No Apple said publishers couldn't sell to other retailers for less than they sold to Apple. Apple's deal didn't prevent retailers from charging more or less than Apple only what the other publishers charged other retailers. Most favored nation clauses are fairly common. .
Quote:
Originally Posted by philgar
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.
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.
Of course, collusion does not apply to our own Federal Reserve, a privately owned corporation that colludes with banking institutions and our very own government to manipulate our currency... Heavens... we'd never want them held accountable.
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.
If there was any collusion, it would be between the book publishers, not Apple. They were already colluding to try to combat Amazon's pricing before Apple came along!
...The issue is Apple's condition that no one else ever sell it for less than Apple.
Sorry but I think that YOU are the one that doesn't quite get it. Apple's agreement is that APPLE can lower the price to match another online bookseller (like Amazon). NOT that others have to match the iBookstore price.
As far as I can tell, it's the Publishers that are being taken to task over pricing, Apple (and specifically Steve Jobs) happen to be the club used by Publishers against Amazon.... ie... something like this "We (publishers) won't be making Certain Books available to you (Amazon) because YOU are selling for LESS than our wholesale price!" Like I said, Apple's Agency Model was used as a great big bargining chip by the Publishers. Apple has great success via the iTunes Store... Publishers believed they would have great success selling via the iBookstore. Can't say that's true because I have chosen Amazon time and time again to buy from and not once chosen the iBookstore.
If there was any collusion, it would be between the book publishers, not Apple. They were already colluding to try to combat Amazon's pricing before Apple came along!
Then Apple doesn't have a thing to worry about. You feel everything was legal and above board. The DoJ must have some other goal in mind by filing this lawsuit?
I'm not sure that Apple saying "we'll offer you this pricing model, but only if you let us price lower if others price lower" qualifies as Apple cutting down on competition. Apple isn't the largest book seller, and the publishers themselves decided to make Amazon change models, which is (you'd think?) their right. If they shoot themselves in the foot doing so, that's their own problem.
But the other interesting thing to me is just why publishers would care about setting the prices directly - they got to set a wholesale price (say it was 70% of the expected retail) that everyone paid. If Amazon wanted to sell at a loss to kill their competition let them, and presumably THAT would be investigated as it actually kills off the competitors. Them messing with the pricing model themselves just shifted the focus - I just can't imagine that Amazon under-pricing to run others out of business was somehow more legit than going to an agency model.
But overall my issue with iBooks is that I can't read them on my Mac or Kindle thanks to the DRM - the DRM in general needs to go like it did with online music. It's not like you can't find book torrents out there, so locking them down is just another stupid RIAA/MPAA type of anti-consumer action. How about the government looks into that if they're looking to protect consumers?
Predatory pricing is what its called, Walmart specializes in it to shut down whatever local businesses there may be. It's not illegal but definitely frowned upon.
I have a young son and have purchased quite a few children's books from Amazon. The physical book is priced at $3.99 while the kindle edition is $2.99, which makes sense since the e-book wasn't printed, nor shipped to a warehouse, nor stocked on a shelf, nor packaged by a Amazon employee, and shipped, nor was it handled by various UPS employees. The only saving grace Amazon has is that the physical book is still listed and available for purchase. I look at it just like the dollar menu at your local fast food joint, most people end up ordering higher priced items, if you buy a e-book below cost but purchase more items at full price then Amazon made out.
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.
How can this possibly be an anti-trust issue. Apple let the seller of the product set their own selling price!!!!! There is absolutely nothing illegal about that. Meanwhile Amazon sells products at a loss and put major book sellers out of business - they took out competitors. Seems like that is the very definition of anti-competitive. Fight them tooth and nail Apple! Since when is buying products below cost a consumer right?
I promised myself I wouldn't reply anymore but then I ran into your post...
"Meanwhile Amazon sells products at a loss and put major book sellers out of business"
- SO WHAT?? This IS NOT illegal.
"Since when is buying products below cost a consumer right?"
- You are joking right? Selling an item below cost is a FREEDOM of choice. I can choose to sell my item, and lose money, or I don't have to. Selling at a loss to get more customers is a fundamental cornerstone of business, it is not illegal and it is a right.
On a side note, how are you enjoying those $9.99, and below, music CDs? I remember when a album used to cost 16.99 to 20.99. Heaven forbid you buy a 2 CD album, that would set you back $30. Do you know why prices are low now? That's because the big music stores were found guilty of price fixing, the same thing Apple and the others are accused of...gasp!
The DOJ complaint is awesome, and should be required reading
...
I love my Apple products, but if this stuff pans out...
Thanks for posting the link. I read it, and you're absolutely right. It's essential reading and many comments posted here based on sound bites in the media are wide of the mark.
The big issue that many do not get is that digital distribution invalidates the economics of paper publishing. You no longer have to make big bucks on bestsellers to cover losses of warehouses full of unsalable stock. Amazon gets it. The DoJ gets it. I'm no so convinced, having read the complaint, that Apple gets it.
