Apple, publishers offer e-book pricing concessions to avoid antitrust suit

Posted:
in iPad edited January 2014
Looking to avoid an antitrust suit from the European Union, Apple and four publishers have offered concessions to retailers, including Amazon.com, that would allow them to sell e-books at a discounted rate for two years.

Details of the offer were shared by an unnamed source with Reuters on Friday. Along with Apple, the offer is said to have been made by Simon & Schuster, HarperCollins, Hachette, and Macmillan.

The details, if true, signal a change for Apple, which chose not to settle and resolve a similar investigation in the U.S. The U.S. Department of Justice filed an antitrust suit against Apple in April, accusing the iPad maker of price fixing and collusion with publishers including Hachette, HarperCollins, Macmillan and Penguin.

Simon & Schuster, Hachette and HarperCollins did settle their cases with the Department of Justice to avoid the antitrust suit, though Apple did not.

Now, Apple reportedly hopes its concessions, along with the four publishing partners, will ward off an antitrust investigation from the European Commission, which first announced its investigation in late 2011. Now, the Commission is said to be "sounding out opinions from the industry" to determine whether or not the concessions offered by Apple and others are sufficient.

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Also necessary for the investigation to be dropped is a "formal market test." Currently, the Commission is "market testing the commitments on an informal basis," Friday's report said, quoting an anonymous source.

Apple and five major book publishers have been accused of colluding to inflate e-book prices through Apple's iBookstore, a move that allegedly helped take some market share away from industry leader Amazon. With the arrival of iBooks for the iPad, book publishers opted to switch to the "agency model," which allows publishers to set e-book prices as they see fit, barring distributors from pushing prices lower.

Previously, e-books were sold by market leader Amazon under the "wholesale model," which allowed the online retailer to set their own prices. Amazon continually sold content at a discounted rate to drum up business, but publishers felt Amazon's prices were too low and hurt other businesses that also sell books.

Publishers have expressed concern that reverting to the wholesale model would allow Amazon to sell e-books at below-cost prices, placing pressure on competing retailers. Apple, Barnes & Noble and other outlets would be forced to lower their prices to stay competitive, or exit the market altogether.

Comments

  • Reply 1 of 18
    lilgto64lilgto64 Posts: 1,147member


    To me it sounds MORE like price fixing if AFTER a deal has been made with one outlet that every other outlet says "Hey me too" and wants the same price.


     


    And haven't we seen exclusivity deals before? what is wrong with a product making its debut from one source at a price lower than any one else can provide? and then when the product moves towards the long-tail everyone can have the same price. 


     


    I do know that a number of brick and mortar book stores in my area have close over the past half dozen years - have to drive about half an hour just to find the nearest one (actually there is likely one downtown that may only be 20 minutes away but easier to go elsewhere than deal with downtown traffic and parking etc). 


     
  • Reply 2 of 18
    herbapouherbapou Posts: 2,221member


    I can understand that Publisher could be accused of price fixing in the Apple ibook store, but, again, what does it have to do with Apple?

  • Reply 4 of 18
    rs9rs9 Posts: 68member


    Apple, stop being so greedy. We buy your products. I'm waiting for the Iphone 5 and Mini Ipad (if it's actually being released) how about a discount on books purchased with your hardware? Start a new Trend.  If one has the Kindle reader, discounts from Amazon, The Google Nexus discounts from Google Play; B and N's Nook Reader discount from Barnes and Noble.


     


    10. 15 or 25% off.

  • Reply 5 of 18
    dasanman69dasanman69 Posts: 12,985member
    rs9 wrote: »
    Apple, stop being so greedy. We buy your products. I'm waiting for the Iphone 5 and Mini Ipad (if it's actually being released) how about a discount on books purchased with your hardware? Start a new Trend.  If one has the Kindle reader, discounts from Amazon, The Google Nexus discounts from Google Play; B and N's Nook Reader discount from Barnes and Noble.

    10. 15 or 25% off.

    In defense of Apple, they're just the middleman. The publishers control the price. Apple simply stores the ebook on their servers and process the transaction and charge 30%. I don't like this and am actually very surprised.
  • Reply 6 of 18


    Originally Posted by RS9 View Post

    …a discount on books purchased with your hardware?


     


    That'd cause an antitrust suit faster than anything.

  • Reply 7 of 18
    mcrsmcrs Posts: 172member


    How about this: Apple knew all along what was going on and let them scam buyers in its lucrative App Store. Then,  when someone confesses of playing that little cartel game there to authorities, like a house of cards, everyone else involved is brought down one by one. 


    Quote:

    Originally Posted by herbapou View Post


    I can understand that Publisher could be accused of price fixing in the Apple ibook store, but, again, what does it have to do with Apple?


  • Reply 8 of 18
    dasanman69dasanman69 Posts: 12,985member
    That'd cause an antitrust suit faster than anything.

