirely predictable, historically it always has, and anti-trust law even assumes it will happen. It's simply a naive fantasy to think that Amazon is somehow different from other companies that have followed the same path of anti-competitive practices that Amazon is embarked on now.

 

This is all classic anti-competitive behavior on Amazon's part -- leveraging their dominance in one market to take control of another, product dumping, using their position to force exclusive deals out of suppliers, etc. -- with the twist that the product dumping was strategically done only with a few titles, just the ones that best allowed amazon to cut the legs out from under its competition. The strange part of this story is that the lawyers at DoJ appear to be so stupid that they don't really understand what's going on here. So stupid in fact that it leads to an impression of corruption, because it's hard to believe they could be so stupid. Unfortunately, while I think this case would never have been brought without heavy lobbying by Amazon, I think in the end the DoJ lawyers just didn't understand what they were doing and got fast talked into bringing this case by Amazon's lobbyists. Now, the ego of the entire department, including the AG, is on the line and they lose so much face if they admit they fucked up, that it's likely they'll go through with this farce even after they realize it was a mistake.

 

The end result, if the DoJ were able to impose its will on the publishing industry, would not only be the elimination of competition in bookselling, but, inevitably, that Amazon will also control the publishing side of the market, controlling not only how much you pay for books, but what books you even get a chance to read.

post #34 of 90
Quote:
Originally Posted by Sensi View Post

The DOJ has of course NOT "taken umbrage with the agency model" but rather with the e-books price fixing....

I'm eager to see the evidence of fixing. Prices increasing isn't direct evidence of collusion. Could easily be the market correcting itself as apublishers regained leverage.

Im in agreement with Chuck's points though. Evidence of collisions between Apple and two other parties will change my mind.
Edited by ChristophB - 7/19/12 at 4:59am
post #35 of 90

Schumer is clearly not intending to help the little guy with his statements.

Quote:
Originally Posted by starbird73 View Post

Quote:
Originally Posted by DarkVader View Post

Schumer is an idiot.

Publishers have plenty of options, the best one being to sell unencrypted PDF ebooks, which they can do from their own websites if they like.

While I know how to do it, and most readers here would, too, the point is that when you buy an e-reader or iPad, there is one really easy way to get the books. That is his point. Buy a kindle, it is the kindle store, buy an iPad, it is iBooks.

 

This might be the case on Apple products where Apple has decreed that they are the only party allowed to have the store built into their app, but in the rest of the universe, you download the app and it links to it's own store. So the Nook app takes you to the BN Store. The Kobo app, Kindle app, etc. all the same. Apple has given themselves a tremendous advantage in decreeing their own apps can have a store built in, but others cannot.

 

Quote:
Originally Posted by TBell View Post

Agreed. Some people unfortunately  seem to view politics as a sporting event. Root for their team no matter what the conduct of the team. Setting the fact he is a democrat aside,  Schumer's opinion is common sense and right on the money. To engage in illegal anti-competitive behavior Apple would have had to collude with its competition. For example, the LCD manufacturers like Samsung and LG recently  paid hundreds of millions of dollars to settle a government suit for all getting together and agreeing on a price to charge to companies like Apple that bought LCDs. So to be guilty of collusion, Apple would have had to have entered into an agreement with competitor  companies like Amazon. Apple can enter into the same agreement with all the publishers because Apple isn't competing with the publishers. Further, Apple has the same model for music and apps and the government has no objection. 

 

Moreover, in part the purpose of anti-competition law is to prevent companies from using a monopoly to gain an unfair advantage in another market thereby undermining fair competition to the determent of consumers. Here Amazon was the monopoly. Apple wasn't in the publishing business. Since, Apple got publishers to agree to the Agency model Amazon's share has dropped to about 65 percent from over  90 percent with both Barnes and Noble and Apple benefiting. This has only increased competition and  benefited consumers.

 

Further, Amazon wasn't forced to adopt the agency model, but choose to do so so it wouldn't lose some of the books it was carrying. Interestingly enough, there is a lot of ebooks available on Amazon not available on Apple's store. It can't be because Apple's terms are onerous as the publishers set the rate. Instead, it is more likely Amazon pressured publishers for exclusives. For instance, Harry Potter and the Hunger Games. What Amazon is doing is similar to what Microsoft got in trouble for. Microsoft used its Windows' dominance to force its partners to favor Internet Explorer over entrenched Netscape Navigator. If it weren't for Windows, Microsoft would have had a hard time unseating Netscape. The same can be said of Amazon and ebooks. If it weren't for its dominance with hard cover books, it never would have got publishers to agree to selling ebooks below cost. 