For example, some of the alleged discussion is about protecting the pricing of hardcovers by pricing up ebooks, something Amazon doesn't support. Nor should Apple.
No Apple said publishers couldn't sell to other retailers for less than they sold to Apple. Apple's deal didn't prevent retailers from charging more or less than Apple only what the other publishers charged other retailers. Most favored nation clauses are fairly common. .
uh, no, I don't know what you're reading, but from the complaint itself
Quote:
Under theagency model, publishers would take control ofretail pricing by appointing retailers as
"agents" who would have no power to alter the retailprices set by the publishers. As a result,the
publishers could end price competition among retailers andraise the prices consumers payfor ebooks through the adoption of identical pricingtiers. Thischange in business model would not
have occurred withoutthe conspiracy among the Defendants.
This says in black and white that the price paid to the retailer MUST be the same. This is how the agency model works, the retailers must sell their book at a set retail price. Granted, the book publishers could agree to sell books to a retailer for less money than someone else, but the RETAIL price that consumers pay on the books had to be the same.
Then Apple doesn't have a thing to worry about. You feel everything was legal and above board. The DoJ must have some other goal in mind by filing this lawsuit?
You talk as if Apple has already been found guilty.
My guess is that they are very "interested" in it, but since it is no longer happening, the DOJ has bigger fish to fry.
Based on nothing other than a guess, FWIW.
I'm pretty sure the DOJ would only be interested in this if amazon was doing this to artificially lower prices to knock their competitors out of business and then planned on raising their prices accordingly. I don't think there was any evidence that this was the case. As many others have said, stores are allowed to sell "loss leaders" at a price lower than wholesale to attract people into their store, and this goes on all the time (just go to any grocery store). This is a legal action, and saying otherwise would imply that most EVERY retailer across the country has broken the law.
The brief claims that consumers have overpaid for ebooks in the thousands due to the alleged collusion, but that simply can't be proven. In the old model, the retailer sets the price which isn't set in stone. How can the DoJ prove that the prices would not have increased regardless? Once Amazon had killed off/weakened most of its competitors, nothing would shave kept them from increasing prices. In fact, because Amazon was selling the books at a loss, it is much more likely that the prices would increase and not stay the same or drop.
Lets see. I bought two books this past week. I went to iBooks and saw that they were more expensive there, than Amazon. So I bought them in Kindle format from Amazon. What is the problem here?
Comments
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.
Phil
It seems you really don't understand the Agency pricing model. Dropped.
It seems you don't understand how this one worked.
Dropped.
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.
Of course, collusion does not apply to our own Federal Reserve, a privately owned corporation that colludes with banking institutions and our very own government to manipulate our currency... Heavens... we'd never want them held accountable.
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.
If there was any collusion, it would be between the book publishers, not Apple. They were already colluding to try to combat Amazon's pricing before Apple came along!
...The issue is Apple's condition that no one else ever sell it for less than Apple.
Sorry but I think that YOU are the one that doesn't quite get it. Apple's agreement is that APPLE can lower the price to match another online bookseller (like Amazon). NOT that others have to match the iBookstore price.
As far as I can tell, it's the Publishers that are being taken to task over pricing, Apple (and specifically Steve Jobs) happen to be the club used by Publishers against Amazon.... ie... something like this "We (publishers) won't be making Certain Books available to you (Amazon) because YOU are selling for LESS than our wholesale price!" Like I said, Apple's Agency Model was used as a great big bargining chip by the Publishers. Apple has great success via the iTunes Store... Publishers believed they would have great success selling via the iBookstore. Can't say that's true because I have chosen Amazon time and time again to buy from and not once chosen the iBookstore.
Is my logic incorrect? If so, how?
I've read the complaint. As stated, it's bullshit!
It's obviously not bullshit to anyone with rational thinking.
If there was any collusion, it would be between the book publishers, not Apple. They were already colluding to try to combat Amazon's pricing before Apple came along!
Then Apple doesn't have a thing to worry about. You feel everything was legal and above board. The DoJ must have some other goal in mind by filing this lawsuit?
I'm not sure that Apple saying "we'll offer you this pricing model, but only if you let us price lower if others price lower" qualifies as Apple cutting down on competition. Apple isn't the largest book seller, and the publishers themselves decided to make Amazon change models, which is (you'd think?) their right. If they shoot themselves in the foot doing so, that's their own problem.
But the other interesting thing to me is just why publishers would care about setting the prices directly - they got to set a wholesale price (say it was 70% of the expected retail) that everyone paid. If Amazon wanted to sell at a loss to kill their competition let them, and presumably THAT would be investigated as it actually kills off the competitors. Them messing with the pricing model themselves just shifted the focus - I just can't imagine that Amazon under-pricing to run others out of business was somehow more legit than going to an agency model.
