With Apple's hands tied in e-book market, Amazon stops taking some preorders from publisher Hachette

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  • Reply 41 of 82
    froodfrood Posts: 771member
    Quote:

    Originally Posted by jungmark View Post





    Then Amazon would have cried that Apple is engaging in predatory pricing. DOJ would investigate as well.

     

    And the DOJ would have come to the same conclusion as they have so far against Amazon- they'd have had no case.

     

    Apple's pricing would have to be so low that they drive Amazon out of business.

    Apple would need to show a profit.

    And it would have to be proven Apple's intent was to recoup its losses by raising prices once there is no competition.

     

    The first two would have been difficult to achieve in and of themselves, the third on is likely not even possible without barriers to entry.

  • Reply 42 of 82
    tbelltbell Posts: 3,146member
    Quote:
    Originally Posted by trumptman View Post

     

     

    Are you seriously suggesting that Amazon's margins are higher than Apple's? That would be the most absurd statement I've read in a while.

     

    Apple's goal with pricefixing was the raise margins for everyone by raising prices.

     

    Amazon is no more a monopoly in epub than Apple is with iTunes.


     

     

    The difference is Apple has not been accused on using its monopoly in electronic music sales to gain an illegal advantage in another market. 

     

    Yet, this is exactly what Amazon has done and is doing. It uses it strong position in traditional online book sales to force publishers to concede to its terms in the entirely different market of electronic book sales. That is how it got its monopoly position in electronic book sales. It is also why Barnes and Noble convinced publishers to go with an agency model that publishers than took to Apple.  

  • Reply 43 of 82
    singularitysingularity Posts: 1,328member
    tbell wrote: »
    <div class="quote-container" data-huddler-embed="/t/179946/with-apples-hands-tied-in-e-book-market-amazon-stops-taking-some-preorders-from-publisher-hachette#post_2538767" data-huddler-embed-placeholder="false">Quote:<div class="quote-block">Originally Posted by <strong><span class="gm-spell gm_ gm_d0198986-cedc-1bd6-bfd1-9792b601ad83">trumptman</span></strong> <a href="/t/179946/with-apples-hands-tied-in-e-book-market-amazon-stops-taking-some-preorders-from-publisher-hachette#post_2538767"><img alt="View Post" src="/img/forum/go_quote.gif" /></a><br /> <p> </p><p>Are you seriously suggesting that Amazon's margins are higher than Apple's? That would be the most absurd statement I've read in a while.</p><p> </p><p><span class="gmw_">Apple's goal with <span class="gm-spell gm_ gm_e6679a35-65aa-adef-38bf-a80bffbf4348">pricefixing</span> was the raise margins for everyone by raising prices.</span></p><p> </p><p><span class="gmw_">Amazon is no more a monopoly in <span class="gm-spell gm_ gm_8af93314-1920-2ca9-8c16-ab2fc8493412">epub</span> than Apple is with iTunes.</span></p></div></div><p> </p><p> </p><p>The difference is Apple has not been accused on using its monopoly in electronic music sales to gain an illegal advantage in another market. </p><p> </p><p>Yet, this is exactly what Amazon has done and is doing. It uses it strong position in traditional online book sales to force publishers to concede to its terms in the entirely different market of electronic book sales. That is how it got its monopoly position in electronic book sales. It is also why Barnes and Noble convinced publishers to go with an agency model that publishers than took to Apple.  </p>
    If amazon are doing this then make a complaint.
  • Reply 44 of 82
    froodfrood Posts: 771member
    Quote:
    Originally Posted by jungmark View Post





    You're analogy is wrong.



    When has the govt acted so quickly in history to level anti trust accusations? This is a relatively new market. Why did The DOJ allow Amazon to set Market Price?



    Consumer protection is more than just price.

     

    The last time this happened was the last time consumer prices in an entire established industry inexplicably jumped ~30% overnight.

     

    The market sets market price.  Amazon sold books for @$9.99.   Apple was free to try to sell the same books for $12.99 if they felt they could succeed.

  • Reply 45 of 82
    tbelltbell Posts: 3,146member
    Quote:
    Originally Posted by Frood View Post

     

     

    And the DOJ would have come to the same conclusion as they have so far against Amazon- they'd have had no case.

