Apple to appeal e-book decision, maintains company did 'nothing wrong'

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  • Reply 41 of 72
    hill60hill60 Posts: 6,992member

    Quote:

    Originally Posted by philgar View Post


    maybe the reason you found the books cheaper on amazon is because the publishers of those books admitted they were guilty of price fixing, and have since reverted to their previous pricing agreements.  Under the agreement signed with apple, Amazon was NOT ALLOWED to price their books less than a fixed price, and apple would be able to buy their books for 30% less than that fixed price.  As apple charges a 30% premium on content, that would mean the CHEAPEST amazon could sell their books was at the same price apple was selling their books.  Under the old agreement, amazon could sell their books at whatever price they wanted to (you know... competition), which meant they could accept a 20% margin and sell their books for less than apple.  


     


    The book publishers admitted they were breaking the law almost immediately when the government went after them, so the illegal price fixing scheme wasn't in effect for very long.  The funniest part about this case is watching the apple zealots defend apple here when at the end of the day this will make next to NO difference in apple's bottom line.  Apple has no change of changing to the favorable pricing agreements they wanted, and if they admitted to being guilty at first, there would have been a small slap on the wrist, and a fine (which would likely be so small that it wouldn't remotely impact apple's profits).  Now they're spending millions fighting this case, and they really have no hope of winning (where winning is defined as using the pricing they want).  I just don't see why they're bothering, and I hope that if they're found guilty (assuming it goes to appeal) the judges slap down a far harsher punishment on apple for their arrogance in this matter.


     


    Phil



     


    There are 33 states ready to launch actions against Apple, along with several class action suits.


     


    The several million in lawyers fees is small change compared to what these cases could cost.

  • Reply 42 of 72
    taniwhataniwha Posts: 347member

    Quote:

    Originally Posted by sac2dude View Post


    As I posted back in June:  "Apple was price fixing, its an open and shut case. They helped organize an effort among top publishers to raise e-book prices. The government has a bunch of e-mail, phone calls, and key witnesses that seem to make this a done deal."  etc.


     


    At the time, the response was that I was an Amazon shill, a one-post troll, etc.  



    Actually all I did was read the news of the day and had a pretty good idea of what the DOJ was presenting.  It simply made sense to me, and obviously to every involved publisher as well, since they all ultimately settled.


     


    I expected Apple to appeal, not because their case has merit or they were short-changed during the trial, but simply due to their corporate arrogance.   They have more than enough money to keep fighting, so its no big deal to them.  In the end, they won't acquiesce and they'll never admit wrong doing - they'll simply bow to the verdict and pay.  



     


    It seems to me that Apple's main concern here is that its business model --- high margins --- is under attack, so I would expect the company to use all available legal tactics to defend that. Failing to do so could have rather drastic consequences so it makes sense in that scenario to fight to the bitter end.  It will be interesting to see their legal strategy unfold.

  • Reply 43 of 72
    philgarphilgar Posts: 93member

    Quote:

    Originally Posted by jungmark View Post





    Wrong. If Amazon wanted to sell for less, Apple had the option to lower its prices too. Amazon sells ebooks at a loss while undercutting everyone.


    no, under the new pricing models, apple made it a rule that if anyone else sold their books cheaper, apple would be allowed to buy their books for the discounted price minus 30 percent.  This means that the publishers would also have to change their dealings with amazon to force them under a similar contract.  if they simply kept amazon on the same terms, every time amazon offered a book with less than 30% margins (assuming amazon paid the same wholesale price as apple), the publishers would have to charge apple a lower wholesale price.  No company in their right mind would go along with that, and in general, under a free market, apple can't dictate what prices their competitors charge.  They can influence them (price wars, etc), but they can't go to a competitor and demand that they charge the same thing (that would be known as price fixing).


     


    Phil

  • Reply 44 of 72
    crushedcrushed Posts: 17member

    Maybe I am missing something here. Where was it that I read Eddie Cue having said, that bits are bits, it doesn't matter what those bits represent, be it an app or an epub, or a movie or a song? Apple doesn't fix the prices, it only takes 30% of every sale that goes through their system, basically their cost of handling payments, reversals and the hardware and software necessary to run the services. So why should epubs be treated any other way? Makes perfect sense to me.


