Thanks for that. That's the distinction that I didn't quite understand.
It is a purely academic distinction.
The combination of the agency model and that clause ensures all stores sell for the same price. In other words, the price is fixed.
The publishers set the price, and Apple "has the right to match the price" as anyone else. The publishers then set one price, one that Apple has now guaranteed can never undercut the one given to them.
-Per the publisher they aren't allowed to undercut the price. Apple's price is as low as permitted.
In other words your first scenario could not happen under the agency pricing model. If Apple is selling books at the publisher's minimum retail price, it's Amazon and every other competitor who are restricted from undercutting Apple's price which is also the publisher's price.
I pointed this out before, Apple does it all the time when they sell their products, no one who carries apple products are allow to sell below what apple said is the price of their products without apple agreeing to the pricing. Bose also does the exact same thing, as far as I know companies are allow to set their selling price and tell their channels what price they can sell at.
In the case of Amazon, they sell books at whatever price they like even below the cost they pay, which is illegal it is called predatory pricing. Apple never told the publisher what pricing they need to sell at, only that apple would be guaranty 30% profits on the sale and their selling price would not be any higher than any other competitor.
All this does is not allow lost leader pricing, since we know not all Amazon books are below cost, they just put a few out there at low pricing and hope users will buy the other things at the higher pricing.
In the end, Amazon like the Cell phone companies devalued the product, people now thing a cell phone is free and book only cost $7.99 when they really cost $16.99.
It wasn't that Apple wanted the ability to match Amazon's low prices. They wanted a guarantee that they didn't have to compete with Amazon on prices...
Now you're saying Apple was making it so Amazon couldn't compete even by selling a title at the same price. Bullshit!
No. Collusion is illegal. The agency model is simply the mechanism they used to fix prices, given the underlying collusion. Read the complaint, it's not hard to understand.
No. Collusion is illegal. The agency model is simply the mechanism they used to fix prices, given the underlying collusion. Read the complaint, it's not hard to understand.
I've read the complaint. As stated, it's bullshit!
This begs the question: Why isn't the DoJ interested in Amazon using it's monopoly position to sell at a loss to keep competitors out of the market?
because our stupid government appear only interested in seeing pricing going down, so what if competitor are taken out. The government did not care when apple began selling music for $0.99 and whipping out the old school industry, (which need to happen anyway) but in their little minds that is okay since pricing was going down. It okay for gas pricing to go up and your taxes increasing but your consumer stuff must go down, why, so you can pay more for taxes and gas. Gee if people spent more on their books and electronic that means you have less to spend on gas and taxes.
No. Collusion is illegal. The agency model is simply the mechanism they used to fix prices, given the underlying collusion. Read the complaint, it's not hard to understand.
Collusion only work if all companies are selling the same product like gas or memory chips, where the consumer can interchange product as they like. I point these two example out since they have been fine in the past for collusion and agreeing to fix prices so no matter who you bough from you paid the same price. Does not work the same in books, only one publisher produces a book, you can not buy Steve Jobs book from more than one book publisher so they can set the price how ever they like. Now it would be collusion if more than one publisher made the book and they all agree not to sell it below $x price. That is not happen in this case.
Collusion only work if all companies are selling the same product like gas or memory chips, where the consumer can interchange product as they like. I point these two example out since they have been fine in the past for collusion and agreeing to fix prices so no matter who you bough from you paid the same price. Does not work the same in books, only one publisher produces a book, you can not buy Steve Jobs book from more than one book publisher so they can set the price how ever they like. Now it would be collusion if more than one publisher made the book and they all agree not to sell it below $x price. That is not happen in this case.
The DOJ complaint is awesome, and should be required reading before posting. My favorite passage so far
I love my Apple products, but if this stuff pans out...
Folks, if you read this the government is treating all books the same, and since Amazon set the market price at $9.99 the government feels pricing should not be allow to increase above this amount. They will have to show that all books are exactly the same and pricing differences are not allowed since in their mind it like a true commodity with no difference in value. They also seem to know that Amazon was setting pricing well below market value, which again is usually frown upon by our government but in this case it is okay.
