Penguin hopes to appease EU regulators by ending e-book deal with Apple

Posted:
in iPod + iTunes + AppleTV edited January 2014
The nearly year and a half-long ebook antitrust investigation involving Apple and a handful of large publishers appears near an end, as Pearson's Penguin unit has offered to the European Commission to end the deals it made with Apple over ebook prices.

books


Penguin has offered to end "most-favored nation" ? which kept rival booksellers from selling ebooks at a lower price point than Apple ? for five years, according to Reuters. The agreement will also allow retailers to set prices and discounts for two years, as is the case with the other publishers that have settled with the Commission.

Penguin is the last publisher still negotiating with the Commission, as Apple and the other accused publishers reached a settlement in December.

In December of 2011, the Commission began looking into allegations of illegal agreements between Apple, Hachette Livre, Penguin, Harper Collins, Simon & Schuster, and Verlagsgruppe Georg von Holzbrinck. Apple, initially, was reluctant to settle, but the iBook seller eventually softened its stance.

The ending of the "agency model" pricing ? in which the publishers set a price for content and allow companies serving the content to take a cut of the sales ? will likely most benefit ebook giant Amazon, which prefers the "wholesale model." Under that model, publishers suggest a price and booksellers are free to set their own prices and offer their own discounts.

None of the parties involved in the investigation have been named guilty of any wrongdoing, and the Commission has assessed no fines. Interested parties will have one month to comment on Penguin's proposals before the Commission renders a decision.
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Comments

  • Reply 1 of 37
    Sorry, "publishers are free to set their own prices" is false. Amazon tells publishers what to charge.
  • Reply 2 of 37
    gatorguygatorguy Posts: 19,703member

    Quote:

    Originally Posted by tflanders View Post



    Sorry, "publishers are free to set their own prices" is false. Amazon tells publishers what to charge.


    Where does your quote come from??


     


    It doesn't come from the AI article unless I'm missing it.

  • Reply 3 of 37
    So for us average types, does this "mean" that there was collusion, that some kind of fix was going on? Or that the book publishers all scurried off a sinking ship?
  • Reply 4 of 37
    gatorguygatorguy Posts: 19,703member

    Quote:

    Originally Posted by Elian Gonzalez View Post



    So for us average types, does this "mean" that there was collusion, that some kind of fix was going on? Or that the book publishers all scurried off a sinking ship?


    Jragosta will be along to answer that for you.image

  • Reply 5 of 37
    tbelltbell Posts: 3,146member

    Quote:

    Originally Posted by Gatorguy View Post


    Where does your quote come from??


     


    It doesn't come from the AI article unless I'm missing it.



     


     


    There have been plenty of stories over the years of Amazon squeezing publishers, which is why publishers were so eager to embrace Apple. Here is Amazon trying to force publishers to use its own Print on Demand services. This would be OK if its own services didn't cost more. Here is Amazon screwing over Developers on its free app of the day promotion. 


     


     


    Moreover, Amazon was telling publishers it wouldn't allow them to sell hard cover books if it didn't steeply discount eBooks. Prior to Apple working out a deal with publishers, Amazon had over a 90 percent share of eBooks. Now it is more like 70 percent with Barnes and Noble and Apple taking some share. The deal helped competition. 

  • Reply 6 of 37
    agramonteagramonte Posts: 345member

    Quote:

    Originally Posted by tflanders View Post



    Sorry, "publishers are free to set their own prices" is false. Amazon tells publishers what to charge.


    Publishers set their prices at wholesale - you, amazon, BN or any store owner pay that price and can sell it at your store at whatever you want after that point. Wholesale is how most products are bought for retail.

  • Reply 7 of 37
    gatorguygatorguy Posts: 19,703member

    Quote:

    Originally Posted by TBell View Post


     


     


    There have been plenty of stories over the years of Amazon squeezing publishers, which is why publishers were so eager to embrace Apple. Here is Amazon trying to force publishers to use its own Print on Demand services. This would be OK if its own services didn't cost more. Here is Amazon screwing over Developers on its free app of the day promotion. 


