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With Apple's hands tied in e-book market, Amazon stops taking some preorders from publisher Hachette - Page 2

post #41 of 83
Quote:
Originally Posted by Future Man View Post
 

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.

 

 

Being a monopoly isn't sufficient.  They have to harm consumers.  Amazon has no ability 'spring the trap' and harm consumers by raising prices.  If the DOJ can find evidence against that and prove that that is Amazon's intent I'm all for going after Amazon.

 

Comcast/Time-Warner is an entirely different animal because there are *HUGE* barriers to entry.  If I wanted to become an 'ebook' seller today, I'd have to create a website.  If I wanted to become a cable provider, I would need to hire an army of skilled cable layers and spend years trying to get zoning permits to try and lay it.  There is probably a substantial argument that this will harm consumers.  Without knowing details, I'll let the justice system, under the close scrutiny of the media, sort it out.  My knee-jerk response is I'm against it.  Hopefully Google fiber or Loon will disrupt their grip, but that will take time.

 
Quote:
Originally Posted by Future Man View Post

 

   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.  

 

I'm in 100% agreement with you there.  And they worked together and came up with a much better deal for themselves.

post #42 of 83
Quote:
Originally Posted by jungmark View Post


Then Amazon would have cried that Apple is engaging in predatory pricing. DOJ would investigate as well.

 

And the DOJ would have come to the same conclusion as they have so far against Amazon- they'd have had no case.

 

Apple's pricing would have to be so low that they drive Amazon out of business.

Apple would need to show a profit.

And it would have to be proven Apple's intent was to recoup its losses by raising prices once there is no competition.

 

The first two would have been difficult to achieve in and of themselves, the third on is likely not even possible without barriers to entry.

post #43 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.

 

 

The difference is Apple has not been accused on using its monopoly in electronic music sales to gain an illegal advantage in another market. 

 

Yet, this is exactly what Amazon has done and is doing. It uses it strong position in traditional online book sales to force publishers to concede to its terms in the entirely different market of electronic book sales. That is how it got its monopoly position in electronic book sales. It is also why Barnes and Noble convinced publishers to go with an agency model that publishers than took to Apple.  

post #44 of 83
Quote:
Originally Posted by TBell View Post

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.

 

 

The difference is Apple has not been accused on using its monopoly in electronic music sales to gain an illegal advantage in another market. 

 

Yet, this is exactly what Amazon has done and is doing. It uses it strong position in traditional online book sales to force publishers to concede to its terms in the entirely different market of electronic book sales. That is how it got its monopoly position in electronic book sales. It is also why Barnes and Noble convinced publishers to go with an agency model that publishers than took to Apple.  

If amazon are doing this then make a complaint.
post #45 of 83
Quote:
Originally Posted by jungmark View Post


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.

 

The last time this happened was the last time consumer prices in an entire established industry inexplicably jumped ~30% overnight.

 

The market sets market price.  Amazon sold books for @$9.99.   Apple was free to try to sell the same books for $12.99 if they felt they could succeed.

post #46 of 83
Quote:
Originally Posted by Frood View Post
 

 

And the DOJ would have come to the same conclusion as they have so far against Amazon- they'd have had no case.

 

Apple's pricing would have to be so low that they drive Amazon out of business.

Apple would need to show a profit.

And it would have to be proven Apple's intent was to recoup its losses by raising prices once there is no competition.

 

The first two would have been difficult to achieve in and of themselves, the third on is likely not even possible without barriers to entry.

 

You assume the DOJ is investigating Amazon. Bezos is a big supporter of Obama. Hence Obama making visits to Amazon. Moreover, the big issue with Amazon is not predatory pricing. It is how it gains concessions from publishers. It essentially uses it monopoly position in online traditional book sales to force publishers to agree to its terms regarding electronic book sales (which is a completely separate market). A big issue was Amazon forcing publishers to agree to release ebooks at the same time as hardcover books disrupting the publishers tiered distribution system (like with movies). Amazon essentially pulled the publishers traditional books from its store. The publishers had enough and started talking about the agency model with companies like Barnes and Noble and Apple. 

post #47 of 83
Quote:
Originally Posted by Frood View Post
 

 

The last time this happened was the last time consumer prices in an entire established industry inexplicably jumped ~30% overnight.

 

The market sets market price.  Amazon sold books for @$9.99.   Apple was free to try to sell the same books for $12.99 if they felt they could succeed.

 

 

That is BS. The market did not really set the price. Amazon set the price. It set the price by forcing publishers to sell the ebooks for less than they desired by using its monopoly position in traditional books sales to gain concessions. Amazon essentially stole its ebook market position. When it actually had to compete, in a short time its position went from 90 percent down to 70. 

