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With Apple's hands tied in e-book market, Amazon stops taking some preorders from publisher Hachette

post #1 of 83
Thread Starter 
Amazon is currently in the midst of a fight with Hachette, one of the so-called "Big Five" largest publishing companies, and has stopped taking preorders for high-profile upcoming titles, including the latest from "Harry Potter" series author J.K. Rowling.




The market dominating book seller on Thursday began refusing preorders for several upcoming Hachette titles including Rowling's latest, "The Silkworm," written under the pseudonym Robert Galbraith. The latest moves by Amazon, detailed by The New York Times, come as the retailer is involved in ongoing negotiations with Hachette, which is the smallest of the top five publishers.

Hachette has also seen higher prices on physical books, slower shipping times, much cheaper prices via the Kindle platform, and recommendations for alternative titles in their Amazon listings. The moves are widely believed to be designed to discourage sales of physical books sold by Hachette.

In addition, Amazon is also at odds with Bonnier, a major international publisher, by delaying deliveries of its titles in Germany.

Industry watchers believe Amazon is using its power to frustrate writers, hoping they will help pressure publishers like Hachette and Bonnier to give a more favorable --?and profitable --?contract to the online mega-retailer. Amazon is facing its own pressure from investors, who want to see the company's razor-thin margins improve.

All of this comes after the U.S. government sided with Amazon and punished Apple for its own moves in the e-book market with the launch of iBooks. Last year, the government successfully sued Apple in an antitrust trial, as a judge ruled that the iPad maker was guilty of conspiring with book publishers to raise e-book prices, and as a result hurt consumers.

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


Apple led the charge in convincing publishers to switch to a so-called "agency" pricing model. That prevented content owners from being able to sell the same titles at a lower price elsewhere, without offering the same price on Apple's iBooks platform -- a "most favored nations" clause.

In contrast, the e-book industry prior to the launch of the first iPad was under the "wholesale model" preferred by market leader Amazon. In that model, resellers such as Amazon had the power to set prices, selling titles at or below cost if they chose to do so.

As part of the ruling against Apple, the company was saddled with an injunction barring the company from entering into any unsavory deals with publishers. Antitrust watchdog Michael Bromwich was also assigned to keep an eye on Apple. Bromwich and Apple have butted heads since he was installed last October.

Apple has formally appealed the antitrust ruling, asking for either a dismissal of the verdict or a complete retrial. Apple continues to believe that the iBookstore and iPad created competition in the e-book space, where Amazon's Kindle platform controlled some 90 percent of the market as of 2009.
post #2 of 83
Interesting how government is not going against the real monopoly in the book/ebook market: the Amazon store.

Are Amazon lobbyists paying better than Apple's? Apple is still a giant neophyte in the lobby area. Google and Amazon have strong lobbies in Washington, Apple has a small one. And it shows. Google is a monopoly in search and government is not going after them. Amazon is a monopoly in online sales and books, and government is not going after them either.

Time for T.Diddy to wake up and hire some real lobbyists and start defending Apple from government goons.
post #3 of 83
The Times needs to leave St. Bezos alone.

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post #4 of 83
A publisher could always drop Amazon and give Apple the exclusive...just thinking out loud here.

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post #5 of 83
Originally Posted by SpamSandwich View Post
A publisher could always drop Amazon and give Apple the exclusive...just thinking out loud here.


DoJ then sues Apple, forcing them to nullify the deal.

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post #6 of 83

Heh heh. Predictable (although, I would not have expected it so soon).

 

These fools -- including a whole bunch of authors as well as Amazon users, Cote, Bromwich, and the US DoJ -- are simply reaping what they sowed.

post #7 of 83

Only the current DoJ would use anti-trust law to grant a de facto monopoly to Amazon.  And, of course, this is how Amazon behaves as a result.

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post #8 of 83

While I doubt it, I secretly hope this is the beginning of the end of Amazon's ebook business.  Their stock has been taking a beating by wall street, now lets pile it on with more publishers who refuse to meet their terms.

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post #9 of 83
Are Apples hands really that tied? If they had the power for force publishers into a deal where books couldn't be offered cheaper than the iBooks price then they must have enough power to buy then at the cheapest wholesale price.
post #10 of 83
Quote:
Originally Posted by timgriff84 View Post

Are Apples hands really that tied? If they had the power for force publishers into a deal where books couldn't be offered cheaper than the iBooks price then they must have enough power to buy then at the cheapest wholesale price.

all I know is the books are being offered in the Apple bookstore for those not offered in Amazon.   Keep it going Amazon, piss off some more publishers.  No doubt the other 4 publisher are watching this closely as it could happen to them also.