     

    Apple's pricing would have to be so low that they drive Amazon out of business.

    Apple would need to show a profit.

    And it would have to be proven Apple's intent was to recoup its losses by raising prices once there is no competition.

     

    The first two would have been difficult to achieve in and of themselves, the third on is likely not even possible without barriers to entry.


     

    You assume the DOJ is investigating Amazon. Bezos is a big supporter of Obama. Hence Obama making visits to Amazon. Moreover, the big issue with Amazon is not predatory pricing. It is how it gains concessions from publishers. It essentially uses it monopoly position in online traditional book sales to force publishers to agree to its terms regarding electronic book sales (which is a completely separate market). A big issue was Amazon forcing publishers to agree to release ebooks at the same time as hardcover books disrupting the publishers tiered distribution system (like with movies). Amazon essentially pulled the publishers traditional books from its store. The publishers had enough and started talking about the agency model with companies like Barnes and Noble and Apple. 

  • Reply 46 of 82
    tbelltbell Posts: 3,146member
    Quote:
    Originally Posted by Frood View Post

     

     

    The last time this happened was the last time consumer prices in an entire established industry inexplicably jumped ~30% overnight.

     

    The market sets market price.  Amazon sold books for @$9.99.   Apple was free to try to sell the same books for $12.99 if they felt they could succeed.


     

     

    That is BS. The market did not really set the price. Amazon set the price. It set the price by forcing publishers to sell the ebooks for less than they desired by using its monopoly position in traditional books sales to gain concessions. Amazon essentially stole its ebook market position. When it actually had to compete, in a short time its position went from 90 percent down to 70. 

     

    Moreover, the agency model did not prevent Amazon from negotiating for exclusives for certain titles and setting the price. There were plenty of titles under the agency agreement that only Amazon carried. Studies also showed that for most books the agency model lowered prices. 

     

    The DOJ overstepped. Apple had no market power to force anything from publishers. It asked for a wholesale model. Publishers countered with the agency model, which is a legal distribution model. In the long run the DOJ hurt competition and awarded an anti-competitive abuser like Amazon. 

  • Reply 47 of 82
    froodfrood Posts: 771member
    Quote:
    Originally Posted by hill60 View Post

     

     

    That decision is under appeal, Apple will be exonerated mainly because they were a vertical entrant to the market and Denise Cote misapplied the law by treating Apple as a horizontal entrant, i.e. Apple was not another publisher, Apple did not set prices.

     

    The class action by the states has been stayed pending the appeal.


     

    This I agree with- and the publishers also were technically not found guilty nor did they admit guilt.  If the legal system finds Apple innocent I applaud Apple for that.  I like the end result of breaking the 'Apple/Publisher Engineered solution'  regardless of whether that solution is deemed illegal or not.

     

    There was a really good site with the evidence in the case presented and it was better than any episode of CSI.

     

    Steve Jobs knew it would be illegal to tell publishers:  'You must all set your prices to $12.99'

     

    He instead sent a note along the lines of:

     

    I'm not going to tell you what price to set, you are free to set your own price.

    You guys aren't making a whole heck of a lot with Amazon selling at $9.99.

    If you raised your prices to where ebooks sell at $12.99 you'd make a lot more.  Anything less than that and you're not likely to make enough, and Apple won't be interested in doing business with you..

    If you sell for more than $12.99 you're not likely to succeed.

     

    Thanks!  Let me know what each of you individually come up with!

     

    A good lawyer could argue that Steve's method was not illegal.  You'd have to be an idiot, or more importantly, think Steve was an idiot if you don't believe he knew exactly what he was telling publishers.  I don't think too many people on this site would make that assertion.

     

    I really don't care if Apple's guilty verdict is overturned or not for whatever reason- I'm glad the system put in place was stopped and that since then competition has increased and prices have come down.

  • Reply 48 of 82
    jungmarkjungmark Posts: 6,918member
    frood wrote: »
    The last time this happened was the last time consumer prices in an entire established industry inexplicably jumped ~30% overnight.

