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Apple is lone holdout in DOJ e-book pricing case after Macmillan settles

post #1 of 60
Thread Starter 
Book publisher Macmillan has settled with the U.S. Department of Justice to avoid an e-book price fixing investigation, leaving Apple as the only company that has not yet reached an out-of-court settlement.

Macmillan's settlement means that book retailers, including Amazon, will be able to discount digital titles of all major publishers, according to The Wall Street Journal. Macmillan joins settlements already made by Penguin, Hachette, HarperCollins, and Simon & Schuster.

Book publishers
Late Apple cofounder Steve Jobs introduces iBooks iPad app and partner publishers in 2010. | Source: Apple


Those publishers, along with Apple, were accused of collusion in raising e-book prices. Apple offered publishers the ability to set their own prices on its iBookstore through the so-called "agency model."

That was a change from Amazon's low-margin wholesale model, which lets retailers buy content in bulk and sell it at or below cost. Apple and publishers favored the agency model because it gave the publishers the ability to set their own prices and control what an e-book should cost.

However, the end result of that was higher prices for e-books for consumers. That led the DOJ to move forward with litigation for "conspiring to raise e-book prices."

Following Macmillan's settlement, Apple stands alone against the DOJ's allegations. The iPad maker has denied the charges, but has not signaled whether it plans to settle.

Friday's settlement requires Macmillan to allow e-book retailers to begin discounting titles within three business days. John Sargent, Macmillan's chief executive, said his company settled "Because the penalties became too high to risk even the possibility of an unfavorable outcome," though he still contends that his company did not actually do anything wrong.
post #2 of 60

The DoJ continues on its crusade to gut an industry and hand it over to Amazon. There is either gross stupidity or rank corruption at work here.

post #3 of 60
Quote:
Originally Posted by anonymouse View Post

The DoJ continues on its crusade to gut an industry and hand it over to Amazon. There is either gross stupidity or rank corruption at work here.

I agree. But at what point does amazon start making money? Can they survive indefinitely with this model?
post #4 of 60
Originally Posted by anonymouse View Post
The DoJ continues on its crusade to gut an industry and hand it over to Amazon. There is either gross stupidity or rank corruption at work here.

 

One breeds the other. I imagine it's both.

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post #5 of 60
America is quickly losing its ability to remain a great nation. DOJ lawsuits like this, fighting wars we don't belong in, a government that seeks to satisfy itself instead of its people is a pathetic commentary on all of us.
post #6 of 60
I'm for a free market setsing the price and compition thats what the constitution says but amazon is giving everything for free how do you call them a profitable comany and they seem to be in bed with the DOJ but that's my opinion
post #7 of 60

This isn't even about Amazon. Anyone saying that is just like the folks defending Apple letting their stock tank while releasing "new" products with price increases all with last years technology (See "new" iPod Touch at $300 and "new" iPad Mini at $329).

 

We are told that Apple doesn't care about the 30% they make on the iTune store. We are constantly told that it just pays for the hosting infrastructure. Well e-publishers are more than willing to host their own infrastructure as is anyone who wanted to include a store within their app for purchasing. Apple has denied stores within apps and is trying to bring more market to their own infrastructure rather than let lower margin products be dealt with by others.

 

So the point about Apple and their 30% is pure nonsense. It is profitable and they want it.

 

The claim that Amazon is trying to clear the field by forcing all their competitors out of this area is also nonsense. Apple has bucket loads of cash. Amazon could never force them to burn through it and survive themselves. Are we supposed to believe that Amazon has some means of losing $150 billion to force Apple to burn through their $137 billion, all so they can make that back and some untold of additional billions later on in the e-book market? Ebook revenue is still estimated to be less than $2 billion this year. So Amazon just needs to find a way to make Apple lose $137 billion so they can claim a $2 billion dollar a year market.

 

People repeat these talking points so they can turn off their thinking.

 

Apple wants their margins. They want it everywhere. They made a deal to keep them because Amazon will accept less than 30% profit on some books.

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post #8 of 60

Fortunately if the DoJ is true to form they'll let Apple settle too without admitting they did anything wrong. That's seems to be the norm.