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post #11 of 83
Amazon - Gov't Supported, Legalized, eBook Mafia
post #12 of 83
undefined
post #13 of 83

I hope they kick Amazon's butt.  They most certainly deserve it.

post #14 of 83

Wel, well, well, who could've seen this coming ?

Certainly not the hapless DOJ or all the greedy short-sighted consumers. This was Amazon's plan all along.

 

Quote:

Originally Posted by bighype View Post

Interesting how government is not going against the real monopoly in the book/ebook market: the Amazon store.

Are Amazon lobbyists paying better than Apple's?

 

That's the general consensus it seems amongst Apple followers of this case. Interesting is an interesting PC choice of words.

 

Quote:
Originally Posted by AppleInsider View Post

Apple led the charge in convincing publishers to switch to a so-called "agency" pricing model.

 

No, they did not. AppleInsider please stop writing this. Eddy Cue approached the publishers with the wholesale model and they came back proposing the agency model. When Cue forwarded this along with sample wholesale prices to Jobs he famously responded in his infamously unsent draft email :

"I can live with this, as long as they move Amazon to the agent model too for new releases for the first year, […] If they don't, I'm not sure we can be competetive (sic) …".

 

Quote:
Originally Posted by AppleInsider View Post

That prevented content owners from being able to sell the same titles at a lower price elsewhere, without offering the same price on Apple's iBooks platform --
 
No, it didn't ! The agency model does not do that.
Quote:
Originally Posted by AppleInsider View Post

-- a "most favored nations" clause.
 
This is what prevented them !
These are 2 separate concepts, neither of which by themselves or combined are wrong or illegal, h.
 
Quote:
Originally Posted by AppleInsider View Post

In contrast, the e-book industry prior to the launch of the first iPad was under the "wholesale model" preferred by market leader Amazon. the market as of 2009.
 
Which is exactly why Eddy Cue first approached the publishers with this model.
 

These fallacies are being repeated constantly everywhere. I wish that at least AppleInsider would stick to the real facts on this. Daniel, please get the rest of the staff on track.

post #15 of 83
Quote:
Originally Posted by timgriff84 View Post

Are Apples hands really that tied? If they had the power for force publishers into a deal where books couldn't be offered cheaper than the iBooks price then they must have enough power to buy then at the cheapest wholesale price.

Why would Apple want to buy at cheapest wholesale price? They wanted an agency model which was designed such that Apple always gets 30% profit, regardless of price to be set by the publishers.

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post #16 of 83
Quote:
Originally Posted by SpamSandwich View Post

A publisher could always drop Amazon and give Apple the exclusive...just thinking out loud here.

 

Of they could but considering Apple doesn't offer an iBook for Android, Windows (phone, tablet or PC) and barely offers a decent client for Mac, it would significantly limit their market. The publisher could offer it on the Google Play Store as well. In fact the Play Store shows it available for pre-sale for $12.74. Apple hasn't been stopped from offering it either and has it for $12.99.

 

Quote:
Originally Posted by Tallest Skil View Post
 
Originally Posted by SpamSandwich View Post
A publisher could always drop Amazon and give Apple the exclusive...just thinking out loud here.


DoJ then sues Apple, forcing them to nullify the deal.

 

No. Apple hasn't been stopped from taking such actions. However Apple's current attitude regarding these matters makes them an unviable solution for exclusives in the e-pub market because their solutions are inferior, incomplete and exclusive to Apple products.

 

Quote:
Originally Posted by timgriff84 View Post

Are Apples hands really that tied? If they had the power for force publishers into a deal where books couldn't be offered cheaper than the iBooks price then they must have enough power to buy then at the cheapest wholesale price.

 

Apple doesn't compete on price. They want their 30% and a tidy profit. That is what the whole epub lawsuit was about in the first place.

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post #17 of 83
Quote:
Originally Posted by Tallest Skil View Post
 


DoJ then sues Apple, forcing them to nullify the deal.

 

 

What a country!

