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Penguin Books CEO gives mixed testimony in Apple e-books suit - Page 2

post #41 of 68
Quote:
Originally Posted by JollyPaul View Post

I get the feeling the DOJ is more interested in a show piece win than finding the truth. Start with a conclusion and work backwards. The publishers who did wrong settled, and I bet part of that settlement was a promise to help drag Apple into their mess.

 

If you objectively look at all the facts in this case, which includes Amazon's monopoly position in the eBook market, and near monopoly position in physical books, at the time all of this happened, you are left with only 2 possible explanations:

 

1. The lawyers at DoJ are utterly stupid and unable to see the effects this would have on the publishing industry if they prevail.

 

2. Someone at DoJ controlling this process is completely corrupt and either paid off by Amazon (or promised future "compensation") or they or someone close to them owns a lot of Amazon stock.

 

Nothing but long-term, severe consumer harm and damage to the publishing industry can come from the DoJ winning this case and handing Amazon monopoly control of the entire publishing industry. And I for one don't believe the lawyers who work there are that stupid. (Although, there were those hires by the previous administration that were based on political views and not professional qualifications.) So it's very hard not to conclude that this entire proceeding stems from some utterly corrupt person or persons at the DoJ.

post #42 of 68

Can't claim to know anything about ebook price fixing but I can safely say I've never understood how an ebook can cost more than a paperback.  To me there's nothing tangible there, nothing to actually touch so why (in UK) do we see examples of paperback at £ 7 & ebook at £ 10?

post #43 of 68
Quote:
Originally Posted by Wiggin View Post

 

An honest question...exactly what laws does everyone think Amazon has violated? Monopolies are not automatically illegal. And I would go so far as to suggest that "ebooks" are not a market onto themselves. Doesn't everyone remember when iTunes Store had the vast majority of of the downloadable music market? When people started complaining about Apple's "monopoly" many of the same people posting here were saying that can't be because you can still buy CDs. Well, I can still buy paper books. And I often do because they are CHEAPER than the ebooks!
 

Actually, monopolies are not illegal at all. Monopolistic practices are a different story.

post #44 of 68
Quote:
Originally Posted by hill60 View Post

 

Such as the publisher of the best selling 50 Shades series, who sold their books on iBooks for $9.99?

 

 

They did so on their own volition. I am saying DoJ's case clearly shows Apple et al to be guilty. Their contention is that there was an attempt to form a cartel. People here, most of whom are clearly not legal experts, categorically refute the validity of any evidence. All I am saying is that there is some logic to their case. But I am starting to see a pattern here - It's not about logic. One is not allowed to submit any opinion that paints Apple in any negative light at all. 

 

Quote:
Originally Posted by hill60 View Post

 

Since Apple opened their iBooks store the price of eBooks fell from $7.97 on average to $7.34.

 

Which coincided with the "other distributors and retailers" of eBooks increasing their market share from 10 to 40%.

 

Apple actually fostered competition along with more choice for consumers.

 

The outcome is most irrelevant. DoJ's target is the formation of the cartel, not whether it achieved its objective or not.

post #45 of 68

For those not familiar with the MFN clause (Most Favor Nation) this is standard in contract price negotiation and many time there are stipulation around this clause since a company would never guaranty a buyer of their products the best price under any and all conditions. Many time if you are new to doing business with a company your ability to get an MFN is next to zero % because they usually have it with another buyer and can not grant the same MFN two buyers. Also most companies will not sign up to MFN since it limits who they can do business with many time.

 

If the publisher sign up for them it was their doing, they did not have to agree to an MFN with Apple, or they could have put conditions around it which still allowed them to price how they liked with other customers. Part of the reason Amazon get a better price is the fact that Publisher over product books (paper books that is) and Publishers do this to get the lowest production costs, but most time they can not sell them through regular channels at the higher price so they dump them to Amazon to sell cheep.