 

Amazon used its monopoly status in on-line traditional book sales to force publishers to agree to sell their works below market rates for emerging ebook market sales. Essentially Amazon would tell publishers it isn't going to carry and/or promote their traditional books without them agreeing to allow Amazon to set the price of the e-books. That is traditional anti-competitive behavior. Further, this really hurt consumers because traditional book stores are already at a disadvantage because their customers have to pay a sales tax. Amazon essentially drove sales to ebooks by making them far less expensive then traditional books at the expense of traditional retailers. Borders was a victim of such practices. 

 

The government in an election year is getting caught up in the agency model increasing the price of some books to consumers. However, the books were being sold below cost, and since when can't the owner of a work sell it for what the owner wants. 

 

You are largely talking nonsense. Collusion is "an agreement among firms to divide the market, set prices, or limit production." Apple and the publishers who signed agreements with them did exactly this in terms of setting prices. They sought as Schumer notes to limit and raise the prices of digital e-books. Claiming Apple cannot collude unless they work with Amazon is just ignoring the definition of collusion and substituting whatever you want. Amazon did not have a monopoly due to predatory action. Many other e-book resellers met and matched the Amazon pricing. Note how sly Schumer is with his wording. "Because of its large product catalog, Amazon could afford to sell e-books below cost." Note he never states they did sell the books below cost. He merely notes "they could".

 

Amazon was indeed forced to accept the Agency model. It wasn't just one publisher that was forcing it on them, it was all the major publishers after they made their agreement with Apple. Hence why it is called COLLUSION and why there is a big lawsuit related to it. As an example, right now Viacom is in disagreement with DirectTV. They are withholding their programming from DirectTV. DirectTV can still negotiate with them because there is still plenty of other programming to show. Yet if every content creator made a secret prior agreement and decided to withhold their programming at the same time, DirectTV wouldn't have a choice but to go along because they can't run their business with next to no content. However for that to happen, for a bunch of competing channels to all agree or back each other and withhold at the same time would require.....wait for it.... COLLUSION. That is what happened to Amazon and that is why the DOJ has stepped in.

 

Amazon in NO FORM forced publishers to sell their works below market rates for emerging ebook markets sales because that phrase is made up nonsense. An emerging market doesn't already have set market rates. Even Schumer doesn't attempt to claim such nonsense. Rather he repeats the argument about HARD COVER books which in no form or fashion involves Amazon or Kindle. This shows he is just a lobbying tool the publishers and Apple because he is repeating the publisher argument verbatim. That argument is merely that people won't pay more for expensive hardcover books when they can have a digital copy wirelessly delivered to their iPad, Kindle or any other device for much less.

 

That is the whole point of technology though. It saves money while improving efficiency. You check your email on your iPhone because it is much more convenient than paying someone to carry physical pieces of paper.

 

Apple did the exact same thing in music and major music retailers disappeared. Of course they did because when I can sit at a coffee shop and download an album, I'm not going to waste the time effort and energy to drive to a music store to do it. Apple and the publishers are clearly in the wrong here.

 

Quote:
Originally Posted by Smallwheels View Post

Quote:
Originally Posted by DarkVader View Post

 

Publishers have plenty of options, the best one being to sell unencrypted PDF ebooks, which they can do from their own websites if they like.


I hope somebody brings up this point in the trial. It will make all of them look bad, on both sides.

 

When I can buy e-books for less than paperback books shipped to my home I'll start buying them. Until then they all seem like tremendous rip-offs. It is profiteering at its worst in plain sight. The convenience of having a few thousand books in a tiny device is valuable for somebody living in a submarine, but it isn't really worth it anywhere else.

 

Amazon isn't a monopoly anymore. Barnes & Noble is online, so is Sony. There are probably other places too selling digital books. When one of these online companies finally begins pricing their e-books below the prices of paperbacks AND does some big time advertising to let people everywhere know about it, they will take over the market. It is the price fixing of the publishers that are causing these problems, not the book sellers. I'll spend fifty cents to two dollars for some electrons to be sent to my computer. If I can spend $27.50 to have ten books shipped to my door with shipping included, you can bet that companies would make much more profit selling those same ten books to me via the internet for $1.00 each.

 

Apple's problem began not because it wanted to use the agency model. It was because they got the publishers together and told them that they all must agree with the pricing model or that Apple wouldn't move forward.