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post #9 of 60
Quote:
Originally Posted by trumptman View Post

This isn't even about Amazon. Anyone saying that is just like the folks defending Apple letting their stock tank while releasing "new" products with price increases all with last years technology (See "new" iPod Touch at $300 and "new" iPad Mini at $329).

We are told that Apple doesn't care about the 30% they make on the iTune store. We are constantly told that it just pays for the hosting infrastructure. Well e-publishers are more than willing to host their own infrastructure as is anyone who wanted to include a store within their app for purchasing. Apple has denied stores within apps and is trying to bring more market to their own infrastructure rather than let lower margin products be dealt with by others.

So the point about Apple and their 30% is pure nonsense. It is profitable and they want it.

The claim that Amazon is trying to clear the field by forcing all their competitors out of this area is also nonsense. Apple has bucket loads of cash. Amazon could never force them to burn through it and survive themselves. Are we supposed to believe that Amazon has some means of losing $150 billion to force Apple to burn through their $137 billion, all so they can make that back and some untold of additional billions later on in the e-book market? Ebook revenue is still estimated to be less than $2 billion this year. So Amazon just needs to find a way to make Apple lose $137 billion so they can claim a $2 billion dollar a year market.

People repeat these talking points so they can turn off their thinking.

Apple wants their margins. They want it everywhere. They made a deal to keep them because Amazon will accept less than 30% profit on some books.

Funny thing - I don't notice any facts to back up your rant.

It is public knowledge that Apple's direct profits on iTunes are minimal (no one ever said that Apple doesn't care about it). The gross margins in ITMS are 30%. From that, you subtract all the costs of hosting, advertising, support, etc to get the operating margin. Both numbers are far, far lower than Apple's margins on other products.

Apple obviously wants iTMS. It is probably also profitable (at a much lower level than most of their product). It is NOT, however profitable enough to be justified as a standalone business, at least not for Apple.

The nonsense about Amazon is ridiculous, too. The fact that Apple has lots of cash does not mean that Amazon can't be guilty of anticompetitive behavior.
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post #10 of 60
@trumptman You don't make sense. You're saying Amazon is not out to clear out their competitors because their pockets are not deep enough to get Apple to lose $137 billion. Well, guess what? They don't need deep pockets now because the feds are doing the clearing out for them. Sure Apple wants the profits. Amazon does too and they'll be making more than 30% margins once they've sewed up the eBook retailing AND publishing industries.
post #11 of 60

I guess Apple's the one with the money to fight. Ironic, since Apple can't lose: even if iBooks' pricing has to change, or even if (worst case) iBooks' selection is harmed, it does little to Apple's core business of selling devices. An iPad will still be a better Kindle (because it's so much more than that) than an actual Kindle.

 

BOTH Apple and Amazon would rather you buy an iPad than a no-profit Kindle... Amazon's happy to have you buy books on their site and read them in the Kindle app. Same with the Nook.

 

There's good-sounding rhetoric on both sides, but in the end, an Amazon monopoly helps nobody. Heck, Apple's devices support Kindle content! Kindle is the ereader I use most on my iPad (because iBooks doesn't support library lending).

 

And Amazon isn't always that great to authors—discounting your work without your say-so, etc.

post #12 of 60
Quote:
Originally Posted by nagromme View Post

I BOTH Apple and Amazon would rather you buy an iPad than a no-profit Kindle... Amazon's happy to have you buy books on their site and read them in the Kindle app. Same with the Nook.

There's good-sounding rhetoric on both sides, but in the end, an Amazon monopoly helps nobody. Heck, Apple's devices support Kindle content! Kindle is the ereader I use most on my iPad (because iBooks doesn't support library lending).

And Amazon isn't always that great to authors—discounting your work without your say-so, etc.

Well, an Amazon monopoly helps no one ..... except Amazon. A monopoly allows them to control pricing and to lock authors and publishers into unreasonable terms (you even gave an example yourself). It's a mistake to look at only the present. A monopoly would allow Amazon enormous power in the future.

Your claim that Amazon would rather have you buy an iPad is nonsense. Why did Amazon spend millions developing the Kindle? Why are they continuing to advertise it heavily? Why not simply partner with Apple and get the benefits you cite without the costs?
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post #13 of 60

Yeah, Apple should just wave the white flag and let Amazon own the e-book market.  I mean, it's not like Amazon is selling tablets or anything...

