Apple's ebook price-fixing court battle spills into Canada

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  • Reply 21 of 51
    solipsismxsolipsismx Posts: 19,566member


     


    Quote:

    Originally Posted by hill60 View Post

    So should thin people start a class action because they pay the same price for clothing as fat people, even though the incremental costs are different?


    And why should people who drink regular coffee pay as much as those who drink decaf? After that decaf process requires equipment and labor which will increase its cost, not to mention that it probably sells in less quantity which affects economics of scale.

  • Reply 22 of 51
    dasanman69dasanman69 Posts: 12,985member
    Maybe I misunderstood the agreement. I thought that Apple only wanted to be able to match the price if a ebook was offered elsewhere at a lower price. In other words, the publishers get to set the price but allows Apple to lower the price if the same product is offered elsewhere at a discount price. If this was the case I don't see a problem - Apple has no advantage over the competition and the selling price is actually set by the discounter - Apple set no prices only adjusted to prices set by others. Also if the publishers agreed to this I can see where they would have to move all other retailers to the agency model so that they could retain control over their profits and their business. I also doubt publishers got together to discuss pricing. It might have happened but I don't see Apple acting as a middleman if it did. Each publisher's pricing probably adjusted rather quickly, if not instantly, by just looking at what price the competition (the other publishers) was charging online and adjust there own pricing accordingly. If the publishers did get together to discuss pricing in specifics, not just generalities, then the publishers would be guilty of price fixing, but again I don't see Apple's involvement here.

    Here's the problem. Lets say the publisher sells the e-book wholesale for $9.99 to Amazon and then Amazon sells it for that same price, the publishers get their asking price regardless of at what price Amazon sells it for. Now with Apple's agency model, in order for the publishers to get $9.99 for the e-book they have to price it at least for $12.99 in order to get at least $9.99, because of the 70/30 split with Apple. There's nothing wrong with either model but its pretty hard to compete with Amazon.
  • Reply 23 of 51
    charlitunacharlituna Posts: 7,215member
    dasanman69 wrote: »

    Here's the problem. Lets say the publisher sells the e-book wholesale for $9.99 to Amazon and then Amazon sells it for that same price, the publishers get their asking price regardless of at what price Amazon sells it for. Now with Apple's agency model, in order for the publishers to get $9.99 for the e-book they have to price it at least for $12.99 in order to get at least $9.99, because of the 70/30 split with Apple. There's nothing wrong with either model but its pretty hard to compete with Amazon.

    Or the publishers just put in a rule that Amazon can't sell the title for less that wholesale+whatever. They get to have the books at their pricing and it's not agency.
  • Reply 24 of 51


     


    Quote:

    Originally Posted by charlituna View Post




    Quote:

    Originally Posted by dasanman69 View Post





    Here's the problem. Lets say the publisher sells the e-book wholesale for $9.99 to Amazon and then Amazon sells it for that same price, the publishers get their asking price regardless of at what price Amazon sells it for. Now with Apple's agency model, in order for the publishers to get $9.99 for the e-book they have to price it at least for $12.99 in order to get at least $9.99, because of the 70/30 split with Apple. There's nothing wrong with either model but its pretty hard to compete with Amazon.




    Or the publishers just put in a rule that Amazon can't sell the title for less that wholesale+whatever. They get to have the books at their pricing and it's not agency.


     


    In general, if none of them have market power, then they are all free to do what ever they individually decide.


     


    However, if they all get together and form a powerful combination which imposes the agency model to drive up prices, it is illegal.  And if Apple is necessary to kick things off, by colluding with them and forming a necessary piece of the scheme, then Apple too is culpable.


     


    The publishers seem more culpable than  Apple, but their scheme needed Apple, because without Apple asceding to the plan, Amazon would not have budged.

  • Reply 25 of 51
    dasanman69dasanman69 Posts: 12,985member


    In general, if none of them have market power, then they are all free to do what ever they individually decide.

    However, if they all get together and form a powerful combination which imposes the agency model to drive up prices, it is illegal.  And if Apple is necessary to kick things off, by colluding with them and forming a necessary piece of the scheme, then Apple too is culpable.

    The publishers seem more culpable than  Apple, but their scheme needed Apple, because without Apple asceding to the plan, Amazon would not have budged.

