Retailers begin distributing credits from e-book price fixing settlements

Posted:
in General Discussion edited March 2014
Apple, Amazon, Barnes & Noble, and Kobo have begun the process of handing out $166 million in account credits to consumers affected by the e-books price fixing scandal as notification emails began going out on Tuesday.

Summation
Apple's closing slide in its e-book antitrust case. | Source: U.S. District Court


E-book buyers can expect to receive a credit of $3.17 for each electronic version of a book on the New York Times bestseller list purchased between April 1, 2010 and May 21, 2012, while books not found on the bestseller list draw a credit of $0.73 each. Consumers who purchased e-books from Sony and some other retailers will receive a partial refund check rather than a credit.

The payments are the result of a settlement between the Department of Justice and publishers Hachette, HarperCollins, Simon & Schuster, Penguin and Macmillan. Those publishers reached a settlement agreement with the government after being accused, along with Apple, of conspiring to raise e-book prices by agreeing to a new agency pricing model.

Unlike the traditional wholesale model, in which content is purchased in bulk and resold at a price decided entirely by the retailer, the agency model allows publishers to effectively set minimum retail prices throughout the market. The defendants argued that while prices did increase slightly under the agency model, it also had the effect of leveling the playing field by eliminating Amazon's market hegemony.

Apple was not party to the settlement and was eventually found guilty of price fixing, though the company continues to vigorously defend itself. Apple is now in the midst of an appeal seeking to either overturn that verdict or secure a new trial before a new judge.
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Comments

  • Reply 1 of 41
    sudonymsudonym Posts: 233member

    I can't believe that Apple is being singled out for this.  Why do they want Amazon to have a monopoly?  That will raise prices.  And besides, Apple didn't do anything wrong because it was the publishers who get to set the price not Apple.  The government should not be doing this when we have so many other problems that they should be taking care of instead of giving Amazon a monopoly to set unfair prices.  I think that agency pricing is better because that way the people who bring us the contnet get to set the price.  They know best what it is worth, and how much they have to pay the writers.  Agency pricing is a lot better for the writers who actually do the work.  All this is going to do is to give a monopoly to Amazon.

  • Reply 2 of 41
    sudonym wrote: »
    I can't believe that Apple is being singled out for this.  Why do they want Amazon to have a monopoly?  That will raise prices.  And besides, Apple didn't do anything wrong because it was the publishers who get to set the price not Apple.  The government should not be doing this when we have so many other problems that they should be taking care of instead of giving Amazon a monopoly to set unfair prices.

    Imagine if Google got together with app developers and got them to agree to raise prices on all platforms, so everyone would make more money. Would you agree with this practice?
  • Reply 3 of 41
    solipsismxsolipsismx Posts: 19,566member
    drealoth wrote: »
    Imagine if Google got together with app developers and got them to agree to raise prices on all platforms, so everyone would make more money. Would you agree with this practice?

    As shown by the trial Apple in no way colluded with the publishers in secret meetings to raise prices.
  • Reply 4 of 41
    Quote:

    Originally Posted by Drealoth View Post





    Imagine if Google got together with app developers and got them to agree to raise prices on all platforms, so everyone would make more money. Would you agree with this practice?

     

    Google is evil (actually, any company but Apple is evil).

    Apple never did anything wrong.

    All hail our savior, the Jesus of the 21st century, the almighty Steve Jobs.

  • Reply 5 of 41
    lilgto64lilgto64 Posts: 1,147member

    Gosh price fixing is so terrible - its a good thing the government does get involved in setting minimum prices for alcohol. What's that, they do? or well at least they leave tobacco alone. What, not that either? Well at least the government doesn't try to tell us what we should pay for healthcare. What, they are messing with that as well? 

     

    Maybe the real problem here is not that someone decided what they should be allowed to charge for their own product but that the government previously had no say in it, guess we solved that problem. 

  • Reply 6 of 41
    froodfrood Posts: 771member
    Quote:

    Originally Posted by SolipsismX View Post





    As shown by the trial Apple in no way colluded with the publishers in secret meetings to raise prices.

     

    As shown by the trial, Apple was found guilty as sin.  Did you read all of the evidence?  There was a link to much of it on this site and it was a long but pretty amazing read.  Steve and Eddy cue are geniuses without a doubt.  Steve instigated the whole process, and especially near finalization everyone on board knew they were doing something illegal, they just didn't think they'd get caught.

     

    The evidence did show private meetings occurred, but obviously when asked about the meetings nobody could recall what they had discussed during them.   There were a few occasions where they crossed the line in emails which were usually closed out with 'we need to meet and discuss this in person'  Nothing illegal with meeting in person certainly, but the fact they had already colluded before that statement was sufficient.

     

    Steven's famous quip about all prices being the same isn't even the most damning part, it was the reaction of the co-conspirators.  One of the publishers involved emailed another one to the tune of calling Steve an idiot and being afraid they would get caught.  Another publisher emailing Eddy Cue that they weren't on board with the scheme and Eddy responding 'we have two of the three, guaranteed' and the fourth publisher responding 'we need all three' doesn't sound like independent negotiations.

