iOS apps affect Apple and Apple users. Nobody has a problem with that. Apple wanted iBooks. If they had set their price at $12.99 no one would have a problem with that either and there would be no lawsuit.
The problem is, unlike iOS apps which only work on Apple's system, books are the same everywhere.....
Books are not the same everywhere. Ebooks might look to the naive like printed books but on a screen, but they are not. Ebooks are computer programs and the programs are different for Nook, Kindle, ePub, PDF, postscript, HTML, mathematica CDF and other formats. The respective readers are programming language interpreters that read the respective ebook programs and execute them, resulting in the display and behavior we see and experience.
Many iOS apps are also books using their own proprietary content programs, many such books/apps/programs are common in the education apps category.
Further, apps available on iOS may also be available on Nook, Kindle, and android devices. It's a matter of the particular technology used whether these apps are compiled into an intermediate interpreted language then fed to a back end to compile into a device/OS specific version.
The point is ebooks and apps are fundamentally the same; data and programs are the same and interchangeable. This is a fundamental truth of computer science, from Godel, to Church, to Turing, to von Neumann.
iOS apps affect Apple and Apple users. Nobody has a problem with that. Apple wanted iBooks. If they had set their price at $12.99 no one would have a problem with that either and there would be no lawsuit.
The problem is, unlike iOS apps which only work on Apple's system, books are the same everywhere. Apple knew they would fail horribly if they priced their books at $12.99 while the same books were available everywhere else for $9.99. So they came up with an amazing structure that would raise prices across all platforms to $12.99. That is the problem. I could care less if Apple wants to sell iBooks for $100. If it comes up with a system that raises book prices to $100 in all stores I have problem.
Seriously, read the DoJ's evidence from start to finish. It starts out with 'hahaha we can't set our prices to $12.99, no one will all buy our books'.... Apple "well, not if you were all to do it at the same time....." "ooooohhhhhhhh....." And from there it degrades to 'hey, double delete all these emails' Steve Jobs asked about he is going to sell books at $12.99 while others at $9.99.... "They won't be" To the publishers 'OMG I can't believe he said that' You'd have to be pretty smitten with Apple to actually believe they weren't involved and all books doing a step price change from $9.99 to $12.99 overnight is an amazing coincidence that is somehow terrific for consumers.
Amazon was making money on books. Incredibly low margins so they had to sell a ton of them, and they *were* selling top titles at a loss to get consumers in the door. Because the DoJ stepped in prices are now actually lower. I think the average e-book is around $7.50 now (which Apple fans actually credit to Apple lol). More people have entered the market. So if $9.99 is 'selling at a loss' and 'dumping' how are people making money at $7.50 Did the price of electrons drop? Or are people entering the market because they all want to make huge losses?
You are likely missing the bigger picture. Like movie distributors, book publishers had a multitiered distribution model. Movie distributors hope to make all their money back when a movie is first released and excitement high with the higher priced ticket sales at the box office. After that profit from other distribution models is smaller. Book publishers hope to make the bulk of their money with new releases through hard cover sales. Traditionally it would be hard cover sales and then softcover six months to a year later. Amazon used its near monopoly position with hard cover sales to threaten publishers if they did not release eBooks at the same time as hard cover books, Amazon would not carry the higher profit making hard cover books. Amazon then sold the eBooks at slightly higher then cost and sometimes below cost. This caused hard cover sales to fall and allowed Amazon to take 90 percent of the eBook market.
Amazon used its power in hard cover sales to force publishers to release eBooks when Amazon wanted, not publishers. Ultimately, this harmed the publishers, and Amazons competitors like Borders and Barnes and Noble who 1) relied largely on hard cover sales, and 2) already was at a disadvantage because they had to charge sales tax. In the long run, it also harmed consumers.
I read the government's case and under traditional anti-trust law it is weak. Apple had no power to force any terms on publishers. It was not a player in the eBook market. Publishers were already set to go to the agency model with Barnes and Noble. The goal was to preserve new release hard cover sales.
The Apple MFN clause only applies to new releases. Moreover, publishers could, and did, get around the MFN clause simply by not offering a book on iBooks. Retailers could also buy exclusive new release rights, which Amazon frequently did. MFN clauses are also common.
Further typically collusion is between competitors. Apple did not compete with publishers, and it did not have power to force publishers to do anything they did not want.
Wrong, they would be making money with Amazon and losing their asses with Apple. The publishers are still getting $10 per ebook regardless of sales model.
But they loose every customer who doesn't use or want use Amazon. So their loss can be substantial. They also loose the opportunity to sell the books on their own or the authors websites because they are being undercut and their product devalued to benefit Amazon.
With the 'Apple plan' if those publishers broke even at $9.99 they would have to sell at $12.99 in order to make only the $9.99 needed (since Apple takes 30% guaranteed). Voila the new price publishers have to set is now $12.99 across all resellers.