    They formed a "union" in order to "collectively bargin" with Amazon. I'm gonna assume Apple wasn't in on the collusion but their presence in the e-book market certainly got things going.
  • Reply 26 of 51


    What really concerns me is if Amazon's attempt to protect its wholesale model of selling existing eBooks succeeds, will it mean that Apple's agency model for selling new eBooks and software be declared illegal as well. This would be an absolute tragedy, because there is no need whatsoever for wholesalers and retailers for goods that can be distributed electronically. All one needs is an author, maybe a publisher, a globally available online retail store, and customers who can connect to the Internet. That is now possible for a vast number of potential new authors with tools that Apple has developed.


     


    Amazon's attempt to nobble Apple's agency model for selling eBooks must NOT be allowed to succeed. If it does then one thing is certain - the cost of new eBooks and software will be far higher than is necessary. If the Law wants to prove yet again that it is completely out of touch with evolving technology and business practices by supporting Amazon against Apple, then let the Law face the consequences.

  • Reply 27 of 51
    ljocampoljocampo Posts: 657member


     


    So why is collusion OK with almost all major online store today. You want to buy something and before you get to know the price, you have to enter your mailing zip code to get the price. Isn't that price fixing buy economic region. Someone who lives in affluent places like Fairfield Connecticut gets a higher price than someone from a low income region for the same item.


     


    It wasn't always like this. When the Internet started selling things, this was considered price fixing. Online buyers complained and the sellers stopped that practice but few people today seem to notice the online stores are doing this again today covertly. Apple's online store doesn't need to ask for your zip code because they know who and where the buyer lives automatically. Not every online seller does this but all major car dealerships do it all the time. Ever look to buy a new car online? You won't get a price or even enter the site until you put in a zip code.


     


    Many online buyers stopped complaining because they don't realize what is going on with this model. This price fixing business model has been around now for at least 5 years since savvy Internet buyers got deluded by the masses today. I suspect the online stores started doing this so buyers wouldn't notice the price differences because it's done covertly. The sellers were right. It's harder for the consumer to know that they are being price fixed. If this law suit bring this practice to light, then all consumers will benefit, not just iTune Store book buyers.

  • Reply 28 of 51
    ljocampoljocampo Posts: 657member


    By the way, this new forum program is OK but will take some getting use to, and it doesn't work properly. It thinks I'm offline even as I post this, and the browsers back button doesn't work properly. The button won't take you back to the place you came from. AI should fix it (pun intended). image


     


    So where are all the smileys we use to have? The one I used here with the quick reply was the only one available. Well at least it has one smiley because the previous format had none at all in the quick reply section. So it's an half-hearted improvement.

  • Reply 29 of 51
    solipsismxsolipsismx Posts: 19,566member


     


    Quote:

    Originally Posted by ljocampo View Post

    So why is collusion OK with almost all major online store today. You want to buy something and before you get to know the price, you have to enter your mailing zip code to get the price. Isn't that price fixing buy economic region. Someone who lives in affluent places like Fairfield Connecticut gets a higher price than someone from a low income region for the same item.


    That's different. Pricing fixing is when they get together to adjust prices. They certainly have the right to adjust them on their own because of cost associations for different areas or even because there is more or less competition in an area they are competing. They just can't collude otherwise it's no longer a free market.

  • Reply 30 of 51
    fuwafuwafuwafuwa Posts: 163member


     


    Quote:

    Originally Posted by dasanman69 View Post





    Here's the problem. Lets say the publisher sells the e-book wholesale for $9.99 to Amazon and then Amazon sells it for that same price, the publishers get their asking price regardless of at what price Amazon sells it for. Now with Apple's agency model, in order for the publishers to get $9.99 for the e-book they have to price it at least for $12.99 in order to get at least $9.99, because of the 70/30 split with Apple. There's nothing wrong with either model but its pretty hard to compete with Amazon.


     


    Nice new GUI, now I don't see ugly user name of ignored users.


     


    What I read from various sources, Amazon is asking 55% discount (45/55 split), or even more 70% discount (30/70 split). For example suggested price is $12.99, with 45/55 split, Amazon only need to pay $5.85 to publisher. If Amazon sell at $9.99, there is still $3.14 margin, still much more to cover operating cost (server, etc). Actually the operating cost is lower than iTunes, because Amazon ask the publisher to pay the ebook transfer cost to buyer, per megabyte of book size.

