I disagree with your analysis. The Publishers set the price, not Apple. There is no minimum price.
Yes there are minimum prices. Apple and the publishers reportedly agreed that no new releases would be sold for less than $12.99, and some would be priced higher. There was no wiggle room on that. Amazon could not choose to advertise any new release for less.
This wasn't anything to do with Apple being able to match Amazon low prices with publishers taking the hit to guarantee Apple 30%. There wouldn't be any low Amazon book prices for Apple to worry about if those publishers hadn't been approached by the DoJ.
Anyone CAN undercut Apple. But if they do, Apple gets to charge that price as well. I don't blame Apple - why would they let a publisher tell them that the price for a particular eBook is $20 and then let the publisher sell to someone else under the same agency model where the price for the same book is $10?
.
Apple takes 30% of whatever price the publisher charges. If amazon charges 5 dollars and takes a loss then the publisher that sold the book to them for 10 dollars , as per the complaint and the MFN provision, must now allow apple to charge 5 dollars if it wishes and keep a 30% profit of that. It doesn't seem possible for Apple to be able to record a net loss by any undercutting. Just less of a profit.
The complaint appears to be addressing final retail price and not the lower price a publisher is offering someone else.
Apple takes 30% of whatever price the publisher charges. If amazon charges 5 dollars and takes a loss the publisher that sold the book to them for 10 dollars , as per the complaint and the MFN provision, must now allow apple to charge 5 dollars if it wishes and keep a 30% profit of that. It doesn't seem possible for Apple to be able to record a loss by any undercutting. Just less of a profit.
The complaint is addressing final retail price not the lower price a publisher is offering someone else.
You're not following what their version of an agency model actually did. There's numerous links posted that clarify the fact that minimum prices were set by the publishers facilitated by Apple if the DoJ has the facts correct. Amazon (or any other competitor) were given no right to advertise books for less than the publisher permitted. Neither the publisher nor seller were giving up any profit because there would be no competitive price pressures. Only consumers were giving up any money. There was going to be no such thing as your $5 ebook bestseller.
Thanks for that. That's the distinction that I didn't quite understand.
If I understand you correctly then this means that Apple only asked, the publishers complied.
The publishers therefore knew better (and why most if not all have negotiated a settlement) but went along with the agency model anyway. Apple didn't hold a gun to their heads.
Anytime . You're close, but it's even a bit finer of a distinction than that. Apple did not ask publishers to charge other retailers any specific price. The publisher's acted on their own in that regard, and supposedly met in secret to collude on price as a reaction to the market opportunity Apple was presenting. The governments case at first glance seem's analogous to suing a gun maker (apple) when a bunch of people get together and decide to shoot someone (the publisher's price fixing).
Quote:
Originally Posted by Asherian
It is a purely academic distinction.
The combination of the agency model and that clause ensures all stores sell for the same price. In other words, the price is fixed.
The publishers set the price, and Apple "has the right to match the price" as anyone else. The publishers then set one price, one that Apple has now guaranteed can never undercut the one given to them.
Again, it seems on it's face that you have the facts a bit reversed. If the AI article is a proper summation of the facts (obviously it's too early to be definitive here), then Apple had no say on what price publishers could set for other retailers. It only offered them more than their competitor (Amazon) was offering for books, and asked for the right to depart from the agreed upon pricing for a given book to match any price that was lower than theirs. It simply gave publishers an incentive to hope that their distribution channel would grow as it was a more profitable channel than Amazon's under the proposed pricing/split. Then the publishers went off and colluded to make sure that it worked because they saw dollar signs in their eyes.
For example, let's say you and I both sell books, and we aren't initially colluding with one another, then we both would give Apple a price and our books would compete on price and quality, etc. and then we could both go to other retailers and set higher or lower prices with the understanding that if any retailer we sold books to decided to undercut Apple's price, we would get a smaller amount from Apple. So with that situation in place, there would be market pressure for you and I to get together and make a secret agreement to never undercut Apple's price because if you undercut my prices, then I would undercut yours and it would be a race to the bottom. Especially in light of the fact that prior to the development of Apple's ebook channel (the iPad), Amazon was our only option and we were getting less than what we wanted from that channel. So we get together and we decide that we no longer want to compete on price. I'll sell my books to everyone for the same price I sell them to Apple, if you do the same. Does that make Apple guilty of something illegal? If so, what exactly?