    The publishers could just as easily have priced their ebooks at $9.99 and sold millions of copies via iBooks and there would be no problems. They could have even raised their prices to Amazon keeping the wholesale model, but no they couldn't because Amazon too had an MFN clause, for which they are not being accused of any wrong-doing. But instead, they forced Amazon to accept the agency model, which wasn't really something Apple even asked them to do.


    It is obvious that the DoJ doesn't understand the nature of doing business online at all... And of course, the Publishers are greedy to charge more than what is fair for an ebook, considering no printing, stocking and shipping are necessary.
  • Reply 45 of 72
    brutus009brutus009 Posts: 356member

    Quote:

    Originally Posted by philgar View Post


    no, under the new pricing models, apple made it a rule that if anyone else sold their books cheaper, apple would be allowed to buy their books for the discounted price minus 30 percent.  This means that the publishers would also have to change their dealings with amazon to force them under a similar contract.  if they simply kept amazon on the same terms, every time amazon offered a book with less than 30% margins (assuming amazon paid the same wholesale price as apple), the publishers would have to charge apple a lower wholesale price.  No company in their right mind would go along with that, and in general, under a free market, apple can't dictate what prices their competitors charge.  They can influence them (price wars, etc), but they can't go to a competitor and demand that they charge the same thing (that would be known as price fixing).


     


    Phil



     


    I've read everything I could along the way for all this and I am dead positive that you do not understand the Agency Model that Apple had been using, nor do you understand what everyone has been calling the "most favored nation" clause.  I believe jungmark is spot on.


     


    You're going to have to provide some proof.

  • Reply 46 of 72
    brutus009brutus009 Posts: 356member

    Quote:

    Originally Posted by crushed View Post


    Apple doesn't fix the prices, it only takes 30% of every sale that goes through their system, basically their cost of handling payments, reversals and the hardware and software necessary to run the services. So why should epubs be treated any other way? Makes perfect sense to me.


     


    I've got to say-- I've heard this argument over and over but I don't buy it.  Sure, it makes sense for music through iTunes where prices between commodities are relatively static (all songs are approximately $1), but book prices can vary wildly.


     


    Imagine:


    - a 30% cut could be anywhere from less than $1 (novella) up to $15 (textbook)


    - primary variance in product is file size


    - there is no direct correlation between price and file size


     


    If you think about these things, I think it becomes obvious that there is no logical reason why the old 30% should make perfect sense.  That isn't to say that the numbers don't work out, either.  It may well be that Apple continues to make similar profits (supposedly breaking even), but we can only assume this to be true on faith.

  • Reply 47 of 72
    jessijessi Posts: 302member



    Quote:

    Originally Posted by Russell View Post

    "Congress passed the first antitrust law, the Sherman Act, in 1890 as a "comprehensive charter of economic liberty aimed at preserving free and UNFETTERED COMPETITION as the rule of trade."


     


    Please explain to me how preserving Amazon's monopoly serves the goal of "unfettered competition"? 


     


    Apples "crime" here was offering a better deal to suppliers.  


     


    So called "anti-trust" "law" (it isn't law, it's illegal, under the constitution) is just a political tool to pick favorites.   It is the essence of corruption in government. 


     


    I'm certain at some point before this case was started, Apple got a call demanding they pay off some powerful political figure, just like a mafia style shakedown, because that's what it was-- and when they refused to corrupt themselves by doing so, the DoJ started going after them.


     


    You have to be seriously naive (not to mention ignorant of the law) to think otherwise.  


  • Reply 48 of 72
    malaxmalax Posts: 1,598member

    Quote:

    Originally Posted by brutus009 View Post


     


    I've read everything I could along the way for all this and I am dead positive that you do not understand the Agency Model that Apple had been using, nor do you understand what everyone has been calling the "most favored nation" clause.  I believe jungmark is spot on.


     


    You're going to have to provide some proof.



    You're right.  Philgar's recent posts are full of errors and mischaracterizations.