  • Reply 31 of 51
    ljocampoljocampo Posts: 657member


     


    Quote:

    Originally Posted by SolipsismX View Post


     


    That's different. Pricing fixing is when they get together to adjust prices. They certainly have the right to adjust them on their own because of cost associations for different areas or even because there is more or less competition in an area they are competing. They just can't collude otherwise it's no longer a free market.



     


    I disagree, although I'm not a lawyer, just an average Joe. Do you really think they didn't get together with the stores to use this system. It was collusion when Sony tried it in the past and was accused of price fixing because you couldn't go in any other retail store to buy Sony products at a lower or discounted price. The collusion is where they all agree to use a commercial shopping cart program with this feature, and both parties have to maintain the zip code price list. There really isn't any difference. It's been easier to get away with online because it's now done covertly, and no one with any muscle has called them on it like they did to Sony.

  • Reply 32 of 51
    solipsismxsolipsismx Posts: 19,566member


     


    Quote:

    Originally Posted by ljocampo View Post

    I disagree, although I'm not a lawyer, just an average Joe. Do you really think they didn't get together with the stores to use this system. It was collusion when Sony tried it in the past and was accused of price fixing because you couldn't go in any other retail store to buy Sony products at a lower or discounted price. The collusion is where they all agree to use a commercial shopping cart program with this feature, and both parties have to maintain the zip code price list. There really isn't any difference. It's been easier to get away with online because it's now done covertly, and no one with any muscle has called them on it like they did to Sony.


    But where is the proof they are all getting together to set prices? Setting a price based on your general location could just be these online stores doing their due diligence to check other online store prices, local store prices, and local competition and then pricing their products accordingly for optimal sales and profit. That isn't colluding, that's business.


     


    What you say may be happening every time a store asks for your zip code but that's a huge hurdle to jump without any proof. I'm sure there are analytic companies that do nothing but catalog this data to sell to other companies. Even if it's the same data that isn't colluding unless the stores are directly in contact with each other.

  • Reply 33 of 51
    hill60hill60 Posts: 6,992member
    dasanman69 wrote: »
    Maybe I misunderstood the agreement. I thought that Apple only wanted to be able to match the price if a ebook was offered elsewhere at a lower price. In other words, the publishers get to set the price but allows Apple to lower the price if the same product is offered elsewhere at a discount price. If this was the case I don't see a problem - Apple has no advantage over the competition and the selling price is actually set by the discounter - Apple set no prices only adjusted to prices set by others. Also if the publishers agreed to this I can see where they would have to move all other retailers to the agency model so that they could retain control over their profits and their business. I also doubt publishers got together to discuss pricing. It might have happened but I don't see Apple acting as a middleman if it did. Each publisher's pricing probably adjusted rather quickly, if not instantly, by just looking at what price the competition (the other publishers) was charging online and adjust there own pricing accordingly. If the publishers did get together to discuss pricing in specifics, not just generalities, then the publishers would be guilty of price fixing, but again I don't see Apple's involvement here.

    Here's the problem. Lets say the publisher sells the e-book wholesale for $9.99 to Amazon and then Amazon sells it for that same price, the publishers get their asking price regardless of at what price Amazon sells it for. Now with Apple's agency model, in order for the publishers to get $9.99 for the e-book they have to price it at least for $12.99 in order to get at least $9.99, because of the 70/30 split with Apple. There's nothing wrong with either model but its pretty hard to compete with Amazon.

    Apart from the top three books on the NYT best sellers list selling for $9.99 in iBooks, right now, which tends to show the agency model is competitive and works, it also demonstrates that publishers ARE free to set their own prices independently of Apple, which absolves Apple of any wrong doing.

    I still have not seen ANY figures comparing average prices of ebooks before and after iBooks launched indicating a trend of rising prices, which you'd think they'd need as evidence in a case like this.

    You'd think cherrypicking examples would not hold much merit in a court case.
  • Reply 34 of 51


    It looks to me like Apple is guilty of collusion.  I'm a big Apple fan and own quite a bit of their stock, but com'on.  If we were talking about Microsoft...There would be a lot of screams of "guilty" coming from the forums.  I would have hoped Apple would have settled this before it even made it into the news.  Can't go back in time... 


