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Retailers begin distributing credits from e-book price fixing settlements

post #1 of 39
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Apple, Amazon, Barnes & Noble, and Kobo have begun the process of handing out $166 million in account credits to consumers affected by the e-books price fixing scandal as notification emails began going out on Tuesday.

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


E-book buyers can expect to receive a credit of $3.17 for each electronic version of a book on the New York Times bestseller list purchased between April 1, 2010 and May 21, 2012, while books not found on the bestseller list draw a credit of $0.73 each. Consumers who purchased e-books from Sony and some other retailers will receive a partial refund check rather than a credit.

The payments are the result of a settlement between the Department of Justice and publishers Hachette, HarperCollins, Simon & Schuster, Penguin and Macmillan. Those publishers reached a settlement agreement with the government after being accused, along with Apple, of conspiring to raise e-book prices by agreeing to a new agency pricing model.

Unlike the traditional wholesale model, in which content is purchased in bulk and resold at a price decided entirely by the retailer, the agency model allows publishers to effectively set minimum retail prices throughout the market. The defendants argued that while prices did increase slightly under the agency model, it also had the effect of leveling the playing field by eliminating Amazon's market hegemony.

Apple was not party to the settlement and was eventually found guilty of price fixing, though the company continues to vigorously defend itself. Apple is now in the midst of an appeal seeking to either overturn that verdict or secure a new trial before a new judge.
post #2 of 39

I can't believe that Apple is being singled out for this.  Why do they want Amazon to have a monopoly?  That will raise prices.  And besides, Apple didn't do anything wrong because it was the publishers who get to set the price not Apple.  The government should not be doing this when we have so many other problems that they should be taking care of instead of giving Amazon a monopoly to set unfair prices.  I think that agency pricing is better because that way the people who bring us the contnet get to set the price.  They know best what it is worth, and how much they have to pay the writers.  Agency pricing is a lot better for the writers who actually do the work.  All this is going to do is to give a monopoly to Amazon.


Edited by SudoNym - 3/25/14 at 10:27am
post #3 of 39
Quote:
Originally Posted by SudoNym View Post

I can't believe that Apple is being singled out for this.  Why do they want Amazon to have a monopoly?  That will raise prices.  And besides, Apple didn't do anything wrong because it was the publishers who get to set the price not Apple.  The government should not be doing this when we have so many other problems that they should be taking care of instead of giving Amazon a monopoly to set unfair prices.

Imagine if Google got together with app developers and got them to agree to raise prices on all platforms, so everyone would make more money. Would you agree with this practice?
post #4 of 39
Quote:
Originally Posted by Drealoth View Post

Imagine if Google got together with app developers and got them to agree to raise prices on all platforms, so everyone would make more money. Would you agree with this practice?

As shown by the trial Apple in no way colluded with the publishers in secret meetings to raise prices.

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post #5 of 39

Gosh price fixing is so terrible - its a good thing the government does get involved in setting minimum prices for alcohol. What's that, they do? or well at least they leave tobacco alone. What, not that either? Well at least the government doesn't try to tell us what we should pay for healthcare. What, they are messing with that as well? 

 

Maybe the real problem here is not that someone decided what they should be allowed to charge for their own product but that the government previously had no say in it, guess we solved that problem. 

post #6 of 39
Quote:
Originally Posted by SolipsismX View Post


As shown by the trial Apple in no way colluded with the publishers in secret meetings to raise prices.

 

As shown by the trial, Apple was found guilty as sin.  Did you read all of the evidence?  There was a link to much of it on this site and it was a long but pretty amazing read.  Steve and Eddy cue are geniuses without a doubt.  Steve instigated the whole process, and especially near finalization everyone on board knew they were doing something illegal, they just didn't think they'd get caught.

 

The evidence did show private meetings occurred, but obviously when asked about the meetings nobody could recall what they had discussed during them.   There were a few occasions where they crossed the line in emails which were usually closed out with 'we need to meet and discuss this in person'  Nothing illegal with meeting in person certainly, but the fact they had already colluded before that statement was sufficient.