     


     


    Moreover, Amazon was telling publishers it wouldn't allow them to sell hard cover books if it didn't steeply discount eBooks. Prior to Apple working out a deal with publishers, Amazon had over a 90 percent share of eBooks. Now it is more like 70 percent with Barnes and Noble and Apple taking some share. The deal helped competition. 



    I still don't see where Amazon was telling publishers what to charge, nor where the OP's quote came from. Maybe you have the link? As for Amazon in general they are certainly an aggressive competitor to retail outlets and may not have clean hands themselves. If they don't then the EU may come knocking on their door too one day.

  • Reply 8 of 37
    tbelltbell Posts: 3,146member

    Quote:

    Originally Posted by Elian Gonzalez View Post



    So for us average types, does this "mean" that there was collusion, that some kind of fix was going on? Or that the book publishers all scurried off a sinking ship?


     


     


    They scurried off a sinking ship. Moreover, this law suit by the US and pressure from the EU go against traditional anti-competitive behaviour enforcement. First, Apple didn't collude with a competitor. Amazon is the competitor. Perhaps the publishers, as they are competitors, can be found to have colluded, but not Apple. Second, Apple has the same business model for apps and music, but nobody is complaining there. Third, the change to the agency model actually helped competition. Barnes and Noble and Apple were capturing some of Amazon's massive 90 percent share of the market. Barnes and Noble came out with the Nook, which in my view is better then the Kindle. Now with publishers abandoning their contracts with Apple, and Amazon going back to its ways, Barnes and Noble and Apple as well as other parties likely have little shot of competing with Amazon. Amazon is able to eat the cost on low cost e-books through money earned through its other operations.  This is the same type of thing Microsoft got in trouble for. Subsidizing Explorer through Windows sales at Netscape's expense. 

  • Reply 9 of 37
    tbelltbell Posts: 3,146member

    Quote:

    Originally Posted by Gatorguy View Post


    I still don't see where Amazon was telling publishers what to charge, nor where the OP's quote came from. Maybe you have the link?



    I misread, I agree I don't know where the quote came from. There are stories that suggest Amazon pressured publishers to lower prices on ebook by using hard cover book sales as leverage. 

  • Reply 10 of 37
    anonymouseanonymouse Posts: 6,558member


    It's very easy to obscure the truth with carefully chosen details and nitpicking. (Something that GG is a practiced hand at.) But, the simple truth is that Amazon already has a dangerous degree of control over the publishing industry, a situation that regulator actions in the EU and US will only succeed in making worse. Amazon's major competitors are all either KO'd or on the ropes, small booksellers may very soon become a thing of the past, and with Amazon awarded license to dictate terms to publishers, the entire industry, already in bad shape, is about to become a very unhealthy environment. For everyone but Amazon, that is.


     


    Prices are the focus, but the pricing situation has been entirely misrepresented, and there were not "across the board" price increases as charged. Furthermore, while these regulator actions may result in cheaper prices on a few titles in the short run, the inevitable end result of these misguided actions will be higher prices and fewer voices, as Amazon gains increasing control of what gets published and where it's available.


     


    It's a bad situation about to be made much worse, and only those -- like GG, apparently -- who don't believe in the fundamental values of a free society can applaud what's being done here, with the entire industry being handed to Amazon on a platter.

  • Reply 11 of 37
    philboogiephilboogie Posts: 7,435member
    gatorguy wrote: »
    tflanders wrote: »
    Sorry, "publishers are free to set their own prices" is false. Amazon tells publishers what to charge.
    Where does your quote come from??

    It doesn't come from the AI article unless I'm missing it.