     

    If Amazon were to exhibit monopolistic behavior and drive prices up, the DOJ would be on them in a heartbeat.  They have not, and they won't because they can't.  There are near zero barriers to entry in the ebook market.

     

    Apple builds great products, but when it comes to being sneaky weasels to make an extra buck- whether its illegally jacking book prices up or illiegally screwing over their own employees, or legally playing a shell game to minimize taxes, they are brilliant at all of them.

  • Reply 7 of 41
    solipsismxsolipsismx Posts: 19,566member
    frood wrote: »
    As shown by the trial, Apple was found guilty as sin.  Did you read all of the evidence?  There was a link to much of it on this site and it was a long but pretty amazing read.  Steve and Eddy cue are geniuses without a doubt.  Steve instigated the whole process, and especially near finalization everyone on board knew they were doing something illegal, they just didn't think they'd get caught.

    The evidence did show private meetings occurred, but obviously when asked about the meetings nobody could recall what they had discussed during them.   There were a few occasions where they crossed the line in emails which were usually closed out with 'we need to meet and discuss this in person'  Nothing illegal with meeting in person certainly, but the fact they had already colluded before that statement was sufficient.

    Steven's famous quip about all prices being the same isn't even the most damning part, it was the reaction of the co-conspirators.  One of the publishers involved emailed another one to the tune of calling Steve an idiot and being afraid they would get caught.  Another publisher emailing Eddy Cue that they weren't on board with the scheme and Eddy responding 'we have two of the three, guaranteed' and the fourth publisher responding 'we need all three' doesn't sound like independent negotiations.

    If Amazon were to exhibit monopolistic behavior and drive prices up, the DOJ would be on them in a heartbeat.  They have not, and they won't because they can't.  There are near zero barriers to entry in the ebook market.

    Apple builds great products, but when it comes to being sneaky weasels to make an extra buck- whether its illegally jacking book prices up or illiegally screwing over their own employees, or legally playing a shell game to minimize taxes, they are brilliant at all of them.

    The judge found Apple guilty but there was no proof that Apple was colluding with the publishers to raise prices. Surely you don't think that a vendor talking with a perspective customer or business associate is in itself illegal. If you do then every time Apple contacts another company it would then be considered colluding. Jobs emails were very clear and straightforward; the publishers can set the prices as they see fit without any input from Apple, Apple gets their cut. The only questionable request was MFN.


    PS: Amazon has exhibited monopolistic prices of their books and physical goods store for a very long time. Prices meant to keep the others from fairly competing. They even "colluded" with music labels to offer higher-nitrate audio, with no DRM, at lower prices than Apple offered despite Steve Jobs letter requesting the end of DRM on music and CEOs of companies that signed with Amazon lambasting Jobs for making such a comment.
  • Reply 8 of 41
    tallest skiltallest skil Posts: 43,399member
    Originally Posted by SolipsismX View Post

    The judge found Apple guilty but there was no proof that Apple was colluding with the publishers to raise prices.

     

    Wonder what they were guilty of, then.

     

    Amazon needs destroyed for this.

  • Reply 9 of 41
    iaeeniaeen Posts: 588member
    Yup, got an email from amazon today saying that I have less than $2.00 credit that I can use only on amazon and only for books.

    Whoopty-fucken-doo.
  • Reply 10 of 41
    The article says Apple (and others) are paying out as part of the settlement, then later the article states Apple is not part of the settlement. Really, AI?
  • Reply 11 of 41
    froodfrood Posts: 771member
    Quote:

    Originally Posted by Suddenly Newton View Post



    The article says Apple (and others) are paying out as part of the settlement, then later the article states Apple is not part of the settlement. Really, AI?

     

    The others were caught, and when faced with the prospect of an expensive legal battle, without admitting guilt, chose to agree to pay as part of a settlement.  Apple did not agree to settle and is not part of the settlement.

     

    Apple was ordered to pay because they were found guilty.

  • Reply 12 of 41
    Quote:
    Originally Posted by Tallest Skil View Post

     

     

    Wonder what they were guilty of, then.

     

    Amazon needs destroyed for this.


     

     

    "Tallest Skill" going "I can take care of the spam. Just say the word, guys" in his sig.

     

    Trollololol, indeed, "Tallest Skill" was a moderator of this board for a while. It probably was the closest to being "employed" he ever came... alas, he even failed in this "job".

     

     

  • Reply 13 of 41
    Quote:

    Originally Posted by Drealoth View Post





    Imagine if Google got together with app developers and got them to agree to raise prices on all platforms, so everyone would make more money. Would you agree with this practice?

     

    Google is evil (actually, any company but Apple is evil).

    Apple never did anything wrong.

    All hail our savior, the Jesus of the 21st century, the almighty Steve Jobs.