But overall my issue with iBooks is that I can't read them on my Mac or Kindle thanks to the DRM - the DRM in general needs to go like it did with online music. It's not like you can't find book torrents out there, so locking them down is just another stupid RIAA/MPAA type of anti-consumer action. How about the government looks into that if they're looking to protect consumers?
Predatory pricing is what its called, Walmart specializes in it to shut down whatever local businesses there may be. It's not illegal but definitely frowned upon.
I have a young son and have purchased quite a few children's books from Amazon. The physical book is priced at $3.99 while the kindle edition is $2.99, which makes sense since the e-book wasn't printed, nor shipped to a warehouse, nor stocked on a shelf, nor packaged by a Amazon employee, and shipped, nor was it handled by various UPS employees. The only saving grace Amazon has is that the physical book is still listed and available for purchase. I look at it just like the dollar menu at your local fast food joint, most people end up ordering higher priced items, if you buy a e-book below cost but purchase more items at full price then Amazon made out.
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.
You have made the point perfectly. Thank you.
How can this possibly be an anti-trust issue. Apple let the seller of the product set their own selling price!!!!! There is absolutely nothing illegal about that. Meanwhile Amazon sells products at a loss and put major book sellers out of business - they took out competitors. Seems like that is the very definition of anti-competitive. Fight them tooth and nail Apple! Since when is buying products below cost a consumer right?
I promised myself I wouldn't reply anymore but then I ran into your post...
"Meanwhile Amazon sells products at a loss and put major book sellers out of business"
- SO WHAT?? This IS NOT illegal.
"Since when is buying products below cost a consumer right?"
- You are joking right? Selling an item below cost is a FREEDOM of choice. I can choose to sell my item, and lose money, or I don't have to. Selling at a loss to get more customers is a fundamental cornerstone of business, it is not illegal and it is a right.
On a side note, how are you enjoying those $9.99, and below, music CDs? I remember when a album used to cost 16.99 to 20.99. Heaven forbid you buy a 2 CD album, that would set you back $30. Do you know why prices are low now? That's because the big music stores were found guilty of price fixing, the same thing Apple and the others are accused of...gasp!
http://www.usatoday.com/life/music/n...ttlement_x.htm
The DOJ complaint is awesome, and should be required reading
...
I love my Apple products, but if this stuff pans out...
Thanks for posting the link. I read it, and you're absolutely right. It's essential reading and many comments posted here based on sound bites in the media are wide of the mark.
The big issue that many do not get is that digital distribution invalidates the economics of paper publishing. You no longer have to make big bucks on bestsellers to cover losses of warehouses full of unsalable stock. Amazon gets it. The DoJ gets it. I'm no so convinced, having read the complaint, that Apple gets it.
For example, some of the alleged discussion is about protecting the pricing of hardcovers by pricing up ebooks, something Amazon doesn't support. Nor should Apple.
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?
My guess is that they are very "interested" in it, but since it is no longer happening, the DOJ has bigger fish to fry.
Based on nothing other than a guess, FWIW.
No Apple said publishers couldn't sell to other retailers for less than they sold to Apple. Apple's deal didn't prevent retailers from charging more or less than Apple only what the other publishers charged other retailers. Most favored nation clauses are fairly common. .
uh, no, I don't know what you're reading, but from the complaint itself
Under theagency model, publishers would take control ofretail pricing by appointing retailers as
"agents" who would have no power to alter the retailprices set by the publishers. As a result,the
publishers could end price competition among retailers andraise the prices consumers payfor ebooks through the adoption of identical pricingtiers. Thischange in business model would not
have occurred withoutthe conspiracy among the Defendants.
This says in black and white that the price paid to the retailer MUST be the same. This is how the agency model works, the retailers must sell their book at a set retail price. Granted, the book publishers could agree to sell books to a retailer for less money than someone else, but the RETAIL price that consumers pay on the books had to be the same.
This is limiting competition.
Phil
Then Apple doesn't have a thing to worry about. You feel everything was legal and above board. The DoJ must have some other goal in mind by filing this lawsuit?
You talk as if Apple has already been found guilty.
My guess is that they are very "interested" in it, but since it is no longer happening, the DOJ has bigger fish to fry.
Based on nothing other than a guess, FWIW.
I'm pretty sure the DOJ would only be interested in this if amazon was doing this to artificially lower prices to knock their competitors out of business and then planned on raising their prices accordingly. I don't think there was any evidence that this was the case. As many others have said, stores are allowed to sell "loss leaders" at a price lower than wholesale to attract people into their store, and this goes on all the time (just go to any grocery store). This is a legal action, and saying otherwise would imply that most EVERY retailer across the country has broken the law.
Phil
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...
Great link. The Verge has summarized the key parts here: http://www.theverge.com/2012/4/11/29...le-an-analysis
Never mind.
Lets see. I bought two books this past week. I went to iBooks and saw that they were more expensive there, than Amazon. So I bought them in Kindle format from Amazon. What is the problem here?
That Apple made $0 off your purchases.