You're not following what their version of an agency model actually did. There's numerous links posted that clarify the fact that minimum prices were set by the publishers facilitated by Apple if the DoJ has the facts correct. Amazon (or any other competitor) were given no right to advertise books for less than the publisher permitted. Neither the publisher nor seller were giving up any profit because there would be no competitive price pressures. Only consumers were giving up any money. There was going to be no such thing as your $5 ebook bestseller.
The quote from the DOJ complaint is that the MFN provision "required each publisher to guarantee that it would lower the retail price of each e-book in Apple's iBookstore to match the lowest price offered by any other retailer, even if the publisher defendant did not control the other retailer's ultimate consumer price". The end the sentence is the key part. Why is this a problem for the DOJ? I'm a shareholder and really want this just to go away but I also want to be very clear about what the DOJs case is.
Especially in light of the fact that prior to the development of Apple's ebook channel (the iPad), Amazon was our only option and we were getting less than what we wanted from that channel. So we get together and we decide that we no longer want to compete on price. I'll sell my books to everyone for the same price I sell them to Apple, if you do the same. Does that make Apple guilty of something in your eyes?
The odd things is that the publishers were actually making more with Amazon's wholesale model than when they went to the agency model. Amazon typically paid half the cover price of the hardback edition for an ebook, so on a $28 hardback, the ebook cost Amazon $14. Amazon then sold the book at a loss for 9.99.
Under the agency model, that ebook was priced at 14.99, and the publisher took 10.50 while Amazon took 4.50. Hence, the publisher made 10.50 under agency when it was making 14 under the wholesale.
The quote from the DOJ complaint is that the MFN provision "required each publisher to guarantee that it would lower the retail price of each e-book in Apple's iBookstore to match the lowest price offered by any other retailer, even if the publisher defendant did not control the other retailer's ultimate consumer price". The end the sentence is the key part. Why is this a problem for the DOJ? I'm a shareholder and really want this just to go away but I also want to be very clear about what the DOJs case is.
The accusation is based on this allegation (in a nutshell): No individual publisher had the nerve to approach Amazon and demand a different pricing system. Without some form of cooperation by those publishers to impose an agreement on Amazon, Apple had no chance of getting the MFN clause. Thus, the accusation is that Apple became the mediator or hub in a conspiracy to have five of the world's six largest publishers collude to threaten Amazon with terms that would be crippling to Amazon's business if Amazon refused to accept agency pricing.
This begs the question: Why isn't the DoJ interested in Amazon using it's monopoly position to sell at a loss to keep competitors out of the market?
Grab the low hanging fruit first. While in the process of prosecuting Apple, Amazon information my come to light and allow the DOJ to move right on into Amazon.
The brief claims that consumers have overpaid for ebooks in the thousands due to the alleged collusion, but that simply can't be proven. In the old model, the retailer sets the price which isn't set in stone. How can the DoJ prove that the prices would not have increased regardless? Once Amazon had killed off/weakened most of its competitors, nothing would shave kept them from increasing prices. In fact, because Amazon was selling the books at a loss, it is much more likely that the prices would increase and not stay the same or drop.
Since no one has a crystal ball, speculation is not allowed in courts.
yup, Apple and the publishers are price fixing. and consuemr prices went up. ok, bust 'em.
but ... Amazon was "dumping" with essentially a monopoly control of the market, in order to drive its competitors out of the business. why isn't the DOJ going after them for that too?
Who are these "competitors"? Amazon pretty much revolutionized the eBook, they didn't have competition. They then figured out that money can be made in selling eBooks cheaper than paper books simply by selling in volume. In turn, the lower priced eBooks would generate interest in the platform and sell Kindles. Everyone was still getting paid the same since Amazon was still buying at the normal price. The problem was publishers never expected eBooks to take off. Once they did and started cutting into the paper sales, publishers were concerned their antiquated business model losing money. Well the publishers were already in too deep to do anything to slow eBooks (like raise prices) because they had no other eBook distributor. Well along comes Apple trying to get the iPad off the ground. They approach the publishers and offer them an alternative. The only way iBook could work though is if Amazon was not able to keep selling low cost eBooks because people would just keep buyingnfrommAmazon. THey conspired and fixed the prices. Amazon had no choice but to except because Apple is a power house and Amazon knew they would lose all the publishers. Bottomline Amazons method was good for everyone. Apples is not simply because prices went up for The consumer.