  • Reply 14 of 41
    froodfrood Posts: 771member
    Quote:
    Originally Posted by SolipsismX View Post





     Surely you don't think that a vendor talking with a perspective customer or business associate is in itself illegal. I

     

    Absolutely not.  If the major publishers had all sat in a room and said, "Let's all raise prices by 30% overnight together"  That would have been stupidly illegal.  Instead they each talked to Apple and said get all the others on board and we'll be on board too.  Once they all knew they were on board together by not talking to each other, but instead working through Eddy, they achieved the end result through a pretty well thought out plan that would indirectly prevented anyone from being allowed to undersell.  Just because they used Apple as an intermediary doesn't make it legal, but it sure made it a lot smarter and more difficult to prove.  In the end I think it is pretty hard to come up with prices jumping 30% overnight, with the 'Woah, what are the odds of that??!  Sheesh we just kind of all magically independently all did the same thing at once which would have been disastrous for any one of us if we hadn't all decided to just indepentently jump at the same time.  That is crazy odds your honor, like greater odds than picking a perfect bracket.  Can you believe the coincidence your Honor?"  Apparantly the judge didn't think there was much coincidence.

     

    It was brazen and brilliant.  It was terrible for consumers, and made them pay more for books, but as Steve said to the publishers "but that's what we all want!"  I'll let the legal system take care of itself, and Apple may have deep enough lawyer pockets to dig themselves out yet.  Either way I don't fault Apple for trying, although I'm happier for consumers with the end result.   Only *after* the DOJ stepped in, but because there are more entrants, pricing is even more competitive now.

  • Reply 15 of 41
    Quote:

    Originally Posted by SudoNym View Post

     

    I can't believe that Apple is being singled out for this.  Why do they want Amazon to have a monopoly?  That will raise prices.  And besides, Apple didn't do anything wrong because it was the publishers who get to set the price not Apple.  The government should not be doing this when we have so many other problems that they should be taking care of instead of giving Amazon a monopoly to set unfair prices.  I think that agency pricing is better because that way the people who bring us the contnet get to set the price.  They know best what it is worth, and how much they have to pay the writers.  Agency pricing is a lot better for the writers who actually do the work.  All this is going to do is to give a monopoly to Amazon.


    I'm in favor of the prices for e-books increasing as necessary. Monopolies are bad, and what has been happening is that big and biggers are able to create production monopolies by artificially lowering prices which destroy the ability for competition to be built. You keep forgetting that there are a significant lack of jobs in the US. Lowering prices, lowering wages, no jobs means we are in a death spiral, and this is caused primarily by big and biggers pricing competitors out of business. Conglomerates and mergers are bad for all of us, but they are given the go ahead because in each case they argue that *consumers* will not be hurt because the prices will be decreasing. We are dying because we have become merely consumers and not producers. 

  • Reply 16 of 41
    solipsismxsolipsismx Posts: 19,566member
    frood wrote: »
    Can you believe the coincidence your Honor?"  Apparantly the judge didn't think there was much coincidence.

    How is it coincidental that the publishers were finally given the opportunity to set prices and they did, just as App Store vendors can set prices as they choose? That is how the agency model works. The only thing that screams illegal to me is Amazon's monopolist hold over publishers and customers that have hindered the value of eBooks in order to help sell their physical products.
  • Reply 17 of 41
    icoco3icoco3 Posts: 1,460member
    Quote:
    Originally Posted by Drealoth View Post





    Imagine if Google got together with app developers and got them to agree to raise prices on all platforms, so everyone would make more money. Would you agree with this practice?



    Bad analogy as app developers already set the price for their apps.

  • Reply 18 of 41
    Quote:

    Originally Posted by waldobushman View Post

     

    … what has been happening is that big and biggers are able to create production monopolies by artificially lowering prices …


     

    I've seen it argued many, many times that this is what Amazon has been doing. But I've got a wish list of more than 100 Kindle books with a price history maintained by eReaderIQ that shows otherwise. Occasionally selling a book below cost (maybe 0.000001% of their listings or less at any one time) is not a monopolistic practice.

  • Reply 19 of 41
    solipsismxsolipsismx Posts: 19,566member
    ewtheckman wrote: »
    I've seen it argued many, many times that this is what Amazon has been doing. But I've got a wish list of more than 100 Kindle books with a price history maintained by eReaderIQ that shows otherwise. Occasionally selling a book below cost (maybe 0.000001% of their listings or less at any one time) is not a monopolistic practice.

    How would 0.0001 penny lower per dollar even show up on a price listing? More importantly, why would the publishers care about the devaluing of their digital books by Amazon if the price was lowered by only 1/10,000th of a penny per dollar, thus making it the same price except for books that cost over $9,999,99 which would then be lower by 1¢?
  • Reply 20 of 41
    hill60hill60 Posts: 6,992member
    drealoth wrote: »
    Imagine if Google got together with app developers and got them to agree to raise prices on all platforms, so everyone would make more money. Would you agree with this practice?

    Does Google set the prices?

    No.

    Just like Apple.

    Google wanted to steal author's works and give them away for free.
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