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post #18 of 83
Quote:
Originally Posted by trumptman View Post


Apple doesn't compete on price. They want their 30% and a tidy profit. That is what the whole epub lawsuit was about in the first place.

And how much was Amazon taking prior to Apple being in the market?

Thank God the DOJ allowed Amazon to keep a monopoly.
post #19 of 83

So when JK Rowling publishes her next book (via Hachette), I will order direct and expect delivery by owl, rather than by drone.  Seems preferable in any event!

 

More seriously, doesn't this make ya wish mainstream bookstores were still around? Thank goodness at least Barnes & Noble survives with Apple, as they're the only two real competitors to the Kindle (with their iPad & Nook).  Too bad we lost Borders.  And so many others.  Competition is good!  (And mergers & monopolies are bad!)

post #20 of 83
Quote:
Originally Posted by jungmark View Post
 
Quote:
Originally Posted by trumptman View Post


Apple doesn't compete on price. They want their 30% and a tidy profit. That is what the whole epub lawsuit was about in the first place.

And how much was Amazon taking prior to Apple being in the market?

Thank God the DOJ allowed Amazon to keep a monopoly.

 

Are you seriously suggesting that Amazon's margins are higher than Apple's? That would be the most absurd statement I've read in a while.

 

Apple's goal with pricefixing was the raise margins for everyone by raising prices.

 

Amazon is no more a monopoly in epub than Apple is with iTunes.

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post #21 of 83
Quote:
Originally Posted by jungmark View Post


And how much was Amazon taking prior to Apple being in the market?

Thank God the DOJ allowed Amazon to keep a monopoly.

 

More than 50%?

post #22 of 83
The judge who ruled against Apple e-Books need to re-examine her decision in light of Amazon becoming a bully with the publishing houses! DOJ should never have brought this suite against Apple, instead the DOJ target should have been Amazon.
post #23 of 83
Quote:
Originally Posted by trumptman View Post

Are you seriously suggesting that Amazon's margins are higher than Apple's? That would be the most absurd statement I've read in a while.

Apple's goal with pricefixing was the raise margins for everyone by raising prices.

Amazon is no more a monopoly in epub than Apple is with iTunes.

1. Apple doesn't take 30% margins. You do realize they pay for servers, CC fees, etc.

2. The avg ebook price fell after Apple got in the game.

3. Prior to Apple, Amazon used its monopoly power to take up to a 70% discount off the wholesale price.
post #24 of 83
Quote:
Originally Posted by trumptman View Post
 

 

Are you seriously suggesting that Amazon's margins are higher than Apple's? That would be the most absurd statement I've read in a while.

 

Apple's goal with pricefixing was the raise margins for everyone by raising prices.

 

Amazon is no more a monopoly in epub than Apple is with iTunes.

Uhm, prior to Apple, et al competing, Amazon was 90% of the market for epub, and was getting a 70% share of the revenue from independent publishers. That's not to mention their predatory pricing especially on new releases to drive other retailers and online distributors out of the market and force pricing pressure on publishers.

 

Gee, what changed?

 

After Apple entered the market, Amazon matched the 30% take from independent publishers, same as Apple does for everyone, and still undercuts pricing on new releases to capture dead tree and epub marketshare.

 

The difference now with this story is that Amazon is using its size to push publishers around yet again in an attempt to increase profits, not just share. Where art the DOJ now?

post #25 of 83

Does anybody here realize that this dispute is over physical books, not ebooks?

 

These new titles haven't been published yet - Amazon is preventing pre-orders of future physical books. There's no mention of Amazon and Hatchette fighting over ebooks. It's a whole different issue, though it does show how scummy Amazon is, and that they'll do anything to screw the publishers.

 

The funny thing is that Amazon can't do the same thing against the publishers with ebooks, because of Apple being a strong competitor.

post #26 of 83
Quote:
Originally Posted by elroth View Post
 

Does anybody here realize that this dispute is over physical books, not ebooks?

 

These new titles haven't been published yet - Amazon is preventing pre-orders of future physical books. There's no mention of Amazon and Hatchette fighting over ebooks. It's a whole different issue, though it does show how scummy Amazon is, and that they'll do anything to screw the publishers.

 

The funny thing is that Amazon can't do the same thing against the publishers with ebooks, because of Apple being a strong competitor.

It's ebooks as well.