 

I find it interesting that a Publisher would sign and MFN with Apple being new to the market place and. It hard to enforce MFN's especially when you have no history of buying the product. It like coming in and say I want the best pricing since I am going to sell more than any of your other customers, and you have no track record of buying the product in the past. MFN usually come into play after you been doing business together and you have proven track history of buying so much product.

post #46 of 68
Quote:
Originally Posted by TimmyDax View Post


In the case of a lack of a dominant position, it should indeed be presumed that any price fixing damages the consumer, unless proven otherwise. The problem is that this is backwards when retailers are substantially decreasing the value of the products they sell through excessively aggressive pricing. This damages the market as a whole.
I, for one, very much appreciate your contributions; they stop this forum from being a group of old men nodding in unison, or picking at pedantic unprovable beliefs.

 

Can beliefs be pedantic?

 

What's wrong with picking at unprovable beliefs?

post #47 of 68
Quote:
Originally Posted by Maestro64 View Post

 

I find it interesting that a Publisher would sign and MFN with Apple being new to the market place and. It hard to enforce MFN's especially when you have no history of buying the product. It like coming in and say I want the best pricing since I am going to sell more than any of your other customers, and you have no track record of buying the product in the past. MFN usually come into play after you been doing business together and you have proven track history of buying so much product.

The testimony of Penguin's CEO may explain why. First, he called it "irrational enthusiasm", as he was persuaded to believe the hyperbolic sales that would be facilitated by the iBooks platform. Second, it was peer pressure. Once other publishers signed on, being left out could be a risk. Lest we forget, Apple was also new to music distribution when it persuaded the major labels to sign onto to the $0.99 iTunes deal.

post #48 of 68
Quote:
Originally Posted by whatever71 View Post

Can't claim to know anything about ebook price fixing but I can safely say I've never understood how an ebook can cost more than a paperback.  To me there's nothing tangible there, nothing to actually touch so why (in UK) do we see examples of paperback at £ 7 & ebook at £ 10?

I think ebooks are released when the hardcovers are released and way before any soft backs are release. When soft backs are released, they don't drop the hard cover prices either.
post #49 of 68
Quote:
Originally Posted by Gatorguy View Post


FWIW:
http://www.ftc.gov/opa/2012/08/mfn.shtm
"The most commonly used MFN provisions guarantee a customer that it will receive prices that are at least as favorable as those provided to other buyers of the same seller, for the same products or services. Although at times employed for benign purposes, MFNs can under certain circumstances present competitive concerns. This is because they may, especially when used by a dominant buyer of intermediate goods, raise other buyers’ costs or foreclose would-be competitors from accessing the market. Additionally, MFNs can facilitate collusion and stabilize coordinated pricing among sellers."

Even someone as experienced at contract law as yourself might still be able to learn a few new things from researching the subject. Stuff changes.

 

When the FTC made that statement is not about the buyer stand point but the seller. In the case of the publishers, agreeing to the MFN may help them control pricing as they want. but the buyer can not be held responsible for the seller actions. Just because and MFN exist, the sell is free to sell to everyone at the same price, all it will guarantees the buyer with the MFN would never pay more than anyone else. In Apple case if the publisher still sold to Amazon at $10 then they would have to sell to Apple for $10 as well. It was the publishers choose in the matter. Now if the publish choose to set pricing at a higher price and then went to Amazon and say they now have to raise their price due to an MFN clause they now have with Apple , well we now know the end result of that strategy.

 

Just remember the sole purpose of an MFN from the buyers stand point to always get the best and lowest price, thus best for the consumer. If the selling used the MFN to ensure fixed higher pricing that is a different matter and not the fault of the buyer and their contract.

 

I think in the DoJ case they thing the publish and apple agree to have MFN with all the publisher thus allowing them to force all buyers to a higher price. Well I guess this will teach Amazon to get MFN in place so they can guaranty the lowest price.

post #50 of 68
Quote:
Originally Posted by StruckPaper View Post

The testimony of Penguin's CEO may explain why. First, he called it "irrational enthusiasm", as he was persuaded to believe the hyperbolic sales that would be facilitated by the iBooks platform. Second, it was peer pressure. Once other publishers signed on, being left out could be a risk. Lest we forget, Apple was also new to music distribution when it persuaded the major labels to sign onto to the $0.99 iTunes deal.

