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Penguin appeases EU regulators by ditching e-book deal with Apple

post #1 of 36
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The European Commission on Thursday announced that it has reached an agreement with book publisher Penguin, ending its antitrust probe against the company.

iBooks


The European Union's legislative arm officially approved the conditions it and Penguin reached in April, the commission announced in a press release. Per the terms of those conditions, Penguin will not make any agreements that would allow it, and not a retailer, to set prices on titles.

The agreement brings to an end the so-called "most favored nation" pricing agreement Penguin had with Apple, which allowed the publisher to set content pricing as long as it didn't sell said content to another retailer for less.

Major book publishers and Apple had agreed to an "agency model" of pricing when the iPad with iBooks debuted. That was a change from the "wholesale model" they had before with book sellers like Amazon, which were allowed to resell e-books at or below cost.

Apple's e-books deals found the company under fire on both sides of the Atlantic. Apple and the accused publishers outside of Penguin reached a settlement in Europe in December, but Apple fought an antitrust suit from the U.S. Department of Justice in its home country.

But Apple lost that case, as a judge found that the iPad maker had conspired with book publishers to raise the price of e-books. Apple has appealed the decision, but if the ruling stands, one estimate published Thursday speculates that Apple could pay nearly $500 million in damages.
post #2 of 36
Is the EU actually working for Amazon?
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post #3 of 36
So Apple were guilty of raising e-book prices. Does everyone think Amazon were going to continue selling e-books at a loss after they had wiped out the competition who were trying to make a legitimate profit?
post #4 of 36
Quote:
Originally Posted by Robin Huber View Post

Is the EU actually working for Amazon?

 

This is not about Amazon. It might be easier to understand if we try not to see everything as Apple v. the world.

post #5 of 36

The problem is the "most favored nation" clause.  Apple will always lose in court over this.

post #6 of 36
Given that Amazon are anti-competitive, strong-arming, tax-dodging, store-closing shysters it's almost as if Governments the world over are on their payroll.

Apple enabled publishers to start making money again in an environment that had been distorted by Amazon's bullying tactics.

The economy loses, we all lose. Once again.
post #7 of 36

It has everything to do with Amazon, most retail distortions these days have something to do with them.

post #8 of 36
Disguting.
post #9 of 36
Quote:
Originally Posted by messele View Post

Given that Amazon are anti-competitive, strong-arming, tax-dodging, store-closing shysters it's almost as if Governments the world over are on their payroll.

Apple enabled publishers to start making money again in an environment that had been distorted by Amazon's bullying tactics.

The economy loses, we all lose. Once again.

They were always making money, the only one that makes more money with the agency model is it vendor not the publishers and they actually lost money because sales went down after the price increase.
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post #10 of 36

Apple should start dumping Penguin books for 99c in Europe, now that they have been given the green light to set any price they want.

 

It's not as if iBooks are a vast moneymaker anyway.

 

What can Penguin and the EU do about it, they are the one's who forced this situation?

 

Time to kill off Amazon in Europe and move people back to iOS.

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post #11 of 36
Quote:
Originally Posted by Robin Huber View Post

Is the EU actually working for Amazon?

 

Ha! No.

post #12 of 36
Quote:
Originally Posted by herbapou View Post

The problem is the "most favored nation" clause.  Apple will always lose in court over this.

 

This is common in vendor relations and contracts:  http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/AERS/us_aers_CRC_Most%20Favored%20Nation_120211.pdf

 

...which makes it even easier to understand how this arrangement would make perfect sense for Apple as a requirement from e-book sellers.

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post #13 of 36
Quote:
Originally Posted by hill60 View Post

Apple should start dumping Penguin books for 99c in Europe, now that they have been given the green light to set any price they want.

 

It's not as if iBooks are a vast moneymaker anyway.

 

What can Penguin and the EU do about it, they are the one's who forced this situation?

 

Time to kill off Amazon in Europe and move people back to iOS.

 

Interesting idea. In fact, Apple could offer all New York Times bestsellers for free for a year for anyone with an iTunes account and effectively destroy Amazon's e-book business.

 

This seems to be what the law allows.

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post #14 of 36
Quote:
Originally Posted by ankleskater View Post

This is not about Amazon. It might be easier to understand if we try not to see everything as Apple v. the world.
It's not about Amazon but it is rather valid to ask why the US and EU never looked at that companies practices.

And in the end consumes could lose out in this. Apple could decide that they don't want to change their terms and will drop all appropriate titles. Which means the consumers will be denied choice etc. unless the EU has the gall to claim they can force Apple to sell items and the terms they will use. Which would not go over well.
post #15 of 36
Quote:
Originally Posted by hill60 View Post

Apple should start dumping Penguin books for 99c in Europe, now that they have been given the green light to set any price they want.

Price dumping would get them into trouble and they have no contract to sell said titles as the EU just voided it.
post #16 of 36
Quote:
Originally Posted by SpamSandwich View Post

Interesting idea. In fact, Apple could offer all New York Times bestsellers for free for a year for anyone with an iTunes account and effectively destroy Amazon's e-book business.

This seems to be what the law allows.

