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States want Apple to pay at least $280M in e-books antitrust case, push for $840M

post #1 of 132
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The state attorneys general suing Apple for price fixing are seeking $280 million in damages and will ask that the court order the award tripled to $840 million in advance of an upcoming damages trial, a new report says.

Summation
Apple's closing slide in its e-book antitrust case. | Source: U.S. District Court


The demands were made in a memorandum filed Friday with Judge Denise Cote, the federal judge presiding over the case, according to Bloomberg. The plaintiffs argue that Apple should be subjected to treble damages thanks to the company's "conclusively proven" role as the scheme's leader.

"The three cases pending before this court allege the same conspiracy, by the same conspirators, with the same goals, methods, and effects," the memo reportedly read. The document was sealed upon submission.

Apple was found guilty last July of joining with five major publishers in a conspiracy to fix the price of e-books. As a result of the verdict --?which is still under appeal --?the company was forced to alter its agreements with publishers and was assigned an external antitrust compliance monitor, a penalty which Apple is also fighting.

A new trial to determine damages in the case is set for May of this year.
post #2 of 132
Ridiculous. If anyone should be on trial it's Amazon not Apple.

Apple coming along was one of the best things that could have happened for the eBook market, considering it allowed for some, you know, actual competition - yet apparently Apple are the bad guys and Amazon's monopoly is completely lawful.

It's stupidity like this that makes me extremely glad I don't live in the US and have to deal with the idiocy of the legal system there.
post #3 of 132
Three states licking their Mr Burns lips to cover state budget deficits on Apple's dime.
post #4 of 132
they had a great quarter lets get some $ out of them..
post #5 of 132
Quote:
Originally Posted by TheBMT View Post

Ridiculous. If anyone should be on trial it's Amazon not Apple.

Apple coming along was one of the best things that could have happened for the eBook market, considering it allowed for some, you know, actual competition - yet apparently Apple are the bad guys and Amazon's monopoly is completely lawful.

It's stupidity like this that makes me extremely glad I don't live in the US and have to deal with the idiocy of the legal system there.

Freedom isn't free.
And how was making me pay more for a eBook actually better? When Amazon start selling music against Apple's monopoly they actually charged less not more. And this was when Apple's iTunes were not the great quality they are today.
Thinking you can have it both ways is actually pretty stupid.
 
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post #6 of 132
Quote:
Originally Posted by pazuzu View Post


Freedom isn't free.
And how was making me pay more for a eBook actually better? When Amazon start selling music against Apple's monopoly they actually charged less not more. And this was when Apple's iTunes were not the great quality they are today.
Thinking you can have it both ways is actually pretty stupid.

The average e-book price went down if you follow the facts.  Amazon was/is trying to commoditize books which causes brilliant authors to look to other fields to make decent money.  If you want to read garbage then Amazon's method is the way to get there since soon that's all that would be available....

post #7 of 132
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post #8 of 132
Quote:
Originally Posted by GregInPrague View Post
 

The average e-book price went down if you follow the facts.  Amazon was/is trying to commoditize books which causes brilliant authors to look to other fields to make decent money.  If you want to read garbage then Amazon's method is the way to get there since soon that's all that would be available....

 

if you follow the facts, average accused publishers e-book prices went up

post #9 of 132
Quote:
Originally Posted by GregInPrague View Post

The average e-book price went down if you follow the facts.  Amazon was/is trying to commoditize books which causes brilliant authors to look to other fields to make decent money.  If you want to read garbage then Amazon's method is the way to get there since soon that's all that would be available....

Going from $9.99 to $14.99 is an increase Basic accounting, math and logic.
If the price decreased there never would have been a case- if fact it's the whole basis of the case.
Can you follow?
 
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post #10 of 132
IMHO it's ridiculous for those States to be seeking triple damages.
melior diabolus quem scies
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post #11 of 132
Quote:
Originally Posted by pazuzu View Post


Freedom isn't free.
And how was making me pay more for a eBook actually better? When Amazon start selling music against Apple's monopoly they actually charged less not more. And this was when Apple's iTunes were not the great quality they are today.
Thinking you can have it both ways is actually pretty stupid.