     


    Apple is never buying anything from the publishers; there is no wholesale price.  Amazon was never limited by the proposed agreement; the MFN clause just gave Apple the ability to implement a lower price under some conditions.

  • Reply 49 of 72
    malaxmalax Posts: 1,598member

    Quote:

    Originally Posted by Jessi View Post


     


    Please explain to me how preserving Amazon's monopoly serves the goal of "unfettered competition"? 


     


    Apples "crime" here was offering a better deal to suppliers.  


     


    So called "anti-trust" "law" (it isn't law, it's illegal, under the constitution) is just a political tool to pick favorites.   It is the essence of corruption in government. 


     


    I'm certain at some point before this case was started, Apple got a call demanding they pay off some powerful political figure, just like a mafia style shakedown, because that's what it was-- and when they refused to corrupt themselves by doing so, the DoJ started going after them.


     


    You have to be seriously naive (not to mention ignorant of the law) to think otherwise.  





     


    Count me as seriously naive then.


     


    I do believe this case wouldn't have been brought under a GOP administration, but I am fairly certain that there was no phone call extorting Apple to pay off "some powerful political figure."


     


    I believe applying the anti-trust act in this case is bad for lots of reasons (including the irony of using the anti-trust act to protect the business practices of the market leader that demonstrably resorts to predatory pricing to protest that party power), but because the way the law is written it was very hard for Apple to defend its (perfectly reasonable) actions.  It's not a district court judge's job to determine whether a law is good policy, so I don't blame her for the ruling.  The appeals will be interesting though.

  • Reply 50 of 72
    philgarphilgar Posts: 93member

    Quote:

    Originally Posted by malax View Post


    You're right.  Philgar's recent posts are full of errors and mischaracterizations.


     


    Apple is never buying anything from the publishers; there is no wholesale price.  Amazon was never limited by the proposed agreement; the MFN clause just gave Apple the ability to implement a lower price under some conditions.



    I'm trying to figure out which part of my logic didn't make sense (see http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/10/a-judge-says-apple-fixed-e-book-prices-this-chart-shows-how-they-did-it/ for information on this).  


     


    Before apple was in the business, books were sold on a wholesale model.  Amazon paid $X for a book, and could sell the books for whatever price they want.  This meant that Amazon could choose to sell a book below cost to gain interest in their store (just as grocery stores often have Sales on items to drive traffic to the store where they'll pay higher prices for other goods to make up for the loss leaders that were on sale).  


     


    Apple made agreements to change to the Agency model: "Apple got five of the six publishers to agree to an “agency model,” where publishers set the price and Apple got a fixed percentage of the sale price. And Apple’s contract with the five publishers included a “most favored nation” clause, stating that if Amazon offered books at a lower price, the publisher would match that price on Apple’s e-book store."  Because of the MFN clause, the publishers could not continue selling books to amazon under the old wholesale pricing model (under the wholesale model the publishers could not control the price that the resellers sold their books for).  From this same article:  "The fact that five of nation’s leading publishers had all accepted this “most favored nation” clause greatly strengthened their bargaining power with Amazon. Each of them gave the Kindle maker an ultimatum: accept an agency model, and higher prices, or Amazon would lose access to the publishers’ books. Amazon would have refused if any single publisher had made this demand. But with five publishers making the same demand simultaneously, Amazon was forced to capitulate."  


     


    After these changes, Amazon could no longer choose what price they wanted to sell ebooks for.  The publishers saw to this.  What part of this doesn't make sense to you, and what part of my statements earlier didn't make sense?  Facts are facts, and this is how things happened.  


     


    Phil

  • Reply 51 of 72


    "the customer pays a little more, but that’s what you want anyway"


     


    A direct quote from Steve Jobs


    One of the most amazing entrepreneurs of our time


    Embedded in the Apple culture


     


    Is it any wonder they need alot of lawyers and get fairly frequent lawsuits?


    Its why I own the stock...

  • Reply 52 of 72
    anonymouseanonymouse Posts: 6,660member

    Quote:

    Originally Posted by Russell View Post


    People can see I know it better than you.


    The Judge's summary backs up what I posted.