The fact that apple and a few of the publishers are not backing down tell me that feel the government may not have a case especially when there are plenty of example which company set pricing and will not allow anyone to sell below those prices. Milk is one of them and the government is involved in the price fixing as well as with electricity.
No Apple did not set the base price. That was the publishers. The guarantee that Apple reportedly worked out with those 5 publishers spelled out that Amazon couldn't set their own prices either. If Apple sold their books at the publisher's retail price, assuring a 30% profit rather than getting even greedier and selling above retail, they were guaranteed not to have a worry that Amazon might sell at a lower price.
It wasn't that Apple wanted the ability to match Amazon's low prices. They wanted a guarantee that they didn't have to compete with Amazon on prices...
according to reports.
So you're saying Apple's contract stipulated that whatever price they sold the book at had to be the same for every seller? I haven't seen that supported by any contractual language that has been published. Can you link to a source that has such language?
Everything I've seen has pointed out that Apple wanted to match pricing not dictate pricing for other sellers. Again, the quote from Steve Jobs, "... we also asked for a guarantee that if anybody else is selling the books cheaper than we are, then we can sell them at the lower price too."
So we have a conspiracy to raise (nearly double) e-books price and people here are happy and condoning it... Great. Moreover the AI OP "bizarrely" leave aside most of the case info...
Now you're saying Apple was making it so Amazon couldn't compete even by selling a title at the same price. Bullshit!
No, bull-hockey to your re-imagined argument. Find where I said Amazon couldn't sell at the same price. I said they could not sell at a lower price than Apple if the publishers' price was used.
Geesh, it must be create your own argument day and no one told me.
I think the DoJ probably has a better idea what its legal definitions are than anyone with enough time to post here (i.e., me, you, etc).
I do not disagree with you, but the publishers did not all agree to set a price or limit supply of book there buy driving up demand, they just agree to a pricing model, publisher are still free to see pricing at any price they like for their books, they may even choose to sell at $9.99 depending on the books. I personally think the government will have a up hill battle proving that all ebook are only worth $9.99 and a publisher is not allow to tell their retail partners what price they can sell at. If i was Apple legal defense I would just show all the examples that exist today where this exact thing happens and the DoJ has never taken action on. That is a problem with are laws, unless the government enforces the law equally in all cases they run in to problem they using selective enforcement.
As nicely pointed out, just my opinion at this point, it will be interesting to see how this plays out. I do also know even if the government is wrong they will still find away to get their point across.
So you're saying Apple's contract stipulated that whatever price they sold the book at had to be the same for every seller? I haven't seen that supported by any contractual language that has been published. Can you link to a source that has such language?
Everything I've seen has pointed out that Apple wanted to match pricing not dictate pricing for other sellers. Again, the quote from Steve Jobs, "... we also asked for a guarantee that if anybody else is selling the books cheaper than we are, then we can sell them at the lower price too."
What does it matter what Steve Jobs supposedly asked for in a quote from his biography? The plan actually put in place does not allow Amazon to set their own pricing. The minimum retail price is set by the publisher so that Apple would not have to concern themselves with any price competition. Amazon is not permitted to sell at a lower price than the publishers price used by Apple.
It's not really as hard to understand as you're making it.
Definitely not surprised. Apple seems to have this market locked down tight.
True. Apple = Book monopoly
Even though the government's case is based on alleged price fixing, all Apple is supposed to be guilty of is agreeing to allow publishers set their own prices, which is what they do today for physical books. I'd like to see how they explain how that limits competition.
I don't think people realize here, or some do, but many don't, but apple's arrangement was clearly illegal. Not because they had a monopoly, or anything to do with a monopoly. They engaged in price fixing plain and simple.
Apple told the publishers (and they agreed) that books should be sold to apple for a set fee, and then the actual price would be that fee plus 30%.... That alone is fine, however they took it a step further.
They said that all retailers (not just apple) MUST sell the books at the same price. For all you people who claim itunes needs the 30% cut to pay their overhead, this means that any company that could handle this more efficiently (say taking a 15% cut, and giving a discount to the consumer) is not allowed to do this.
There would be no competition amongst the companies, and who would win... The owners of the default store on tablet and ereader devices. Who would buy from store X when the default installed store has the exact same price for everything.