 

/sarcasm

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post #14 of 60
Quote:
Originally Posted by AppleInsider 
Those publishers, along with Apple, were accused of collusion in raising e-book prices. Apple offered publishers the ability to set their own prices on its iBookstore through the so-called "agency model."

That was a change from Amazon's low-margin wholesale model, which lets retailers buy content in bulk and sell it at or below cost. Apple and publishers favored the agency model because it gave the publishers the ability to set their own prices and control what an e-book should cost.

This is great, only Amazon can afford to buy in such large volumes to be able to sell at or below low volume cost price so preventing other retailers raising the prices means it gives Amazon an anti-competitive advantage. Nice work Department of Justice. I suppose now we just sit back, count the business closures and watch the unemployment rise as they can't replicate a business model that operates with...

let's see 2012 annual sales $61b, net profit -$39m = -0.06% net margins.

If I walked into a bank and asked for a $61b loan to buy books in bulk and sell them at or below cost price to effectively end up with bugger all at the end of the year and wipe out retail businesses up and down the country, do you think they'd give it me? At least I'd be able to make it look to investors like it was worth something what with all the big numbers:

http://seekingalpha.com/article/1157031-amazon-s-margin-myth-sleight-of-hand

This is one of those scenarios like the ones that break the laws of robotics. Which outcome do you decide is the greater good? Does the robot kill the human who is dismantling the robot before it can prevent the human detonating a bomb to kill thousands of people? If the greater good is ensuring the survival of the many at the expense of the few then yes.

Are people really going to stop shopping at Amazon if their prices are higher? No because nobody else can undercut them when they don't pay their taxes anyway. Laws need to be enforced to help not destroy the economy.
post #15 of 60
Quote:
Originally Posted by starbird73 View Post

I agree. But at what point does amazon start making money? Can they survive indefinitely with this model?

 

Sure, just as long as their shareholders let them get away with it.  Last time I checked, their P/E ratio was something approaching 4000.

 

Edit:  The P/E for AMZN is currently 3,752.9.  As a comparison, AAPL is 10.8.  1eek.gif


Edited by John.B - 2/8/13 at 10:45am

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post #16 of 60
why not room for both model?

or is letting the owner of the content have any say whatsoever in the price of their product now a bag thing? I suppose if you want to buy everything from Amazon and WalMart with no other option whatsoever, then maybe so.
post #17 of 60

nice, done... you have to be pretty stupid, young or just to into Apple not to understand why this needs to happen. But I think those are qualities the new iOS era has brought into the Apple community.

post #18 of 60
Originally Posted by agramonte View Post
nice, done... you have to be pretty stupid, young or just to into Apple not to understand why this needs to happen. But I think those are qualities the new iOS era has brought into the Apple community.

 

(Demeaningly) Young, stupid, and "too into Apple". Way to endear yourself to much of the userbase here.

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post #19 of 60
Quote:
Originally Posted by jragosta View Post

Why did Amazon spend millions developing the Kindle? Why are they continuing to advertise it heavily? Why not simply partner with Apple and get the benefits you cite without the costs?

They sold Kindles at a much lower price than iPads, especially at the beginning. This allowed them to get POS terminals into the hands of more people.
Also, don't forget the data mining benefits of selling their own devices.
post #20 of 60
Quote:
Originally Posted by trumptman View Post

 

The claim that Amazon is trying to clear the field by forcing all their competitors out of this area is also nonsense. 

 

If you are correct then why did Amazon have a favored nation clause since they opened their ebook sales that gave them control over what other stores could charge by way of denying them the right to discount below Amazon. Why did Amazon push for rights to start sales before 'street' and deny it to all others or dump all ebook and paper from publishers, why the demands for lifetime exclusive rights and so on

onto amazon never had the DOJ after them but it doesn't make what they were doing legal or right. Just not punished.

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post #21 of 60
Quote:
Originally Posted by lilgto64 View Post

why not room for both model?

or is letting the owner of the content have any say whatsoever in the price of their product now a bag thing? I suppose if you want to buy everything from Amazon and WalMart with no other option whatsoever, then maybe so.