The thing is digital downloads are a data only version. There are no material costs, no printing costs, no shipment costs etc to cover, so the price can be lowered easily & the same profit made. I think it was the publishers thinking they can make a fast buck by charging more, a premium you could say, as it would be on Apple products. That's the way I see it, & nothing to do with Apple themselves. The collusion between the publishers, all quite possibly unknown by Apple, could have been started of by a publisher mentioning to another that it was in talks with Apple & it grew from there.
Hell, you could even say Apple themselves, like us consumers, would then be a victim of this. With their money reserves, it seems almost everyone wants to take a bite out of Apple if they can.
I could be wrong, but that's my take on this case.
The thing is digital downloads are a data only version. There are no material costs, no printing costs, no shipment costs etc to cover, so the price can be lowered easily & the same profit made. ...
What are, as an industry average, the exact percentages of the things you mention -- materials, printing, shipping -- of the overall cost of bringing a new fiction hardcover to market?
Not really, at least not in any sense of what I have seen and what I understand the law to be.
The problem with your argument is that the price was always $13. Amazon just engaged in illegal dumping and sold for $10. Initially, the publishers sold to Amazon at $10, expecting them to mark up the price to $13. When they didn't, the publishers increased prices to what they thought Retail should be, and Amazon decided to sell at an actual loss.
Effectively, the publishers used Apple as a tool in their fight against Amazon, much like the music industry did the reverse of with DRM-free tracks. The difference being that music was never sold at a loss.
The DOJ didn't go after Amazon because it isn't as good politics. Amazon lowered prices to the consumer (by taking a loss).
I meant the evidence was pretty damning as far as reality goes. Everybody was pretty clearly on board and knew what the gig was. They were obviously pretty good about avoiding legal pitfalls and because of that there's a pretty good chance they can wriggle out of it. They made enough slip ups so its clear they all knew the goal and intent.
You have a 'no trespassing' sign on your property. Your neighbor enters your property. You shoot him. Did you commit a crime? Yes. Would saying, "I shot him because he was breaking the law and I was just correcting that, so clearly I am innocent" hold any water?
Whether Amazon was or wasn't dumping is open to debate- and it could be tried as its own case. They were selling some title below cost but making money on most- it is a common business practice. Sell printers at cost/loss once, get the customers, make a ton of money selling them ink. Plenty of entrants were coming to market. Was it hard to enter the market? Sure. Low margins are hard to compete with, you need a ton of volume. But that's like saying Walmart should be put on trial because they sell a ton of stuff at low margins, so that makes it hard for Joe Schmoe to open a store because no one will buy his stuff at high prices.
Publishers did clearly have a problem. Getting on board with Apple and conspiring to all raise prices together was indeed a good fix for that "Amazon problem." It was just an illegal one.
So which is it? Do the publishers set the price or does Apple? And if Apple just handles the transaction how are they a reseller? The MFN would be moot since they don't buy anything from the publishers.
Why are you commenting on things where you don't understand even the most basic concepts?
In the agency model, the publisher sets the price. Period. Apple sells it for whatever the publisher says to sell it for, keeps 30% and sends the rest to the publisher.
The publisher sets the price under the agency model.
The MFN clause adjusts the publisher's price to reflect the lowest price.
Independent of whatever the price is, the agent gets 30%.
So, if Amazon was on wholesale, they buy a $13 e-book for $10 and sell it for $10, making 0 profit.
When they do this, Apple's retail price is adjusted to $10, and they get $3 commission so the publisher only gets $7. Obviously, the publisher would prefer to get $10 from everybody, so they would want to shift Amazon to a agent model with the same MFN clause.
Your own example shows that your logic is wrong. In your example, Amazon pays the publisher $10 and sells it for $10. Apple pays the publisher $7 and sells it for $10. So why would the publisher want to switch Amazon to the agency model? They're making more money from Amazon.
The entire thing comes down to margins. If Amazon is keeping more than 30% - on average - then the publishers would prefer Apple's model. If, OTOH, Amazon is paying the publisher more than 70% of MSRP, then Amazon is a better deal. In the end, it should be up to the publisher to choose what's best for their business without the DOJ trying to take the position as to which model is better.
I meant the evidence was pretty damning as far as reality goes. Everybody was pretty clearly on board and knew what the gig was. They were obviously pretty good about avoiding legal pitfalls and because of that there's a pretty good chance they can wriggle out of it. They made enough slip ups so its clear they all knew the goal and intent.
You have a 'no trespassing' sign on your property. Your neighbor enters your property. You shoot him. Did you commit a crime? Yes. Would saying, "I shot him because he was breaking the law and I was just correcting that, so clearly I am innocent" hold any water?