If the scope of things you consider in this matter is limited to just price differential immediately before and just after Apple brought iBooks to market, then I could see why you might reach the conclusion that Apple is guilty.

 

But if you start your consideration with Amazon's strategy and the state of the market before iBooks came to market, you would likely conclude that Amazon was engaging in predatory pricing to prevent others from being able to compete, and they were successful at it too.  In other words, you may very well conclude that the price differential you fixated on was not due to anticompetitive pricing after iBooks but rather anticompetitive pricing before iBooks.  So Apple's combined use of: (1) an agency pricing model (not illegal) and (2) most-favored nation clauses (also not illegal) resulted in a solution to a marketplace problem as opposed to the creation of one.  Prices going up is not always indicative of a bad thing in a marketplace.  Sure the customers aren't happy about it at first, but if it results in healthy competition going forward (it undoubtedly did, as more entities entered the market... not just Apple) then you can expect the pricing would take care of itself and gravitate towards what the consumers would support.

 

Food for thought.

 

Thompson

post #12 of 132
Quote:
Originally Posted by pazuzu View Post


Going from $9.99 to $14.99 is an increase Basic accounting, math and logic.
If the price decreased there never would have been a case- if fact it's the whole basis of the case.
Can you follow?


The price of the best sellers increased while the average price fell I believe

post #13 of 132
Quote:
Originally Posted by thompr View Post

If the scope of things you consider in this matter is limited to just price differential immediately before and just after Apple brought iBooks to market, then I could see why you might reach the conclusion that Apple is guilty.

But if you start your consideration with Amazon's strategy and the state of the market before iBooks came to market, you would likely conclude that Amazon was engaging in predatory pricing to prevent others from being able to compete, and they were successful at it too.  In other words, you may very well conclude that the price differential you fixated on was not due to anticompetitive pricing after iBooks but rather anticompetitive pricing before iBooks.  So Apple's combined use of: (1) an agency pricing model (not illegal) and (2) most-favored nation clauses (also not illegal) resulted in a solution to a marketplace problem as opposed to the creation of one.  Prices going up is not always indicative of a bad thing in a marketplace.  Sure the customers aren't happy about it at first, but if it results in healthy competition going forward (it undoubtedly did, as more entities entered the market... not just Apple) then you can expect the pricing would take care of itself and gravitate towards what the consumers would support.

Food for thought.

Thompson

Is 99cents a song "predatory pricing"?
More food for thought.
 
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post #14 of 132
Quote:
Originally Posted by pazuzu View Post


Going from $9.99 to $14.99 is an increase Basic accounting, math and logic.
If the price decreased there never would have been a case- if fact it's the whole basis of the case.
Can you follow?

 

You are over simplifying the matter. Amazon forced publishers to release ebooks at the same time as hardcover releases by threatening to not carry publishers hardcover books. Amazon then significantly undercut the price of the hardcover books, which essentially killed hardcover sales and put stores like Borders out of business. This hurt consumers would don't just want Barnes and Nobles as an option. So it used its online monopoly in traditional online book sales to gain a monopoly on ebooks. Publishers wanted a tiered distribution system similar to movies for books, but Amazon used its monopoly power to kill that. What Amazon did was not sustainable for publishers in the long term, and therefore not beneficial to consumers in the long term either. 

 

The fixed prices you refer to only related to new releases that publishers offered to both Apple and Amazon. Amazon was free to negotiate with publishers and authors directly for exclusive distribution rights thereby still being able to charge whatever it wanted. Further, this is exactly what Amazon did. It has many exclusives such as Ian Flemmings works, as well as things such as Harry Potter. Moreover, for anything not a new releases  (the great majority of books), the prices on ebooks based on competition brought the prices of ebooks down

 

Moreover, the key point is Apple unlike Amazon did not have any power over the publishers to demand anything, and by striking a deal with the publishers, it was not colluding with its competition. It is generally fine for a player like Apple with no market power in an established market to collude against competitors. 

post #15 of 132
Quote:
Originally Posted by pazuzu View Post


Going from $9.99 to $14.99 is an increase Basic accounting, math and logic.
If the price decreased there never would have been a case- if fact it's the whole basis of the case.
Can you follow?