 

Basically my argument. Let each store set their terms and those that are okay with them be okay with them. The only real collusion is the favored nation clauses so ban those. I would also say, to benefit customers, put a limit on exclusive deals for all media if not ban them. Say no more than six months, no renewals or extensions. 

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post #22 of 60
Quote:
Originally Posted by trumptman View Post

 

Apple wants their margins. They want it everywhere. They made a deal to keep them because Amazon will take more than 30% profit on some books, if publishers don't discount them.

 

Ain't dat da truth!

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post #23 of 60
Quote:
Originally Posted by starbird73 View Post

I agree. But at what point does amazon start making money? Can they survive indefinitely with this model?

Plenty of companies do just well with razor thin margins. Wall Street seems to like companies that thread water and keep their nose just above water.
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post #24 of 60
Quote:
Originally Posted by charlituna View Post

 

If you are correct then why did Amazon have a favored nation clause since they opened their ebook sales that gave them control over what other stores could charge by way of denying them the right to discount below Amazon. 

I wasn't aware that Amazon ever had that type of agreement with the publishers. Are you certain you didn't confuse them with Apple?

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post #25 of 60
Quote:
Originally Posted by charlituna View Post

Basically my argument. Let each store set their terms and those that are okay with them be okay with them. The only real collusion is the favored nation clauses so ban those. I would also say, to benefit customers, put a limit on exclusive deals for all media if not ban them. Say no more than six months, no renewals or extensions. 

Most favored nation is Apple's idea you know.
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post #26 of 60
Quote:
Originally Posted by John.B View Post

Yeah, Apple should just wave the white flag and let Amazon own the e-book market.  I mean, it's not like Amazon is selling tablets or anything...

/sarcasm

Can you read Amazon's ebooks on a iPad?
Can you read a iBook ebooks on a Kindle?
One isn't forced to own a Kindle to buy a ebook from Amazon. See the difference?
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post #27 of 60
Quote:
Originally Posted by agramonte View Post

nice, done... you have to be pretty stupid, young or just to into Apple not to understand why this needs to happen. But I think those are qualities the new iOS era has brought into the Apple community.

 

No, you just need to be an Apple shareholder, like the majority of people around here.

post #28 of 60
Quote:
Originally Posted by lilgto64 View Post

why not room for both model?

or is letting the owner of the content have any say whatsoever in the price of their product now a bag thing? I suppose if you want to buy everything from Amazon and WalMart with no other option whatsoever, then maybe so.

 

There is room for both models.   Apple can sell ebooks to iPhone users and people trapped in the Apple ecosystem for 30% higher than the exact same ebook that Amazon and other competitors sell for 30% less.  I have no problem with that at all.  When Apple tries to raise prices for *everyone* by 30% by getting suppliers to agree to that, that is a problem.

 

That's where the anticompetitive behavior comes in.  Apple got all the publishers to agree to selling their products on Apple's ecosystem at the higher 30% price.  Apple then pulled an Apple along the lines of "Well, we can't set the price and tell you you're not allowed to sell anywhere else- because that would meet the legal definition of price fixing, so what we're going to is this.  You set the (high) price for your product on the Apple ecosystem.  We can't tell you you can't sell anywhere else, but if you sell anywhere else for less than the price you have listed on the Apple ecosystem, we'll kick you out of our store."

 

Publishers would have loved this.  It is basically price fixing that a good lawyer can dance around for years to come.  End result:  Apple users would pay 30% more for ebooks which they would of course be happy with because Apple is the best thing ever.  Amazon users and everyone else as well would have to pay the price that Apple effectively sets as well.  Big win for Apple of course, nobody else can compete on them on price, and since they own the ecosystem no one can compete with them on delivery either.

 

If Apple wants to *compete* in the ebook market, traditional ways of competing would be to offer something better (or perceived to be better) that users are willing to pay more for; or to offer the exact same product at a *lower* price.   Offering the exact same product at a much higher price and preventing suppliers from offering that product to anyone else at a lower price is- well- price fixing, no matter how well they dance around the technicalities.