Oh come in he is a CEO, there is no peer pressure, it not like writers of books sign deals with multiply publishers, If people want to read the books his company has to sell the consumer can not go to another publisher and buy the book. Talk about illegal activities, why can writers sign deals with as many companies as they like, why do they have to be limited to one publisher. Yeah the publishers have to fear being left our since you can write a book and sell it on itunes and not share the profits with the publisher.

 

Yeah they did the deal with Apple to ensure that apple will not allow writers to self publish and cut them out. You know that a music artist is not allow to sell their songs on itunes unless they go through a record label, That is the deal that Apple made with all the record label to ensure they got access to their record library

 

The more I read about this and listen to what happen and I believe part of the reason Apple is letting it go this far is to allow it all to be on the public record. It is obvious that Amazon did not like what was about to happen so they made a stink to the DoJ and the publishers probably all got together used the Apple model to undo the monster they created in Amazon and it is now back fired on the publishers and they pulled Apple into their mess.


Edited by Maestro64 - 6/5/13 at 2:39pm
post #51 of 68
Quote:
Originally Posted by Maestro64 View Post

When the FTC made that statement is not about the buyer stand point but the seller. In the case of the publishers, agreeing to the MFN may help them control pricing as they want. but the buyer can not be held responsible for the seller actions. Just because and MFN exist, the sell is free to sell to everyone at the same price, all it will guarantees the buyer with the MFN would never pay more than anyone else. In Apple case if the publisher still sold to Amazon at $10 then they would have to sell to Apple for $10 as well. It was the publishers choose in the matter. Now if the publish choose to set pricing at a higher price and then went to Amazon and say they now have to raise their price due to an MFN clause they now have with Apple , well we now know the end result of that strategy.

Just remember the sole purpose of an MFN from the buyers stand point to always get the best and lowest price, thus best for the consumer. If the selling used the MFN to ensure fixed higher pricing that is a different matter and not the fault of the buyer and their contract.

I think in the DoJ case they thing the publish and apple agree to have MFN with all the publisher thus allowing them to force all buyers to a higher price. Well I guess this will teach Amazon to get MFN in place so they can guaranty the lowest price.

You're getting arguments confused. JRag commented on there being nothing wrong with MFN clauses. He's right there's nothing inherently illegal about them but there are possible scenarios where they might cross the line leading to anti-competitive or antitrust allegations. He apparently wasn't aware of that.

Apple of course isn't the party who instigates the MFN clause. That would be the publishers and the FTC addresses such a situation where several competitors act in concert. Apple was sucked into the case only because the DoJ says Apple coordinated the publisher agreements acting as a go-between and thus colluded with the publishers on an illegal scheme. The MFN clause itself isn't Apple's responsibility but if it can be proved that Apple facilitated and /or encouraged the conversations between the usually competing companies leading to a non-competitive MFN agreement then it could be a problem for Apple.
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post #52 of 68

From what I remember reading, the MFN Clause only referred to new titles. Older titles can be sold anywhere at whatever price. Also, it only applies to titles that the publisher sells through Apple. Amazon (and others) are still allowed to have exclusives on content. This is why they still have a book of the week and can still offer content at lower prices on some books.

 

Is Amazon scheduled to testify here at all? Curious. 

 

I also wonder if this is a way to put Amazon and its practices on trial without actually suing them directly. 

 

Doesn't Penguin's CEO say that after they inked the Agency model deal with Apple that they called Amazon and "Tried to get them to move to it as well"?  This implies that Amazon didn't have to switch to this model. Not sure what would of happened if they didn't. 

post #53 of 68
Quote:
Originally Posted by timgriff84 View Post

 

So if you assume the publisher gets $5 for the book irrespective of who sells it and Apple are selling it at $7. A bookstore who wants to sell a range of books at cost price at $5 for a promotion would be prohibited as they would not be allowed to undercut Apple. The publisher wouldn't be lowering the price on Apple site as it isn't them paying for the promotion. That is fixing a price up, not down.