 

Moreover, the agency model did not prevent Amazon from negotiating for exclusives for certain titles and setting the price. There were plenty of titles under the agency agreement that only Amazon carried. Studies also showed that for most books the agency model lowered prices. 

 

The DOJ overstepped. Apple had no market power to force anything from publishers. It asked for a wholesale model. Publishers countered with the agency model, which is a legal distribution model. In the long run the DOJ hurt competition and awarded an anti-competitive abuser like Amazon. 

post #48 of 83
Quote:
Originally Posted by hill60 View Post
 

 

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.

 

This I agree with- and the publishers also were technically not found guilty nor did they admit guilt.  If the legal system finds Apple innocent I applaud Apple for that.  I like the end result of breaking the 'Apple/Publisher Engineered solution'  regardless of whether that solution is deemed illegal or not.

 

There was a really good site with the evidence in the case presented and it was better than any episode of CSI.

 

Steve Jobs knew it would be illegal to tell publishers:  'You must all set your prices to $12.99'

 

He instead sent a note along the lines of:

 

I'm not going to tell you what price to set, you are free to set your own price.

You guys aren't making a whole heck of a lot with Amazon selling at $9.99.

If you raised your prices to where ebooks sell at $12.99 you'd make a lot more.  Anything less than that and you're not likely to make enough, and Apple won't be interested in doing business with you..

If you sell for more than $12.99 you're not likely to succeed.

 

Thanks!  Let me know what each of you individually come up with!

 

A good lawyer could argue that Steve's method was not illegal.  You'd have to be an idiot, or more importantly, think Steve was an idiot if you don't believe he knew exactly what he was telling publishers.  I don't think too many people on this site would make that assertion.

 

I really don't care if Apple's guilty verdict is overturned or not for whatever reason- I'm glad the system put in place was stopped and that since then competition has increased and prices have come down.

post #49 of 83
Quote:
Originally Posted by Frood View Post

The last time this happened was the last time consumer prices in an entire established industry inexplicably jumped ~30% overnight.

The market sets market price.  Amazon sold books for @$9.99.   Apple was free to try to sell the same books for $12.99 if they felt they could succeed.

So do you have a specific example of this occurring?

How can the market set the price when Amazon had a monopoly. Surely you have to give the market time to balance. 2+ years is a small time frame.
post #50 of 83
Quote:
Originally Posted by Frood View Post
 

Apple's pricing...

 

Apple's pricing?

 

The publishers set the pricing, Apple provided a place to sell.

 

If you want to write a book and sell it via Apple, you set the price, there is no barrier to entry.

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post #51 of 83
Quote:
Originally Posted by Frood View Post
 

 

...an entire established industry inexplicably jumped ~30% overnight.

 

 

Wrong.

 

A small segment of prices jumped, the effect on the "entire established market" was an overall decrease in the average price of eBooks.

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post #52 of 83
Quote:
Originally Posted by Frood View Post
 

 

This I agree with- and the publishers also were technically not found guilty nor did they admit guilt.  If the legal system finds Apple innocent I applaud Apple for that.  I like the end result of breaking the 'Apple/Publisher Engineered solution'  regardless of whether that solution is deemed illegal or not.

 

There was a really good site with the evidence in the case presented and it was better than any episode of CSI.

 

Steve Jobs knew it would be illegal to tell publishers:  'You must all set your prices to $12.99'

 

He instead sent a note along the lines of:

 

I'm not going to tell you what price to set, you are free to set your own price.

You guys aren't making a whole heck of a lot with Amazon selling at $9.99.

If you raised your prices to where ebooks sell at $12.99 you'd make a lot more.  Anything less than that and you're not likely to make enough, and Apple won't be interested in doing business with you..

If you sell for more than $12.99 you're not likely to succeed.

 

Thanks!  Let me know what each of you individually come up with!

 

A good lawyer could argue that Steve's method was not illegal.  You'd have to be an idiot, or more importantly, think Steve was an idiot if you don't believe he knew exactly what he was telling publishers.  I don't think too many people on this site would make that assertion.

 

I really don't care if Apple's guilty verdict is overturned or not for whatever reason- I'm glad the system put in place was stopped and that since then competition has increased and prices have come down.

 

You mean an unsent draft which strangely enough was in line with paperback pricing.

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post #53 of 83
The DOJ claims it went after Apple mainly to help consumers, who were getting 'overcharged' by Thai Apple deal.

But where is the DOJ over this kind of game

A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

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A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

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post #54 of 83
Quote:
Originally Posted by bighype View Post


Time for T.Diddy to wake up and hire some real lobbyists and start defending Apple from government goons.