Nope, cause Amazon also has a MFN nd would just match said offer.
post #17 of 36
Quote:
Originally Posted by Crosslad View Post

So Apple were guilty of raising e-book prices. Does everyone think Amazon were going to continue selling e-books at a loss after they had wiped out the competition who were trying to make a legitimate profit?

 

This is a myth, as are the sentiments that "Apple was helping publishers"

 

Selling books at 12.99 on the Apple store yielded publishers zero more dollars than selling on Amazon for 9.99, since Apple was guaranteed 30%.  As a matter of fact the only thing Apple did was guarantee that publishers would get a HUGE loss if they competed and sold books for 9.99 on the Apple store.

 

The potential for Amazon to raise prices after wiping out the competition isn't a realistic possibility and probably one of the criteria for not having regulatory concern.  Quality Steel production requires hundreds of million or even billions of dollars in capital investments and tremendous amounts of intellectual know how.  In the textbook 'steel dumping' scenario, selling steel at a loss will cause competition to close their factories and not invest in new ones, and they then lose all people with the skill sets to build quality steel.  At that point the dumper can raise prices astronomically.  Nobody can build a billion dollar steel plant overnight and they won't be able to find people who have the know-how.

 

Ebooks have almost zero barrier to entry.  Any e-commerce site can be converted to carry 'e-books' in no time.   Amazons pricing is so tough to beat that it likely has prevented more venues from opening stores- but that is actually a great thing for consumers.  If the Amazon doomsday scenario of raising prices occurred, new bookstores would open virtually overnight as the pricepoint would spur plenty of new entrants to the market.

 

Besides it is unlikely even in the Amazon doomsday scenario that they would raise prices by something crazy like 30% overnight.   People arguing that Apple *actually* raising prices 30% overnight preemptively to avoid an improbable scenario that Amazon *might* raise prices a smaller amount just aren't providing a realistic argument to anyone without a bias toward all things Apple.

post #18 of 36
Quote:
Originally Posted by charlituna View Post

It's not about Amazon but it is rather valid to ask why the US and EU never looked at that companies practices.

And in the end consumes could lose out in this. Apple could decide that they don't want to change their terms and will drop all appropriate titles. Which means the consumers will be denied choice etc. unless the EU has the gall to claim they can force Apple to sell items and the terms they will use. Which would not go over well.

Did you forget that Apple settled in the EU as well?
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post #19 of 36
Quote:
Originally Posted by charlituna View Post


Price dumping would get them into trouble and they have no contract to sell said titles as the EU just voided it.

 

Price dumping, what price dumping?

 

Apple is free to set whatever price they want in Europe and there is not a damn thing Penguin can do about it.

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post #20 of 36
Quote:
Originally Posted by Robin Huber View Post

Is the EU actually working for Amazon?

Absolutely! The entire world is working for Amazon and conspiring against poor and innocent Apple!

post #21 of 36
Quote:
Originally Posted by charlituna View Post


Price dumping would get them into trouble and they have no contract to sell said titles as the EU just voided it.

 

The EU only forced them to nullify certain conditions of the agreement. Apple still has an agreement in place to sell their books. 

post #22 of 36
Quote:
Originally Posted by ankleskater View Post

This is not about Amazon. It might be easier to understand if we try not to see everything as Apple v. the world.
Not the world, just its direct competitors. Do you recall Analzon ever being hauled in to court for anything other than failure to collect local taxes on sales?
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post #23 of 36
If Apple can't make money on E-books against Amazon, then so be it. Apple will simply get out of that end of the business to make money elsewhere where the regulations, laws and environment will allow them to make money.

I know that governments believe they are helping consumers by allowing stores to sell at a lower price. But there may be unintended consequences as there are with any such market intrusions by regulators.

After Amazon sells at a loss to put competitors out of business, they will then raise prices as customers have nowhere else to go. So consumer prices will probably exceed what they would have been if regulators had kept their noses out of it to begin with.

The whole regulatory concept has some benefits for some industries. But I don't think publishing is one of them.
post #24 of 36
Quote:
Originally Posted by Robin Huber View Post


. Do you recall Analzon ever being hauled in to court for anything other than failure to collect local taxes on sales?

 

Do you recall Amazon ever being in the center of a scheme that resulted in an entire established industries consumer prices rising literally 30% over night concurrent with their entry into that market?

 

I'm guessing there's a correlation there.

 

 

Amazon's thwarting of sales tax is pretty blatant.... which is why they were called on it.  Like offshoring, it is perfectly legal- and fortunately also like offshoring steps are being taken to put in place a better system.  If only government would pick up the pace a little.

 

Sell a ton of overnight stuff in NYC?  Build a mega warehouse in NJ, deliver overnight, and charge no sales tax!  Sell a ton of stuff in Ca?  Build your warehouses in Nevada... No sales tax!   By law, people are required to report this on their tax forms and pay their state taxes there.  So while in theory the law is correct, in practice people tend not to report the tax free items they bought.....   So it is technically Amazon's customers that are breaking the law, not Amazon itself.  That technicality will be corrected in the next rev of law and Amazon will have to price accordingly.

post #25 of 36

So the consumer was "ripped off", Apple was fined and the Government receive the money. Sounds fair /s.