Thanks for that. That's the distinction that I didn't quite understand.
If I understand you correctly then this means that Apple only asked, the publishers complied.
The publishers therefore knew better (and why most if not all have negotiated a settlement) but went along with the agency model anyway. Apple didn't hold a gun to their heads.
Quote:
Originally Posted by ALNorm
The odd things is that the publishers were actually making more with Amazon's wholesale model than when they went to the agency model. Amazon typically paid half the cover price of the hardback edition for an ebook, so on a $28 hardback, the ebook cost Amazon $14. Amazon then sold the book at a loss for 9.99.
Under the agency model, that ebook was priced at 14.99, and the publisher took 10.50 while Amazon took 4.50. Hence, the publisher made 10.50 under agency when it was making 14 under the wholesale.
I wonder why? Perhaps the hardcover sales represented the minority of book income.
I know many people here are Apple fans...but look at this objectively.
Since Apple's price fixing with publishers (and make no mistake, that's what the "minimum book price" is exactly), the cost of new novels for eBooks has gone up from $9.99 to nearly $20. It is literally cheaper for me to go to the local brick & mortar store and buy a brand new hardcover than to download an eBook.
There's nothing wrong with Apple's agency model. The problem is with them mandating a minimum (high) book price that no one can undercut. That, quite literally, eliminates competition.
If Google or Amazon did this, the lot of you would be screaming bloody murder. Time for some objectivity, no?
You are indeed correct. Only Apple fanbois would stand up for a company that is breaking the law and ripping you off at the same time. Seriously people, wake up. Apple is just another company that wants your money. They are not your friend you protect no matter what they do.
You are indeed correct. Only Apple fanbois would stand up for a company that is breaking the law and ripping you off at the same time. Seriously people, wake up. Apple is just another company that wants your money. They are not your friend you protect no matter what they do.
Hmmm... I wonder if this is the type of objectivity that Asherian was talking about...
I'm disappointed by this article. If only it was written by DED, it would have more spelling errors and include some kind of non sequitur about Google Android activations.
Two things. First, your first sentence doesn't mean the same thing as the second. For instance, if the publisher sets the price they get that is different then them setting the retail price. Second, you may be right about the agency model at question, and if so, I apologize. I generally do read the complaints, but this time I regrettably hadn't when I first posted. I read a summary from someplace, which never does one more justice than getting the information first hand. You do appear to be correct at least about what the government is accusing Apple of doing.
With that said, agency like models aren't per se illegal. Take for instance Apple's other products. Apple sets the price, retailers like Target, Best Buy, and Walmart fall in line on price. You might get a dollar variation here and there, but it is rare. There can only be one reason for that. Further, you can't honestly tell me the oil companies aren't getting together on pump pricing.
I think Scott Turow (Harvard law grad, famous author, and President of the Author's Guild), sums the issue up nicely. He states, ?The irony of this bites hard: our government may be on the verge of killing real competition in order to save the appearance of competition. This would be tragic for all of us who value books and the culture they support?.
Amazon was killing competition by using its market dominance in selling traditional books to force pricing on e-books by denying publishers the ability to sell hard copies if Amazon didn't agree to undervalue the selling price of e-Books. Considering Amazon's dominant market position, that was anti-competitive. It used it's dominant position in one market to further advance its position in another market. That is what Microsoft got in trouble for doing when it used its Windows dominance to advance Internet Explorer at the expense of Netscape. That is the essence of how anti-competitive behavior works. Using one's dominance in one area to gain an advantage in another area.
Assuming everything the government says is true, how was what Apple did anti-competitive?Apple didn't use its market dominance in any area to force the publishers on board. If anything, the opposite is true. Publishers originally were hesitant to make a deal with Apple (go back and read the news stories prior to ibooks being announced). Apple simply gave publishers what music companies have wanted a long time from Apple: the ability to set their own prices. Amazon could have blown this up by simply refusing to deal with the publishers. This is what it originally did. Some publishers, however, jumped from Amazon. Amazon blinked first after a short period of time.