 

http://bits.blogs.nytimes.com/2014/05/23/amazon-escalates-its-battle-against-hachette/?_php=true&_type=blogs&_r=0

post #27 of 83
"Amazon needs competition."

LOL! Who am I kidding? Only "Apple needs competition." /s

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post #28 of 83

Can't fault Amazon for offering a low price. Apple should have simply undercut them, not raised prices. Problem solved.

 
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post #29 of 83
Quote:
Originally Posted by Future Man View Post

The judge who ruled against Apple e-Books need to re-examine her decision in light of Amazon becoming a bully with the publishing houses! DOJ should never have brought this suite against Apple, instead the DOJ target should have been Amazon.

 

Why?  The two have no legal correlation to each other.  

 

My doctor charged me an outrageous medical fee.  That made me sad and broke and looking for a way out.  I went out and robbed a bank.  Can you believe I was tried and found guilty of robbing a bank?!  Clearly I did it because the doctor made things tough for me, he should be on trial, not me.

 

Apple and the publishers colluded to raise ebook prices.  They were found guilty.  I don't doubt that Amazon put a lot of pressure on their models that made them sad and looking for a way out- but their solution to fixing their problem was illegal.

 

Just as Amazon has no bearing or justification in the collusion case,  Apple and the publishers colluding has no bearing on whether Amazon is engaged in predatory pricing or not.

 

Amazon was examined, but it was found they had no evidence to meet the Sherman Act criteria for predatory pricing.  "Low prices" in and of themselves are certainly not the criteria since that benefits consumes.  Specifically to meet the 'crime' criteria the predatory pricing must be targeted to drive competitors out of the market, must be priced at a loss, and the big toughie, it must be proven that there is potential for a 'payoff' from the predatory pricing- a high barrier to entry must exist so you can raise prices once there is no competition.  A classic example would be steel dumping.  The low prices drive competitors out and they shut down their very expensive steel mills and lose their specialized workers.  The predator can than safely raise prices and recoup their losses because new entrants have a huge barrier to entry (no knowledgeable workers, and no steel mills).

 

The barriers to trying Amazon under the Sherman act would be:

Amazon's pricing has not forced competitors out of the market.  Since its entrance to the market and despite its pricing, *more* competitors have entered the market (including: B&N,  Kobo, Google, Samsung, Apple, Baker & Taylor).

Amazon has shown slight profits on ebooks (not all titles specifically, but overall).

There are nearly zero barriers to entry on ebooks.  If Amazon set prices at $1 and drove all the above competitors out of the market, they could not recoup their losses by setting a ridiculously high price and reaping the rewards.  Competition would spring up immediately at lower prices.  There are almost no barriers to entry.

 

If the DoJ had evidence which could meet the criteria, they would have a case.  They don't.

 

Whether Apple colluded with publishers also obviously has zero impact on the issue of whether Amazon is engaged in predatory pricing.

post #30 of 83

Really!   You must also agree with COMCAST also acquiring Times-Warner and furthering its telecommunications monopoly even though it is not defined as one legally, yet in practice it is.

 

Law is not only that (legislation) which exists in print on the books, it is also the practice, acceptance and implementation of laws that manifest 'legality'.   Amazon looks, sounds and acts like a monopoly as far a e-books is concerned,  They have no really large competitors and they have an 85%+ market share in area of business.  They have agreements with publishers to sell many, if not he majority, of the prices low, for market penetration and client retention.  Apple tried to get higher prices along with a group of publishers and DOJ goes after Apple and the book publishers.    DOJ, like the Supreme Court can ether decide or not entertain to take on a case as being monopolistic, they choice in this matter is apparent.  

 

Amazon is a great on-line retailer, I use them all the time.  Yet they can get too big for their britches.  

post #31 of 83

Competitors such as "B&N,  Kobo, Google, Samsung, Apple, Baker & Taylor"- these are 'marginal' players in the e-Book arena and many are even being challenged for their very existence in the hard-copy book business.    The publishers joined with Apple because the prices that Amazon was demanding of them for their books was too low in their opinion, so they thought that they could get a better deal with Apple e-Books.  As long as the consumer had a choice of vendors to purchase books, I do not see for the intervention of the DOJ action.  

post #32 of 83
Quote:
Originally Posted by pazuzu View Post

Can't fault Amazon for offering a low price. Apple should have simply undercut them, not raised prices. Problem solved.