This was the illegal action, apple and the publishers said they could set the prices on everyone, this is not allowed. Whether or not the law is right is a different story, but it is the law, and a major corporation cannot flaunt it and act like they're above it.
I am torn on the issue. You are correct the price has gone up for consumers on eBooks for the reasons you state. This is on the publishers though, not Apple. Under the old model, Amazon was being abusive to publishers, which caused smaller publishers to lose money. Some small publishers closed or sold out to big publishers.
When Amazon set the prices it would tell small publishers it wasn't going to sell regular books if they didn't practically give away the eBooks. A publisher has to be on Amazon, so they would cut their wrists and slash the eBook prices. This would effect the sale of hardcover books.
Publishers need hardcover books to sell for two reasons, 1) most people learn about good reading materials from hardcover books (e.g. even if they don't buy them they look at them in a book store), and 2) the publishers couldn't sustain a profitable business selling eBooks unless sales dramatically increased, which wasn't the case. A significant amount of people, myself included, will not read an eBook. It just isn't as enjoyable.
Quote:
Originally Posted by Asherian
I know many people here are Apple fans...but look at this objectively.
Since Apple's price fixing with publishers (and make no mistake, that's what the "minimum book price" is exactly), the cost of new novels for eBooks has gone up from $9.99 to nearly $20. It is literally cheaper for me to go to the local brick & mortar store and buy a brand new hardcover than to download an eBook.
There's nothing wrong with Apple's agency model. The problem is with them mandating a minimum (high) book price that no one can undercut. That, quite literally, eliminates competition.
If Google or Amazon did this, the lot of you would be screaming bloody murder. Time for some objectivity, no?
What does it matter what Steve Jobs supposedly asked for in a quote from his biography? The plan actually put in place does not allow Amazon to set their own pricing. The minimum retail price is set by the publisher so that Apple would not have to concern themselves with any price competition. Amazon is not permitted to sell at a lower price than the publishers price used by Apple.
It's not really as hard to understand as you're making it.
It seems you really don't understand the Agency pricing model. Dropped.
Comments
Thanks for that. That's the distinction that I didn't quite understand.
It is a purely academic distinction.
The combination of the agency model and that clause ensures all stores sell for the same price. In other words, the price is fixed.
The publishers set the price, and Apple "has the right to match the price" as anyone else. The publishers then set one price, one that Apple has now guaranteed can never undercut the one given to them.
How about this scenario.
-Publisher sells book to Apple for $11.90
-Publisher has retail price set at $16.99
-Apple sells book at $16.99
-Publisher sells book to Amazon for $11.90
-Publisher has retail price set at $16.99
-Amazon wishes to sell said book for $15.99
-Per the publisher they aren't allowed to undercut the price. Apple's price is as low as permitted.
In other words your first scenario could not happen under the agency pricing model. If Apple is selling books at the publisher's minimum retail price, it's Amazon and every other competitor who are restricted from undercutting Apple's price which is also the publisher's price.
I pointed this out before, Apple does it all the time when they sell their products, no one who carries apple products are allow to sell below what apple said is the price of their products without apple agreeing to the pricing. Bose also does the exact same thing, as far as I know companies are allow to set their selling price and tell their channels what price they can sell at.
In the case of Amazon, they sell books at whatever price they like even below the cost they pay, which is illegal it is called predatory pricing. Apple never told the publisher what pricing they need to sell at, only that apple would be guaranty 30% profits on the sale and their selling price would not be any higher than any other competitor.
All this does is not allow lost leader pricing, since we know not all Amazon books are below cost, they just put a few out there at low pricing and hope users will buy the other things at the higher pricing.
In the end, Amazon like the Cell phone companies devalued the product, people now thing a cell phone is free and book only cost $7.99 when they really cost $16.99.
It wasn't that Apple wanted the ability to match Amazon's low prices. They wanted a guarantee that they didn't have to compete with Amazon on prices...
Now you're saying Apple was making it so Amazon couldn't compete even by selling a title at the same price. Bullshit!
Now the agency model is illegal?
No. Collusion is illegal. The agency model is simply the mechanism they used to fix prices, given the underlying collusion. Read the complaint, it's not hard to understand.