     


     

  • Reply 35 of 51
    solipsismxsolipsismx Posts: 19,566member


     


    Quote:

    Originally Posted by bottleworks View Post

    It looks to me like Apple is guilty of collusion.  I'm a big Apple fan and own quite a bit of their stock, but com'on.  If we were talking about Microsoft...There would be a lot of screams of "guilty" coming from the forums.  I would have hoped Apple would have settled this before it even made it into the news.  Can't go back in time... 


    Where do you see proof that Apple conspired with all the major publishers and held a super secret meeting to get them to raise the prices on consumers?


     


    To me that seems like the least likely scenario seeing as Apple was just a distributer, like Amazon and Barns & Noble, it's hard to imagine that even if the 5 publishers did get together they would have included Apple in this pow wow. It's even more unlikely that Apple was spearheading this meeting after openly creating the agency model and MFN clause.


     


    As for your other comments NO ONE CARES ABOUT MICROSOFT! Apple has the dominate mindshare so every little thing becomes a huge fiasco. Case in point, you accusing Apple of colluding despite having no proof.

  • Reply 36 of 51
    dasanman69 wrote: »
    Maybe I misunderstood the agreement. I thought that Apple only wanted to be able to match the price if a ebook was offered elsewhere at a lower price. In other words, the publishers get to set the price but allows Apple to lower the price if the same product is offered elsewhere at a discount price. If this was the case I don't see a problem - Apple has no advantage over the competition and the selling price is actually set by the discounter - Apple set no prices only adjusted to prices set by others. Also if the publishers agreed to this I can see where they would have to move all other retailers to the agency model so that they could retain control over their profits and their business. I also doubt publishers got together to discuss pricing. It might have happened but I don't see Apple acting as a middleman if it did. Each publisher's pricing probably adjusted rather quickly, if not instantly, by just looking at what price the competition (the other publishers) was charging online and adjust there own pricing accordingly. If the publishers did get together to discuss pricing in specifics, not just generalities, then the publishers would be guilty of price fixing, but again I don't see Apple's involvement here.

    Here's the problem. Lets say the publisher sells the e-book wholesale for $9.99 to Amazon and then Amazon sells it for that same price, the publishers get their asking price regardless of at what price Amazon sells it for. Now with Apple's agency model, in order for the publishers to get $9.99 for the e-book they have to price it at least for $12.99 in order to get at least $9.99, because of the 70/30 split with Apple. There's nothing wrong with either model but its pretty hard to compete with Amazon.

    I understand what you think you see, but the error here is that it's not a zero sum game. It's quite possible to sell more units at a lower price which could actually result in more profits overall from a lower price. Yes, on a per unit basis you have to increase the selling price to increase profits, but when total sales are considered this is not the case. In other words if I sell twice as many units at a cheaper price point, I have still increased profits.
  • Reply 37 of 51
    jragostajragosta Posts: 10,473member


     


    Quote:

    Originally Posted by I am a Zither Zather Zuzz View Post


     


     


    In general, if none of them have market power, then they are all free to do what ever they individually decide.


     


    However, if they all get together and form a powerful combination which imposes the agency model to drive up prices, it is illegal.  And if Apple is necessary to kick things off, by colluding with them and forming a necessary piece of the scheme, then Apple too is culpable.


     


    The publishers seem more culpable than  Apple, but their scheme needed Apple, because without Apple asceding to the plan, Amazon would not have budged.



     


    If Apple simply went to the publishers and offered an agency model, then Apple is not guilty of anything. The fact that the publishers needed another outlet for their wares doesn't make Apple guilty. Basically, all you're saying is that Apple provided competition for Amazon. Without evidence of collusion, all your anti-Apple diatribes are useless.


     


    Quote:

    Originally Posted by ljocampo View Post


     


    So why is collusion OK with almost all major online store today. You want to buy something and before you get to know the price, you have to enter your mailing zip code to get the price. Isn't that price fixing buy economic region. Someone who lives in affluent places like Fairfield Connecticut gets a higher price than someone from a low income region for the same item.