 

DoJ called them out on it.  All the suppliers fessed up quietly and are off the hook, 'yeah, we kinda knew, woulda been too good to be true.'  I agree Apple should do the same without much fanfare.  Minimal/no harm done.  The alternative is to spend a ton of money on lawyers, get boatloads more bad press, and have the public  perception of them (outside of the Apple fan circles) shifting ever more towards 'Apple, the new Microsoft'   And in the end, even if they 'win' and can claim they never met the strict definition of price fixing, their dream of not-quite-technically-price-fixing but supplying existing goods at higher prices to everyone will never be allowed to be implemented.

post #29 of 60
Quote:
Originally Posted by jragosta View Post

Funny thing - I don't notice any facts to back up your rant.

It is public knowledge that Apple's direct profits on iTunes are minimal (no one ever said that Apple doesn't care about it). The gross margins in ITMS are 30%. From that, you subtract all the costs of hosting, advertising, support, etc to get the operating margin. Both numbers are far, far lower than Apple's margins on other products.

Apple obviously wants iTMS. It is probably also profitable (at a much lower level than most of their product). It is NOT, however profitable enough to be justified as a standalone business, at least not for Apple.

The nonsense about Amazon is ridiculous, too. The fact that Apple has lots of cash does not mean that Amazon can't be guilty of anticompetitive behavior.

 

There are plenty of facts there. The ebook market is less than $2 billion a year. That is a fact. Apple has $137 billion in cash. That is a fact. iTMS profits are 30% regardless of competitors or media type. That is a fact. Apple made this deal with publishers because they wanted to keep their margins at 30%. That is a fact as well.

 

My "rant" is backed up by the facts and your rant is backed up by delusions contrary to the facts. It is not Amazon being pursued by the DOJ. Amazon did not change the model for all publishers and demand price increases and controls.

 

Quote:
Originally Posted by tundraboy View Post

@trumptman You don't make sense. You're saying Amazon is not out to clear out their competitors because their pockets are not deep enough to get Apple to lose $137 billion. Well, guess what? They don't need deep pockets now because the feds are doing the clearing out for them. Sure Apple wants the profits. Amazon does too and they'll be making more than 30% margins once they've sewed up the eBook retailing AND publishing industries.

 

Apple is a competitor. The claim is that Amazon is using the federal government to dictate to Amazon yet whatever Amazon could pay to lobby or distort the government into doing it's bidding, Apple could spend ten times more to avoid or to bend the government to doing it's own will. This is about what is right and letting the marketplace work, plain and simple.

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post #30 of 60
Quote:
Originally Posted by trumptman View Post

Apple is a competitor. The claim is that Amazon is using the federal government to dictate to Amazon yet whatever Amazon could pay to lobby or distort the government into doing it's bidding, Apple could spend ten times more to avoid or to bend the government to doing it's own will. This is about what is right and letting the marketplace work, plain and simple.

You lost me here. Are you saying Apple is wrong because they could spend more lobbying than Amazon or they are wrong because they aren't spending more on lobbying?

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post #31 of 60
Quote:
Originally Posted by anonymouse View Post

The DoJ continues on its crusade to gut an industry and hand it over to Amazon. There is either gross stupidity or rank corruption at work here.

Apple wants 30% margin on books. Amazon is happy with break even or slight loss. Under Apple's model Amazon would also receive 30% margin. Amazon shouldn't mind making that much profit, but they do, because they know they would never be able to compete against Apple's ecosystem. From the DoJ perspective they think jacking the price of books by 30% across the board is bad for consumers. Consumers of course agree. They are now conditioned to believe that they are entitled to books at wholesale cost. They don't want to pay the markup they used to pay before they started shopping at Amazon. The fair price for retail book purchases, of course, is probably somewhere between 30% and 0% but Apple can't change their price structure as that would open a can of worms for their other app store and in app purchasing fees that they charge software developers.

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post #32 of 60
Look at the the different models at this site:

http://www.teleread.com/publishing/the-math-of-publishing-a-book-in-print-or-electronic-format/

Everyone has a choice where to buy their book Amazon, Barnes and Noble or Apple just as much as where they want to buy bread and toothpaste.

Walmart works on razor thin, discounted margins for some product and higher margins for others. That is what Amazon does as well. If 7-11 has an agency model for Twinkies that raises the actual price overall, should we have to pay more at Walmart, Krogers or another place? WE decide where to buy our products so if buying a book for a bit more at Apple to support them over Amazon fine.