No. Collusion is illegal. The agency model is simply the mechanism they used to fix prices, given the underlying collusion. Read the complaint, it's not hard to understand.
I've read the complaint. As stated, it's bullshit!
I've read the complaint. As stated, it's bullshit!
One can't argue with such a vigorous argument.
I've read the complaint. As stated, it's bullshit!
Ahh, solopsism != SolipsismX... sneaky that. Can I use a regex in my ignore list?
This begs the question: Why isn't the DoJ interested in Amazon using it's monopoly position to sell at a loss to keep competitors out of the market?
because our stupid government appear only interested in seeing pricing going down, so what if competitor are taken out. The government did not care when apple began selling music for $0.99 and whipping out the old school industry, (which need to happen anyway) but in their little minds that is okay since pricing was going down. It okay for gas pricing to go up and your taxes increasing but your consumer stuff must go down, why, so you can pay more for taxes and gas. Gee if people spent more on their books and electronic that means you have less to spend on gas and taxes.
that government logic for you
No. Collusion is illegal. The agency model is simply the mechanism they used to fix prices, given the underlying collusion. Read the complaint, it's not hard to understand.
Collusion only work if all companies are selling the same product like gas or memory chips, where the consumer can interchange product as they like. I point these two example out since they have been fine in the past for collusion and agreeing to fix prices so no matter who you bough from you paid the same price. Does not work the same in books, only one publisher produces a book, you can not buy Steve Jobs book from more than one book publisher so they can set the price how ever they like. Now it would be collusion if more than one publisher made the book and they all agree not to sell it below $x price. That is not happen in this case.
Collusion only work if all companies are selling the same product like gas or memory chips, where the consumer can interchange product as they like. I point these two example out since they have been fine in the past for collusion and agreeing to fix prices so no matter who you bough from you paid the same price. Does not work the same in books, only one publisher produces a book, you can not buy Steve Jobs book from more than one book publisher so they can set the price how ever they like. Now it would be collusion if more than one publisher made the book and they all agree not to sell it below $x price. That is not happen in this case.
Not the OED, but generally trustworthy, a definition of Collusion.
I think the DoJ probably has a better idea what its legal definitions are than anyone with enough time to post here (i.e., me, you, etc).
The DOJ complaint is awesome, and should be required reading before posting. My favorite passage so far
I love my Apple products, but if this stuff pans out...
Folks, if you read this the government is treating all books the same, and since Amazon set the market price at $9.99 the government feels pricing should not be allow to increase above this amount. They will have to show that all books are exactly the same and pricing differences are not allowed since in their mind it like a true commodity with no difference in value. They also seem to know that Amazon was setting pricing well below market value, which again is usually frown upon by our government but in this case it is okay.
The fact that apple and a few of the publishers are not backing down tell me that feel the government may not have a case especially when there are plenty of example which company set pricing and will not allow anyone to sell below those prices. Milk is one of them and the government is involved in the price fixing as well as with electricity.
No Apple did not set the base price. That was the publishers. The guarantee that Apple reportedly worked out with those 5 publishers spelled out that Amazon couldn't set their own prices either. If Apple sold their books at the publisher's retail price, assuring a 30% profit rather than getting even greedier and selling above retail, they were guaranteed not to have a worry that Amazon might sell at a lower price.
It wasn't that Apple wanted the ability to match Amazon's low prices. They wanted a guarantee that they didn't have to compete with Amazon on prices...
according to reports.
So you're saying Apple's contract stipulated that whatever price they sold the book at had to be the same for every seller? I haven't seen that supported by any contractual language that has been published. Can you link to a source that has such language?
Everything I've seen has pointed out that Apple wanted to match pricing not dictate pricing for other sellers. Again, the quote from Steve Jobs, "... we also asked for a guarantee that if anybody else is selling the books cheaper than we are, then we can sell them at the lower price too."
Now you're saying Apple was making it so Amazon couldn't compete even by selling a title at the same price. Bullshit!
No, bull-hockey to your re-imagined argument. Find where I said Amazon couldn't sell at the same price. I said they could not sell at a lower price than Apple if the publishers' price was used.
Geesh, it must be create your own argument day and no one told me.
Not the OED, but generally trustworthy, a definition of Collusion.