Whether Amazon was or wasn't dumping is open to debate- and it could be tried as its own case. They were selling some title below cost but making money on most- it is a common business practice. Sell printers at cost/loss once, get the customers, make a ton of money selling them ink. Plenty of entrants were coming to market. Was it hard to enter the market? Sure. Low margins are hard to compete with, you need a ton of volume. But that's like saying Walmart should be put on trial because they sell a ton of stuff at low margins, so that makes it hard for Joe Schmoe to open a store because no one will buy his stuff at high prices.
Publishers did clearly have a problem. Getting on board with Apple and conspiring to all raise prices together was indeed a good fix for that "Amazon problem." It was just an illegal one.
Respectfully disagree with your points. Amazon's predatory pricing is not on trial but really should be, as they lost 39 million on 61B of revenue in 2012. So where's the DOJ outrage? ...suppressed by the sea of public support that likes 'cheap'. As for "It was just an illegal one"...That is one for the judge so we will need the ruling to determine if you are right. I am betting the DOJ fails to make the case, and you are wrong.
Apart from developers selling the same Apps through Amazon, Play or wherever.
Unless you want to say that iOS has all the Apps, other platforms have nothing.
What part of 'iOS apps' didn't you understand? As a iDevice owner there's only one place to get apps from and as a developer there's only one place to sell your app. A iDevice user cannot buy apps from Amazon's appstore or from Google Play whereas a iDevice user can buy eBooks from a multitude of stores. There would be no trial if iDevice users had only the iBookstore to purchase ebooks from.
Why are you commenting on things where you don't understand even the most basic concepts?
Did you even read what the OP wrote? Try understanding what he wrote before attacking me.
MFN just guarantees me that if a reseller strikes a better deal with the publishers, I have the right to lower my prices to match.
Who's the "I" and "my" that he's referring to? Sounds like he's referring to Apple. Now how can Apple lower the price when they didn't set it in the first place? So either the OP doesn't understand correctly or Apple does indeed set the price but my understanding is intact.
But tthe hey loose every customer who doesn't use or want use Amazon. So their loss can be substantial. They also loose the opportunity to sell the books on their own or the authors websites because they are being undercut and their product devalued to benefit Amazon.
See now that's a valid point and one that I agree with but don't say they're losing money in one model versus the other when in the agency model the only one making money with the price increase is the seller.
If that was all there was to it, there likely would be no trial. The problem is the MFN combined with Apple's 30% guarantee. If competitive pricing drove the price to $9.99 on Amazon, Apple would be allowed to set their price at $9.99 *AND* be guaranteed to make $3 of that. So if the publishers minimum price to make a profit was $9.99 they could not sell at that price. They would be making no money at Amazon and losing their asses on Apple sales.
With the 'Apple plan' if those publishers broke even at $9.99 they would have to sell at $12.99 in order to make only the $9.99 needed (since Apple takes 30% guaranteed). Voila the new price publishers have to set is now $12.99 across all resellers.
Have you actually read the DoJ's evidence? It's pretty damning. Apple is guilty as sin but I'm guessing they may have good enough lawyers to tap dance out of it. With a jury they'd be off the hook for sure; with a judge that actually gets it- flip a coin. As usual per Apple brilliance, I do believe Eddy Cue's statements are true. If publishers wanted to set prices at $9.99 Eddy could care less. Apple would make $3 per book and all the publishers would go out of business. The system pretty much guaranteed they'd all have to raise prices and they all committed to doing that after Eddy got them all to sign up ("Eddy we can't go with just 2 other publishers on board, you have to get at least 3 and then we'll sign on as the fourth",'double delete this message','you set the price, but if it is more than $12.99 we're not doing it and if it is less than that you will lose money.... You set the price, as long as it is $12.99' blah blah blah
With physical books, yeah. Which is why Amazon's monopoly is so powerful over suppliers (like Walmart). Amazon uses eBooks as loss leader. Apple is ONLY interested in eBooks (being a Digital Store). There is no "losing money" to the publisher past the fixed cost of editing and turning the book into an eBook. The work has been done. They offer the author, etc. a cut, and Apple takes a cut, and the publisher gets a cut. The MORE they sell, period, at ALL stores, the better. So they make 1 million sales on Amazon, AND 2 million more on iTunes, albeit at 30% less.
Amazon is merely lowering expectations to what a book is worth in the minds of the consumer, and Amazon offers flat wholesale rate (whether bestseller, or not). Apple says you price it the way you want and that can change over time as it comes off best seller list. You know we take 30% off the frontend because we have 575 million credit card accounts attached to our Store and our customers like purchasing in our Store at least as much as Amazon customers use the online Amazon store or Kindle.
What are, as an industry average, the exact percentages of the things you mention -- materials, printing, shipping -- of the overall cost of bringing a new fiction hardcover to market?