You do understand that Amazon would buy new ebook releases at $x and sell it at below $x, right?  This is to help create the market, as well as to corner the market.

 

What Apple asked was that when Apple pays $y for the books, $y will never be more than $x.

 

Consumers still could go get whatever discounts Amazon wanted to offer, from Amazon.

post #16 of 132
Quote:
Originally Posted by pazuzu View Post


Is 99cents a song "predatory pricing"?
More food for thought.

No. Apple had no power to force music publishers to agree to 99 cents per song. The price was fairly negotiated without Apple holding monopoly power over the publishers. Amazon on the other hand forced ebook concessions by threatening not to carry publishers other books, which would have killed the publishers. 

post #17 of 132
Quote:
Originally Posted by Gatorguy View Post

IMHO it's ridiculous for those States to be seeking triple damages.

 

It technically meets the criteria.  I don't know if it was you that had posted the link to all the evidence in the case, but I actually read most of it and thought it was pretty crippling.

 

Steve definitely knew he was doing something deliberately and willfully that would harm consumers to the benefit of Apple's and the publisher's profits.

 

That said I think it is unlikely they will actually get triple damages- its more just 'lawyers 101'   Sue for 800+ mil so it feels like the verdict is already lowered when they "only" award you 250mil.

post #18 of 132
Quote:
Originally Posted by 65C816 View Post
 

You do understand that Amazon would buy new ebook releases at $x and sell it at below $x, right?  This is to help create the market, as well as to corner the market.

 

What Apple asked was that when Apple pays $y for the books, $y will never be more than $x.

 

Consumers still could go get whatever discounts Amazon wanted to offer, from Amazon.

That is not quite right. For new releases, Apple asked for when it sold a new release book for $y the price nowhere else would be lower than that. That is agency pricing, which is not illegal. So, if a publisher sold a book for $14.99 on Apple, it would also have to sell the book for no less than $14.99 on Amazon. Amazon, however, could avoid the same pricing for new releases by acquiring the exclusive rights to the books. 

post #19 of 132
And how would this fine benefit a single citizen? Answer: It won't. It will all go into the pockets of the greedy government for their self serving interests and pensions.
post #20 of 132

Hey Apple, wouldn't it be cheaper just to bank roll a few more lobbyists in D.C.?  Problem solved.

post #21 of 132
Quote:
Originally Posted by pazuzu View Post


Is 99cents a song "predatory pricing"?

I don't know, is it?  I am unaware that Apple is operating at a loss in order to maintain their dominance in music, which is what predatory pricing is and what Amazon was doing regarding digital Books.  But that is a separate issue that would need to be looked into if it has any merit.  Perhaps someone should look into it.  Food for thought on a different topic.

 

Meanwhile, in the digital books case before us, would it be fair for me to assume that you concur that predatory pricing is a bad thing?  Further, since you don't refute my assertion that Amazon engaged in the practice, then may I assume you agree?  Following on from there, might it be true that breaking Amazon's strategy would be healthy for the marketplace?  I look forward to receiving your thoughtful consideration.

 

Thompson

post #22 of 132
Originally Posted by ceek74 View Post
Hey Apple, wouldn't it be cheaper just to bank roll a few more lobbyists in D.C.?  Problem solved.

 

Having principles is always cheaper.

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post #23 of 132

Politics as usual.

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post #24 of 132

There is more stupidity than hydrogen in the universe, and it has a longer shelf life.

Frank Zappa

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There is more stupidity than hydrogen in the universe, and it has a longer shelf life.

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post #25 of 132
If the penalties are outweighing their iBookstore profits, they should shut it down.