I think you have it wrong, see Maestro's post #49.  There is no (Apple) agreement/contract issue prohibiting the bookstore (i.e. Amazon) from undercutting Apple.  Or am I incorrect?

post #54 of 68
Quote:
Originally Posted by Gatorguy View Post


The group of eBook publishers was the "dominant player", altho the statement you're using in your argument doesn't make industry dominance a requirement anyway does it? Apple got swept in accused of colluding with that "dominant" group. It shouldn't be that hard to understand. It doesn't of course mean they'll be found guilty of anything.


in JungMark's defense, the wording is "dominant buyer" (not "player")...the buyer would be Apple not the group of publishers.

And it DOES matter in the court of law how the words "dominant buyer" is defined and is relevant to this case.

Collusion is a different matter.  I agree that if Apple colluded with the various publishers that that would be wrong and punishable.

post #55 of 68
Quote:
Originally Posted by drewys808 View Post


I think you have it wrong, see Maestro's post #49.  There is no (Apple) agreement/contract issue prohibiting the bookstore (i.e. Amazon) from undercutting Apple.  Or am I incorrect?

There was a prohibition against selling any of the new release "best-sellers" for less than $12.99 (that MFN stipulation), but since the publisher settlements there's not anymore.
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post #56 of 68
Quote:
Originally Posted by StruckPaper View Post

Can beliefs be pedantic?

What's wrong with picking at unprovable beliefs?

I see what you're getting it but they can and often are highly pedantic.

ped•ant |ˈpednt|
noun
- a person who is excessively concerned with minor details and rules or with displaying academic learning.

Think about religion as a prime example of beliefs. They have a lot of rules and there are careers and lives devoted to understanding, teaching, and following the details set by these rules. Often these rules seem highly ambiguous which then leads to interpretation of every minute detail to find answers.

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post #57 of 68
Quote:
Originally Posted by drewys808 View Post


in JungMark's defense, the wording is "dominant buyer" (not "player")...the buyer would be Apple not the group of publishers.

And it DOES matter in the court of law how the words "dominant buyer" is defined and is relevant to this case.

Collusion is a different matter.  I agree that if Apple colluded with the various publishers that that would be wrong and punishable.

 

Apple doesn't "buy" anything, end users do.

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post #58 of 68
Quote:
Originally Posted by hill60 View Post

 

Apple doesn't "buy" anything, end users do.


No.  I believe the use of the term, "buyer" is Apple, not the end user:

http://www.ftc.gov/opa/2012/08/mfn.shtm

post #59 of 68
Quote:
Originally Posted by whatever71 View Post

Can't claim to know anything about ebook price fixing but I can safely say I've never understood how an ebook can cost more than a paperback.  To me there's nothing tangible there, nothing to actually touch so why (in UK) do we see examples of paperback at £ 7 & ebook at £ 10?

What is tangible value is the thought, work, imagination and talent the words represent. The price is determined by what the consumer is willing to pay for it. What "it" is has many factors. I pay for instant download instead of 3 day wait from amazon.com or a road trip to B&N where they may or may not have stock. I pay for convenience by using the content on multiple iPads and iPhone; other's iPads might use my iTunes Store account for content as well. I pay for bookmarks that sync. I pay for mobility of many volumes in a tight package instead if a backpack. I pay for a consistent environment and experience from as few content providers as possible.

Does 7-11 charge the same for the same product as a B&M that closes at 8:00pm?

I think the core mistake being made is that DoJ is believing there is a paper book market and then there is an eBook market.. I believe Apple can demonstrate and is holding as their trump that there is only a book market. Why do hardcover continue to sell after paperbacks are released? It's called the free market.

Edit: a complex component in all this is that each book is a legal monopoly with multiple delivery methods. There are not two or more "Atlas Shrugged"
Edited by ChristophB - 6/5/13 at 7:24pm
post #60 of 68
Quote:
Originally Posted by drewys808 View Post


No. I believe the use of the term, "buyer" is Apple, not the end user:
http://www.ftc.gov/opa/2012/08/mfn.shtm

Apple is an agent, not a buyer.
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post #61 of 68

Dear hill60, please do not edit my post and then repost it.

post #62 of 68
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Originally Posted by drewys808 View Post

Dear [Everyone], please […] edit my post and then repost it.

No problem.