Sorry I don't know, but companies do go on about the costs of shipping etc as to why things cost more in some countries than others.
A typical example is the new Sony PS4 will cost 36% more: £349 to $256, & MS Xbox 1 will cost 34% more: £429 to $320, here in the UK than in the US after currency conversion, it would be like paying $399 & $499 in the US. Both firms blame higher transport costs, taxes in EU & other costs. (Details taken from a paper / press article.)
I know it's not quite the same, but the principles are the same regarding costs, after all ebooks are just downloaded data, not physical items like paperbacks or consoles requiring production or transport. The usual payment percentages still need to be paid of course, author, publisher etc, but costs should be less. Think of it as email compared to physical mail, data & not a physical product. Just imagine having to pay the same to email as you do to mail a letter, even though it is not a physical product.
You have a 'no trespassing' sign on your property. Your neighbor enters your property. You shoot him. Did you commit a crime? Yes. Would saying, "I shot him because he was breaking the law and I was just correcting that, so clearly I am innocent" hold any water?
Obviously you are not a lawyer (I'm not either). Based on those facts there is not enough information to know if a crime was committed, period. When did the neighbor enter the property? (noon? 3am? makes a difference). Why did he enter? (to return the tools he borrowed or to vandalize your car?) Did you have reason to be afraid for your life or serious physical harm? Do you live in a state with the "castle doctrine" or "stand your ground" laws? Was he drunk? Were you? Etc. etc.
Same thing with the Apple case. We don't really know all the facts and we certainly aren't experts in the (I'm sure) complex laws and precedents about the particular laws that Apple is accused of violating.
Having said that, here's my interpretation of what happened (which I don't think should be illegal, but could be I suppose):
1. Apple has an interest in selling books. But it likes the pricing model that works so well for apps and music: the creator/publisher sets the price and Apple takes 30%. Sell your book or app for 99c or $9.99 or $29.99, Apple doesn't really care.
2. Apple needs to sign up publishers (duh).
3. Apple looks at the problem from a publisher's perspective and figures out what talking points will make the Apple agency model look attractive to a publisher. Part of this pitch is: hey wouldn't it be nice to be less dependent on a single retailer (Amazon).
4. Apple presents this pitch to each publisher. "Hey want to sign up under these terms?" Note, there is nothing I've seen that they said "but this only works if all your competitors do too!"
5. After tough negotiations, various publishers agree that they like those terms.
So where is the illegal collusion exactly? Sure, the publishers had/have incentives to collude on pricing, but what's the got to do with Apple. They could do that under the agency model or any other pricing model. Apple didn't particularly care if the publishers sold their books for $9.99 or $12.99; Apple probably makes the same money either way (since lower prices -> higher sales). Frankly, I'd be surprised if at least some Apple execs weren't saying "this whole 'you can sell your books for $12.99' thing is probably BS, but if it helps the publishers decide to join us, who cares."
What's the point of your post? Why do you think the DOJ is looking for brownie points? Their lawyers know that they rarely get any.
In some trials, it can be argued that a specific prosecutor is deliberately grandstanding to gain the spotlight. But this case has not developed like that.
Many of these guys/gals are also pumping up their resumés. As you well know, there's a huge revolving door between private law firms and DOJ, SEC, etc.
What part of 'iOS apps' didn't you understand? As a iDevice owner there's only one place to get apps from and as a developer there's only one place to sell your app. A iDevice user cannot buy apps from Amazon's appstore or from Google Play whereas a iDevice user can buy eBooks from a multitude of stores. There would be no trial if iDevice users had only the iBookstore to purchase ebooks from.
So, say for example Angry Birds isn't available on any other platform as it's "iOS only"...
So, say for example Angry Birds isn't available on any other platform as it's "iOS only..
...right 0_o.
But can you get Angry Birds from Google Play for your iPhone? No. Would it matter much if Angry Birds was cheaper on Google Play than on the app store? What part of one store (apps for iDevices) versus many stores (ebooks for iDevices) is too hard for you to understand?
But can you get Angry Birds from Google Play for your iPhone? No. Would it matter much if Angry Birds was cheaper on Google Play than on the app store? What part of one store (apps for iDevices) versus many stores (ebooks for iDevices) is too hard for you to understand?
Ummm… Bad analogy. By your logic you should be able to buy Windows games and play them on your Mac (both, after all, are computers). It is a gross over-simplification of what is going on here. Yes, Apple is using the same structure that has worked so well for iOS apps. Why not, like I said, it works well for everyone. The difference here is that we are talking about digital distrubutions of books, which are more than likely the same (or damn near it) across multiple platforms. As such, Apple didn't want to be undersold, and asked as a part of the negotiations a MFN clause. The publishers agreed to it, separately. So, who is setting the price? The publisher. All Apple is in this case is the store front. It is like suing Walmart for this same transgression (which is equally bizarre and stupid).