Let us look at other facts. Apple makes its money selling hardware and very little on selling e-Books. On its hardware, Apple allows competitors like Amazon to offer applications like the Kindle that compete with Apple's own offerings. Amazon has something like 70 percent of the e-Book market (largely because of its former shady practices that it used to tie people into the Kindle), and it recently announced it sold more e-books than traditional books. Last I checked Apple had around 20 percent of the e-Book market.
If things go back to Amazon's preferred method, publishers will really be hurting as Amazon will again force the price of e-Books down below the profitability margin to further try and solidify its lead in the e-Book market at the expense of competitors like Apple and the paper based book market. This will be a bigger problem now that traditional book sales are really hurting.
In the world of music, musicians used to make money on the sale of their music. Except for a few artists, this is no longer the case. They make no money on the sale of music. They, however, can afford to lose money on music sales because the sale of music is largely used to promote concerts where the real money is made. In the world of books, authors cannot afford to lose money on the sale of books as book authors typically don't do concerts. Amazon's model will likely put the hurting on authors like Turow.
Quote:
Originally Posted by philgar
uh, no, I don't know what you're reading, but from the complaint itself
This says in black and white that the price paid to the retailer MUST be the same. This is how the agency model works, the retailers must sell their book at a set retail price. Granted, the book publishers could agree to sell books to a retailer for less money than someone else, but the RETAIL price that consumers pay on the books had to be the same.
Comments
I disagree with your analysis. The Publishers set the price, not Apple. There is no minimum price.
Yes there are minimum prices. Apple and the publishers reportedly agreed that no new releases would be sold for less than $12.99, and some would be priced higher. There was no wiggle room on that. Amazon could not choose to advertise any new release for less.
This wasn't anything to do with Apple being able to match Amazon low prices with publishers taking the hit to guarantee Apple 30%. There wouldn't be any low Amazon book prices for Apple to worry about if those publishers hadn't been approached by the DoJ.
Anyone CAN undercut Apple. But if they do, Apple gets to charge that price as well. I don't blame Apple - why would they let a publisher tell them that the price for a particular eBook is $20 and then let the publisher sell to someone else under the same agency model where the price for the same book is $10?
.
Apple takes 30% of whatever price the publisher charges. If amazon charges 5 dollars and takes a loss then the publisher that sold the book to them for 10 dollars , as per the complaint and the MFN provision, must now allow apple to charge 5 dollars if it wishes and keep a 30% profit of that. It doesn't seem possible for Apple to be able to record a net loss by any undercutting. Just less of a profit.
The complaint appears to be addressing final retail price and not the lower price a publisher is offering someone else.
Apple takes 30% of whatever price the publisher charges. If amazon charges 5 dollars and takes a loss the publisher that sold the book to them for 10 dollars , as per the complaint and the MFN provision, must now allow apple to charge 5 dollars if it wishes and keep a 30% profit of that. It doesn't seem possible for Apple to be able to record a loss by any undercutting. Just less of a profit.
The complaint is addressing final retail price not the lower price a publisher is offering someone else.
You're not following what their version of an agency model actually did. There's numerous links posted that clarify the fact that minimum prices were set by the publishers facilitated by Apple if the DoJ has the facts correct. Amazon (or any other competitor) were given no right to advertise books for less than the publisher permitted. Neither the publisher nor seller were giving up any profit because there would be no competitive price pressures. Only consumers were giving up any money. There was going to be no such thing as your $5 ebook bestseller.
Thanks for that. That's the distinction that I didn't quite understand.
If I understand you correctly then this means that Apple only asked, the publishers complied.
The publishers therefore knew better (and why most if not all have negotiated a settlement) but went along with the agency model anyway. Apple didn't hold a gun to their heads.
Anytime
It is a purely academic distinction.
The combination of the agency model and that clause ensures all stores sell for the same price. In other words, the price is fixed.
The publishers set the price, and Apple "has the right to match the price" as anyone else. The publishers then set one price, one that Apple has now guaranteed can never undercut the one given to them.