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post #26 of 132
Quote:
Originally Posted by thompr View Post

I don't know, is it?  I am unaware that Apple is operating at a loss in order to maintain their dominance in music, which is what predatory pricing is and what Amazon was doing regarding digital Books.  But that is a separate issue that would need to be looked into if it has any merit.  Perhaps someone should look into it.  Food for thought on a different topic.

Meanwhile, in the digital books case before us, would it be fair for me to assume that you concur that predatory pricing is a bad thing?  Further, since you don't refute my assertion that Amazon engaged in the practice, then may I assume you agree?  Following on from there, might it be true that breaking Amazon's strategy would be healthy for the marketplace?  I look forward to receiving your thoughtful consideration.

Thompson

I believe Amazon gave us cheap eBooks to drive Kindle sales and Apple gave us cheap eMusic to drive iPod sales. Both were shrewd and looking out for their bottom line and both were embraced by the consumer for doing so because a smart shopper will always go for a better price. And both the music and publishing industries hated them for stealing into their pot. It seems you favor authors more than musicians?
 
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post #27 of 132
Quote:
Originally Posted by TBell View Post

No. Apple had no power to force music publishers to agree to 99 cents per song. The price was fairly negotiated without Apple holding monopoly power over the publishers. Amazon on the other hand forced ebook concessions by threatening not to carry publishers other books, which would have killed the publishers. 

If memory serves Steve Jobs arm twisted and would not let you into the iTunes Store unless you agreed to sell your songs individually at 99cents which is why many artists at the time balked.
 
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post #28 of 132
Quote:
Originally Posted by pazuzu View Post


I believe Amazon gave us cheap eBooks to drive Kindle sales and Apple gave us cheap eMusic to drive iPod sales. Both were shrewd and looking out for their bottom line and both were embraced by the consumer for doing so because a smart shopper will always go for a better price. And both the music and publishing industries hated them for stealing into their pot. It seems you favor authors more than musicians?

 

Your statement ignores the fact that when iTunes came out it saved the music industry from rampant piracy that was growing by leaps and bounds while music sales tanked.  Piracy still exists but huge amounts of pirates were converted to become digital customers.  There was no comparable situation with eBooks and Amazon.  Amazon didn't save the publishers from anything.

post #29 of 132
Quote:
Originally Posted by SpamSandwich View Post

If the penalties are outweighing their iBookstore profits, they should shut it down.

 

Not sure about that, but I personally find reading on an LCD screen laborious. And I don't read enough books to warrant a kindle. I have owned one, but prefer the paper-book experience. I certainly do not agree with your book purchase being tied indefinitely to a single platform. I agree with this guy.

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post #30 of 132
Quote:
Originally Posted by GregInPrague View Post

Your statement ignores the fact that when iTunes came out it saved the music industry from rampant piracy that was growing by leaps and bounds while music sales tanked.  Piracy still exists but huge amounts of pirates were converted to become digital customers.  There was no comparable situation with eBooks and Amazon.  Amazon didn't save the publishers from anything.
I "ignore" the facts simply because more people listen to music than read books. Besides how would you have read an eBook back then- flipping pages on your laptop? MP3 players were long out before the iPod. What devices were our there before the Kindle to portably read an eBook? Amazon gave authors a wider audience with the pricing of books at $9.99.
Edited by pazuzu - 2/3/14 at 11:17am
 
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post #31 of 132
Quote:
Originally Posted by Ireland View Post

Not sure about that, but I personally find reading on an LCD screen laborious. And I don't read enough books to warrant a kindle. I have owned one, but prefer the paper-book experience. I certainly do not agree with your book purchase being tied indefinitely to a single platform. I agree with this guy.

I have also found e-book reading a bit of a chore (and this from a voracious reader). I have heard good things about the Paperwhite Kindle, so I'd at least like to compare.

