Why does everyone think distributing e-books or any other digital media is cheap. Look how much Apple is spending on new data centers. This is the cost of doing business digitally. Amazon doesn't run their systems on an old IBM AT, they also have to pay for all their server farms. Yes, distributing digitally should be less expensive than printing and shipping books but everything has a cost. Add the authors price (why should we feel authors should give away their works of art? e-book dealers aren't paying for one digital copy, they're paying per sale.), advertising, and operational costs and distributing e-books isn't cheap. Try running a business and see how much it costs without even including the original cost of what you're selling. Amazon was selling books below their total operational cost just to drive out other business and to force people to buy their garbage e-book readers.
"Anti trust" is not only about price, it's also about competition. If AMZ is preventing new competitors by undercutting them, that should be investigated.
.
They were selling best sellers at below their cost. Since a small competitor would be unable to do that, it meets the requirements for predatory pricing laws to come into play.
It's pretty much an open and shut case - if the government were to pursue it.
"Why can't Apple just mimic the strategy of Amazon and keep the price as same as Amazon? I believe people will come to Apple even if it same as Amazon price."
because the purpose of Apple is not to loose money, but to win it, doing fair business. Amazon and Google doesn't mind to loose money, because they are taking a previous step: building a monopoly in e-commerce and advertising. With the aid of US government. In some few years, with amazon and google having the power to price their services at will, without any resistance (take the deal or close your business), everybody will regret these legal actions.
Why don't Apple sue Amazon for their attempt to monopolize the market? With its huge popularity, and prices below costs, how long before Amazon becomes the only e-book seller in town? One of the reason why the stock market gives Amazon's share the price it's at is because of this hope of domination. Any attempt for the publishers to come together to gain pricing power is seen as collusion (with Apple being seen as the ring leader in this case, despite it just building a new platform).
If the Department of Justice is of any competence, it should have sued Amazon for price dumping in hope of driving out competitions. Amazon income bounces from small profit to moderate loss since its founding. Its lifetime profit (i.e. Retained Earnings) is $2B, for a company founded in 1994!
Why can't Apple just mimic the strategy of Amazon and keep the price as same as Amazon? I believe people will come to Apple even if it same as Amazon price.
yes true - but will apple waive the 30% - answer no - because EVERY OTHER app devolper would complain - the reason apple got caught was to raise prices was that they COULD get there 30% while all prices are the same.
A publisher is NOT going to sell to apple the same prices as amazon while cutting another 30% share of the sale. NO WAY at all! IMHO
Why can't Apple just mimic the strategy of Amazon and keep the price as same as Amazon? I believe people will come to Apple even if it same as Amazon price.
They can, and it would be great for everyone if they did. That is actually the normal way to enter the market. Competitive markets almost always trend toward low margins while oligopolies tend to maintain high margins. Apple could have entered the market by either offering better books or a better price. Their choice was to offer the same books at a much higher price.
Whether or not Apple is guilty, the Justice department really must go after Amazon now. It's abusing both it's (near) monopoly status and it's ability to sell below cost to (a) drive other retailers out of business, and (b) reduce the value of books to the point that no publisher will be able to support serious authors (i.e. that don't sell in sufficient quantity). While the pricing may appear consumer friendly in the short term, this is not consumer or author friendly in the medium-long term.
They won't, though, because Amazon owns them. They brought this case against Apple solely at Amazon's bidding and they aren't going to now turn on the hand that feeds them.
It's never been more clear that those with money who choose to use it to undermine our society now control it, completely, and probably irredeemably. Democracy, Freedom and Justice are, in the United States today, nothing more than empty words.
Apple can do the same can't they? I don't thin k the government was trying to restrict Apple's price options. They certainly have a huge advantage from a revenue standpoint and can easily afford to price match Amazon.
Maybe, maybe not. Depends on what terms of their contacts ultimately survive this case and the appeals. If the MFN stays in tact then yes if Amazon regains pricing control Apple would in effect gain the same
But ultimately this might not be a huge win for Amazon, or at least not as huge. The press over this whole thing may finally force an examination of Amazon's old practices, particularly if they try to bring them back. The whole exclusive deals for books, digital music and TV shows is not really consumer friendly and should be eliminated or at least strongly restricted.