Apple always has and always will compete, but not at the cost to the consumer or free market. If someone hates Amazon and their discounts so much, get their own investors and do the same thing to them. It is a question of who wants to do business by that model or not, anyone could do the same thing.

Apple is more than likely to be here in 15 years than Amazon, just let the consumer decide.
post #33 of 60
Quote:
Originally Posted by mstone View Post

Apple wants 30% margin on books. Amazon is happy with break even or slight loss. Under Apple's model Amazon would also receive 30% margin. Amazon shouldn't mind making that much profit, but they do, because they know they would never be able to compete against Apple's ecosystem. From the DoJ perspective they think jacking the price of books by 30% across the board is bad for consumers. Consumers of course agree. They are now conditioned to believe that they are entitled to books at wholesale cost. They don't want to pay the markup they used to pay before they started shopping at Amazon. The fair price for retail book purchases, of course, is probably somewhere between 30% and 0% but Apple can't change their price structure as that would open a can of worms for their other app store and in app purchasing fees that they charge software developers.

Why does Amazon have to do it Apple's way? Who the hell is Apple to dictate how Amazon should run their ebook business? This is one time that Apple's ecosystem loses on. Why would I buy a ebook from the iBook store and be locked into only ever reading it on a iOS device when I can buy the same one for Amazon for less and across multiple platforms? Since Apple is late to this game and doesn't want to play by other people's rules it would benefit them to even the playing field.
Edited by dasanman69 - 2/8/13 at 2:39pm
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post #34 of 60
Quote:
Originally Posted by dasanman69 View Post

Why does Amazon have to do it Apple's way? 

They don't. The agreement was that if the publishers allowed Amazon to sell the book for less then Apple was entitled to sell the book for the same price as Amazon. The problem is one for the publishers because Apple still would get the 30% margin. The loss would be entirely the publishers', and Amazon's, because they would still be making zero profit.

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post #35 of 60
Quote:
Originally Posted by mstone View Post

They don't. The agreement was that if the publishers allowed Amazon to sell the book for less then Apple was entitled to sell the book for the same price as Amazon. The problem is one for the publishers because Apple still would get the 30% margin. The loss would be entirely the publishers', and Amazon's, because they would still be making zero profit.

So the publishers have to take a loss because Apple can't compete?
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post #36 of 60
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Originally Posted by SolipsismX View Post

Quote:
Originally Posted by trumptman View Post

Apple is a competitor. The claim is that Amazon is using the federal government to dictate to APPLE yet whatever Amazon could pay to lobby or distort the government into doing it's bidding, Apple could spend ten times more to avoid or to bend the government to doing it's own will. This is about what is right and letting the marketplace work, plain and simple.

You lost me here. Are you saying Apple is wrong because they could spend more lobbying than Amazon or they are wrong because they aren't spending more on lobbying?

 

Sorry about that, my fingers typed the wrong "A" word. lol.gif

 

The claim regarding DOJ and them doing the bidding of Amazon aka "clearing the marketplace" for them is completely unproven. My point is that Apple is the type of that could afford to play that game stronger, longer and in a more expensive fashion than Amazon could ever do.

 

 

Quote:
Originally Posted by dasanman69 View Post

Quote:
Originally Posted by mstone View Post

Apple wants 30% margin on books. Amazon is happy with break even or slight loss. Under Apple's model Amazon would also receive 30% margin. Amazon shouldn't mind making that much profit, but they do, because they know they would never be able to compete against Apple's ecosystem. From the DoJ perspective they think jacking the price of books by 30% across the board is bad for consumers. Consumers of course agree. They are now conditioned to believe that they are entitled to books at wholesale cost. They don't want to pay the markup they used to pay before they started shopping at Amazon. The fair price for retail book purchases, of course, is probably somewhere between 30% and 0% but Apple can't change their price structure as that would open a can of worms for their other app store and in app purchasing fees that they charge software developers.