Or perhaps the lobbyists that Apple needs are the public. 'We the people' can so a lot of damage if folks actually try. Social media etc can be powerful tools. Find a lawyer game to play and file a class action suit or several against Amazon, perhaps even the DOJ (for failing to act against Amazon) and so on. Even if the lawsuits get tossed they are likely to get press. Especially if those that filed start the ball rolling well.

A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

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A non tech's thoughts on Apple stuff 

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post #55 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.

Apple doesn't do the wholesale model. Not likely to ever. Agency where paying out is predicated on getting sales is safer.

And right now yeah their hands are rather tied cause of the DOJ suit. Until they can get it overturned they are limited in their power to sign new contracts etc.

A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

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A non tech's thoughts on Apple stuff 

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post #56 of 83
Quote:
Originally Posted by hill60 View Post
 

 

Wrong.

 

A small segment of prices jumped, the effect on the "entire established market" was an overall decrease in the average price of eBooks.

 

Source?

 

Here is the *weighted* average of e-book prices, which removes the 'small segment' argument.   Unless you count the 5 out of 7 that jumped as a small segment.  But then again the 5 of 7 that jumped are the 5 that worked with Apple.  The two segments whose prices didn't jump were Random House, who was invited, smelled a rat, took the high road, and wanted nothing to do with it- and the 'small fish' who were never invited to the party in the first place.

 

http://www.washingtonpost.com/blogs/wonkblog/files/2013/07/apple_chart.png

 

After the DOJ disrupted the scheme, because there are more entrants and competition in the market- prices have declined.  That's how it is supposed to work.  The icing on the cake is Amazon's market share in ebooks is declining to boot(and I think that is an absolutely great thing).

post #57 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.

 

1.  There's nothing inherently illegal about the agency model.

 

2.  The Supreme Court ruled a number of years ago that manufacturers could indeed set minimum selling prices.   Prior to that ruling, manufacturers could set only minimum advertised prices.    And companies such as Sony and Nikon are now enforcing minimum selling prices on their high-end products.    (Apple also does this, but indirectly, by making its wholesale price so high, there's no room for discounting.)   So if this is fine for manufactured goods, why is not fine for publications?

 

3.  Apple's deal with publishers would have raised eBook prices, but it also would have preserved an industry.    The publishers were desperately trying not to go the way of the music industry, which is now far less than half of its 1999 peak.    On the other hand, when you sell items below cost, as Amazon frequently has done to gain market share, while that does provide a price advantage to consumers, it also can be considered predatory, which is illegal.

 

4.  Amazon's tactics have destroyed their competitors as well as destroying physical bookstores.    The chains killed most independent bookstores and Amazon is now killing the chains.   The last large national chain, Barnes & Noble, is on the brink.   Generally, when a lease is up, it doesn't get renewed.    And as Amazon destroys that competition, they will (and have) raise prices.   

 

5.   While one can make the argument that any retailer can decide what to sell and/or not sell, Amazon is acting as a monopolistic bully in its dealings with Hachette and other publishers.   You don't suddenly declare books unavailable just because the publisher won't give you an additional discount on the wholesale price.

 

If the major publishers had any guts, they would immediately send Amazon a message by not shipping them any product.   How long would Amazon's bookstore survive if they couldn't buy titles from the top 5 publishers?   Bertelsmann alone has about 22% of U.S. trade publishing (via Random House and Bantam-Doubleday-Dell).   And if Amazon went around the publishers and bought from the distributors like Ingram and Baker & Taylor, they'd have to pay at least 10% more than what the publishers are currently charging them.

 

Amazon has just a bit too much arrogance.     And if consumers had any sense, they would steer their online orders to other vendors, such as B&N, even if it means paying a little more.   In the long run, they'll be better off.    Unfortunately, the publishers don't have any guts and they won't stop shipping to Amazon.    They'll probably eventually cave to Amazon's pricing demands which will eventually lead to lower salaries and layoffs in the publishing industry as well as fewer books being published.   It could also lead to further consolidation among the publishers just as it has in the record industry where there are now only three major record companies in the U.S.

 

Book Expo begins next week in NYC.  I bet they'll be a lot of discussion about Amazon's dealing with publishers at the show.

post #58 of 83
Quote:
Originally Posted by Frood View Post

Source?

Here is the *weighted* average of e-book prices, which removes the 'small segment' argument.   Unless you count the 5 out of 7 that jumped as a small segment.  But then again the 5 of 7 that jumped are the 5 that worked with Apple.  The two segments whose prices didn't jump were Random House, who was invited, smelled a rat, took the high road, and wanted nothing to do with it- and the 'small fish' who were never invited to the party in the first place.

http://www.washingtonpost.com/blogs/wonkblog/files/2013/07/apple_chart.png

After the DOJ disrupted the scheme, because there are more entrants and competition in the market- prices have declined.  That's how it is supposed to work.  The icing on the cake is Amazon's market share in ebooks is declining to boot(and I think that is an absolutely great thing).