Then Amazon would have cried that Apple is engaging in predatory pricing. DOJ would investigate as well.
post #33 of 83
Quote:
Originally Posted by Frood View Post

Why?  The two have no legal correlation to each other.  

My doctor charged me an outrageous medical fee.  That made me sad and broke and looking for a way out.  I went out and robbed a bank.  Can you believe I was tried and found guilty of robbing a bank?!  Clearly I did it because the doctor made things tough for me, he should be on trial, not me.

Apple and the publishers colluded to raise ebook prices.  They were found guilty.  I don't doubt that Amazon put a lot of pressure on their models that made them sad and looking for a way out- but their solution to fixing their problem was illegal.

Just as Amazon has no bearing or justification in the collusion case,  Apple and the publishers colluding has no bearing on whether Amazon is engaged in predatory pricing or not.

Amazon was examined, but it was found they had no evidence to meet the Sherman Act criteria for predatory pricing.  "Low prices" in and of themselves are certainly not the criteria since that benefits consumes.  Specifically to meet the 'crime' criteria the predatory pricing must be targeted to drive competitors out of the market, must be priced at a loss, and the big toughie, it must be proven that there is potential for a 'payoff' from the predatory pricing- a high barrier to entry must exist so you can raise prices once there is no competition.  A classic example would be steel dumping.  The low prices drive competitors out and they shut down their very expensive steel mills and lose their specialized workers.  The predator can than safely raise prices and recoup their losses because new entrants have a huge barrier to entry (no knowledgeable workers, and no steel mills).

The barriers to trying Amazon under the Sherman act would be:
Amazon's pricing has not forced competitors out of the market.  Since its entrance to the market and despite its pricing, *more* competitors have entered the market (including: B&N,  Kobo, Google, Samsung, Apple, Baker & Taylor).
Amazon has shown slight profits on ebooks (not all titles specifically, but overall).
There are nearly zero barriers to entry on ebooks.  If Amazon set prices at $1 and drove all the above competitors out of the market, they could not recoup their losses by setting a ridiculously high price and reaping the rewards.  Competition would spring up immediately at lower prices.  There are almost no barriers to entry.

If the DoJ had evidence which could meet the criteria, they would have a case.  They don't.

Whether Apple colluded with publishers also obviously has zero impact on the issue of whether Amazon is engaged in predatory pricing.

You're analogy is wrong.

When has the govt acted so quickly in history to level anti trust accusations? This is a relatively new market. Why did The DOJ allow Amazon to set Market Price?

Consumer protection is more than just price.
post #34 of 83

Crying out loud here will not change anything. I doubt Judges or DoJ read Appleinsider.

 

Why dont we buy some books of Hachette from iBooks to show that iBooks is a profitable platform as well. Amazon is able to play foul things because sales is not high in iBooks Store. Let's show them.

 

No amount of money can prevent me from legally purchase a book from iBooks and help the publishers/authors earn some well deserved money.

post #35 of 83
Quote:
Originally Posted by pazuzu View Post
 

Can't fault Amazon for offering a low price. Apple should have simply undercut them, not raised prices. Problem solved.

Apple doesn't enter a market to lose money.

post #36 of 83
Quote:
Originally Posted by Tsun Zu View Post
 

Crying out loud here will not change anything. I doubt Judges or DoJ read Appleinsider.

 

They may read the New York Times, though. Hopefully the appeals court judges have a wider view of all this, and accept Apple's argument that what they did was legal (because it increased competition). The DoJ should be responding to Apple's appeals court filing very soon.


Edited by elroth - 5/24/14 at 1:53am
post #37 of 83
There's a certain irony in one Hatchet-job spawning another.
post #38 of 83
Quote:
Originally Posted by Frood View Post
 

Apple and the publishers colluded to raise ebook prices.  They were found guilty.  I don't doubt that Amazon put a lot of pressure on their models that made them sad and looking for a way out- but their solution to fixing their problem was illegal.

 

 

That decision is under appeal, Apple will be exonerated mainly because they were a vertical entrant to the market and Denise Cote misapplied the law by treating Apple as a horizontal entrant, i.e. Apple was not another publisher, Apple did not set prices.

 

The class action by the states has been stayed pending the appeal.

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post #39 of 83
Is better to lose money than Goodwill. Marketing 101.
 
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post #40 of 83
Did we expect anything from our United States' government but to screw up yet again?
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