Plus who is to say that is whole thing will automatically turn Amazon to their old terms. It might not do anything to current contracts or if it does it might merely end them and Amazon has to redo all of them. And the option to require agency terms could still be valid or at least wholesale with pricing restrictions. And publishers could refuse to budge and say to hell if Amazon wants to cut their physical books, do it and get sued. Or they will walk and folks can buy them at Barnes and Noble or direct from the publisher. This isn't like FRAND where they have to deal with everyone.
I like this article. The judge explains why she made her decision. You may not agree with her decision, but one thing is clear to me: most of the discussion on this forum is focusing on the wrong things. The issue did not come down to the agency model or price matching. The judge even says she is OK if Apple uses those sames strategies in the future. That's not where this went wrong in her view.
The issue for the judge was Apple serving as a middle man as the publishers worked out a new pricing model. It is because Apple was at the center of those discussions that they are now in trouble. Had Apple simply discussed a deal with each publisher individually and kept the details of each agreement private, this case would have gone differently.
Another person interviewed in the articles points out this sets a precedence as to whether dominant companies can coordinate discussions between the parties in a particular industry. My guess is Apple has used similar strategies with both the movie and music industry, so I know why Apple is sticking to its guns and saying it did nothing wrong.
Personally, I can see a difference. When Apple worked out deals with movie and music industries, they were breaking new ground. With iBooks, they entered an existing market and had far greater market share going into the discussion. That said, I am not sure if I agree with the judge's decision, but I recognize there were different circumstances surrounding the iTunes and iBooks negotiations.
That's the problem with antitrust law. It is very circumstantial. You can do the exact same thing you have done time and time again and finally get in trouble for it simply because your situation has improved.
Considering that Apple is appealing the decision and it's quite possible that it will be reversed on appeal, this article is currently just guesswork.
I suspect that it won't be completely reversed. There are a couple of things that I believe will stick like removing the whole MFN or at least restrictions on its power. Like you can only use it if the regular price of an item is lowered. If it is a promo you can't but that promo is limited in scope so that someone can't mark something as on sale for months and months on end. Like for a while here in California there was a law about how rebates etc couldn't be longer than six months, especially buy this get that rebates like the old printer with a Mac. So every six months Apple would end the promo and start it the next day with a different set of printers. HP now, Epson next time.
So in the Ebook world the court might restrict the MFN so that Amazon can't mark down titles in the Starbucks giveaways as the codes are only valid for like 90 days.
Being allowed to use agency terms I think will ultimately be allowed.
As for this notion of collusion by Apple whether as the ringleader from day one or merely knowing the publishers were doing it and giving them the terms to let them, I think that will be canned. Had Apple not been using agency for ages they might have had a case but Apple has been so it's easy to see how they came into the game for many players. A couple may have been holding out because change is hard. Thus Steve's emails.
I think given the pre trial comments by the judge and how it seems from her post trial comments she's ignoring much of Apple's evidence it will be easy to get an appeal trial. This isn't over for Apple. And as I said before I think the press will force the DOJ to look at Amazon's digital business. Heck I won't be shocked if one of those White House petitions goes up in the next couple of days demanding it. For books, TV shows, movies.
From what I read, the book publishers messed up with their inititial pricing model with Amazon
Yes and no. They needed that initial pricing model to gain a partner. So it wasn't a mistake at that time.
The mistake was in allowing Amazon to keep that control and not reigning them in as time went on. contracts were too long, publishers weren't gutsy enough to demand more control when they did change. They allowed themselves to be bullied by scare tactics etc. THAT is where the mess up occurred.
Once Apple was in the mix they had support, or at least possible support, and were able to hold Amazon's feet to the flames without the lawsuits that should have been filed ages before over stunts like withdrawing physical books which were likely under a different contract or predatory pricing that was hurting other retailers.