There are more entrants because of the Agency model and not the DOJ's early interference.
post #59 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.

No way. That only holds for electronic books and if you only want to sell to Apple hardware owners. But the majority of books is still on paper and for many books MOBI/EPUB and even iBooks formats are not able to handle it properly (as a publisher I recently started with a very graphical book about the Enterprise Architecture language ArchiMate, read the story at the bottom of http://bit.ly/1iNacG8 if you want to know why I did not go for Kindle, partly technical (also holds for iBooks), partly what Amazon charges (65% of sales price, except for a few exceptions)).

post #60 of 83
Quote:
Originally Posted by TeaEarleGreyHot View Post
 

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!)

B&N and the Nook seem to be a lost cause under pressure of both Amazon & Apple.

post #61 of 83
Quote:
Originally Posted by Frood View Post

Comcast/Time-Warner is an entirely different animal because there are *HUGE* barriers to entry.  If I wanted to become an 'ebook' seller today, I'd have to create a website.

You seem to be overlooking the creation of an e-Reader and a marketplace for it, the handling of international finance and the creation of apps for at least the top two mobile OSs.

EBooks that work on PCs aren't a product.
post #62 of 83
Quote:
Originally Posted by gctwnl View Post
 
Quote:
Originally Posted by TeaEarleGreyHot View Post
 

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!)

B&N and the Nook seem to be a lost cause under pressure of both Amazon & Apple.

Most Favor Nation's clause would have helped B&N because it would put an end to Amazon's predatory pricing attacks which is killing off sellers like B&N.   The issue is the only thing B&N has to sell is books. They can't continue to take a loss in books and make it up in other areas like Amazon can. B&N's demise has little to do with competition from Apple's bookstore and all to do with Amazon's predatory pricing in books. 

 

The Prime stuff is also upsetting and has turned out to be game for Amazon to get people to have additional motivation to buy from them exclusive; both product and digital content (I.e. vs. Netflix). They are purposely making non-Prime service horrible to get people to sign up for Prime.    I try to avoid Amazon whenever I can so I don't have Prime membership. Last time I bought something  "in-stock" w/o using Prime it took them 5 days to process the order and ship it out of their warehouse. The actual shipping time once to handed the box over to USPS was quick however.   5 days to "process" vs 2 days actually USPS travel time? Seriously Amazon?? I see your game Amazon, purposely slow down regular in-house processing service to a crawl so that overall door-to-door delivery always takes a week or longer.  Never again. I won't be pawn in your game to motiviate  people to sign up to Prime and won't be doing business anymore with you because of your purposeful regular service in-house processing "inefficiencies".   Non-Prime service order get placed at the back of some queue that takes 5 days to process? That's an entire work week. simply in-excusable. 


Edited by snova - 5/24/14 at 12:29pm
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post #63 of 83
Quote:
Originally Posted by pazuzu View Post

Is better to lose money than Goodwill. Marketing 101.

 

Better to generate revenues than market to the poor. Business 101.

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post #64 of 83
Quote:
Originally Posted by charlituna View Post

Apple doesn't do the wholesale model. Not likely to ever. Agency where paying out is predicated on getting sales is safer.

And right now yeah their hands are rather tied cause of the DOJ suit. Until they can get it overturned they are limited in their power to sign new contracts etc.
That sounds like Apples hands are tied more by their own business model rather than anything the DOJ have done. Obviously getting a publisher to sign a contract saying you get 30% and the publisher cant have a book sold for less elsewhere is the ultimate deal for Apple. They can say there store is the cheapest, not have to do any work in setting prices, and never worry about publishers trying to increase there margins as there only option is to remove the books. They couldn't even give a competitor a price advantage to weaken Apple in the future. But not being able to do it having to operate like everyone else is hardly having your hands tied.
post #65 of 83
Quote:
Originally Posted by zoetmb View Post
 

 

1.  There's nothing inherently illegal about the agency model.

 

2.  The Supreme Court ruled a number of years ago that manufacturers could indeed set minimum selling prices.   Prior to that ruling, manufacturers could set only minimum advertised prices.    And companies such as Sony and Nikon are now enforcing minimum selling prices on their high-end products.    (Apple also does this, but indirectly, by making its wholesale price so high, there's no room for discounting.)   So if this is fine for manufactured goods, why is not fine for publications?