 

You are dead right. Also you make the point that Amazon wasn't a monopoly because they were predatory. They were a natural monopoly due to being an innovator. Apple was late to the game and sought to change the rules of the game to allow them to keep their profits without having to compete on price since they aren't competing on innovation.

 

Quote:
Originally Posted by hill60 View Post

There is a small matter of supporting evidence, which you appear to have overlooked with that claim, seeing as how there is none this farce by the DoJ will go nowhere, there hasn't even been any evidence on the overall effect on pricing of Apple's entry into the eBooks market.

 

There is that small matter of half the publishers already settling. That is certainly going somewhere. Is the DOJ case somehow supposed to be decided before the trial? I read their complaint and presuming they have the evidence to back it up, and they cite logs, emails and people who will be called as witnesses, it is a profoundly strong case.

 

Quote:
Originally Posted by chudq View Post

Apple is changing the way we read books. As Steve Jobs said: "we want to change the world". Let the innovation changing the game! 

 

Apple has changed nothing in the ebook market. Their efforts with iBooks are late, trailing edge technology that are available only on iOS devices. Nook and Kindle are much better solutions.

 

Quote:
Originally Posted by Sensi View Post

The DOJ has of course NOT "taken umbrage with the agency model" but rather with the e-books price fixing....

 

Exactly and both the Schumer piece and the publishers themselves have stated that it isn't present or future profits from ebook sales but protecting markets that are being obsoleted by technological progress. They can't sell their ebooks for the price of a hardcover dead tree book and have colluded to raise the price of ebooks to try to keep the old market alive. I cannot believe how people are defending Apple on this matter. This would be like music publishers colluding with Microsoft to keep digital album prices at $15 and being sold as complete albums instead of singles because Apple and their nature monopoly with their crazy iTunes music store makes it impossible for them to keep selling them at that price with $9.99 albums and $0.99 single tracks.

 

Digital media should be cheaper than physical media. If it isn't then what is the point of buying the technology? It isn't called progress if it is harder and more expensive.

 

As for Schumer and the future of publishing, I can recall the "50 shades" books and the "Wool" series all making their authors very wealthy just this year out of complete obscurity.

 

BTW I just finished the first five Wool books and they are amazing. If you haven't bought the Omnibus edition for a whole $6 then you are missing some amazing and inexpensive reading. It's even available on the iBook store for that price and no one is dying or crying over the lack of dead trees sitting on shelves.

"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

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post #36 of 90
Quote:
Originally Posted by genovelle View Post

Thats one of the problems with Amazon's monopoly.  Authors can't sell their books for a reasonable profit because Amazon undercuts them below cost many times to sell other items.  So doing so makes no sense if you have a predator competing with you. The biggest problem is that Amazon had 90% of the market and kept other would be competitors out because the market was completely unprofitable.

 

What are you talking about? The publishers could sell the books to Amazon at whatever price they wanted. If a book cost $7 to produce and the publisher wanted to make $5 in profit, they sell to the book to Amazon for $12.00.  If Amazon turns around sells that book for $10, it's Amazon losing money, not the publisher.  All Amazon did was extend the existing wholesale pricing model that was being used for printed books to digital books. And yes, Amazon was forced to adopt the agency model. Their choices were either (a) Accept the agency model and continue to have big name books to sell or (b) Refuse the agency model and watch as their selection of books dropped to next to nothing, and certainly without big name titles.

 

As for Amazon selling at a loss to kill competition, where's your evidence? There really wasn't an eBook market before Amazon entered the game. The only reason Amazon bothered to introduce the Kindle was to grow the eBook business. I doubt Amazon ever wanted to enter the electronics device market directly but it needed a device to establish a market. Amazon couldn't give a crap if you read a Kindle eBook on a Kindle or an iPad or just sit in front of your PC and do it. As long as you bought the book from Amazon.

 

Selling certain items at a loss is a well-established business practice for big box stores and Amazon undoubtedly qualifies as a big box store at this point. It generates good will with the consumer. Small ticket items go for a loss and the happy customer comes back when they need to buy more expensive items that aren't sold at a loss.

post #37 of 90
Quote:
Originally Posted by Hellacool View Post

With that crystal ball of yours can you throw out some lottery numbers? Get over it, Amazon only had a monopoly because they were first to the market with a killer product. They never used that position to hurt consumers, they used it too break up the monopoly the publishers had and forced them to abandon their antiquated business model.

War is peace.