What "brought on antitrust scrutiny" was that Apple ALSO got the companies to agree to *raise* prices on Amazon. Price fixing is illegal, and when multiple parties agree to do something illegal that's a conspiracy. THAT is what this court case is about.
Says the judge but she decided that well before the trial. She walked in biased against Apple and walked out biased against Apple. The moment she made those comments she should have been off the trial.
Many witnesses made statements and brought full evidence that in fact Apple had zero to do directly with the publishers demanding agency terms from Amazon et al. Or at least got caught lying about having been told that Apple demanded such a change. The judge ignored that stuff because it didn't fit with her bias.
Apple has been using agency for ages. Agency is better for the publishers as it gives them control. They might have demanded it even without Apple joining the game
Yeah the funny part is that if they did such a "pro-consumer" move they'd be sued for anti-competitive price dumping.
Amazon wasn't. For years they sold ebooks at below cost to kill off any other sellers and got away with it. How was it not an issue then but it is now. Oh right, it's Apple.
This is hardly a case of Apple heroically stepping to defend the downtrodden and defenseless publishing industry. Apple aims for dominance and it's own terms wherever it goes. Publishers are at a turning point in their industry's life, similar to the growing pains/rigor mortis of the newspaper trade. Your average paper is charging 2 or 3 times the price for less content and far less depth than what they offered 15 years ago. I still haven't heard a good justification from the publishers for keeping pricing for e-books at or above hard copy pricing. And I said justification, not excuses. All I see here was Apple trying to corner a market share percentage that they could lock in to the $9.99 & above price-point.... because that's a better position for their 30% cut. I am not the entire market, but there are a lot of people like me that to whatever extent prefer a "real" book. And for $9.99, I usually buy the real book, that I can then do whatever the heck I want with. When I see a deal on an e-book, I get it... but frequently also buy the hard copy when I get a nice price. For the good of the industry, and it's readers... they need to keep an eye on what indie game developers are accomplishing. Public funding of projects, publishing without DRM, selling bundles with pricing determined by the buyer (!)... There are a wide array of options, and this isn't the 20th Century. Stop your sniveling and find the new method... or pricing will come down on it's own, and Apple will still be taking a cut, if they remain in the market at all.
The best way for publishers to counteract Amazon's predatory lowballling of their book prices is to simply raise the price of the book to increase Amazon's loss.
For example, if Amazon sells your $25 book for $1, undercutting the price at other resellers by $24, then simply raise the price of the book that Amazon buys to $100.
For other resellers, simply rebate them $75 so that they can keep the sale price at $25.
This forces Amazon to take a $99 loss on the book it sells for $1.
Amazon wasn't. For years they sold ebooks at below cost to kill off any other sellers and got away with it. How was it not an issue then but it is now. Oh right, it's Apple
You do realize that you are not required by law to make a profit on every item you sell? Retailers have used "loss leaders" for probably centuries or longer to get the buyer in the door. Additionally, if you feel so strongly about it, look into other sellers, where you can voluntarily pay more to assuage your conscience. Regardless, the entity that gets shafted in every scenario is the author who isn't on the A-list. So, most of them. And ya, it's Apple, the company with the most cash in the world. They are playing at the big boy's table by choice... and they play just as dirty as anyone else there.
Now one should confuse Amazon's business tactics with what Apple was doing. Whatever Amazon is doing does not change what Apple did; two wrongs do not make a right.
There also seems to be confusion about what Apple arranged with publishers. They did not make publishers match whatever price they charged to others, including Amazon. Instead, they had publishers agree that they would give Apple whatever price other retailers sold products to the public minus 30%. That takes away any incentive for other retailers to compete with Apple on the basis of price. Whatever price another retailer might offer the public, Apple could always charge less and still make a profit. That is anti competitive and not a free market.
The best way for publishers to counteract Amazon's predatory lowballling of their book prices is to simply raise the price of the book to increase Amazon's loss.
For example, if Amazon sells your $25 book for $1, undercutting the price at other resellers by $24, then simply raise the price of the book that Amazon buys to $100.