 

3.  Apple's deal with publishers would have raised eBook prices, but it also would have preserved an industry.    The publishers were desperately trying not to go the way of the music industry, which is now far less than half of its 1999 peak.    On the other hand, when you sell items below cost, as Amazon frequently has done to gain market share, while that does provide a price advantage to consumers, it also can be considered predatory, which is illegal.

 

4.  Amazon's tactics have destroyed their competitors as well as destroying physical bookstores.    The chains killed most independent bookstores and Amazon is now killing the chains.   The last large national chain, Barnes & Noble, is on the brink.   Generally, when a lease is up, it doesn't get renewed.    And as Amazon destroys that competition, they will (and have) raise prices.   

 

5.   While one can make the argument that any retailer can decide what to sell and/or not sell, Amazon is acting as a monopolistic bully in its dealings with Hachette and other publishers.   You don't suddenly declare books unavailable just because the publisher won't give you an additional discount on the wholesale price.

 

If the major publishers had any guts, they would immediately send Amazon a message by not shipping them any product.   How long would Amazon's bookstore survive if they couldn't buy titles from the top 5 publishers?   Bertelsmann alone has about 22% of U.S. trade publishing (via Random House and Bantam-Doubleday-Dell).   And if Amazon went around the publishers and bought from the distributors like Ingram and Baker & Taylor, they'd have to pay at least 10% more than what the publishers are currently charging them.

 

Amazon has just a bit too much arrogance.     And if consumers had any sense, they would steer their online orders to other vendors, such as B&N, even if it means paying a little more.   In the long run, they'll be better off.    Unfortunately, the publishers don't have any guts and they won't stop shipping to Amazon.    They'll probably eventually cave to Amazon's pricing demands which will eventually lead to lower salaries and layoffs in the publishing industry as well as fewer books being published.   It could also lead to further consolidation among the publishers just as it has in the record industry where there are now only three major record companies in the U.S.

 

Book Expo begins next week in NYC.  I bet they'll be a lot of discussion about Amazon's dealing with publishers at the show.

 

Very good points, and I pretty much agree with all of them.

1.  There's nothing inherently illegal about the agency model.

Absolutely agree.  Apple was not charged with, nor found guilty of, implementing the agency model.

 

2.  Don't know the details of the ruling, so I'll take your word for it as true.  Does the ruling allow the major players in those industries to collaborate and collude together to set that price?

 

Your remaining points 3-5 have no bearing on what Apple or the publishers were (or would have been) charged with, but they are what many people try to link to the trial, because that is what put publishers under enough pressure to take the bait offered them.

 

3.  Focusing just on Apple.... How does Apple's plan help publishers at all?  If they are struggling selling books at $9, how does selling books to Apple $12 and guaranteeing them 30% (putting their selling price effectively back at $9) help publishers in any way shape or form?  [Working through the answer to this will let you see how bad a deal this is for consumers, and even for the publishers in the long run]

 

4.  Watching the book chains wipe out the small bookstores was a sad experience for most ('You've Got Mail'), but ultimately it was consumer's who preferred the ease, price, and larger selections on hand that the chains offered.  Now those 'bullies' are getting eaten by another bully.  It is sad to watch, but not illegal.  As to 'And as Amazon destroys that competition, they will (and have) raise prices' Amazon so far is failing horribly to destroy competition so that isn't likely to occur, and for the 'raising prices' argument the bar has been set very high.  Since under the alternative plan engineered by Apple prices jump to over $12 and publishers have incintives only to raise prices, not lower them (the consumer is completely removed from the process)- Amazon 'raising' prices will only be a valid argument when their ASP goes over $12.  Not going to happen.

 

5.  Amazon is a bully, and has tremendous leverage by being a large player.  They are not a monopoly and are losing their grasp to iBooks and Play.  On: You don't suddenly declare books unavailable just because the publisher won't give you an additional discount on the wholesale price.  erm.... Yes, you do.  Even in your local convenience store.  If a supplier sets the price of a good so high you don't think you'll make a profit on it, you stop carrying it.  That's the market.  Now other iBooks is free to snap up that title and sell it at a higher price- proving consumers like it enough to pay for it, and that it is profitable.

post #66 of 83
Quote:
Originally Posted by Frood View Post
 

3.  Focusing just on Apple.... How does Apple's plan help publishers at all?  If they are struggling selling books at $9, how does selling books to Apple $12 and guaranteeing them 30% (putting their selling price effectively back at $9) help publishers in any way shape or form?  [Working through the answer to this will let you see how bad a deal this is for consumers, and even for the publishers in the long run]

 

 

The publishers did and do not sell anything to Apple, they sold and sell directly to iBook customers via Apple.

 

Publishers decide what price they want to sell at, from a single person uploading an iBook to the big five.

 

Apple provides a conduit.