Sorry, the DOJ is completely in the wrong here. Apple had no monopoly when they started negotiations, Apple did not bring all parties together and dictate price, and Apple is not the one setting the price. End result: Apple could not collude with the publishers because they were not in a position to collude with them.
Ummm… Bad analogy. By your logic you should be able to by Windows games and play them on your Mac (both, after all, are computers). It is a gross over-simplification of what is going on here. Yes, Apple is using the same structure that has worked so well for iOS apps. Why not, like I said, it works well for everyone. The difference here is that we are talking about digital distrubutions of books, which are more than likely the same (or damn near it) across multiple platforms. As such, Apple didn't want to be undersold, and asked as a part of the negotiations a MFN clause. The publishers agreed to it, separately. So, who is setting the price? The publisher. All Apple is in this case is the store front. It is like suing Walmart for this same transgression (which is equally bizarre and stupid).
Sorry, the DOJ is completely in the wrong here. Apple had no monopoly when they started negotiations, Apple did not bring all parties together and dictate price, and Apple is not the one setting the price. End result: Apple could not collude with the publishers because they were not in a position to collude with them.
Next time pay attention to the thread and what I was answering before writing a long winded post. Someone asked the difference between the app store and the iBookstore, and why isn't there collusion in the app store, and I will state yet again that there's only one store to buy apps for a iDevice. Is that so hard for you to comprehend?
But can you get Angry Birds from Google Play for your iPhone? No. Would it matter much if Angry Birds was cheaper on Google Play than on the app store? What part of one store (apps for iDevices) versus many stores (ebooks for iDevices) is too hard for you to understand?
Can you get an iBook from Amazon? No.
Developers and publishers are free to choose which markets to participate in.
Your "comparison" makes no sense.
Why should an interactive iBook containing colour pictures and a lot more content be restricted to the same price as a glorified, locked down, black and white PDF?
Apple offers a different product to Amazon, as different as the iOS Apps you use in your rather senseless example.
Comments
Books are not the same everywhere. Ebooks might look to the naive like printed books but on a screen, but they are not. Ebooks are computer programs and the programs are different for Nook, Kindle, ePub, PDF, postscript, HTML, mathematica CDF and other formats. The respective readers are programming language interpreters that read the respective ebook programs and execute them, resulting in the display and behavior we see and experience.
Many iOS apps are also books using their own proprietary content programs, many such books/apps/programs are common in the education apps category.
Further, apps available on iOS may also be available on Nook, Kindle, and android devices. It's a matter of the particular technology used whether these apps are compiled into an intermediate interpreted language then fed to a back end to compile into a device/OS specific version.
The point is ebooks and apps are fundamentally the same; data and programs are the same and interchangeable. This is a fundamental truth of computer science, from Godel, to Church, to Turing, to von Neumann.
You are likely missing the bigger picture. Like movie distributors, book publishers had a multitiered distribution model. Movie distributors hope to make all their money back when a movie is first released and excitement high with the higher priced ticket sales at the box office. After that profit from other distribution models is smaller. Book publishers hope to make the bulk of their money with new releases through hard cover sales. Traditionally it would be hard cover sales and then softcover six months to a year later. Amazon used its near monopoly position with hard cover sales to threaten publishers if they did not release eBooks at the same time as hard cover books, Amazon would not carry the higher profit making hard cover books. Amazon then sold the eBooks at slightly higher then cost and sometimes below cost. This caused hard cover sales to fall and allowed Amazon to take 90 percent of the eBook market.
Amazon used its power in hard cover sales to force publishers to release eBooks when Amazon wanted, not publishers. Ultimately, this harmed the publishers, and Amazons competitors like Borders and Barnes and Noble who 1) relied largely on hard cover sales, and 2) already was at a disadvantage because they had to charge sales tax. In the long run, it also harmed consumers.
I read the government's case and under traditional anti-trust law it is weak. Apple had no power to force any terms on publishers. It was not a player in the eBook market. Publishers were already set to go to the agency model with Barnes and Noble. The goal was to preserve new release hard cover sales.
The Apple MFN clause only applies to new releases. Moreover, publishers could, and did, get around the MFN clause simply by not offering a book on iBooks. Retailers could also buy exclusive new release rights, which Amazon frequently did. MFN clauses are also common.
Further typically collusion is between competitors. Apple did not compete with publishers, and it did not have power to force publishers to do anything they did not want.
Quote:
Originally Posted by dasanman69
Wrong, they would be making money with Amazon and losing their asses with Apple. The publishers are still getting $10 per ebook regardless of sales model.
But they loose every customer who doesn't use or want use Amazon. So their loss can be substantial. They also loose the opportunity to sell the books on their own or the authors websites because they are being undercut and their product devalued to benefit Amazon.