 

Steven's famous quip about all prices being the same isn't even the most damning part, it was the reaction of the co-conspirators.  One of the publishers involved emailed another one to the tune of calling Steve an idiot and being afraid they would get caught.  Another publisher emailing Eddy Cue that they weren't on board with the scheme and Eddy responding 'we have two of the three, guaranteed' and the fourth publisher responding 'we need all three' doesn't sound like independent negotiations.

 

If Amazon were to exhibit monopolistic behavior and drive prices up, the DOJ would be on them in a heartbeat.  They have not, and they won't because they can't.  There are near zero barriers to entry in the ebook market.

 

Apple builds great products, but when it comes to being sneaky weasels to make an extra buck- whether its illegally jacking book prices up or illiegally screwing over their own employees, or legally playing a shell game to minimize taxes, they are brilliant at all of them.

post #7 of 39
Quote:
Originally Posted by Frood View Post

As shown by the trial, Apple was found guilty as sin.  Did you read all of the evidence?  There was a link to much of it on this site and it was a long but pretty amazing read.  Steve and Eddy cue are geniuses without a doubt.  Steve instigated the whole process, and especially near finalization everyone on board knew they were doing something illegal, they just didn't think they'd get caught.

The evidence did show private meetings occurred, but obviously when asked about the meetings nobody could recall what they had discussed during them.   There were a few occasions where they crossed the line in emails which were usually closed out with 'we need to meet and discuss this in person'  Nothing illegal with meeting in person certainly, but the fact they had already colluded before that statement was sufficient.

Steven's famous quip about all prices being the same isn't even the most damning part, it was the reaction of the co-conspirators.  One of the publishers involved emailed another one to the tune of calling Steve an idiot and being afraid they would get caught.  Another publisher emailing Eddy Cue that they weren't on board with the scheme and Eddy responding 'we have two of the three, guaranteed' and the fourth publisher responding 'we need all three' doesn't sound like independent negotiations.

If Amazon were to exhibit monopolistic behavior and drive prices up, the DOJ would be on them in a heartbeat.  They have not, and they won't because they can't.  There are near zero barriers to entry in the ebook market.

Apple builds great products, but when it comes to being sneaky weasels to make an extra buck- whether its illegally jacking book prices up or illiegally screwing over their own employees, or legally playing a shell game to minimize taxes, they are brilliant at all of them.

The judge found Apple guilty but there was no proof that Apple was colluding with the publishers to raise prices. Surely you don't think that a vendor talking with a perspective customer or business associate is in itself illegal. If you do then every time Apple contacts another company it would then be considered colluding. Jobs emails were very clear and straightforward; the publishers can set the prices as they see fit without any input from Apple, Apple gets their cut. The only questionable request was MFN.


PS: Amazon has exhibited monopolistic prices of their books and physical goods store for a very long time. Prices meant to keep the others from fairly competing. They even "colluded" with music labels to offer higher-nitrate audio, with no DRM, at lower prices than Apple offered despite Steve Jobs letter requesting the end of DRM on music and CEOs of companies that signed with Amazon lambasting Jobs for making such a comment.
Edited by SolipsismX - 3/25/14 at 11:00am

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post #8 of 39
Originally Posted by SolipsismX View Post
The judge found Apple guilty but there was no proof that Apple was colluding with the publishers to raise prices.

 

Wonder what they were guilty of, then.

 

Amazon needs destroyed for this.

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post #9 of 39
Yup, got an email from amazon today saying that I have less than $2.00 credit that I can use only on amazon and only for books.

Whoopty-fucken-doo.
post #10 of 39
The article says Apple (and others) are paying out as part of the settlement, then later the article states Apple is not part of the settlement. Really, AI?

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post #11 of 39
Quote:
Originally Posted by Suddenly Newton View Post

The article says Apple (and others) are paying out as part of the settlement, then later the article states Apple is not part of the settlement. Really, AI?

 

The others were caught, and when faced with the prospect of an expensive legal battle, without admitting guilt, chose to agree to pay as part of a settlement.  Apple did not agree to settle and is not part of the settlement.

