Apple calls DoJ e-book settlement proposal unlawful, says trial is needed - Page 2

Rather like all the Steve Jobs comments, you have zero proof this has anything to do with Obama being in office. So how about we drop that whole of thought and stick to the facts as reported.

Actually the DOJ wants to set the price. They have declared there is a right price for ebooks and they know what it is. And as they are tossing 'overcharging' into the fray, clearing it is less than what Apple and these publishers are charging.

Because if Apple entered the market and started undercutting Amazon, taking a loss on each book they'd be accused of being predatory by the same DoJ. Amazon would have a legit complaint. The publishers would not Apple to just become the only digital book seller after Amazon was forced out. The publishers were not forced by apple to sign with apple. If the prices Apple set are too high, don't buy books from them. Let Amazon compete with Apple on the new high prices and then Apple has no profit in the business.

That is the comment he allegedly made to one publisher. But in many cases the prices haven't gone up much if at all. It's really only in new release big titles like a John Grisham that you see a big change. And his readers are generally older folks that haven't embraced ebooks in general so they are paying that same book for their paper copy.

Keep in mind that was the publishers, not Apple. They wanted pricing control and had leverage to say they would yank their titles if they didn't get it. Amazons stunts like how they pulled all of Macmillan's paper titles 'off the shelves' was a bluff they lost because the company didn't back down. Amazon could have countered with an offer to agree to letting the publishers set a minimum markup on titles for a set period of release or some other system that was still based off the warehouse terms. They didn't, they just caved and switched.

Yea but don't you see its contradictory? If Apple doesn't buy the content and only sells it for a percentage of the price how is that clause effective? I would understand if it said "cannot be sold to consumers for less" but it says resellers. How can one ask to get the same price on something one isn't buying?

Because Amazon had pricing control. They would just counter by dropping their price to beat Apple's. Until the publishers had control of pricing there would always be one side with an unfair advantage -- Amazon. Something the DoJ has ignored. Along with all questions of whether Amazon may have used monopoly power to get that position

The clauses arent that simple. They also generally include terms that if another seller is offering at a lower price the MFN seller can lower theirs without needing permission from the publisher. Amazon has the same deal themselves. It's how they offer the books that go into the Starbucks thing for free during that time.

That sort of thing is why the publishers wanted pricing control from Amazon or they would pull out. They didn't want Amazon cutting prices and screwing them in all markets.

Actually, you're wrong, and FreeRange is correct. Apple's contract with the publishers says that if the publishers allow other companies to sell at a lower price, they must also allow Apple to sell at that lower price. This is not the same as prohibiting the publisher to sell to others at a lower price - they can do that, they just have to sell to Apple at that lower price also. This has been widely misquoted in press stories.

Apple's typical strong arm policy is in fact ripping off consumers, prior to Apple and the publisher's collusion to set up the agency model e-book resellers were free to offer the books at whatever price they wanted just like brick and mortar stores.  If they chose to sell a book below cover price to get business then that's their choice since they are paying the publisher the agreed upon price.  Since Apple wants control of yet another market they (like they have with music and are trying to get into the living room with cable operators).

 

It is Apple's job to prove they are innocent, not the government's job, their job is to prove guilt.  It seems pretty clear to me by the number of publishers who chose to settle there was some shady dealings going on.  

If I manufacture some product and each one costs me £5, why should I be forced to sell that product for less to a retailer, and what gives the retailer (even a monopoly one) the right to demand price-setting rights for my product at less than it costs me to make? I might as well close-up shop and go home (probably make more money by selling any patents I may have for that product).

 

That is how Walmart got rich, and this is how Amazon pulls you into its eStore. Forget about working conditions in Chinese factories, this is happening to domestic businesses which are being absolutely buttf*cked by big retailers.

If enough people kick Uncle Sam's butt enough times maybe Uncle Sam will begin to behave like he isn't above the law... Go Apple!

 

 

That is kind of Apple's appoint. The government can't just cause Apple harm by rewriting its contracts without first proving its case at trial.

Again I ask How can Apple buy something at a lower price that it's not buying in the first place?

I think Apple's statement that "It has no objection to the Proposed Judgment's bar on collusion" is an offering designed to allow the DOJ to save a little face and settle.

How is letting the publishers compete a 'strong arm policy'?

Under the Amazon model, Amazon was well on its way to controlling the entire market. They would have had the ability to raise prices as much as they wished and even dictate content if they so chose. Apple is simply saying "let the publishers compete and price books however they want and we'll simply take a percentage. Apple is the one who's pro-competition here.

Well, no. We have this little thing called 'innocent until proven guilty'. Apple doesn't have to prove their innocence (which would be impossible to prove, anyway). The DOJ has the burden of proof.

Of course, if you want to take the tack that Apple has to prove they are innocent, I guess I'll have to choose to accuse you of stealing a million dollars from me. Prove that you didn't - and if you can't do so, you go to jail.

Which demonstrates nothing beyond your inability to think long term.