There are at least 5 major publishing houses and hundreds of little ones. How did they have a monopoly? And how is it that Amazon was merely 'breaking up a monopoly" when they used their purchasing power to dictate terms and control the market? In the real world, the publishers were competing against each other and Amazon was doing everything in its power to create a monopoly to control the entire industry.
Quote:
Originally Posted by elroth View Post

Name-calling is for morons, and it shows you don't understand the issue, much less have a valid point to make.

You might want to read your own post.
Quote:
Originally Posted by daylove22 View Post

by ripping off consumers

Apple ripped off consumers? By breaking a monopoly and allowing the publishers to compete with each other again?

One publisher reported publicly that they price of their ebooks had declined since Apple instituted the agency model (and sales volume increased). I haven't seen any industry wide figures, though.

More importantly, using short term pricing as an indicator of consumers' best interests is short sighted. Amazon was clearly using predatory pricing to gain control of the market place. There's no guarantee that the price would have remained low after they had squeezed Barnes and Noble (for example) out of business. Similarly, it is not unusual for prices to spike slightly after a monopoly is broken up - but over the long run, competition brings them down lower than they would have been with the monopoly in place.
Quote:
Originally Posted by Sensi View Post

The DOJ has of course NOT "taken umbrage with the agency model" but rather with the e-books price fixing....

I notice that you left out evidence of Apple's price fixing. If you have such evidence, maybe you'd better send it to the DOJ - because they don't seem to have any such evidence.
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"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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post #38 of 90

I mentioned Hugh Howey and his amazing Wool series in my prior post and since the guy is so upfront about what he does and how he does it, I thought I would check his blog as to experiences with Apple.

 

The guy is as nice as can be and as you see the primary discussion is about Nook and how well their website drives people toward new and interesting titles. However he states this about Apple....

 

Quote:

iTunes, amazingly, still hasn’t published the Wool Omnibus, even though I submitted it over two weeks ago! Amazon publishes in 12 hours. B&N gets it done in 24-48 hours. iTunes? I’m hearing from other authors that it has taken over a month.

 

That’s ridiculous. I feel awful for the iBook readers who’ve picked up the first four Wool stories and can’t snag #5. It’s been in Apple’s hands for two weeks. Amazon has really spoiled me (and by extension, you) with their turnaround time.

 

Apple, whom I love to death is clearly not the innovator here. They sound and act like a damn dinosaur. These new authors basically create communities around fans and they smartly take chances with their works. When an author has been interacting with the fans of the works and said fans are clamoring for the new release, no one should have to wait 2 weeks to a month for Apple to wipe their ass and get their content out there. If Amazon has a market advantage, it is because they've been a market innovator. I personally love Kindle Singles and have found more good books to read since I treated myself to my Kindle Touch than I had found in the previous half decade. It is just too simple.

 

Having a device that notes your reading habits and keeps recommending excellent books for $0.99-$4.99 from an array of new and interesting authors is a recipe for success, not failure. It is also the future. I don't give a crap what Senator Schumer wants to say or who he wants to protect. The future is coming and Apple can either jump on or go the way of the other dinosaurs.

"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

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"During times of universal deceit, telling the truth becomes a revolutionary act." -George Orwell

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post #39 of 90
Quote:
Originally Posted by hill60 View Post

 

So, what has happened to the average price of ebooks since Apple entered the market?

 

Have any studies been done apart from choosing from a limited number of cherry picked examples?

 

btw the current top three books from the NYT best sellers list are still selling for the unpossible amount of $9.99 in Apple's iBooks store.

 

 

Way to cherry pick your example.  You pulled the top 3 books, which just happen to be paperback books.  So yeah, you can get paperback books at 9.99 currently(or get the physical copies cheaper on amzon.  Why don't you try looking up the hardcover prices and try again, since it is the pricing of new release hardbacks that people are worried about, not the 50 shades of grey trilogy.

post #40 of 90
Quote:
Originally Posted by TBell View Post

 

 

 

The government in an election year is getting caught up in the agency model increasing the price of some books to consumers. However, the books were being sold below cost, and since when can't the owner of a work sell it for what the owner wants. 

 

The publisher can't sell it for what he wants after he has sold the particular copy of the work to a retailer like Amazon.  That is part of what is known as the "first sale doctrine".

 

Amazon owned the books in question.  They were free to sell them "for what the owner wants" - because they were the owner.

 

You seem to think that the publishers had some right to resale price maintenance. That is a contract right, at most, and seemingly, the publishers did not have the right to make Amazon sell books at the inflated prices that the publishers wanted.

 

Amazon's actions may have been illegal, depending on other factors.  AFAIK, there have never been any charges leveled against Amazon for carrying some loss leaders in stock.

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