    The market sets market price.  Amazon sold books for @$9.99.   Apple was free to try to sell the same books for $12.99 if they felt they could succeed.

    So do you have a specific example of this occurring?

    How can the market set the price when Amazon had a monopoly. Surely you have to give the market time to balance. 2+ years is a small time frame.
  • Reply 49 of 82
    hill60hill60 Posts: 6,992member
    Quote:

    Originally Posted by Frood View Post

     

    Apple's pricing...


     

    Apple's pricing?

     

    The publishers set the pricing, Apple provided a place to sell.

     

    If you want to write a book and sell it via Apple, you set the price, there is no barrier to entry.

  • Reply 50 of 82
    hill60hill60 Posts: 6,992member
    Quote:

    Originally Posted by Frood View Post

     

     

    ...an entire established industry inexplicably jumped ~30% overnight.

     


     

    Wrong.

     

    A small segment of prices jumped, the effect on the "entire established market" was an overall decrease in the average price of eBooks.

  • Reply 51 of 82
    hill60hill60 Posts: 6,992member
    Quote:

    Originally Posted by Frood View Post

     

     

    This I agree with- and the publishers also were technically not found guilty nor did they admit guilt.  If the legal system finds Apple innocent I applaud Apple for that.  I like the end result of breaking the 'Apple/Publisher Engineered solution'  regardless of whether that solution is deemed illegal or not.

     

    There was a really good site with the evidence in the case presented and it was better than any episode of CSI.

     

    Steve Jobs knew it would be illegal to tell publishers:  'You must all set your prices to $12.99'

     

    He instead sent a note along the lines of:

     

    I'm not going to tell you what price to set, you are free to set your own price.

    You guys aren't making a whole heck of a lot with Amazon selling at $9.99.

    If you raised your prices to where ebooks sell at $12.99 you'd make a lot more.  Anything less than that and you're not likely to make enough, and Apple won't be interested in doing business with you..

    If you sell for more than $12.99 you're not likely to succeed.

     

    Thanks!  Let me know what each of you individually come up with!

     

    A good lawyer could argue that Steve's method was not illegal.  You'd have to be an idiot, or more importantly, think Steve was an idiot if you don't believe he knew exactly what he was telling publishers.  I don't think too many people on this site would make that assertion.

     

    I really don't care if Apple's guilty verdict is overturned or not for whatever reason- I'm glad the system put in place was stopped and that since then competition has increased and prices have come down.


     

    You mean an unsent draft which strangely enough was in line with paperback pricing.

  • Reply 52 of 82
    charlitunacharlituna Posts: 7,217member
    The DOJ claims it went after Apple mainly to help consumers, who were getting 'overcharged' by Thai Apple deal.

    But where is the DOJ over this kind of game
  • Reply 53 of 82
    charlitunacharlituna Posts: 7,217member
    bighype wrote: »

    Time for T.Diddy to wake up and hire some real lobbyists and start defending Apple from government goons.

    Or perhaps the lobbyists that Apple needs are the public. 'We the people' can so a lot of damage if folks actually try. Social media etc can be powerful tools. Find a lawyer game to play and file a class action suit or several against Amazon, perhaps even the DOJ (for failing to act against Amazon) and so on. Even if the lawsuits get tossed they are likely to get press. Especially if those that filed start the ball rolling well.
  • Reply 54 of 82
    charlitunacharlituna Posts: 7,217member
    timgriff84 wrote: »
    Are Apples hands really that tied? If they had the power for force publishers into a deal where books couldn't be offered cheaper than the iBooks price then they must have enough power to buy then at the cheapest wholesale price.

    Apple doesn't do the wholesale model. Not likely to ever. Agency where paying out is predicated on getting sales is safer.

    And right now yeah their hands are rather tied cause of the DOJ suit. Until they can get it overturned they are limited in their power to sign new contracts etc.
  • Reply 55 of 82
    froodfrood Posts: 771member
    Quote:

    Originally Posted by hill60 View Post

     

     

    Wrong.

     

    A small segment of prices jumped, the effect on the "entire established market" was an overall decrease in the average price of eBooks.


     

    Source?