    I think the poster was referring to this bit:
    The ending of the "agency model" pricing ? in which the publishers set a price for content and allow companies serving the content ...
  • Reply 12 of 37
    arlorarlor Posts: 479member

    Quote:

    Originally Posted by anonymouse View Post


    It's a bad situation about to be made much worse, and only those -- like GG, apparently -- who don't believe in the fundamental values of a free society can applaud what's being done here, with the entire industry being handed to Amazon on a platter.



     


    That's a little disingenuous. Apple's deal with the publishers was in part an effort to control what other ebook vendors -- including Amazon, but also every other vendor -- could charge for their products. Is that consistent with "the fundamental values of a free society?" 


     


    I agree that Amazon has a dangerous concentration of power, but I don't think Apple was purely a white knight in this affair. Both of them together are putting just about every other vendor of music, books, optical media, etc., out of business.

  • Reply 13 of 37

    Quote:

    Originally Posted by anonymouse View Post

    Prices are the focus, but the pricing situation has been entirely misrepresented, and there were not "across the board" price increases as charged. Furthermore, while these regulator actions may result in cheaper prices on a few titles in the short run, the inevitable end result of these misguided actions will be higher prices and fewer voices, as Amazon gains increasing control of what gets published and where it's available.


     


    It's a bad situation about to be made much worse, and only those -- like GG, apparently -- who don't believe in the fundamental values of a free society can applaud what's being done here, with the entire industry being handed to Amazon on a platter.



     


    This already happened. Baen ebooks which were previously sold only via their own library have seen their price increase following landing a distribution contract with Amazon. They had no choice, Amazon was, as the distributor you cannot do without it, able to dictate its conditions, the main one being higher prices on new books.


     


    The price increase is greater than 50% for books still only in hardcover and 16% for paperbacks.


     


    Baen was able to continue distributing DRM-free but even that was touch and go it seems.


     


    Everything is not bad as this also permit a bump in royalties for the authors but this show the power of Amazon.


     


    http://www.teleread.com/ebooks/baen-inks-deal-with-amazon-makes-major-changes-to-webscriptions-and-free-library/


     


    edited once to add reference link

  • Reply 14 of 37
    dasanman69dasanman69 Posts: 12,969member
    tbell wrote: »

    They scurried off a sinking ship. Moreover, this law suit by the US and pressure from the EU go against traditional anti-competitive behaviour enforcement. First, Apple didn't collude with a competitor. Amazon is the competitor. Perhaps the publishers, as they are competitors, can be found to have colluded, but not Apple. Second, Apple has the same business model for apps and music, but nobody is complaining there. Third, the change to the agency model actually helpedcompetition. Barnes and Noble and Apple were capturing some of Amazon's massive 90 percent share of the market. Barnes and Noble came out with the Nook, which in my view is better then the Kindle. Now with publishers abandoning their contracts with Apple, and Amazon going back to its ways, Barnes and Noble and Apple as well as other parties likely havelittle shot of competing with Amazon. Amazon is able to eat the cost on low cost e-books through money earned through its other operations.  This is the same type of thing Microsoft got in trouble for. Subsidizing Explorer through Windows sales at Netscape's expense. 

    The agency model in itself is not the problem, and Apple is free to use it. The problem arises when that model is forced onto a competitor. The agency model is a double edge sword, on one side it's good for the publishers and Apple, and the other side it's bad. With the MFN clause the publishers will lose money when forced to match Amazon's price because of Apple's 30% cut yet with Amazon they'll always get the wholesale price regardless of what Amazon charges.
  • Reply 15 of 37
    anonymouseanonymouse Posts: 6,558member

    Quote:

    Originally Posted by Arlor View Post


     


    That's a little disingenuous. Apple's deal with the publishers was in part an effort to control what other ebook vendors -- including Amazon, but also every other vendor -- could charge for their products. Is that consistent with "the fundamental values of a free society?" 


     


    I agree that Amazon has a dangerous concentration of power, but I don't think Apple was purely a white knight in this affair. Both of them together are putting just about every other vendor of music, books, optical media, etc., out of business.