I think the DoJ probably has a better idea what its legal definitions are than anyone with enough time to post here (i.e., me, you, etc).
I do not disagree with you, but the publishers did not all agree to set a price or limit supply of book there buy driving up demand, they just agree to a pricing model, publisher are still free to see pricing at any price they like for their books, they may even choose to sell at $9.99 depending on the books. I personally think the government will have a up hill battle proving that all ebook are only worth $9.99 and a publisher is not allow to tell their retail partners what price they can sell at. If i was Apple legal defense I would just show all the examples that exist today where this exact thing happens and the DoJ has never taken action on. That is a problem with are laws, unless the government enforces the law equally in all cases they run in to problem they using selective enforcement.
As nicely pointed out, just my opinion at this point, it will be interesting to see how this plays out. I do also know even if the government is wrong they will still find away to get their point across.
So you're saying Apple's contract stipulated that whatever price they sold the book at had to be the same for every seller? I haven't seen that supported by any contractual language that has been published. Can you link to a source that has such language?
Everything I've seen has pointed out that Apple wanted to match pricing not dictate pricing for other sellers. Again, the quote from Steve Jobs, "... we also asked for a guarantee that if anybody else is selling the books cheaper than we are, then we can sell them at the lower price too."
What does it matter what Steve Jobs supposedly asked for in a quote from his biography? The plan actually put in place does not allow Amazon to set their own pricing. The minimum retail price is set by the publisher so that Apple would not have to concern themselves with any price competition. Amazon is not permitted to sell at a lower price than the publishers price used by Apple.
It's not really as hard to understand as you're making it.
Definitely not surprised. Apple seems to have this market locked down tight.
True. Apple = Book monopoly
Even though the government's case is based on alleged price fixing, all Apple is supposed to be guilty of is agreeing to allow publishers set their own prices, which is what they do today for physical books. I'd like to see how they explain how that limits competition.
Apple told the publishers (and they agreed) that books should be sold to apple for a set fee, and then the actual price would be that fee plus 30%.... That alone is fine, however they took it a step further.
They said that all retailers (not just apple) MUST sell the books at the same price. For all you people who claim itunes needs the 30% cut to pay their overhead, this means that any company that could handle this more efficiently (say taking a 15% cut, and giving a discount to the consumer) is not allowed to do this.
There would be no competition amongst the companies, and who would win... The owners of the default store on tablet and ereader devices. Who would buy from store X when the default installed store has the exact same price for everything.
This was the illegal action, apple and the publishers said they could set the prices on everyone, this is not allowed. Whether or not the law is right is a different story, but it is the law, and a major corporation cannot flaunt it and act like they're above it.
Phil
When Amazon set the prices it would tell small publishers it wasn't going to sell regular books if they didn't practically give away the eBooks. A publisher has to be on Amazon, so they would cut their wrists and slash the eBook prices. This would effect the sale of hardcover books.
Publishers need hardcover books to sell for two reasons, 1) most people learn about good reading materials from hardcover books (e.g. even if they don't buy them they look at them in a book store), and 2) the publishers couldn't sustain a profitable business selling eBooks unless sales dramatically increased, which wasn't the case. A significant amount of people, myself included, will not read an eBook. It just isn't as enjoyable.
I know many people here are Apple fans...but look at this objectively.
Since Apple's price fixing with publishers (and make no mistake, that's what the "minimum book price" is exactly), the cost of new novels for eBooks has gone up from $9.99 to nearly $20. It is literally cheaper for me to go to the local brick & mortar store and buy a brand new hardcover than to download an eBook.
There's nothing wrong with Apple's agency model. The problem is with them mandating a minimum (high) book price that no one can undercut. That, quite literally, eliminates competition.
If Google or Amazon did this, the lot of you would be screaming bloody murder. Time for some objectivity, no?
What does it matter what Steve Jobs supposedly asked for in a quote from his biography? The plan actually put in place does not allow Amazon to set their own pricing. The minimum retail price is set by the publisher so that Apple would not have to concern themselves with any price competition. Amazon is not permitted to sell at a lower price than the publishers price used by Apple.
It's not really as hard to understand as you're making it.
It seems you really don't understand the Agency pricing model. Dropped.