Quote:
Originally Posted by Frood
With the 'Apple plan' if those publishers broke even at $9.99 they would have to sell at $12.99 in order to make only the $9.99 needed (since Apple takes 30% guaranteed). Voila the new price publishers have to set is now $12.99 across all resellers.
The thing is digital downloads are a data only version. There are no material costs, no printing costs, no shipment costs etc to cover, so the price can be lowered easily & the same profit made. I think it was the publishers thinking they can make a fast buck by charging more, a premium you could say, as it would be on Apple products. That's the way I see it, & nothing to do with Apple themselves. The collusion between the publishers, all quite possibly unknown by Apple, could have been started of by a publisher mentioning to another that it was in talks with Apple & it grew from there.
Hell, you could even say Apple themselves, like us consumers, would then be a victim of this. With their money reserves, it seems almost everyone wants to take a bite out of Apple if they can.
I could be wrong, but that's my take on this case.
Quote:
Originally Posted by TogetherWeStand
The thing is digital downloads are a data only version. There are no material costs, no printing costs, no shipment costs etc to cover, so the price can be lowered easily & the same profit made. ...
What are, as an industry average, the exact percentages of the things you mention -- materials, printing, shipping -- of the overall cost of bringing a new fiction hardcover to market?
Quote:
Originally Posted by aaarrrgggh
Not really, at least not in any sense of what I have seen and what I understand the law to be.
The problem with your argument is that the price was always $13. Amazon just engaged in illegal dumping and sold for $10. Initially, the publishers sold to Amazon at $10, expecting them to mark up the price to $13. When they didn't, the publishers increased prices to what they thought Retail should be, and Amazon decided to sell at an actual loss.
Effectively, the publishers used Apple as a tool in their fight against Amazon, much like the music industry did the reverse of with DRM-free tracks. The difference being that music was never sold at a loss.
The DOJ didn't go after Amazon because it isn't as good politics. Amazon lowered prices to the consumer (by taking a loss).
I meant the evidence was pretty damning as far as reality goes. Everybody was pretty clearly on board and knew what the gig was. They were obviously pretty good about avoiding legal pitfalls and because of that there's a pretty good chance they can wriggle out of it. They made enough slip ups so its clear they all knew the goal and intent.
You have a 'no trespassing' sign on your property. Your neighbor enters your property. You shoot him. Did you commit a crime? Yes. Would saying, "I shot him because he was breaking the law and I was just correcting that, so clearly I am innocent" hold any water?
Whether Amazon was or wasn't dumping is open to debate- and it could be tried as its own case. They were selling some title below cost but making money on most- it is a common business practice. Sell printers at cost/loss once, get the customers, make a ton of money selling them ink. Plenty of entrants were coming to market. Was it hard to enter the market? Sure. Low margins are hard to compete with, you need a ton of volume. But that's like saying Walmart should be put on trial because they sell a ton of stuff at low margins, so that makes it hard for Joe Schmoe to open a store because no one will buy his stuff at high prices.
Publishers did clearly have a problem. Getting on board with Apple and conspiring to all raise prices together was indeed a good fix for that "Amazon problem." It was just an illegal one.
Why are you commenting on things where you don't understand even the most basic concepts?
In the agency model, the publisher sets the price. Period. Apple sells it for whatever the publisher says to sell it for, keeps 30% and sends the rest to the publisher.
Your own example shows that your logic is wrong. In your example, Amazon pays the publisher $10 and sells it for $10. Apple pays the publisher $7 and sells it for $10. So why would the publisher want to switch Amazon to the agency model? They're making more money from Amazon.
The entire thing comes down to margins. If Amazon is keeping more than 30% - on average - then the publishers would prefer Apple's model. If, OTOH, Amazon is paying the publisher more than 70% of MSRP, then Amazon is a better deal. In the end, it should be up to the publisher to choose what's best for their business without the DOJ trying to take the position as to which model is better.
Quote:
Originally Posted by Frood
I meant the evidence was pretty damning as far as reality goes. Everybody was pretty clearly on board and knew what the gig was. They were obviously pretty good about avoiding legal pitfalls and because of that there's a pretty good chance they can wriggle out of it. They made enough slip ups so its clear they all knew the goal and intent.
You have a 'no trespassing' sign on your property. Your neighbor enters your property. You shoot him. Did you commit a crime? Yes. Would saying, "I shot him because he was breaking the law and I was just correcting that, so clearly I am innocent" hold any water?
Whether Amazon was or wasn't dumping is open to debate- and it could be tried as its own case. They were selling some title below cost but making money on most- it is a common business practice. Sell printers at cost/loss once, get the customers, make a ton of money selling them ink. Plenty of entrants were coming to market. Was it hard to enter the market? Sure. Low margins are hard to compete with, you need a ton of volume. But that's like saying Walmart should be put on trial because they sell a ton of stuff at low margins, so that makes it hard for Joe Schmoe to open a store because no one will buy his stuff at high prices.