     


    It's not disingenuous at all. The publishing industry is broken because of the inordinate power Amazon exercises over it. The agency model fixed that by removing central control of book pricing. Yes, Apple and every other bookseller, besides Amazon, benefitted from that fix, but more importantly, it was what was best for the industry and consumers in the long run. What their motives were is irrelevant, what's relevant is the effect it had. What's relevant with these regulator actions is the effect they will have. The effect the regulator actions will have is to solidify and increase Amazon's power to control the industry, including what gets published and where you can buy it. This interferes with, and will stifle, the free expression and dissemination of ideas, which is a necessary condition for a free society. The fundamental values of a free society are not the fundamental values of "free markets", and monopolies don't lead to free markets anyway. Your objections to my comments are noted, but are fundamentally confused.

  • Reply 16 of 37
    anonymouseanonymouse Posts: 6,558member

    Quote:

    Originally Posted by dasanman69 View Post





    The agency model in itself is not the problem, and Apple is free to use it. The problem arises when that model is forced onto a competitor. The agency model is a double edge sword, on one side it's good for the publishers and Apple, and the other side it's bad. With the MFN clause the publishers will lose money when forced to match Amazon's price because of Apple's 30% cut yet with Amazon they'll always get the wholesale price regardless of what Amazon charges.


     


    Take your blinders off for once, step back, look at the big picture. The MFN clause is simply a counterweight to Amazon's ability to dictate terms because of their market position.

  • Reply 17 of 37
    dasanman69dasanman69 Posts: 12,969member
    anonymouse wrote: »
    Take your blinders off for once, step back, look at the big picture. The MFN clause is simply a counterweight to Amazon's ability to dictate terms because of their market position.

    Then offer a better customer experience if you want to compete. Nobody gave Amazon their market position, there's nothing wrong with being first and most popular.
  • Reply 18 of 37
    umrk_labumrk_lab Posts: 550member

    Quote:

    Originally Posted by Arlor View Post


     


    That's a little disingenuous. Apple's deal with the publishers was in part an effort to control what other ebook vendors -- including Amazon, but also every other vendor -- could charge for their products. Is that consistent with "the fundamental values of a free society?" 


     


    I agree that Amazon has a dangerous concentration of power, but I don't think Apple was purely a white knight in this affair. Both of them together are putting just about every other vendor of music, books, optical media, etc., out of business.



     


     


    I think that focusing solely on the short term customer interest (lowest price) should be balanced by the need to have a healthy market = one into which noone sells at loss. Because if so, as mentioned by other posts , the mid/long term (and desired) effect is to kill some players, which ultimately goes against competition, and therefore customer interest, if only one (Amazon) is left. Having said this, it is clear to me that publishers tend to fix ebook prices higher than they could be, because they are in fact reluctant to enter a future where the traditional paper book is no longer competitive. Publishers (for books or Neswpapers) have to reinvent their business, this is not just a pricing policy issue.


     


    Indeed Apple will benefit from this new digital age, at the detriment of traditional players, but Apple's vision of dematerialized content is a long term objective, pursued with tenacity, and it is fair that they enjoy success, as they have done all necessary efforts to make it possible ... which is not exactly the case of other traditional players, who only think in terms of protecting their established position (including, and I am surprised the debate never goes into this, the royalties paid to authors, which can no longer be as low as they are, in the new digital age, as the publisher takes much less risks, and invests much less).

  • Reply 19 of 37
    gtrgtr Posts: 3,231member
    gatorguy wrote: »
    Apple BAD! Others GOOD! I don't see. Have the link? Thank you for showing me the error of my ways. See you in my next pointless post!

    Perhaps you should just add this to your signature to save time from now on?
  • Reply 20 of 37
    gatorguygatorguy Posts: 19,703member

    Quote:

    Originally Posted by GTR View Post





    Perhaps you should just add this to your signature to save time from now on?


    LOL!


     


    EDIT: The next time  The first time I post that Apple is bad and others good I'll be sure to use it. Thanks!

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