For other resellers, simply rebate them $75 so that they can keep the sale price at $25.
This forces Amazon to take a $99 loss on the book it sells for $1.
The problem is that Amazon has driven other book sellers out of business. If you don't sell it through Amazon then were are you going to sell it?
Comments
Quote:
Originally Posted by leaot
Distributing e-books costs next to nothing.
Why does everyone think distributing e-books or any other digital media is cheap. Look how much Apple is spending on new data centers. This is the cost of doing business digitally. Amazon doesn't run their systems on an old IBM AT, they also have to pay for all their server farms. Yes, distributing digitally should be less expensive than printing and shipping books but everything has a cost. Add the authors price (why should we feel authors should give away their works of art? e-book dealers aren't paying for one digital copy, they're paying per sale.), advertising, and operational costs and distributing e-books isn't cheap. Try running a business and see how much it costs without even including the original cost of what you're selling. Amazon was selling books below their total operational cost just to drive out other business and to force people to buy their garbage e-book readers.
They were selling best sellers at below their cost. Since a small competitor would be unable to do that, it meets the requirements for predatory pricing laws to come into play.
It's pretty much an open and shut case - if the government were to pursue it.
"Why can't Apple just mimic the strategy of Amazon and keep the price as same as Amazon? I believe people will come to Apple even if it same as Amazon price."
because the purpose of Apple is not to loose money, but to win it, doing fair business. Amazon and Google doesn't mind to loose money, because they are taking a previous step: building a monopoly in e-commerce and advertising. With the aid of US government. In some few years, with amazon and google having the power to price their services at will, without any resistance (take the deal or close your business), everybody will regret these legal actions.
Why don't Apple sue Amazon for their attempt to monopolize the market? With its huge popularity, and prices below costs, how long before Amazon becomes the only e-book seller in town? One of the reason why the stock market gives Amazon's share the price it's at is because of this hope of domination. Any attempt for the publishers to come together to gain pricing power is seen as collusion (with Apple being seen as the ring leader in this case, despite it just building a new platform).
If the Department of Justice is of any competence, it should have sued Amazon for price dumping in hope of driving out competitions. Amazon income bounces from small profit to moderate loss since its founding. Its lifetime profit (i.e. Retained Earnings) is $2B, for a company founded in 1994!
Quote:
Originally Posted by Chandra69
Why can't Apple just mimic the strategy of Amazon and keep the price as same as Amazon? I believe people will come to Apple even if it same as Amazon price.
yes true - but will apple waive the 30% - answer no - because EVERY OTHER app devolper would complain - the reason apple got caught was to raise prices was that they COULD get there 30% while all prices are the same.
A publisher is NOT going to sell to apple the same prices as amazon while cutting another 30% share of the sale. NO WAY at all! IMHO
Quote:
Originally Posted by Chandra69
Why can't Apple just mimic the strategy of Amazon and keep the price as same as Amazon? I believe people will come to Apple even if it same as Amazon price.
They can, and it would be great for everyone if they did. That is actually the normal way to enter the market. Competitive markets almost always trend toward low margins while oligopolies tend to maintain high margins. Apple could have entered the market by either offering better books or a better price. Their choice was to offer the same books at a much higher price.
Quote:
Originally Posted by MattBookAir
Whether or not Apple is guilty, the Justice department really must go after Amazon now. It's abusing both it's (near) monopoly status and it's ability to sell below cost to (a) drive other retailers out of business, and (b) reduce the value of books to the point that no publisher will be able to support serious authors (i.e. that don't sell in sufficient quantity). While the pricing may appear consumer friendly in the short term, this is not consumer or author friendly in the medium-long term.
They won't, though, because Amazon owns them. They brought this case against Apple solely at Amazon's bidding and they aren't going to now turn on the hand that feeds them.
It's never been more clear that those with money who choose to use it to undermine our society now control it, completely, and probably irredeemably. Democracy, Freedom and Justice are, in the United States today, nothing more than empty words.