First, Amazon was on its way to having monopoly power - which would have let them dictate prices not only to the consumer, but also how much the publisher got paid. That obviously harms the market.

Second, Even the DOJ's own evidence says that the average eBook pricing has been declining (other than a few very high profile books which Amazon was dumping previously) since Apple instituted its policy.

Third, Apple chooses to follow the law. Predatory pricing to take over a market is illegal. Too bad no one ever explained that to Amazon or the DOJ.

Fourth, even if Apple and Amazon got into a price war, it's effects would be limited. Eventually, one or the other would be unable to continue selling below cost - but the market might easily be destroyed by then.

Heck, why didn't Apple supply the advertising and support costs and give the eBooks away? With their money, they could have afforded to buy the eBooks and PAY consumers to take them. Wouldn't that be better for consumers?

Sure - in the short term. Until the market was destroyed and/or Apple went bankrupt.

Apple's model was to take a fair percentage of the price (Amazon used to take a much higher percentage - up to 70% or more) and let the market choose. Other vendors could come in and compete. In the end, Apple's market fosters competition. Amazon's model blocks competition.

In the long run, competition is better for consumers.

 

That's simply a fairness clause that means, "we want to sell your books, but don't make it impossible for us to do so by making us sell them for more than you have others sell them for."

 

 

You don't understand the bigger picture. Amazon has a monopoly on online book sales. It used that monopoly power to unfairly force the publishers to to charge less for the e-books. If the publishers didn't agree, Amazon would threaten to not carry their hard cover books. Amazon was acting as a true monopolist by using its power in one marked to gain a monopoly in another market. That is strong arming.

 

Apple couldn't strong arm the publishers as it wasn't in the book business. It didn't have any leverage. The publishers hated Amazon for the above mentioned tactics, so they were happy to embrace Apple. Apple merely negotiated the same types of contracts it did for music and apps. Further, Apple can't be guilty of collusion because Apple doesn't compete with the publishers. The publishers, however, compete with one another. Moreover, since the adoption of the agency model you have seen companies like Barnes and Noble become competitive and be able to offer its customers e-books for its Nook without Amazon using its market power to force publishers to accept less than market price. This keep stores like Barnes and Nobles around, which benefits people like me who like to go in actual stores.  Moreover, Amazon is also keeping Apple from getting popular books like the Hunger Games, Harry Potter, and Sherlock Holmes.

 

I am glad your not in charge. The government's job is to proof guilt. Apple is supposed to be presumed  innocent. Further, you proof guilt at a trial. Apple is merely saying don't punish it until it has been proven guilty.

Edited by TBell - 8/16/12 at 10:35am

 

 

Moreover, the clause only applied to new releases.

If the publishers want more profit, they should go with Apple and simply pull their e-books from Amazon. Then they could set whatever price they want just like app publishers. 

 

There is another route to take though. For example Nikon now forces all certified dealers to charge full retail price for their cameras. If a retailer is found to be discounting the product they are cut off and can no longer get inventory. If retailers want to offer discounts they have to do it with bundling of other merchandise.

 

If, in this case, the publishers had some balls they would do the same thing to Amazon.

 

Thing is they are scared that losing Amazon's sales will hurt them in the short term.

So in other words screw yourselves and anyone you did business with prior before you screw me? Since when did the publishers have the means of making anyone sell at a certain price. Oh yeah when they colluded with each other and ganged up on Amazon or at least that's what they're accused of doing.

Betting the DoJ would have reached a similar conclusion and action. "Not good for he consumer" - threaten to sue and big brother divides and settles. My thought is they didn't count on Apple fighting back. I hope Apple does not settle and this goes to trial and ultimately a ruling that will establish precedent (no matter which direction). Guessing the DoJ will drop the suit before a negative ruling happens. It will injure their ability to bully companies and people into settling.

I don't think the DOJ can force the publishers to sell their e-books to Amazon if they don't want to. Exclusive resale channels are not against the law as far as I know.

 

I understand that you are intent on twisting the reality of the situation into the form you want it to be (there's plenty of that goes on here as well) but, no. It simply means, promise you won't screw me if you want me to sell you books.

 

But, this is a bad tree to bark up for anyone supporting Amazon. These sort of most favored nation clauses are pretty much the only way Amazon does business with anyone. So, if we're going to put an end to that sort of thing, which is entirely legal, pretty much all of Amazon's contracts with everyone in every line of business will be thrown out the window. And, to criticize Apple on these grounds, but not Amazon, is rank hypocrisy*.

 

* Especially since Amazon's contracts often contain clauses that say things like, "and we can give your stuff away for free whenever we like, at no cost to us."

 

Then again, an exclusive retail channel is exactly the problem publishers are trying to avoid, and which the DoJ is attempting to push them to.

If the publishers have the right to set their own price how is there a down side for them. I know it is unlikely that they would ever pull their e-books from Amazon as it would leave millions Kindle owners with bricks because they would not be able to decode Apples DRM. But the situation wouldn't last long because Amazon would blink first and renegotiate the contract that would require them to sell only at full retail price.