Why does Amazon have to do it Apple's way? Who the hell is Apple to dictate how Amazon should run their ebook business? This is one time that Apple's ecosystem loses on. Why would I buy a ebook from the iBook store and be locked into only ever reading it on a iOS device when I can buy the same one for Amazon for less and across multiple platforms? Since Apple is late to this game and doesn't want to play by other people's rules it would benefit them to even the playing field.

 

This is a very well made point. Also Amazon has been an innovator in ebooks with their Kindle line. They've been very open and, in my opinion provide the best solutions and ecosystem for reading ebooks. Apple's problem with them is that they have out-Apple'd Apple. They have Kindles in all flavors just like Apple had iPods. They offer their reader on all manner of platforms. It wasn't the recording companies that dicated to Apple back in the day, it was Apple that told them that singles at $.99 and albums for no more than $9.99 were in their best interest.

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post #37 of 60
Quote:
Originally Posted by dasanman69 View Post

Quote:
Originally Posted by mstone View Post

They don't. The agreement was that if the publishers allowed Amazon to sell the book for less then Apple was entitled to sell the book for the same price as Amazon. The problem is one for the publishers because Apple still would get the 30% margin. The loss would be entirely the publishers', and Amazon's, because they would still be making zero profit.

So the publishers have to take a loss because Apple can't compete?

I'm not saying 30% is a fair markup but that is in keeping with Apple's app store markup. I actually think it should be less but I'm not really involved except as a consumer. The only reason Apple gets away with 30% in apps is because they have an exclusive for iOS devices and somewhat in Mac hardware. I seriously doubt they get 30% in movies or music from the big studios as there are many places to download those medias. But they don't disclose the margins on those medias either. It probably would have been better if Amazon had originally structured their ebook prices with some profit built in as Apple would have quietly matched the price and not publicize the deals, but Apple is not going to sell ebooks for zero margin like Amazon so they tried to structure the arrangement differently than other media downloads.

 

It will be interesting to see how this turns out. Strictly from a technical or legal definition, it is against the law to sell your retail items at a loss in order to create a monopoly. It is not like Amazon has their ebooks temporarily on sale. That is their everyday, no profit, price so there is some question whether Amazon's pricing model is even legal.

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post #38 of 60
Quote:
Originally Posted by trumptman View Post

It wasn't the recording companies that dicated to Apple back in the day, it was Apple that told them that singles at $.99 and albums for no more than $9.99 were in their best interest.

Exactly, and I'm sure no one here said "Who the hell is Apple to tell the record companies at what price to sell songs and albums?" Now Amazon sets the ebook market and people only complained when Apple decided to sell ebooks. Now all of a sudden there's cries of "Amazon has a monopoly", where were those cries pre-iPad?
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
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"Few things are harder to put up with than the annoyance of a good example" Mark Twain
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post #39 of 60
Quote:
Originally Posted by mstone View Post


It probably would have been better if Amazon had originally structured their ebook prices with some profit built in as Apple would have quietly matched the price and not publicize the deals, but Apple is not going to sell ebooks for zero margin like Amazon so they tried to structure the arrangement differently than other media downloads.

It will be interesting to see how this turns out. Strictly from a technical or legal definition, it is against the law to sell your retail items at a loss in order to create a monopoly. It is not like Amazon has their ebooks temporarily on sale. That is their everyday, no profit, price so there is some question whether Amazon's pricing model is even legal.

Do you seriously believe Amazon sells every ebook at cost or below cost? No they do not. Most ebooks sell for the same price across all ebook stores. It's some of the best sellers that they're willing to take a loss on in hopes that the consumer purchases even more from them.
"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
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"Few things are harder to put up with than the annoyance of a good example" Mark Twain
"Just because something is deemed the law doesn't make it just" - SolipsismX
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post #40 of 60
Quote:
Originally Posted by dasanman69 View Post

 Most ebooks sell for the same price across all ebook stores. It's some of the best sellers that they're willing to take a loss on in hopes that the consumer purchases even more from them.

I had not done a comparison before but after a quick look at Nook vs. Kindle prices they are largely the same as you say although I found a few that were marginally more expensive on Nook and several that were not available on Kindle. I wonder if you have any links to support that either/both stores are not selling at break even or a loss. As far as I know they don't release information like that.

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  • Apple is lone holdout in DOJ e-book pricing case after Macmillan settles
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