Seriously though, I think he just put the cursor in the wrong place.

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post #63 of 68
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Originally Posted by SolipsismX View Post

No problem.

Seriously though, I think he just put the cursor in the wrong place.

Corrected. Looks like an honest mistake to me.
post #64 of 68
Quote:
Originally Posted by hill60 View Post


Apple is an agent, not a buyer.


Thanks for correcting.  My apologies for jumping to conclusions.

 

Back to MFN clause...please read it.  It's related to a "buyer" of intermediate goods.  Apple is the Buyer. 

 

Anyway, I was just clarifying JungMark's original point which was valid.  No sense in beating a dead horse.

 

Here's the text from FTC:

"The most commonly used MFN provisions guarantee a customer that it will receive prices that are at least as favorable as those provided to other buyers of the same seller, for the same products or services.  Although at times employed for benign purposes, MFNs can under certain circumstances present competitive concerns.  This is because they may, especially when used by a dominant buyer of intermediate goods, raise other buyers’ costs or foreclose would-be competitors from accessing the market. "

post #65 of 68
Quote:
Originally Posted by drewys808 View Post


Thanks for correcting.  My apologies for jumping to conclusions.

Back to MFN clause...please read it.  It's related to a "buyer" of intermediate goods.  Apple is the Buyer. 

Anyway, I was just clarifying JungMark's original point which was valid.  No sense in beating a dead horse.

Here's the text from FTC:
"The most commonly used MFN provisions guarantee a customer that it will receive prices that are at least as favorable as those provided to other buyers of the same seller, for the same products or services.  Although at times employed for benign purposes, MFNs can under certain circumstances present competitive concerns.  This is because they may, especially when used by a dominant buyer of intermediate goods, raise other buyers’ costs or foreclose would-be competitors from accessing the market. "

Apple wasn't the dominant buyer though, that would be Amazon, and it probably still is. I really haven't tracked the details of this case, but I can understand not wanting to compete in a market where another player has such a drastic preferential pricing. There would be a distinct disadvantage.
post #66 of 68
Quote:
Originally Posted by JeffDM View Post


Apple wasn't the dominant buyer though, that would be Amazon, and it probably still is. I really haven't tracked the details of this case, but I can understand not wanting to compete in a market where another player has such a drastic preferential pricing. There would be a distinct disadvantage.


Yes!...and that was JungMark's original point (that Apple was not a DOMINANT buyer).

As well, some may say that the word "dominant" is a non-issue, but I beg to differ.

post #67 of 68
Quote:
Originally Posted by drewys808 View Post


Yes!...and that was JungMark's original point (that Apple was not a DOMINANT buyer).
As well, some may say that the word "dominant" is a non-issue, but I beg to differ.

It's clearly not a non-issue or the FTC wouldn't mention it. Being a dominant player also isn't a requirement. Note the phrase is set within commas and the sentence will stand-alone just fine without it. Try reading it that way and you'll realize it's not intended to be limited to only dominant players.
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post #68 of 68
Quote:
Originally Posted by drewys808 View Post


Thanks for correcting.  My apologies for jumping to conclusions.

Back to MFN clause...please read it.  It's related to a "buyer" of intermediate goods.  Apple is the Buyer. 

Anyway, I was just clarifying JungMark's original point which was valid.  No sense in beating a dead horse.

Here's the text from FTC:
"The most commonly used MFN provisions guarantee a customer that it will receive prices that are at least as favorable as those provided to other buyers of the same seller, for the same products or services.  Although at times employed for benign purposes, MFNs can under certain circumstances present competitive concerns.  This is because they may, especially when used by a dominant buyer of intermediate goods, raise other buyers’ costs or foreclose would-be competitors from accessing the market. "

Customer purchases iBook listed in Apples store.

Apple pays the person who listed said iBook 70% of the price they listed it for and retains 30%.

At what stage in this transaction does Apple become the "buyer".

Is EBay the "buyer" of all the goods listed in their stores?

Apple is an agent, pure and simple.

btw the earlier post resulted due to an error no doubt caused by using my tiny screened iPhone 5, which I hold delicately in my hand, like a thimble.
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