It's not a question of the price Apple buys at, because, as already pointed out, they don't buy the books - they just sell them on behalf of the publisher and keep 30% of the sale price. This clause simply requires that if the publishers sell to other companies at lower prices, Apple can also sell at the lower price.

I don't think Apple even cares what the wholesale price is that the publishers charge Amazon for the e-books. Apple just wants the retail price to be the same on the Apple store as it is on Amazon.

 

B/c even w/taking 30% on all sales thru iTunes, Apple only clears about 2% on selling things.  It is not a big money maker for them.  Cut their proceed to 20% and it is a losing affair for them.

 

 

Clearly all of those years of experience selling books lets the DoJ know all about this.  Right? </s>

But the publishers have little control over what a reseller wants to sell a book they purchased wholesale for.

Why would Amazon's contracts with anyone have to be broken? They're not the ones bought up on charges, so that conversation should be left for another day. Btw I don't support Amazon, I would like what best for us as consumers. A ebook the same price across the board isn't. Say a certain book is selling well on the iBook store but not on Amazon, so to bolster sales the publisher lowers the price in an attempt to increase demand but in order to do so they have to lower the price in Apple's store. That doesn't make sense to me. I feel things should be flexible for market forces.

Have to agree with dasanman69 on this one. It is an untruth that amazon 'will' raise prices. It's very likely, but not definite.
But let's not get too caught up in the finer details of the dictionary meanings of our words. I think the overall idea is still understood. Giving them a virtual monopoly could be very bad.

Fair play to apple. Kind of old days sticking it to the man! Only now having billions to back yourself up with. I think most of us would love just one shot at this type of scenario in our lifetime.

Thanks, finally someone with some sense and understanding.

 

Well, saying it's an "untruth" implies that the opposite is true, since you've declared the first, contradictory proposition, false. But, even you are saying that it's more likely than not, so, we can dance around words, but the bottom line is that there's no reason to expect Amazon wouldn't raise prices after consolidating a monopoly, and every reason to believe they would, so the DoJ's action to establish them in a monopoly, sanctioned by the government, is contrary to the public interest.

That sounds good in theory, but when you go beyond the superficial, it doesn't make sense.

What you are proposing essentially amounts to a system where the strongest (and/or largest) customer can dictate a large advantage for themselves. At the start of Apple's ebook efforts, Amazon outsold them by many orders of magnitude. Amazon could have said to the publishers "we demand a price that's consistently 10% below Apple or we will stop selling your books. Since this would be fatal for the publisher and since Amazon had most of the business at that time, most publishers would have gone along - and the status quo would have become entrenched.

Apple's solution simply guarantees that no one has a significant advantage in purchase price and can therefore compete by offering better service, better support, better hardware, etc. It also ensures that it would be fairly easy for a new player to enter the market while Amazon's policies were designed to keep new entries out of the market.

Raising prices is not the only damage Amazon could do with their monopoly:

- Demanding lower prices from publishers. Might look good on the surface, but there's no reason to think they'd lower prices to consumers, so the consumer would not benefit. The publishers, OTOH could be severely damaged - even to the point of bankruptcy

- Demanding control over the creative process and/or content of the books.

- Limiting access to other resellers by demanding an exclusive position. This could put their competitors out of business and further strengthen their monopoly.

Possibly not, but what does that have to do with it? The MFN clause requires the publishers to ensure that the iBooks price is no higher than the lowest price being offered elsewhere, whether or not the publishers control that price.

Bleh... that is an incredibly myopic view as there's literally no way to infallibly define what constitutes such an outcome. Is it based on cost? quality of materials? availability? I'd like to see better textbooks and technical material that doesn't require reviewing an errata every other page.

 

I thought some of the breakdowns suggested a better percentage there? Out of curiosity where did you find this?

Really? Then would you be so kind to give me an example as I have that what I'm proposing amounts to a system where the strongest can dictate a large advantage. Superficial? Really? I'd bet the bank that if you went to the Barnes & Noble near you and I the one near me we'd find totally different books on sale and that's the same retailer. Why can't the same happen in the ebook business?

So because a reseller puts a book on sale the publisher should take a hit so that Apple can sell at the same price? Say I make a book and after all my costs and a nice little profit I price it at $10, it's sold on Amazon and iBooks for $12.99, great right? But then unbeknownst to me or without my input Amazon drops the price to $9.99 taking a $. 01 loss on it, it really doesn't impact me because I'm still getting my $10 now Apple turns around and says under our agreement we have to sell the book at the same price but in this case I'll be only getting $7 per ebook.
Edited by dasanman69 - 8/16/12 at 1:04pm

That's the agency model. Curious that the objection has now morphed to how it hurts the publisher rather than the consumer, yet it was the publishers who agreed to it over the wholesale model and were then accused of price fixing.