     


    People can see that the judge prejudged the case, that much is obvious. I'll repeat, based on your postings here, if you're a lawyer, find another career.

  • Reply 53 of 72
    anonymouseanonymouse Posts: 6,660member

    Quote:

    Originally Posted by Victory2013 View Post


    Take off your apple shaped and shaded glasses. The evidence was strong against Apple. The publishers knew it and settled but Apple was to arrogant and took a chance and Apple lost.



     


    Quote:

    Originally Posted by Victory2013 View Post


    You are pretty full of yourself. Apple thought they could get away with price fixing and they failed. Now they have to accept their punishment. Hopefully it will be a severe punishment.



     


    The evidence was embarrassingly flimsy, to the point of being virtually non-existent. The judge decided the case before it was heard and used the thinnest of pretexts to justify the "decision". This was the definition of a kangaroo court, and is a disgrace to the entire U.S. justice system. Cases like this that are brought because of corruption, and decided based on allegations, rather than evidence, undermine all confidence in our legal system, and rightly so.

  • Reply 54 of 72
    anonymouseanonymouse Posts: 6,660member

    Quote:

    Originally Posted by Jessi View Post


    ... So called "anti-trust" "law" (it isn't law, it's illegal, under the constitution) is just a political tool to pick favorites.   It is the essence of corruption in government. ...





     


    Anti-trust law is necessary and, of itself, has nothing to do with corruption. Unfortunately, like all laws, corruption can lead to abuse. This case was entirely driven by corruption, and it's clear that the source of that corruption is Amazon who found lawyers at the DoJ willing to do their bidding. And apparently a judge who doesn't belong on the bench to go along with it, regardless of the lack of actual evidence. It's a sad day when we see so clearly that the DoJ is bought and sold by those without scruples.

  • Reply 55 of 72
    froodfrood Posts: 771member

    Quote:

    Originally Posted by philgar View Post


    I'm trying to figure out which part of my logic didn't make sense (see http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/10/a-judge-says-apple-fixed-e-book-prices-this-chart-shows-how-they-did-it/ for information on this).  


     


     


    Phil



     


    The part of your logic that doesn't make sense is that you are trying to use logic on Apple fanatics on a decision that went against Apple 

  • Reply 56 of 72
    froodfrood Posts: 771member

    Quote:

    Originally Posted by brutus009 View Post


     


    I've got to say-- I've heard this argument over and over but I don't buy it.  Sure, it makes sense for music through iTunes where prices between commodities are relatively static (all songs are approximately $1), but book prices can vary wildly.


     


    Imagine:


    - a 30% cut could be anywhere from less than $1 (novella) up to $15 (textbook)


    - primary variance in product is file size


    - there is no direct correlation between price and file size


     


    If you think about these things, I think it becomes obvious that there is no logical reason why the old 30% should make perfect sense.  That isn't to say that the numbers don't work out, either.  It may well be that Apple continues to make similar profits (supposedly breaking even), but we can only assume this to be true on faith.



     


    There is nothing wrong with Apple wanting high margins or insisting on a 30% cut.  If they can deliver a superior product and/or convince people their products are worth more- that is super for them.


     


    The problem was that books were already market priced at 9.99 at which price point publishers were not making high margins.  If Apple sold books for 9.99 and took 30% the publishers would take a huge loss. Apple was free to sell its books for 12.99. If you look at the evidence and Steves comments, he quickly realized Apple would fail if everyone else was selling at 9.99. Since he evidently concluded that he couldnt convince Apple users that iBooks were somehow superior magical Apple books the only logical solution to get Apple 30% margins and sell well was to come up with a system that would force the competition to raise their prices as well.  He came up with a pretty good one.  Note that Apple wasnt heroically "saving publishers"    At 12.99, take out Apples 30% and publishers get the same 9.99 they make elsewhere.  Now publishers were essentially forced to raise prices to 12.99 everywhere.  They were free to sell for less, say 9.99, but they would be forced to allow Apple to match that price AND still guarantee Apple 30% (effectively selling at 6.00 and taking a big loss)  The plan worked, iBooks were born, and consumer prices for books rose overnight.  Unfortunately that pesky DOJ stepped in and prices dropped again.