     

    Here is the *weighted* average of e-book prices, which removes the 'small segment' argument.   Unless you count the 5 out of 7 that jumped as a small segment.  But then again the 5 of 7 that jumped are the 5 that worked with Apple.  The two segments whose prices didn't jump were Random House, who was invited, smelled a rat, took the high road, and wanted nothing to do with it- and the 'small fish' who were never invited to the party in the first place.

     

    http://www.washingtonpost.com/blogs/wonkblog/files/2013/07/apple_chart.png

     

    After the DOJ disrupted the scheme, because there are more entrants and competition in the market- prices have declined.  That's how it is supposed to work.  The icing on the cake is Amazon's market share in ebooks is declining to boot(and I think that is an absolutely great thing).

  • Reply 56 of 82
    zoetmbzoetmb Posts: 2,614member
    Quote:
    Originally Posted by Frood View Post

     

     

    Why?  The two have no legal correlation to each other.  

     

    My doctor charged me an outrageous medical fee.  That made me sad and broke and looking for a way out.  I went out and robbed a bank.  Can you believe I was tried and found guilty of robbing a bank?!  Clearly I did it because the doctor made things tough for me, he should be on trial, not me.

     

    Apple and the publishers colluded to raise ebook prices.  They were found guilty.  I don't doubt that Amazon put a lot of pressure on their models that made them sad and looking for a way out- but their solution to fixing their problem was illegal.

     

    Just as Amazon has no bearing or justification in the collusion case,  Apple and the publishers colluding has no bearing on whether Amazon is engaged in predatory pricing or not.

     

    Amazon was examined, but it was found they had no evidence to meet the Sherman Act criteria for predatory pricing.  "Low prices" in and of themselves are certainly not the criteria since that benefits consumes.  Specifically to meet the 'crime' criteria the predatory pricing must be targeted to drive competitors out of the market, must be priced at a loss, and the big toughie, it must be proven that there is potential for a 'payoff' from the predatory pricing- a high barrier to entry must exist so you can raise prices once there is no competition.  A classic example would be steel dumping.  The low prices drive competitors out and they shut down their very expensive steel mills and lose their specialized workers.  The predator can than safely raise prices and recoup their losses because new entrants have a huge barrier to entry (no knowledgeable workers, and no steel mills).

     

    The barriers to trying Amazon under the Sherman act would be:

    Amazon's pricing has not forced competitors out of the market.  Since its entrance to the market and despite its pricing, *more* competitors have entered the market (including: B&N,  Kobo, Google, Samsung, Apple, Baker & Taylor).

    Amazon has shown slight profits on ebooks (not all titles specifically, but overall).

    There are nearly zero barriers to entry on ebooks.  If Amazon set prices at $1 and drove all the above competitors out of the market, they could not recoup their losses by setting a ridiculously high price and reaping the rewards.  Competition would spring up immediately at lower prices.  There are almost no barriers to entry.

     

    If the DoJ had evidence which could meet the criteria, they would have a case.  They don't.

     

    Whether Apple colluded with publishers also obviously has zero impact on the issue of whether Amazon is engaged in predatory pricing.


     

    1.  There's nothing inherently illegal about the agency model.

     

    2.  The Supreme Court ruled a number of years ago that manufacturers could indeed set minimum selling prices.   Prior to that ruling, manufacturers could set only minimum advertised prices.    And companies such as Sony and Nikon are now enforcing minimum selling prices on their high-end products.    (Apple also does this, but indirectly, by making its wholesale price so high, there's no room for discounting.)   So if this is fine for manufactured goods, why is not fine for publications?

     

    3.  Apple's deal with publishers would have raised eBook prices, but it also would have preserved an industry.    The publishers were desperately trying not to go the way of the music industry, which is now far less than half of its 1999 peak.    On the other hand, when you sell items below cost, as Amazon frequently has done to gain market share, while that does provide a price advantage to consumers, it also can be considered predatory, which is illegal.

     

    4.  Amazon's tactics have destroyed their competitors as well as destroying physical bookstores.    The chains killed most independent bookstores and Amazon is now killing the chains.   The last large national chain, Barnes & Noble, is on the brink.   Generally, when a lease is up, it doesn't get renewed.    And as Amazon destroys that competition, they will (and have) raise prices.   