Maybe, maybe not. Depends on what terms of their contacts ultimately survive this case and the appeals. If the MFN stays in tact then yes if Amazon regains pricing control Apple would in effect gain the same
But ultimately this might not be a huge win for Amazon, or at least not as huge. The press over this whole thing may finally force an examination of Amazon's old practices, particularly if they try to bring them back. The whole exclusive deals for books, digital music and TV shows is not really consumer friendly and should be eliminated or at least strongly restricted.
Plus who is to say that is whole thing will automatically turn Amazon to their old terms. It might not do anything to current contracts or if it does it might merely end them and Amazon has to redo all of them. And the option to require agency terms could still be valid or at least wholesale with pricing restrictions. And publishers could refuse to budge and say to hell if Amazon wants to cut their physical books, do it and get sued. Or they will walk and folks can buy them at Barnes and Noble or direct from the publisher. This isn't like FRAND where they have to deal with everyone.
I like this article. The judge explains why she made her decision. You may not agree with her decision, but one thing is clear to me: most of the discussion on this forum is focusing on the wrong things. The issue did not come down to the agency model or price matching. The judge even says she is OK if Apple uses those sames strategies in the future. That's not where this went wrong in her view.
The issue for the judge was Apple serving as a middle man as the publishers worked out a new pricing model. It is because Apple was at the center of those discussions that they are now in trouble. Had Apple simply discussed a deal with each publisher individually and kept the details of each agreement private, this case would have gone differently.
Another person interviewed in the articles points out this sets a precedence as to whether dominant companies can coordinate discussions between the parties in a particular industry. My guess is Apple has used similar strategies with both the movie and music industry, so I know why Apple is sticking to its guns and saying it did nothing wrong.
Personally, I can see a difference. When Apple worked out deals with movie and music industries, they were breaking new ground. With iBooks, they entered an existing market and had far greater market share going into the discussion. That said, I am not sure if I agree with the judge's decision, but I recognize there were different circumstances surrounding the iTunes and iBooks negotiations.
That's the problem with antitrust law. It is very circumstantial. You can do the exact same thing you have done time and time again and finally get in trouble for it simply because your situation has improved.
I suspect that it won't be completely reversed. There are a couple of things that I believe will stick like removing the whole MFN or at least restrictions on its power. Like you can only use it if the regular price of an item is lowered. If it is a promo you can't but that promo is limited in scope so that someone can't mark something as on sale for months and months on end. Like for a while here in California there was a law about how rebates etc couldn't be longer than six months, especially buy this get that rebates like the old printer with a Mac. So every six months Apple would end the promo and start it the next day with a different set of printers. HP now, Epson next time.
So in the Ebook world the court might restrict the MFN so that Amazon can't mark down titles in the Starbucks giveaways as the codes are only valid for like 90 days.
Being allowed to use agency terms I think will ultimately be allowed.
As for this notion of collusion by Apple whether as the ringleader from day one or merely knowing the publishers were doing it and giving them the terms to let them, I think that will be canned. Had Apple not been using agency for ages they might have had a case but Apple has been so it's easy to see how they came into the game for many players. A couple may have been holding out because change is hard. Thus Steve's emails.
I think given the pre trial comments by the judge and how it seems from her post trial comments she's ignoring much of Apple's evidence it will be easy to get an appeal trial. This isn't over for Apple. And as I said before I think the press will force the DOJ to look at Amazon's digital business. Heck I won't be shocked if one of those White House petitions goes up in the next couple of days demanding it. For books, TV shows, movies.
Yes and no. They needed that initial pricing model to gain a partner. So it wasn't a mistake at that time.
The mistake was in allowing Amazon to keep that control and not reigning them in as time went on. contracts were too long, publishers weren't gutsy enough to demand more control when they did change. They allowed themselves to be bullied by scare tactics etc. THAT is where the mess up occurred.
Once Apple was in the mix they had support, or at least possible support, and were able to hold Amazon's feet to the flames without the lawsuits that should have been filed ages before over stunts like withdrawing physical books which were likely under a different contract or predatory pricing that was hurting other retailers.