No one forced people to buy ebooks from Apple, the customers had the opportunity to shop about.

post #26 of 36
I agree with Hill60. Apple should play Amazon at their own game. Lower pricing on books below Amazon and take their business away. If the gov't have decided that Amazon can sell below cost then so can Apple.

All Apple needs to do is run this for 2 quarters and Amazon will end up posting huge losses (especially if it has inventory it can't shift or has lower its prices more). They can use $10B of their cash to run the game until Amazon collapses.
post #27 of 36
Quote:
Originally Posted by DogGone View Post

I agree with Hill60. Apple should play Amazon at their own game. Lower pricing on books below Amazon and take their business away. If the gov't have decided that Amazon can sell below cost then so can Apple.

All Apple needs to do is run this for 2 quarters and Amazon will end up posting huge losses (especially if it has inventory it can't shift or has lower its prices more). They can use $10B of their cash to run the game until Amazon collapses.

The problem with that tactic is that it'll only benefit iOS users. Amazon sells ebooks across all platforms
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post #28 of 36
The EU need to reread this agreement. All apple appear to have done is ask to get the same price as everyone else for the content THEY BUY from Penguin. What other retailers choose to sell that content on for to the public would still be up to them and they could still make a loss. It appears to have been twisted somewhat by someone somewhere. There again not suprising as both the EU and Americamhave some hefty deficits to sort out. Hmmm maybe that is more the case here they need money and Apple sensible stashed theirs for a rain day. As others have said go after those companies that have actually totally avoided tax first. If they want taxes then close the loopholes. In apples case Ireland are still happy to give them a tax haven which is within EU law, so you cannot really blame Apple or other companies for using it. I know it was done to attract big business in the good times but that may need looking at. It's time to sort out the tax mess rather than combining up with other convoluted schemes to extract cash that I'm not entirely sure are on a firm legal foundation. At least if what has been presented represents what actually happened.
post #29 of 36
Quote:
Originally Posted by dasanman69 View Post


The problem with that tactic is that it'll only benefit iOS users. Amazon sells ebooks across all platforms

Not that it makes a lot of difference, but iBook will be available on Mavericks.

post #30 of 36
Hmm I checked the BBC website on this, see link, as I trust their review. The problem I see with the agency model is when more than one retailer agrees to it. However as it is the publisher setting the price in each case then I would say it is mostly their responsibility. However in the EU at least they have little to complain about as France has fixed book pricing for physical book by law giving a precedent in the EU for the agency model. See the link below in the what will happen section

http://www.bbc.co.uk/news/business-17685120.
post #31 of 36
Quote:
Originally Posted by Frood View Post

 

...that resulted in an entire established industries consumer prices rising literally 30% over night concurrent with their entry into that market?

 

 

Taking into account the "entire" eBook industry, prices actually fell.

 

...unless you cherrypick a very small sample of specific titles, which is not the "entire" market.

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post #32 of 36
Quote:
Originally Posted by dasanman69 View Post


The problem with that tactic is that it'll only benefit iOS users. Amazon sells ebooks across all platforms

 

 

...so?

 

Amazon don't give a f*ck about consumers, as can be seen by their wholesale destruction of competitors.

 

So what happened at Bezo's boathouse?

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post #33 of 36
Apple was not the 1st to take-up the Agency Model, the very first I believe was Sony whatever their ebook system was called!?
Now although mostly around Asia for Sony things were going well, so Amazon was getting itchy about this.
They decided to try this route too, this is between 2006 - 2009.

Google back in Jan of 2009 announced they were going the Agency Model preempting Amazon.





http://inkmesh.com/blog/2009/11/30/amazon-barnes-and-noble-sony-ebook-pricing/

http://kindlingromance.wordpress.com/2009/09/11/romance-ebook-stats-9-11-09-kindle-store-still-outpacing-sony-ebook-store/
post #34 of 36
Quote:
Originally Posted by hill60 View Post


...so?

Amazon don't give a f*ck about consumers, as can be seen by their wholesale destruction of competitors.

So what happened at Bezo's boathouse?

And how many competitors has Apple destroyed? Does it really matter how it's achieved when the end result is the same?
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post #35 of 36
Quote:
Originally Posted by AirBubble View Post

Apple was not the 1st to take-up the Agency Mode

Google back in Jan of 2009 announced they were going the Agency Model preempting Amazon.





http://inkmesh.com/blog/2009/11/30/amazon-barnes-and-noble-sony-ebook-pricing/

http://kindlingromance.wordpress.com/2009/09/11/romance-ebook-stats-9-11-09-kindle-store-still-outpacing-sony-ebook-store/

I don 't see that anywhere in the links you provided other than a single forum post from "random internet guy". Do you have something a bit more reliable supporting your claim of Google doing an agency model? Perhaps they did but I hadn't seen the news before.

In any event I don't think an agency model by itself is an issue. It became one when combined with the most-favored-nation clause
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post #36 of 36
Quote:
Originally Posted by ankleskater View Post

This is not about Amazon.

It has everything to do with Amazon.

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