Originally Posted by jragosta
Originally Posted by AppleInsider
When Apple launched its iBookstore in April of 2010, virtually overnight the retail prices of many bestselling and newly released e-books published in this country jumped 30 to50 percent—affecting millions of consumers.
That's funny - their own data doesn't support their allegation. AT WORST (even assuming that their numbers are correct), the price jumped by 10-15%. Why would anyone believe the DOJ who can't even accurately report their own data?
But since other reports say that the price dropped after Apple got involved, even that conclusion is questionable.
Clearly, at a minimum, the data shows that prices, which were on a downward trajectory rose and afterwards oscillated between higher and the same price. However the agreements clearly changed the price direction for the worst.
Originally Posted by Blastdoor
I suspect that if the DOJ forces Apple and the publishers to switch back to a wholesale model, Apple will still charge the same markup over the wholesale price as they are now (i.e., 30% of the sticker price goes to apple). The only difference is that Amazon will be liberated to sell books at a lower profit margin, or even at a loss.
If this had happened back in 2010 it might have seriously hurt iBooks. But now I'm not so sure. There's no "most favored nation" clause (that I know of) in Apple's agreements with recording labels. Indeed, you can often buy mp3s from Amazon for less money that AACs from iTunes. Yet iTunes is doing very well, in large part because it's the default option on iDevices. Being the default option is tremendously valuable, especially on a monster platform like the iPad (or the iPod before it).
Even if this does hurt iBooks, I doubt that it will hurt iPad sales since most of the value of the iPad comes from apps, not ebooks.
Finally, if the DOJ wins this, then the DOJ is on the hook to make sure that Amazon doesn't become a monopolist. If Amazon becomes a monopolist, it's the DOJ's fault, and it will be up to the DOJ to rectify the situation.
There is another scenario and that is that the DOJ could look into Apple and how they support a lack of competition within their own ecosystem by granting themselves rights that competitors are not granted. This is what got Microsoft into a consent decree related to inability to set other browsers as default and use of hidden system API's to gain benefits for their own apps.
As you note, Amazon and others cannot become the default option. People presume it is Amazon pushing this inquiry. I suspect it is simply the fact that collusion occurred but beyond that, I suspect this grand group looking for relief from competing will come after Apple next. If they don't want to compete against Amazon on price what makes someone think they want to compete against Apple?
Originally Posted by Mechanic
By the way apple uses the agency model to sell music, movies, tv shows, and audio books, it is a fair way to sell things.
The DOJ has there head so far up there ass on this one they will be lucky if they win. Even Senator Chuck Shumer wrote a letter to the doj asking them to drop this ridiculous law suit.
Apple does not use the agency model to sell other services and they certainly do not have a most favored nation clause forbidding price competition.
Originally Posted by dasanman69
Do you own a Mac or an iPod? Aren't those items priced considerably higher than similar competing items? So why is Apple all of a sudden worried about the price of a competitor? Is it because they're late to the game? Or because this is a rare instance that they cannot offer a better product?
Apple hasn't offered a better product. iBooks is inferior to solutions both from BN and Amazon. They are also late to the game. Apple really hasn't seemed to do well with new software or even continuing software development lately.
Originally Posted by festerfeet
So the DOJ decided to cherry-pick less than 10% of the public comments which suited their argument and dismissed the rest as self-serving.
Does anybody else sense a note of irony here?
Most of the time, determining whether someone has broken the law is not a popularity contest.
Originally Posted by DutchessPDX
And the flaw in your logic is that amazon no longer has 90% of the e-book market. Your scenario might have been true when it was a kindle only market but now iPad, Android Tablets and Nook all share the same marketplace. Logic says these retailers should be able to compete on the free market by offering these books at their lowest price and compete based on price. Now prices are artificially inflated because the agency agreements they have with apples say that they can't offer the books elsewhere for less. Normally I would agree that manufacturers should be able to price their goods as they see fit but we're talking about monopolistic pricing which is keeping prices artificially high. The proof, look at the price of physical books. Physical books are on average less expensive than their electronic counterparts. You can't call this supply and demand since there is no supply component per se to a virtual good. It costs as much to sell 1 as it does 100 electronic versions.
Allowing retailers to price electronics to books the same way they do physical books is good for consumers and competition so I support the DOJ's actions here.
The additional flaw is that there has been zero proof that Amazon obtained their market-share by any other means than being the just about the first and best entrant into the market. Amazon Kindle was available for two years before BN crafted a competitor and for three years before Apple got into the game. It's hard to have market-share when you don't have a product to sell. Now that BN, Apple and others have products available, Amazon has settled into a position of majority share but not monopoly share. Amazon is hardly acting like any sort of monopolist in that they desire to still innovate and additionally to compete on price. That is the exact opposite of a monopolist. It is Apple who acts like the monopolist here in that they have a late and lagging product but still believe they should be able to demand their 30% and price increases to accommodate it. People neglect to mention that one of the reasons the publishers sought price increases was to keep giving Apple their 30%. Amazon under the wholesale model was still giving the publishers their profits but was sometimes forgoing their own profits. Apple would not forgo anything and thus demanded higher prices.
Originally Posted by cmorris
Reading through the comments, it's fairly apparent that hardly anyone has even bothered to read the DoJ complaint. The evidence against Apple and the publishers is pretty damning. If even half of it is true, this is a clear cut case of antitrust violation. I get that Amazon is a ruthless competitor but guess what? That's not illegal. However, a group of companies banding together to inflate prices across the board is. Not only that, it is a "per se" antitrust violation, meaning there are no mitigating factors. In other words, you can't walk into court and go, "Yeah but your honor, Amazon hit us first." As for the DoJ ignoring the bulk of the public complaints in refusing to drop the suit, this is not American Idol. You don't win just because you have the most votes. I read some of those complaints and even a layperson like me could see that they didn't have a basis in law. Rather these are publishing industry people desperately trying to avoid the same disintermediation that happened to the music industry. Good luck with that.
You've hit it on the head. Most people on here who have followed my political discussions have to know I would be the last person on earth who would desire to defend the Obama administration's DOJ. However they are correct in what they are doing here. It is very clear cut collusion and they have all manner of evidence to back it.
Originally Posted by ApolloFortyNine
Correct, I was mistaken about Amazon only taking 10%, it is actually 30%. However, that's still a lot more than what the publishers give to the Author's. And Amazon was usually right in where they priced books, Amazon knew that more people would buy a book if it was priced at 9.99 rather that 12.99, that 9.99 would actually make them more money selling at 12.99. Its called economics, finding what price you can reach the most consumers.
And here's one of the articles on the THIRD publisher settling: http://news.cnet.com/8301-13579_3-57436521-37/simon-schuster-settles-e-book-antitrust-suit-with-state-ags/ . That means that even though those three publishers would have been in a lawsuit with Apple, a company that has billions of dollars in its warchest to throw at a case like this, they STILL settled, obviously meaning that they must believe they did wrong doing.
And the DoJ has proof of the price fixing from Steve Jobs as well http://news.cnet.com/8301-13579_3-57434195-37/new-details-reveal-steve-jobs-involved-in-e-book-lawsuit/
The case is a slam dunk, please stop embarrassing yourselves and come to accept that.
I've really been mystified by the acceptance of these actions on here and the defense of Apple at any and all costs. Apple now isn't the same Apple many of us signed on the help back in the day. There was a time where a half billion dollar Microsoft investment and pledge to continue Office basically kept the company alive. Now Apple has $100 billion in cash reserves and is among the largest cap companies on earth. They can have their big boy britches on and compete against everyone else on equal terms.
Edited by trumptman - 7/24/12 at 11:00am