  • Reply 57 of 72
    russellrussell Posts: 296member

    Quote:

    Originally Posted by anonymouse View Post


     


    Anti-trust law is necessary and, of itself, has nothing to do with corruption. Unfortunately, like all laws, corruption can lead to abuse. This case was entirely driven by corruption, and it's clear that the source of that corruption is Amazon who found lawyers at the DoJ willing to do their bidding. And apparently a judge who doesn't belong on the bench to go along with it, regardless of the lack of actual evidence. It's a sad day when we see so clearly that the DoJ is bought and sold by those without scruples.



     


     


    Vanilla Sky.

  • Reply 58 of 72

    Quote:

    Originally Posted by anonymouse View Post


     


    But, it's good to see the trolls still sign up to post their mindless vitriol.



     


    I agree. Why the f is this guy/ girl here? I reported him/ her.

  • Reply 59 of 72
    malaxmalax Posts: 1,598member

    Quote:

    Originally Posted by Frood View Post


     


    There is nothing wrong with Apple wanting high margins or insisting on a 30% cut.  If they can deliver a superior product and/or convince people their products are worth more- that is super for them.


     


    The problem was that books were already market priced at 9.99 at which price point publishers were not making high margins.  If Apple sold books for 9.99 and took 30% the publishers would take a huge loss. Apple was free to sell its books for 12.99. If you look at the evidence and Steves comments, he quickly realized Apple would fail if everyone else was selling at 9.99. Since he evidently concluded that he couldnt convince Apple users that iBooks were somehow superior magical Apple books the only logical solution to get Apple 30% margins and sell well was to come up with a system that would force the competition to raise their prices as well.  He came up with a pretty good one.  Note that Apple wasnt heroically "saving publishers"    At 12.99, take out Apples 30% and publishers get the same 9.99 they make elsewhere.  Now publishers were essentially forced to raise prices to 12.99 everywhere.  They were free to sell for less, say 9.99, but they would be forced to allow Apple to match that price AND still guarantee Apple 30% (effectively selling at 6.00 and taking a big loss)  The plan worked, iBooks were born, and consumer prices for books rose overnight.  Unfortunately that pesky DOJ stepped in and prices dropped again.



     


    That's a pretty good summary, but perhaps with the motivations wrong.


     


    Apple literally didn't care what the prices were.  They simply wanted to sell box using their simple 70-30 model.  They didn't want to become a full-blown old-school retailer having Apple staff figuring out prices.  Like with the App Store, it's better for Apple if they let the providers of the content decide on pricing and Apple just takes 30% off the top.  That was their motivation, period.  If they could have signed up one publisher under those terms, they would have been happy to.  Two publishers, better.  Three? Sure.  So they went to each publisher and tried to convince them into adopting that model.  Obviously you don't pitch something by telling the party "here's why this is good from MY perspective" you figure out arguments that will be persuasive to them.  So obviously if the publishers are used to making $10 a book, you explain why it's a win-win if hey sell it at your store for $13.  If after the deals are signed, competition forces the book prices down to $10 or even $5 Apple wouldn't care.  They would be just as happy selling a million books at $5 as half a million at $10.  So that's the part about "conspiring to raise prices" that pissed Apple off when they were charged with it.  In their minds they literally had no interest in conspiring to raise prices; they just wanted a way to enter the market using the business model that works for them.  They worked with each publisher separately and tried for the best.  In retrospect, you wonder how the case would have gone (or if their would have been a case) if they had just published a statement on their Web site: "If anyone wants to sell books in the iTunes store where you set the price, give us 30% and agree that if someone else charges a lower price we can match it, let us know, we're ready to sign the deal."  That is exactly what Apple did, but less publicly.  And somehow that is illegal.

  • Reply 60 of 72
    The red flag for me is why was Barnes & Noble was not pursued or included for doing the exact same thing as Apple.

    The company is certainly more vested in the book selling and publishing industry than Apple.

    Why did Amazon and the DOJ omit them? To suggest they were not visible is a farce. To selectively go after a new player for restrictive practices when Amazon as the market leader with 80% were using predatory price stinks of corruption in the system.
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