 

Apple was ordered to pay because they were found guilty.

post #12 of 39
Quote:
Originally Posted by SolipsismX View Post


 Surely you don't think that a vendor talking with a perspective customer or business associate is in itself illegal. I

 

Absolutely not.  If the major publishers had all sat in a room and said, "Let's all raise prices by 30% overnight together"  That would have been stupidly illegal.  Instead they each talked to Apple and said get all the others on board and we'll be on board too.  Once they all knew they were on board together by not talking to each other, but instead working through Eddy, they achieved the end result through a pretty well thought out plan that would indirectly prevented anyone from being allowed to undersell.  Just because they used Apple as an intermediary doesn't make it legal, but it sure made it a lot smarter and more difficult to prove.  In the end I think it is pretty hard to come up with prices jumping 30% overnight, with the 'Woah, what are the odds of that??!  Sheesh we just kind of all magically independently all did the same thing at once which would have been disastrous for any one of us if we hadn't all decided to just indepentently jump at the same time.  That is crazy odds your honor, like greater odds than picking a perfect bracket.  Can you believe the coincidence your Honor?"  Apparantly the judge didn't think there was much coincidence.

 

It was brazen and brilliant.  It was terrible for consumers, and made them pay more for books, but as Steve said to the publishers "but that's what we all want!"  I'll let the legal system take care of itself, and Apple may have deep enough lawyer pockets to dig themselves out yet.  Either way I don't fault Apple for trying, although I'm happier for consumers with the end result.   Only *after* the DOJ stepped in, but because there are more entrants, pricing is even more competitive now.

post #13 of 39
Quote:
Originally Posted by SudoNym View Post
 

I can't believe that Apple is being singled out for this.  Why do they want Amazon to have a monopoly?  That will raise prices.  And besides, Apple didn't do anything wrong because it was the publishers who get to set the price not Apple.  The government should not be doing this when we have so many other problems that they should be taking care of instead of giving Amazon a monopoly to set unfair prices.  I think that agency pricing is better because that way the people who bring us the contnet get to set the price.  They know best what it is worth, and how much they have to pay the writers.  Agency pricing is a lot better for the writers who actually do the work.  All this is going to do is to give a monopoly to Amazon.

I'm in favor of the prices for e-books increasing as necessary. Monopolies are bad, and what has been happening is that big and biggers are able to create production monopolies by artificially lowering prices which destroy the ability for competition to be built. You keep forgetting that there are a significant lack of jobs in the US. Lowering prices, lowering wages, no jobs means we are in a death spiral, and this is caused primarily by big and biggers pricing competitors out of business. Conglomerates and mergers are bad for all of us, but they are given the go ahead because in each case they argue that *consumers* will not be hurt because the prices will be decreasing. We are dying because we have become merely consumers and not producers. 

post #14 of 39
Quote:
Originally Posted by Frood View Post

Can you believe the coincidence your Honor?"  Apparantly the judge didn't think there was much coincidence.

How is it coincidental that the publishers were finally given the opportunity to set prices and they did, just as App Store vendors can set prices as they choose? That is how the agency model works. The only thing that screams illegal to me is Amazon's monopolist hold over publishers and customers that have hindered the value of eBooks in order to help sell their physical products.

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post #15 of 39
Quote:
Originally Posted by Drealoth View Post


Imagine if Google got together with app developers and got them to agree to raise prices on all platforms, so everyone would make more money. Would you agree with this practice?


Bad analogy as app developers already set the price for their apps.

post #16 of 39
Quote:
Originally Posted by waldobushman View Post
 

… what has been happening is that big and biggers are able to create production monopolies by artificially lowering prices …

 

I've seen it argued many, many times that this is what Amazon has been doing. But I've got a wish list of more than 100 Kindle books with a price history maintained by eReaderIQ that shows otherwise. Occasionally selling a book below cost (maybe 0.000001% of their listings or less at any one time) is not a monopolistic practice.

post #17 of 39
Quote:
Originally Posted by EWTHeckman View Post

I've seen it argued many, many times that this is what Amazon has been doing. But I've got a wish list of more than 100 Kindle books with a price history maintained by eReaderIQ that shows otherwise. Occasionally selling a book below cost (maybe 0.000001% of their listings or less at any one time) is not a monopolistic practice.

How would 0.0001 penny lower per dollar even show up on a price listing? More importantly, why would the publishers care about the devaluing of their digital books by Amazon if the price was lowered by only 1/10,000th of a penny per dollar, thus making it the same price except for books that cost over $9,999,99 which would then be lower by 1¢?