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post #67 of 83
Quote:
Originally Posted by hill60 View Post
 

 

The publishers did and do not sell anything to Apple, they sold and sell directly to iBook customers via Apple.

 

Publishers decide what price they want to sell at, from a single person uploading an iBook to the big five.

 

Apple provides a conduit.

 

You're arguing semantics to avoid the point.

 

Which would make the publisher more money:

 

A.  Selling a book to Amazon for $9.99

B.  Selling a book 'via Apple's conduit' for $12.00

 

The answer is obviously they make a lot more money on the book they sell to Amazon for $9.99.  So what's the catch?

post #68 of 83
Quote:
Originally Posted by John.B View Post

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.
Can the people (DoJ is an institution made up of people) be sued for gross misuse of the mandate to them given by the population ?

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post #69 of 83
Quote:
Originally Posted by Frood View Post


3.  Focusing just on Apple.... How does Apple's plan help publishers at all?  If they are struggling selling books at $9, how does selling books to Apple $12 and guaranteeing them 30% (putting their selling price effectively back at $9) help publishers in any way shape or form?  [Working through the answer to this will let you see how bad a deal this is for consumers, and even for the publishers in the long run]


5.  Amazon is a bully, and has tremendous leverage by being a large player.  They are not a monopoly and are losing their grasp to iBooks and Play.  On: You don't suddenly declare books unavailable just because the publisher won't give you an additional discount on the wholesale price.  erm.... Yes, you do.  Even in your local convenience store.  If a supplier sets the price of a good so high you don't think you'll make a profit on it, you stop carrying it.  That's the market.  Now other iBooks is free to snap up that title and sell it at a higher price- proving consumers like it enough to pay for it, and that it is profitable.

3. While publishers will make less, there would and have been more competition. In addition, they would have control and limit Amazon's bullying. Also, the ebook pricing wouldn't devalue books, in general, and will slow down the decline in hardbacks or paperbacks sales.

5. Is the publisher setting the price too high or is Amazon demanding a larger discount? It may not be a monopoly in the purest sense but it is by far the largest player. If it was a smaller player, this wouldn't be an issue.

Also if it was a convenience store, if the cost of the product increases they would pass that to the customer. Amazon doesn't want to do that not because it loves its customers but because it have power.
post #70 of 83
Quote:
Originally Posted by Frood View Post
 

 

Very good points, and I pretty much agree with all of them.

1.  There's nothing inherently illegal about the agency model.

Absolutely agree.  Apple was not charged with, nor found guilty of, implementing the agency model.

 

2.  Don't know the details of the ruling, so I'll take your word for it as true.  Does the ruling allow the major players in those industries to collaborate and collude together to set that price?

 

Your remaining points 3-5 have no bearing on what Apple or the publishers were (or would have been) charged with, but they are what many people try to link to the trial, because that is what put publishers under enough pressure to take the bait offered them.

 

3.  Focusing just on Apple.... How does Apple's plan help publishers at all?  If they are struggling selling books at $9, how does selling books to Apple $12 and guaranteeing them 30% (putting their selling price effectively back at $9) help publishers in any way shape or form?  [Working through the answer to this will let you see how bad a deal this is for consumers, and even for the publishers in the long run]

 

4.  Watching the book chains wipe out the small bookstores was a sad experience for most ('You've Got Mail'), but ultimately it was consumer's who preferred the ease, price, and larger selections on hand that the chains offered.  Now those 'bullies' are getting eaten by another bully.  It is sad to watch, but not illegal.  As to 'And as Amazon destroys that competition, they will (and have) raise prices' Amazon so far is failing horribly to destroy competition so that isn't likely to occur, and for the 'raising prices' argument the bar has been set very high.  Since under the alternative plan engineered by Apple prices jump to over $12 and publishers have incintives only to raise prices, not lower them (the consumer is completely removed from the process)- Amazon 'raising' prices will only be a valid argument when their ASP goes over $12.  Not going to happen.

 

5.  Amazon is a bully, and has tremendous leverage by being a large player.  They are not a monopoly and are losing their grasp to iBooks and Play.  On: You don't suddenly declare books unavailable just because the publisher won't give you an additional discount on the wholesale price.  erm.... Yes, you do.  Even in your local convenience store.  If a supplier sets the price of a good so high you don't think you'll make a profit on it, you stop carrying it.  That's the market.  Now other iBooks is free to snap up that title and sell it at a higher price- proving consumers like it enough to pay for it, and that it is profitable.