     

    5.   While one can make the argument that any retailer can decide what to sell and/or not sell, Amazon is acting as a monopolistic bully in its dealings with Hachette and other publishers.   You don't suddenly declare books unavailable just because the publisher won't give you an additional discount on the wholesale price.

     

    If the major publishers had any guts, they would immediately send Amazon a message by not shipping them any product.   How long would Amazon's bookstore survive if they couldn't buy titles from the top 5 publishers?   Bertelsmann alone has about 22% of U.S. trade publishing (via Random House and Bantam-Doubleday-Dell).   And if Amazon went around the publishers and bought from the distributors like Ingram and Baker & Taylor, they'd have to pay at least 10% more than what the publishers are currently charging them.

     

    Amazon has just a bit too much arrogance.     And if consumers had any sense, they would steer their online orders to other vendors, such as B&N, even if it means paying a little more.   In the long run, they'll be better off.    Unfortunately, the publishers don't have any guts and they won't stop shipping to Amazon.    They'll probably eventually cave to Amazon's pricing demands which will eventually lead to lower salaries and layoffs in the publishing industry as well as fewer books being published.   It could also lead to further consolidation among the publishers just as it has in the record industry where there are now only three major record companies in the U.S.

     

    Book Expo begins next week in NYC.  I bet they'll be a lot of discussion about Amazon's dealing with publishers at the show.

  • Reply 57 of 82
    jungmarkjungmark Posts: 6,918member
    frood wrote: »
    Source?

    Here is the *weighted* average of e-book prices, which removes the 'small segment' argument.   Unless you count the 5 out of 7 that jumped as a small segment.  But then again the 5 of 7 that jumped are the 5 that worked with Apple.  The two segments whose prices didn't jump were Random House, who was invited, smelled a rat, took the high road, and wanted nothing to do with it- and the 'small fish' who were never invited to the party in the first place.

    http://www.washingtonpost.com/blogs/wonkblog/files/2013/07/apple_chart.png

    After the DOJ disrupted the scheme, because there are more entrants and competition in the market- prices have declined.  That's how it is supposed to work.  The icing on the cake is Amazon's market share in ebooks is declining to boot(and I think that is an absolutely great thing).

    There are more entrants because of the Agency model and not the DOJ's early interference.
  • Reply 58 of 82
    gctwnlgctwnl Posts: 278member
    Quote:



    Originally Posted by SpamSandwich View Post



    A publisher could always drop Amazon and give Apple the exclusive...just thinking out loud here.

    No way. That only holds for electronic books and if you only want to sell to Apple hardware owners. But the majority of books is still on paper and for many books MOBI/EPUB and even iBooks formats are not able to handle it properly (as a publisher I recently started with a very graphical book about the Enterprise Architecture language ArchiMate, read the story at the bottom of http://bit.ly/1iNacG8 if you want to know why I did not go for Kindle, partly technical (also holds for iBooks), partly what Amazon charges (65% of sales price, except for a few exceptions)).

  • Reply 59 of 82
    gctwnlgctwnl Posts: 278member
    Quote:

    Originally Posted by TeaEarleGreyHot View Post

     

    So when JK Rowling publishes her next book (via Hachette), I will order direct and expect delivery by owl, rather than by drone.  Seems preferable in any event!

     

    More seriously, doesn't this make ya wish mainstream bookstores were still around? Thank goodness at least Barnes & Noble survives with Apple, as they're the only two real competitors to the Kindle (with their iPad & Nook).  Too bad we lost Borders.  And so many others.  Competition is good!  (And mergers & monopolies are bad!)


    B&N and the Nook seem to be a lost cause under pressure of both Amazon & Apple.

  • Reply 60 of 82
    netmagenetmage Posts: 314member
    frood wrote: »
    Comcast/Time-Warner is an entirely different animal because there are *HUGE* barriers to entry.  If I wanted to become an 'ebook' seller today, I'd have to create a website.

    You seem to be overlooking the creation of an e-Reader and a marketplace for it, the handling of international finance and the creation of apps for at least the top two mobile OSs.

    EBooks that work on PCs aren't a product.
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