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post #18 of 39
Quote:
Originally Posted by Drealoth View Post

Imagine if Google got together with app developers and got them to agree to raise prices on all platforms, so everyone would make more money. Would you agree with this practice?

Does Google set the prices?

No.

Just like Apple.

Google wanted to steal author's works and give them away for free.
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post #19 of 39
Quote:
Originally Posted by Suddenly Newton View Post

The article says Apple (and others) are paying out as part of the settlement, then later the article states Apple is not part of the settlement. Really, AI?

They aren't, they are a retailer paying out the publisher's settlement to their customers.
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post #20 of 39
Quote:
Originally Posted by Frood View Post

The others were caught, and when faced with the prospect of an expensive legal battle, without admitting guilt, chose to agree to pay as part of a settlement.  Apple did not agree to settle and is not part of the settlement.

Apple was ordered to pay because they were found guilty.

Perhaps as a punishment for standing up to City Hall, a warning to others who pursue their rights.

"We will make shit up to find you guilty."
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post #21 of 39
Quote:

Originally Posted by Frood View Post

 

If Amazon were to exhibit monopolistic behavior and drive prices up, the DOJ would be on them in a heartbeat.  They have not, and they won't because they can't.  There are near zero barriers to entry in the ebook market.

 

Instead, Amazon leverages its size (and investors that apparently don't care about corporate profit) by selling ebooks at a loss to eliminate competition.  Once competitors are wiped out, Amazon will be free to do (charge) anything it wants in the ebook world.  And yes, there is a major barrier to entry in the ebook market: it's called "You can't sell products at a profit because Amazon will simply undercut you with a loss."  Try getting around that barrier.

 

But I guess that is legal/moral/perfectly fine?

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post #22 of 39
Quote:
Originally Posted by EWTHeckman View Post
 

Occasionally selling a book below cost (maybe 0.000001% of their listings or less at any one time) is not a monopolistic practice.

 

Citation needed?

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post #23 of 39

Apple, please hire more lobbyists and put more money behind political candidates and lawmakers who will support Apple's interests. This is how the whole corrupt game is played.

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post #24 of 39
Quote:
Originally Posted by RedHotFuzz View Post
 

Citation needed?

 

Direct observation. You can do it too.

post #25 of 39
Quote:
Originally Posted by Frood View Post

Absolutely not.  If the major publishers had all sat in a room and said, "Let's all raise prices by 30% overnight together"  That would have been stupidly illegal.  Instead they each talked to Apple and said get all the others on board and we'll be on board too.  Once they all knew they were on board together by not talking to each other, but instead working through Eddy, they achieved the end result through a pretty well thought out plan that would indirectly prevented anyone from being allowed to undersell.  Just because they used Apple as an intermediary doesn't make it legal, but it sure made it a lot smarter and more difficult to prove.  In the end I think it is pretty hard to come up with prices jumping 30% overnight, with the 'Woah, what are the odds of that??!  Sheesh we just kind of all magically independently all did the same thing at once which would have been disastrous for any one of us if we hadn't all decided to just indepentently jump at the same time.  That is crazy odds your honor, like greater odds than picking a perfect bracket.  Can you believe the coincidence your Honor?"  Apparantly the judge didn't think there was much coincidence.

It was brazen and brilliant.  It was terrible for consumers, and made them pay more for books, but as Steve said to the publishers "but that's what we all want!"  I'll let the legal system take care of itself, and Apple may have deep enough lawyer pockets to dig themselves out yet.  Either way I don't fault Apple for trying, although I'm happier for consumers with the end result.   Only *after* the DOJ stepped in, but because there are more entrants, pricing is even more competitive now.

Go into a bookstore, if you can still find one, look at the back cover of the book for the recommended price, it is what publishers started charging when free to set their own prices for eBooks.

Coincidence?

I think not!
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post #26 of 39
Quote:
Originally Posted by EWTHeckman View Post
 

 

Direct observation. You can do it too.

 

Wow, I haven't seen that detailed a "direct observation" since Rain Man.  Good job.

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post #27 of 39
Quote:
Originally Posted by RedHotFuzz View Post
 

 

Wow, I haven't seen that detailed a "direct observation" since Rain Man.  Good job.