     


    First, many places do that just to determine local availability, taxes, and shipping cost - and there's nothing wrong with that.




    More importantly, even if a store charges different prices in different areas, that's no collusion unless they met with the competition and agreed to charge more in some areas. If the stores independently decided to charge more in Connecticut, that's perfectly legal. As a store owner, I can decide that I don't like people in Nebraska and double the price for anything shipped to that state if I wish - and there's nothing illegal about it.




    Look at the airline industry. For decades, their pricing model LOOOKS like collusion, but it's not. Airline A sets a price in a market. Airline B is monitoring prices and matches the price. Then, when Airline A wants to increase the price in the market, they don't collude with Airline B. Instead, they announce a $10 increase for that market. If Airline B follows, then that becomes the new price. If Airline B doesn't follow, then Airline A withdraws the increase. You may not like that, but it's perfectly legal.


     


    Quote:

    Originally Posted by bottleworks View Post


    It looks to me like Apple is guilty of collusion.  I'm a big Apple fan and own quite a bit of their stock, but com'on.  If we were talking about Microsoft...There would be a lot of screams of "guilty" coming from the forums.  I would have hoped Apple would have settled this before it even made it into the news.  Can't go back in time... 


     


     



     


    If Apple is guilty of collusion, where is the evidence? If you have real evidence, you'd better get it over to the DOJ because there's no smoking gun in their complaint.


     


    Quote:

    Originally Posted by diplication View Post





    I understand what you think you see, but the error here is that it's not a zero sum game. It's quite possible to sell more units at a lower price which could actually result in more profits overall from a lower price. Yes, on a per unit basis you have to increase the selling price to increase profits, but when total sales are considered this is not the case. In other words if I sell twice as many units at a cheaper price point, I have still increased profits.


     


    Yes, but if you can sell more units at a lower price and you're the publisher, wouldn't you rather sell more units at a lower price where the distributor keeps 30% rather than having the distributor keep 55% or 70%?



    There's nothing in the agency model which precludes a distributor from dropping price to sell more units. It's simply up to the publisher to set the price rather than leaving it to the distributor. And since the publisher is more likely to have their own interests in mind than the distributor, it's not surprising that publishers like the agency model.

  • Reply 38 of 51
    ljocampoljocampo Posts: 657member


     


     


    Quote: SolipsismX wrote:


    But where is the proof they are all getting together to set prices? Setting a price based on your general location could just be these online stores doing their due diligence to check other online store prices, local store prices, and local competition and then pricing there products accordingly for optimal sales and profit. That isn't colluding, that's business.



     


    With this interpretation there is no such thing as collusion in pricing since it's just good business practice. I still disagree with you and I have to add that it's people like you that keep the practice going. Apple should make sure you are sitting on the jury. As a consumer, I believe a major retail outlet, online or not, should set a price for a product that they believe the whole market will bear. If they want to discount the item, fine, but raising the price just because of economic status in different regions should be illegal. Would you be so agreeable to this pricing scheme if the federal government set their income tax rate higher in different regions of the country? I don't need proof to know this is happening. I've purchased enough items online to know it is, even when cynical people like you try play the confrontational game.


     

  • Reply 39 of 51


     


    Quote:

    Originally Posted by SolipsismX View Post


     


     


    But where is the proof they are all getting together to set prices? Setting a price based on your general location could just be these online stores doing their due diligence to check other online store prices, local store prices, and local competition and then pricing there products accordingly for optimal sales and profit. That isn't colluding, that's business.


     


     



    you're right.  That is competition.  Companies checking out each other's prices and trying to beat the other guy.

  • Reply 40 of 51
    ljocampoljocampo Posts: 657member


     


    Quote:

    Originally Posted by I am a Zither Zather Zuzz View Post


     


    That is competition.  Companies checking out each other's prices and trying to beat the other guy.



     


    You don't raise prices to be competitive. You discount prices to be competitive. The practice I mention is to get more profit out of higher income regions from online buyers, even when they don't live anywhere near your place of operation. It was considered illegal, or at least a no no, when the Internet marketplace began, but like with everything else when people aren't willing, or too lazy, to complain about something with their wallet, it just allows retailers to become more brazen in their greed. Aren't you the one who is always calling out Apple for their greedy practices?

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