Publishers did clearly have a problem. Getting on board with Apple and conspiring to all raise prices together was indeed a good fix for that "Amazon problem." It was just an illegal one.
Respectfully disagree with your points. Amazon's predatory pricing is not on trial but really should be, as they lost 39 million on 61B of revenue in 2012. So where's the DOJ outrage? ...suppressed by the sea of public support that likes 'cheap'. As for "It was just an illegal one"...That is one for the judge so we will need the ruling to determine if you are right. I am betting the DOJ fails to make the case, and you are wrong.
What part of 'iOS apps' didn't you understand? As a iDevice owner there's only one place to get apps from and as a developer there's only one place to sell your app. A iDevice user cannot buy apps from Amazon's appstore or from Google Play whereas a iDevice user can buy eBooks from a multitude of stores. There would be no trial if iDevice users had only the iBookstore to purchase ebooks from.
Did you even read what the OP wrote? Try understanding what he wrote before attacking me.
Who's the "I" and "my" that he's referring to? Sounds like he's referring to Apple. Now how can Apple lower the price when they didn't set it in the first place? So either the OP doesn't understand correctly or Apple does indeed set the price but my understanding is intact.
See now that's a valid point and one that I agree with but don't say they're losing money in one model versus the other when in the agency model the only one making money with the price increase is the seller.
Quote:
Originally Posted by Frood
If that was all there was to it, there likely would be no trial. The problem is the MFN combined with Apple's 30% guarantee. If competitive pricing drove the price to $9.99 on Amazon, Apple would be allowed to set their price at $9.99 *AND* be guaranteed to make $3 of that. So if the publishers minimum price to make a profit was $9.99 they could not sell at that price. They would be making no money at Amazon and losing their asses on Apple sales.
With the 'Apple plan' if those publishers broke even at $9.99 they would have to sell at $12.99 in order to make only the $9.99 needed (since Apple takes 30% guaranteed). Voila the new price publishers have to set is now $12.99 across all resellers.
Have you actually read the DoJ's evidence? It's pretty damning. Apple is guilty as sin but I'm guessing they may have good enough lawyers to tap dance out of it. With a jury they'd be off the hook for sure; with a judge that actually gets it- flip a coin. As usual per Apple brilliance, I do believe Eddy Cue's statements are true. If publishers wanted to set prices at $9.99 Eddy could care less. Apple would make $3 per book and all the publishers would go out of business. The system pretty much guaranteed they'd all have to raise prices and they all committed to doing that after Eddy got them all to sign up ("Eddy we can't go with just 2 other publishers on board, you have to get at least 3 and then we'll sign on as the fourth",'double delete this message','you set the price, but if it is more than $12.99 we're not doing it and if it is less than that you will lose money.... You set the price, as long as it is $12.99' blah blah blah
With physical books, yeah. Which is why Amazon's monopoly is so powerful over suppliers (like Walmart). Amazon uses eBooks as loss leader. Apple is ONLY interested in eBooks (being a Digital Store). There is no "losing money" to the publisher past the fixed cost of editing and turning the book into an eBook. The work has been done. They offer the author, etc. a cut, and Apple takes a cut, and the publisher gets a cut. The MORE they sell, period, at ALL stores, the better. So they make 1 million sales on Amazon, AND 2 million more on iTunes, albeit at 30% less.
Amazon is merely lowering expectations to what a book is worth in the minds of the consumer, and Amazon offers flat wholesale rate (whether bestseller, or not). Apple says you price it the way you want and that can change over time as it comes off best seller list. You know we take 30% off the frontend because we have 575 million credit card accounts attached to our Store and our customers like purchasing in our Store at least as much as Amazon customers use the online Amazon store or Kindle.
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Originally Posted by anonymouse
What are, as an industry average, the exact percentages of the things you mention -- materials, printing, shipping -- of the overall cost of bringing a new fiction hardcover to market?
Sorry I don't know, but companies do go on about the costs of shipping etc as to why things cost more in some countries than others.
A typical example is the new Sony PS4 will cost 36% more: £349 to $256, & MS Xbox 1 will cost 34% more: £429 to $320, here in the UK than in the US after currency conversion, it would be like paying $399 & $499 in the US. Both firms blame higher transport costs, taxes in EU & other costs. (Details taken from a paper / press article.)
I know it's not quite the same, but the principles are the same regarding costs, after all ebooks are just downloaded data, not physical items like paperbacks or consoles requiring production or transport. The usual payment percentages still need to be paid of course, author, publisher etc, but costs should be less. Think of it as email compared to physical mail, data & not a physical product. Just imagine having to pay the same to email as you do to mail a letter, even though it is not a physical product.