Says the judge but she decided that well before the trial. She walked in biased against Apple and walked out biased against Apple. The moment she made those comments she should have been off the trial.
Many witnesses made statements and brought full evidence that in fact Apple had zero to do directly with the publishers demanding agency terms from Amazon et al. Or at least got caught lying about having been told that Apple demanded such a change. The judge ignored that stuff because it didn't fit with her bias.
Apple has been using agency for ages. Agency is better for the publishers as it gives them control. They might have demanded it even without Apple joining the game
Amazon wasn't. For years they sold ebooks at below cost to kill off any other sellers and got away with it. How was it not an issue then but it is now. Oh right, it's Apple.
Quote:
Originally Posted by AppleZilla
The American Justice System: Creating monopolies, making corporations people, and selecting our presidents since 2000 and beyond.
And there's nothing you can do about it but whine and cry? You might at least have ended with that tired, hollow battle cry "Wake up America!"
This is hardly a case of Apple heroically stepping to defend the downtrodden and defenseless publishing industry. Apple aims for dominance and it's own terms wherever it goes. Publishers are at a turning point in their industry's life, similar to the growing pains/rigor mortis of the newspaper trade. Your average paper is charging 2 or 3 times the price for less content and far less depth than what they offered 15 years ago. I still haven't heard a good justification from the publishers for keeping pricing for e-books at or above hard copy pricing. And I said justification, not excuses. All I see here was Apple trying to corner a market share percentage that they could lock in to the $9.99 & above price-point.... because that's a better position for their 30% cut. I am not the entire market, but there are a lot of people like me that to whatever extent prefer a "real" book. And for $9.99, I usually buy the real book, that I can then do whatever the heck I want with. When I see a deal on an e-book, I get it... but frequently also buy the hard copy when I get a nice price. For the good of the industry, and it's readers... they need to keep an eye on what indie game developers are accomplishing. Public funding of projects, publishing without DRM, selling bundles with pricing determined by the buyer (!)... There are a wide array of options, and this isn't the 20th Century. Stop your sniveling and find the new method... or pricing will come down on it's own, and Apple will still be taking a cut, if they remain in the market at all.
For example, if Amazon sells your $25 book for $1, undercutting the price at other resellers by $24, then simply raise the price of the book that Amazon buys to $100.
For other resellers, simply rebate them $75 so that they can keep the sale price at $25.
This forces Amazon to take a $99 loss on the book it sells for $1.
Quote:
Originally Posted by charlituna
Amazon wasn't. For years they sold ebooks at below cost to kill off any other sellers and got away with it. How was it not an issue then but it is now. Oh right, it's Apple
You do realize that you are not required by law to make a profit on every item you sell? Retailers have used "loss leaders" for probably centuries or longer to get the buyer in the door. Additionally, if you feel so strongly about it, look into other sellers, where you can voluntarily pay more to assuage your conscience. Regardless, the entity that gets shafted in every scenario is the author who isn't on the A-list. So, most of them. And ya, it's Apple, the company with the most cash in the world. They are playing at the big boy's table by choice... and they play just as dirty as anyone else there.
There also seems to be confusion about what Apple arranged with publishers. They did not make publishers match whatever price they charged to others, including
Amazon. Instead, they had publishers agree that they would give Apple whatever price other retailers sold products to the public minus 30%. That takes away any incentive for other retailers to compete with Apple on the basis of price. Whatever price another retailer might offer the public, Apple could always charge less and still make a profit. That is anti competitive and not a free market.
Quote:
Originally Posted by jameskatt2
The best way for publishers to counteract Amazon's predatory lowballling of their book prices is to simply raise the price of the book to increase Amazon's loss.
For example, if Amazon sells your $25 book for $1, undercutting the price at other resellers by $24, then simply raise the price of the book that Amazon buys to $100.
For other resellers, simply rebate them $75 so that they can keep the sale price at $25.
This forces Amazon to take a $99 loss on the book it sells for $1.
The problem is that Amazon has driven other book sellers out of business. If you don't sell it through Amazon then were are you going to sell it?