2.   No, obviously collusion would be illegal.    

 

3.   When Amazon sells eBooks below cost, that in itself doesn't really hurt the publishers directly, because they still get the same wholesale price. But the problem is that it lowers the perception of what books are worth, which in turn would impact what publishers can charge for hardcover and paperback books.   And in turn, it would (and apparently has) led to demands from Amazon for lower wholesale prices.     We can look again at the music industry where the perception is that if a track is worth anything at all, it's worth $1 to $1.29 and catalog midline CDs sell for $3 to $5 whereas a single listed for $1 and sold for about 65 cents back in the early 1960s ($7.65 and $4.97 in 2014 dollars, using 1964 as the base year).    The publishers are scared to death of this happening to the book industry.    The consumer trade book industry is actually a very low margin business and always has been.   You can't just look at consumer prices - you have to look at what enables an industry to survive.    

 

4.  I never said it was illegal and certainly the big physical chains didn't generally use predatory pricing.   But one can make the case that Amazon uses predatory pricing and that is illegal.    And you don't have to be the last company standing to be defined as a monopoly.    Microsoft had (some) competition, but in essence, they became a monopoly.   And they realized that which is why when Apple was in financial trouble, when Steve Jobs returned to Apple in 1997, Microsoft made an investment in Apple to keep it alive:  they needed to show that there was some competition.     

 

5.  "On: You don't suddenly declare books unavailable just because the publisher won't give you an additional discount on the wholesale price.  erm.... Yes, you do.  Even in your local convenience store.  If a supplier sets the price of a good so high you don't think you'll make a profit on it, you stop carrying it.  "

 

Your local convenience store can only carry a small number of books.   And generally, they do not choose which books to sell - that is handled by the distributor, which are called "rack jobbers".    That's quite different than an e-commerce store which claims to sell "everything".    

 

Most of your argument seems to be based on the fact that Amazon provides lower prices and therefore the consumer benefits.   But once Amazon knocks out almost all the competition, do you really think prices are going to stay low?    Not a chance.    Then what happens?    

post #71 of 83
Quote:
Originally Posted by Frood View Post
 

 

You're arguing semantics to avoid the point.

 

 

Correcting your misleading statement.

 

Publishers do not sell eBooks to Apple.

 

Apple does not set prices.

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post #72 of 83
Quote:
Originally Posted by hill60 View Post

Correcting your misleading statement.

Publishers do not sell eBooks to Apple.

Apple does not set prices.

You're avoiding @Frood's questions?
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post #73 of 83
Quote:
Originally Posted by Frood View Post
 

3.  Focusing just on Apple.... How does Apple's plan help publishers at all?  If they are struggling selling books at $9, how does selling books to Apple $12 and guaranteeing them 30% (putting their selling price effectively back at $9) help publishers in any way shape or form?  [Working through the answer to this will let you see how bad a deal this is for consumers, and even for the publishers in the long run]

 

Quote:
Originally Posted by dasanman69 View Post


You're avoiding @Frood's questions?

 

What questions?

 

Seeing as how publishers do not sell iBooks to Apple.

 

Apple does not buy iBooks from publishers.

 

Apple has nothing to do with the price publishers charge consumers for iBooks.

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post #74 of 83
Quote:
Originally Posted by hill60 View Post


What questions?

Seeing as how publishers do not sell iBooks to Apple.

Apple does not buy iBooks from publishers.

Apple has nothing to do with the price publishers charge consumers for iBooks.

He altered his wording and you still ducked the question.
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post #75 of 83
Quote:
Originally Posted by jungmark View Post
 
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.

 

1. I never claimed 30% margin. Read more carefully. I said they take their 30% and a tidy profit. I said their margins are higher than Amazon's which is a true statement as well.

 

2. The average doesn't matter. The facts matter. The average books sells squat. The majority of books, like the majority of sales in most areas are of a narrow range or products. Apple itself understands this because they keep their product matrix small, focused and hit the areas of the market that offer premium profit opportunities. They don't spam products. They understand that average and profits have nothing to do with each other. Amazon has the same understanding and wanted to offer bundles and deals in the areas of best opportunities which Apple denied and was thus ruled against.

 

3. Loss leaders are a common strategy. Amazon didn't create it nor are they the exclusive provider of loss leaders. Selling a couple products or offering specials to get people to enter their info, and get into the ecosystem is a great strategy. Apple USED to understand such things like when they would give you an iPod with purchase of a Mac computer.

 

Apple gives away plenty as well like OS updates,  Applications like Pages and iMovie, and music singles, television episodes, etc.

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post #76 of 83
Quote:
Originally Posted by jungmark View Post

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

Do you know why prices fell? There was an immediate 12% drop in sales when prices went up.
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post #77 of 83
Quote:
Originally Posted by charlituna View Post

Apple doesn't do the wholesale model. Not likely to ever. Agency where paying out is predicated on getting sales is safer.