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Originally Posted by Frood
You have a 'no trespassing' sign on your property. Your neighbor enters your property. You shoot him. Did you commit a crime? Yes. Would saying, "I shot him because he was breaking the law and I was just correcting that, so clearly I am innocent" hold any water?
Obviously you are not a lawyer (I'm not either). Based on those facts there is not enough information to know if a crime was committed, period. When did the neighbor enter the property? (noon? 3am? makes a difference). Why did he enter? (to return the tools he borrowed or to vandalize your car?) Did you have reason to be afraid for your life or serious physical harm? Do you live in a state with the "castle doctrine" or "stand your ground" laws? Was he drunk? Were you? Etc. etc.
Same thing with the Apple case. We don't really know all the facts and we certainly aren't experts in the (I'm sure) complex laws and precedents about the particular laws that Apple is accused of violating.
Having said that, here's my interpretation of what happened (which I don't think should be illegal, but could be I suppose):
1. Apple has an interest in selling books. But it likes the pricing model that works so well for apps and music: the creator/publisher sets the price and Apple takes 30%. Sell your book or app for 99c or $9.99 or $29.99, Apple doesn't really care.
2. Apple needs to sign up publishers (duh).
3. Apple looks at the problem from a publisher's perspective and figures out what talking points will make the Apple agency model look attractive to a publisher. Part of this pitch is: hey wouldn't it be nice to be less dependent on a single retailer (Amazon).
4. Apple presents this pitch to each publisher. "Hey want to sign up under these terms?" Note, there is nothing I've seen that they said "but this only works if all your competitors do too!"
5. After tough negotiations, various publishers agree that they like those terms.
So where is the illegal collusion exactly? Sure, the publishers had/have incentives to collude on pricing, but what's the got to do with Apple. They could do that under the agency model or any other pricing model. Apple didn't particularly care if the publishers sold their books for $9.99 or $12.99; Apple probably makes the same money either way (since lower prices -> higher sales). Frankly, I'd be surprised if at least some Apple execs weren't saying "this whole 'you can sell your books for $12.99' thing is probably BS, but if it helps the publishers decide to join us, who cares."
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Originally Posted by stelligent
What's the point of your post? Why do you think the DOJ is looking for brownie points? Their lawyers know that they rarely get any.
In some trials, it can be argued that a specific prosecutor is deliberately grandstanding to gain the spotlight. But this case has not developed like that.
Many of these guys/gals are also pumping up their resumés. As you well know, there's a huge revolving door between private law firms and DOJ, SEC, etc.
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Originally Posted by dasanman69
What part of 'iOS apps' didn't you understand? As a iDevice owner there's only one place to get apps from and as a developer there's only one place to sell your app. A iDevice user cannot buy apps from Amazon's appstore or from Google Play whereas a iDevice user can buy eBooks from a multitude of stores. There would be no trial if iDevice users had only the iBookstore to purchase ebooks from.
So, say for example Angry Birds isn't available on any other platform as it's "iOS only"...
...right 0_o.
But can you get Angry Birds from Google Play for your iPhone? No. Would it matter much if Angry Birds was cheaper on Google Play than on the app store? What part of one store (apps for iDevices) versus many stores (ebooks for iDevices) is too hard for you to understand?
Ummm… Bad analogy. By your logic you should be able to buy Windows games and play them on your Mac (both, after all, are computers). It is a gross over-simplification of what is going on here. Yes, Apple is using the same structure that has worked so well for iOS apps. Why not, like I said, it works well for everyone. The difference here is that we are talking about digital distrubutions of books, which are more than likely the same (or damn near it) across multiple platforms. As such, Apple didn't want to be undersold, and asked as a part of the negotiations a MFN clause. The publishers agreed to it, separately. So, who is setting the price? The publisher. All Apple is in this case is the store front. It is like suing Walmart for this same transgression (which is equally bizarre and stupid).
Sorry, the DOJ is completely in the wrong here. Apple had no monopoly when they started negotiations, Apple did not bring all parties together and dictate price, and Apple is not the one setting the price. End result: Apple could not collude with the publishers because they were not in a position to collude with them.
Next time pay attention to the thread and what I was answering before writing a long winded post. Someone asked the difference between the app store and the iBookstore, and why isn't there collusion in the app store, and I will state yet again that there's only one store to buy apps for a iDevice. Is that so hard for you to comprehend?
Can you get an iBook from Amazon? No.
Developers and publishers are free to choose which markets to participate in.
Your "comparison" makes no sense.
Why should an interactive iBook containing colour pictures and a lot more content be restricted to the same price as a glorified, locked down, black and white PDF?
Apple offers a different product to Amazon, as different as the iOS Apps you use in your rather senseless example.