 

If you bothered to read his post, he referenced the eReaderIQ web service which can, I presume from a quick glance at their site, let you get notifications when books prices drop and see the price history of X books.

 

http://bookriot.com/2013/11/27/track-kindle-ebook-bargains-ereader-iq/

post #28 of 39
Quote:
Originally Posted by joshuarayer View Post

If you bothered to read his post, he referenced the eReaderIQ web service which can, I presume from a quick glance at their site, let you get notifications when books prices drop and see the price history of X books.

http://bookriot.com/2013/11/27/track-kindle-ebook-bargains-ereader-iq/

I'm not questioning the price tracking of eReaderIQ. I'm questioning the validity of this statement:

"Occasionally selling a book below cost (maybe 0.000001% of their listings or less at any one time"

That stat very well may be true. I doubt it, but it may be. But it's certainly not a number you can validate by tracking the price fluctuations of 100 books.
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post #29 of 39
Quote:
Originally Posted by RedHotFuzz View Post


I'm not questioning the price tracking of eReaderIQ. I'm questioning the validity of this statement:

"Occasionally selling a book below cost (maybe 0.000001% of their listings or less at any one time"

That stat very well may be true. I doubt it, but it may be. But it's certainly not a number you can validate by tracking the price fluctuations of 100 books.

 

Certainly not the very small subset which is 'NYT Bestsellers'.

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post #30 of 39
Quote:
Originally Posted by RedHotFuzz View Post


I'm not questioning the price tracking of eReaderIQ. I'm questioning the validity of this statement:

"Occasionally selling a book below cost (maybe 0.000001% of their listings or less at any one time"

That stat very well may be true. I doubt it, but it may be. But it's certainly not a number you can validate by tracking the price fluctuations of 100 books.

 

It's a guestimate (see the word "maybe") based on the number of ebooks Amazon has available plus the fact that Amazon actively advertises the "below cost" specials. Specials / Number Available = Percentage

 

Edited to Add: I just checked Amazon's Kindle Books page. It says they currently have 2,501,582 Kindle books available. Their "Big Deal" page (defined as 85% off, likely below cost) lists 504 books. That means they are (assuming the publisher isn't giving a discount) selling 0.02% of their ebooks under cost. Obviously I had too many decimal places in my guestimate. However, even using the higher numbers shows that what Amazon is doing does not qualify as "dumping" by any reasonable measure.


Edited by EWTHeckman - 3/27/14 at 9:07am
post #31 of 39
Quote:
Originally Posted by EWTHeckman View Post

It's a guestimate (see the word "maybe") based on the number of ebooks Amazon has available plus the fact that Amazon actively advertises the "below cost" specials. Specials / Number Available = Percentage

Edited to Add: I just checked Amazon's Kindle Books page. It says they currently have 2,501,582 Kindle books available. Their "Big Deal" page (defined as 85% off, likely below cost) lists 504 books. That means they are (assuming the publisher isn't giving a discount) selling 0.02% of their ebooks under cost. Obviously I had too many decimal places in my guestimate. However, even using the higher numbers shows that what Amazon is doing does not qualify as "dumping" by any reasonable measure.

The problem with your analysis is you are assuming the "normal" price is above cost simply because it is called "normal."

The fact is: you have no idea what amazons cost is or whether or not Amazon's price is above or below cost.
post #32 of 39
Quote:
Originally Posted by iaeen View Post


The problem with your analysis is you are assuming the "normal" price is above cost simply because it is called "normal."

The fact is: you have no idea what amazons cost is or whether or not Amazon's price is above or below cost.

 

Don't be silly. Just compare the ebook price to the paper book price. Compare the prices among platforms. The cost of producing each printed copy is necessarily higher than each copy of an ebook. The front end costs (editing, layout, paying the author, etc.) are the same. If the prices are in the same general range (and they usually are), then it's reasonable to conclude that they're not being sold below cost.

 

Where is your evidence to back up your claim that they are routinely selling below cost?

post #33 of 39
I'm just starting to get spam e-mails now encouraging me to click on a link to get my "refund"...these guys are clever with their timing.