And right now yeah their hands are rather tied cause of the DOJ suit. Until they can get it overturned they are limited in their power to sign new contracts etc.

FYI, Apple uses the wholesale model for movies/TV shows.
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post #78 of 83
Quote:
Originally Posted by zoetmb View Post

Quote:
Originally Posted by Frood View Post


1.  There's nothing inherently illegal about the agency model.

2.  The Supreme Court ruled a number of years ago that manufacturers could indeed set minimum selling prices.   Prior to that ruling, manufacturers could set only minimum advertised prices.    And companies such as Sony and Nikon are now enforcing minimum selling prices on their high-end products.    (Apple also does this, but indirectly, by making its wholesale price so high, there's no room for discounting.)   So if this is fine for manufactured goods, why is not fine for publications?

3.  Apple's deal with publishers would have raised eBook prices, but it also would have preserved an industry.    The publishers were desperately trying not to go the way of the music industry, which is now far less than half of its 1999 peak.    On the other hand, when you sell items below cost, as Amazon frequently has done to gain market share, while that does provide a price advantage to consumers, it also can be considered predatory, which is illegal.

4.  Amazon's tactics have destroyed their competitors as well as destroying physical bookstores.    The chains killed most independent bookstores and Amazon is now killing the chains.   The last large national chain, Barnes & Noble, is on the brink.   Generally, when a lease is up, it doesn't get renewed.    And as Amazon destroys that competition, they will (and have) raise prices.   

5.   While one can make the argument that any retailer can decide what to sell and/or not sell, Amazon is acting as a monopolistic bully in its dealings with Hachette and other publishers.   You don't suddenly declare books unavailable just because the publisher won't give you an additional discount on the wholesale price.

If the major publishers had any guts, they would immediately send Amazon a message by not shipping them any product.   How long would Amazon's bookstore survive if they couldn't buy titles from the top 5 publishers?   Bertelsmann alone has about 22% of U.S. trade publishing (via Random House and Bantam-Doubleday-Dell).   And if Amazon went around the publishers and bought from the distributors like Ingram and Baker & Taylor, they'd have to pay at least 10% more than what the publishers are currently charging them.

Amazon has just a bit too much arrogance.     And if consumers had any sense, they would steer their online orders to other vendors, such as B&N, even if it means paying a little more.   In the long run, they'll be better off.    Unfortunately, the publishers don't have any guts and they won't stop shipping to Amazon.    They'll probably eventually cave to Amazon's pricing demands which will eventually lead to lower salaries and layoffs in the publishing industry as well as fewer books being published.   It could also lead to further consolidation among the publishers just as it has in the record industry where there are now only three major record companies in the U.S.

Book Expo begins next week in NYC.  I bet they'll be a lot of discussion about Amazon's dealing with publishers at the show.

Good comment. It's a shame the publishers caved—if they had stuck to their guns with Apple, the DoJ would have thought twice about putting all the big publishers out of business.

I'll be interested to see how it all plays out. Apple deserve to win their appeal and reinstate the agency model.
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post #79 of 83

Apple's hands are tied because....they won't take less than 30% to even consider offering a sale.....this has nothing to do with a court decision BTW....

 

Meanwhile over at Walmart........

 

Quote:
Walmart (WMT) didn't need to be asked twice.

 

It began offering nearly 400 Hachette titles for 40% off, with delivery dates as soon as this week. The sale was given prominent placement on the Walmart.com home page.

On Friday, Walmart said sales of physical books (excluding e-books) were up 70% since Tuesday.

 

Barnes and Noble's website is also offering discounts for Hachette books.

 

The CEO of Hachette Book Group, Michael Pietsch, wrote to the company's authors that the dispute with Amazon presents a "challenging period" but said the signs from other retailers are "extremely encouraging."

 

In case anyone else was keeping track, Amazon has lost every battle with a publisher that I have read about including with all publishers in the DOJ case related to Apple. All publishers demanded and forced Amazon to take their terms, not the reverse.

 

Amazon has such a monopoly on book sales that Walmart sales only gained 70% this week.

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post #80 of 83
Quote:
Originally Posted by trumptman View Post

Apple's hands are tied because....they won't take less than 30% to even consider offering a sale.....this has nothing to do with a court decision BTW....

Meanwhile over at Walmart........


In case anyone else was keeping track, Amazon has lost every battle with a publisher that I have read about including with all publishers in the DOJ case related to Apple. All publishers demanded and forced Amazon to take their terms, not the reverse.

Amazon has such a monopoly on book sales that Walmart sales only gained 70% this week.

I thought Amazon were forced to take Apple's terms, well in the world according to Cote anyway???

They were supposed to be the "ringleader", weren't they?
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