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post #32 of 132
Quote:
Originally Posted by pazuzu View Post


I "ignore" the facts because more people listen to music than read books. Besides how would you have read an eBook back then- flipping pages on your laptop? MP3 players were long out before the iPod. What devices were our there before the Kindle to portably read an eBook? Amazon gave authors a wider audience with the pricing of books at $9.99.

Not only does the point not make sense in the context of my post I don't know that it's even true.  How do you know more people listen to music than read books? 

 

Also, Sony had e-readers (2004) and e-ink readers (2006) long before Kindle (2007) and other companies did as well.  http://en.wikipedia.org/wiki/E-book

post #33 of 132

They smell blood in the water.

post #34 of 132
Quote:
Originally Posted by pazuzu View Post

Is 99cents a song "predatory pricing"?
More food for thought.

 

For what it’s worth, Apple’s official position on the $0.99 price tag was/is that the company takes 30%. And at first that was in order to break even with their expenses and fees. So iTunes was meant as a way to provide their hardware with a competitive advantage, more than being their core business. They never willfully sold music at 25-30% loss in order to create the market. They wound up making money with the iTunes Store after a few years of operation and they have diversified the price points since then, but Apple has’t used their buying power in order to undercut newcomers or sell at a loss.

 

Also, Apple was fighting against piracy (basically $0 a song) when the $0.99 a song iTunes Store first came in.

post #35 of 132
I guess I am not seeing how the states were damaged.
post #36 of 132

Sad. When the states run out of money and can't even afford to pay for public education properly, they just go after the one thing that is working in this country, and that's our corporations. This government is so corrupt.

post #37 of 132
Quote:
Originally Posted by pazuzu View Post


I believe Amazon gave us cheap eBooks to drive Kindle sales and Apple gave us cheap eMusic to drive iPod sales. Both were shrewd and looking out for their bottom line and both were embraced by the consumer for doing so because a smart shopper will always go for a better price.  And both the music and publishing industries hated them for stealing into their pot. It seems you favor authors more than musicians?

 

To be fair, I believe that your assessment here is qualitatively correct, i.e. that the music and publishing industries were unhappy seeing their products devalued in the eyes (and wallets) of the consumer, and both Amazon and Apple had their motives for negotiating their deals in the respective industries.  I am not concerned about those motives, and I have no problem with either... even Amazon's.  So to answer your question: no, I don't favor either industry.  You may have a problem with those motives, but I do not.

 

The problem I have with Amazon's approach is that they purposely operated at a loss.  They paid the publishers more per title than they charged the consumers.  This artificially low price prevented any possibility of competition in the eBooks market, and that is illegal.  In order for Apple to get into the game and not also operate at a loss, they modified their strategy in a way that broke Amazon's strategy.  Thus Amazon was forced to stop its predatory pricing, and it got the competition it deserved.  Note that this enabled not just Apple, but several other - albeit smaller - competitors to try their hand as well.  Fair outcome, in my opinion.  If there is an analogous situation in the music industry, whereby competition for iTunes was deterred by the price point - and whereby iTunes operated at a loss to secure this advantage - then I would be forced to argue the same against Apple.  But the analogy simply isn't there.

 

Such is my perspective:  I don't care about the low prices in and of themselves.  I care about the deliberate stunting of a market place through predatory pricing.

 

Thompson


Edited by thompr - 2/3/14 at 11:35am
post #38 of 132
Quote:
Originally Posted by Rob Bonner View Post

I guess I am not seeing how the states were damaged.

States sue on behalf of their residents.  I have no problem with that.

 

Thompson

post #39 of 132

I have two questions.

First, what is the difference of the agency model in iBook store with the App Store?

Two, what has changed in the iBook agency model?

post #40 of 132

Steve Jobs would have argued that without Apple's involvement, publishers would not have a legitimate alternative to Amazon, the eBooks would not have taken off they way it did, and the ripple effect could have caused millions of jobs in the publishing industry and beyond. 

 

To focus the argument solely on consumer price and not pricing model or the actual contracts between Apple and publishers, is not only shortsighted but also clearly misunderstood how free market works.

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