    I think Amazon gets around that by letting Kindle owners "borrow" ebooks. Any specials like the daily deal is available to anyone with the Kindle app.
  • Reply 9 of 18

    Quote:


    Apple, stop being so greedy. We buy your products. I'm waiting for the Iphone 5 and Mini Ipad (if it's actually being released) how about a discount on books purchased with your hardware? Start a new Trend. If one has the Kindle reader, discounts from Amazon, The Google Nexus discounts from Google Play; B and N's Nook Reader discount from Barnes and Noble.



     


    I just wish Apple would let me read my iBooks on my Mac.   Doesn't seem like it should be such a stretch, but there you are.

  • Reply 10 of 18
    lilgto64lilgto64 Posts: 1,147member

    Quote:

    Originally Posted by RS9 View Post


    Apple, stop being so greedy. We buy your products. I'm waiting for the Iphone 5 and Mini Ipad (if it's actually being released) how about a discount on books purchased with your hardware? Start a new Trend.  If one has the Kindle reader, discounts from Amazon, The Google Nexus discounts from Google Play; B and N's Nook Reader discount from Barnes and Noble.


     


    10. 15 or 25% off.



     


    Or how about rewards points? for every dollar you spend at the Apple Store, the iTunes Music Store, the iBook Store etc - you get points then cash in your points for merchandise. As far as I know, Amazon et all have not been sued for having a rewards point system linked to a store branded credit card. 


     
  • Reply 11 of 18
    pendergastpendergast Posts: 1,358member
    I find this whole case quite interesting, as it involves either having a virtual monopoly with lower prices (Amazon before the accused collusion) and more competition with higher prices (agency model).

    What's better for the consumer? Amazon's model may seem cheaper at first, but how long will they sell at a loss? It's clearly to buy marketshare as, unlike Apple, they don't sell their hardware at a premium. In fact, the Kindles are sold at or below cost. So where does Amazon make its money? Odds are, after they control the market, prices will climb. It would be ironic if the ended up at the same price they are with the agency model.
  • Reply 12 of 18
    dasanman69dasanman69 Posts: 12,985member
    Very quiet today. Where are all the defenders of Apple at any cost. What's your explanation for why Apple did this? Is this less expensive than fighting it? Where did all the chest thumping of a week ago disappear to? Although I still don't believe Apple did anything wrong there most certainly is the appearance of guilt and unfortunately in cases like this it's more than enough.
  • Reply 13 of 18


    I suspect their reluctance to settle in America is because America is a bunch of spineless give-ins in this respect whereas the EU has balls.


     


    I'm not meaning that in a derogatory way I'm referencing the Microsoft anti-trust suit. America bowed to Microsoft but the EU handed them a $40 mil / day fine until they changed their system. I might be wrong on the amount but it was hefty and the EU didn't really back down forcing M$ to change their system for the EU.


     


    I suspect that Apple believes it can walk away in America but it's not likely in the EU so they are willing to consent in the EU.

  • Reply 14 of 18
    tallest skiltallest skil Posts: 43,399member


    Originally Posted by Darryn Lowe View Post


    …the EU handed them a $40 mil / day fine… 



     


    Wish the US had done that to Samsung for every day until the injunction starts… 


     


    I don't really see how you can be innocent in one place and guilty in another. There's nothing antitrust actually going on with Apple.

  • Reply 15 of 18
    ronboronbo Posts: 669member

    Quote:

     Now, the Commission is said to be "sounding out opinions from the industry" to determine whether or not the concessions offered by Apple and others are sufficient.


    Sufficient to let Amazon tighten its iron grip on the market and finish becoming the absolute monopoly they had threatened to become? The answer is yes.

  • Reply 16 of 18
    hill60hill60 Posts: 6,992member

    Quote:

    Originally Posted by dasanman69 View Post



    Very quiet today. Where are all the defenders of Apple at any cost. What's your explanation for why Apple did this? Is this less expensive than fighting it? Where did all the chest thumping of a week ago disappear to? Although I still don't believe Apple did anything wrong there most certainly is the appearance of guilt and unfortunately in cases like this it's more than enough.


     


    So fill us in on the "discounts" Apple will offer other retailers.


     


    The fatal flaw in this story from an "unnamed source", is that Apple is a retailer not a wholesaler and as such is unable to "offer concessions to retailers".

  • Reply 17 of 18
    dasanman69dasanman69 Posts: 12,985member
    hill60 wrote: »
    So fill us in on the "discounts" Apple will offer other retailers.

    The fatal flaw in this story from an "unnamed source", is that Apple is a retailer not a wholesaler and as such is unable to "offer concessions to retailers".

    So what's the truth?
  • Reply 18 of 18


    I can't see how the average book author makes any money under Amazon's sell-at-a-loss model. It would seem to me it would be in the best interests of the content creators to go with the "agency model." If digital content is so valuable that a file sharer can be found liable for over $675k, how can the US DOJ allow book content to continually be sold at a loss? How is it in the consumer's best interests when content creators can no longer afford to create content?

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