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post #34 of 39
Quote:
Originally Posted by EWTHeckman View Post
 

Don't be silly. Just compare the ebook price to the paper book price. Compare the prices among platforms. The cost of producing each printed copy is necessarily higher than each copy of an ebook. The front end costs (editing, layout, paying the author, etc.) are the same. If the prices are in the same general range (and they usually are), then it's reasonable to conclude that they're not being sold below cost.

 

Possibly.  But publishers/media companies have been shown time and time again to push for higher profits on digital media despite lower production costs.  It's infuriating to customers, but we see it day after day.

 

Quote:
Originally Posted by EWTHeckman View Post

Where is your evidence to back up your claim that they are routinely selling below cost?

 

I think anyone who has followed Amazon's business model (or has been a customer) for any length of time realizes that this is sometimes/often/occasionally (who knows other than the Amazon folks themselves?) part of its business strategy.  And other than the Amazon insiders who control the pricing and their suppliers, no one has any broad evidence for either side of the argument.

 

And if selling below cost isn't the general rule, they likely sell at cost (or at a typically-unsustainable margin) in many cases to squeeze out competitors.

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post #35 of 39

Quote:

 Originally Posted by RedHotFuzz View Post
 

Possibly.  But publishers/media companies have been shown time and time again to push for higher profits on digital media despite lower production costs.  It's infuriating to customers, but we see it day after day.

 

True. The antidote to that is competition, not price fixing, which was the case made against Apple and the publishers.

 

Quote:
And if selling below cost isn't the general rule, they likely sell at cost (or at a typically-unsustainable margin) in many cases to squeeze out competitors.

 

See "no one has any broad evidence for either side of the argument."

 

One thing we can say for sure is that Amazon would not be so large and profitable if they did not have excellent control of their own infrastructure costs. Using such an actual cost advantage in competition is neither illegal nor immoral.

post #36 of 39
Quote:
Originally Posted by EWTHeckman View Post
 

Quote:

 

True. The antidote to that is competition, not price fixing, which was the case made against Apple and the publishers.

 

How does one compete against an arbitrarily/artificially-standardized price ($9.99 (is that price fixing?)) that is either below cost, at cost, or priced at a profit margin that is unsustainable?  How can Barnes & Noble compete (or survive) against an Amazon that makes little to no money selling online books but makes it up by selling non-book-related products?  Or, in Amazon's case, doesn't make it up at all but continues to lose money year after year, to the apparent delight of investors?

 

Quote:
Originally Posted by EWTHeckman View Post
 

Quote:

 

One thing we can say for sure is that Amazon would not be so large and profitable if they did not have excellent control of their own infrastructure costs. Using such an actual cost advantage in competition is neither illegal nor immoral.

 

Wait, Amazon is profitable?  Have you followed their earnings statements since their original founding???

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post #37 of 39

Oh, and don't forget all those $5 albums and $.69 songs in Amazon's MP3 store.  You think they're making money on those?

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post #38 of 39
Quote:
Originally Posted by EWTHeckman View Post
 

 

Don't be silly. Just compare the ebook price to the paper book price. Compare the prices among platforms. The cost of producing each printed copy is necessarily higher than each copy of an ebook. The front end costs (editing, layout, paying the author, etc.) are the same. If the prices are in the same general range (and they usually are), then it's reasonable to conclude that they're not being sold below cost.

 

Where is your evidence to back up your claim that they are routinely selling below cost?

 

Using the subset you want to use there was also no eBook price rise, in fact based on your sample for eBook pricing, prices fell.

 

Apple is innocent, the publishers are innocent.

 

There was no increase.

 

The DoJ was wrong, the courts were wrong, the EU was wrong.

Better than my Bose, better than my Skullcandy's, listening to Mozart through my LeBron James limited edition PowerBeats by Dre is almost as good as my Sennheisers.
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Better than my Bose, better than my Skullcandy's, listening to Mozart through my LeBron James limited edition PowerBeats by Dre is almost as good as my Sennheisers.
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post #39 of 39
Originally Posted by hill60 View Post

The DoJ was wrong, the courts were wrong, the EU was wrong.

 

How dare you claim that government could be wrong?!

Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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Originally Posted by Marvin

The only thing more insecure than Android’s OS is its userbase.
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