Again, it seems on it's face that you have the facts a bit reversed. If the AI article is a proper summation of the facts (obviously it's too early to be definitive here), then Apple had no say on what price publishers could set for other retailers. It only offered them more than their competitor (Amazon) was offering for books, and asked for the right to depart from the agreed upon pricing for a given book to match any price that was lower than theirs. It simply gave publishers an incentive to hope that their distribution channel would grow as it was a more profitable channel than Amazon's under the proposed pricing/split. Then the publishers went off and colluded to make sure that it worked because they saw dollar signs in their eyes.
For example, let's say you and I both sell books, and we aren't initially colluding with one another, then we both would give Apple a price and our books would compete on price and quality, etc. and then we could both go to other retailers and set higher or lower prices with the understanding that if any retailer we sold books to decided to undercut Apple's price, we would get a smaller amount from Apple. So with that situation in place, there would be market pressure for you and I to get together and make a secret agreement to never undercut Apple's price because if you undercut my prices, then I would undercut yours and it would be a race to the bottom. Especially in light of the fact that prior to the development of Apple's ebook channel (the iPad), Amazon was our only option and we were getting less than what we wanted from that channel. So we get together and we decide that we no longer want to compete on price. I'll sell my books to everyone for the same price I sell them to Apple, if you do the same. Does that make Apple guilty of something illegal? If so, what exactly?
http://www.theverge.com/2012/4/11/29...le-an-analysis
You're not following what their version of an agency model actually did. There's numerous links posted that clarify the fact that minimum prices were set by the publishers facilitated by Apple if the DoJ has the facts correct. Amazon (or any other competitor) were given no right to advertise books for less than the publisher permitted. Neither the publisher nor seller were giving up any profit because there would be no competitive price pressures. Only consumers were giving up any money. There was going to be no such thing as your $5 ebook bestseller.
The quote from the DOJ complaint is that the MFN provision "required each publisher to guarantee that it would lower the retail price of each e-book in Apple's iBookstore to match the lowest price offered by any other retailer, even if the publisher defendant did not control the other retailer's ultimate consumer price". The end the sentence is the key part. Why is this a problem for the DOJ? I'm a shareholder and really want this just to go away but I also want to be very clear about what the DOJs case is.
Especially in light of the fact that prior to the development of Apple's ebook channel (the iPad), Amazon was our only option and we were getting less than what we wanted from that channel. So we get together and we decide that we no longer want to compete on price. I'll sell my books to everyone for the same price I sell them to Apple, if you do the same. Does that make Apple guilty of something in your eyes?
The odd things is that the publishers were actually making more with Amazon's wholesale model than when they went to the agency model. Amazon typically paid half the cover price of the hardback edition for an ebook, so on a $28 hardback, the ebook cost Amazon $14. Amazon then sold the book at a loss for 9.99.
Under the agency model, that ebook was priced at 14.99, and the publisher took 10.50 while Amazon took 4.50. Hence, the publisher made 10.50 under agency when it was making 14 under the wholesale.
etwashoo's reply:
Here?s Jobs knowing already that Amazon would cave. Check it out at 1:56 :
http://m.wsj.net/video/20100128/0128...mossy_320k.mp4
The quote from the DOJ complaint is that the MFN provision "required each publisher to guarantee that it would lower the retail price of each e-book in Apple's iBookstore to match the lowest price offered by any other retailer, even if the publisher defendant did not control the other retailer's ultimate consumer price". The end the sentence is the key part. Why is this a problem for the DOJ? I'm a shareholder and really want this just to go away but I also want to be very clear about what the DOJs case is.
The accusation is based on this allegation (in a nutshell): No individual publisher had the nerve to approach Amazon and demand a different pricing system. Without some form of cooperation by those publishers to impose an agreement on Amazon, Apple had no chance of getting the MFN clause. Thus, the accusation is that Apple became the mediator or hub in a conspiracy to have five of the world's six largest publishers collude to threaten Amazon with terms that would be crippling to Amazon's business if Amazon refused to accept agency pricing.
OK, let's look at this with some objectivity.
The court case has just started. Let's see what they have to say.
Let's try not letting our "feelings" about Google or Amazon get in the way.
Only on Apple Insider will someone try to insinuate "feelings" about Amazon are involved.
Typical apologist attitude.
This begs the question: Why isn't the DoJ interested in Amazon using it's monopoly position to sell at a loss to keep competitors out of the market?
Grab the low hanging fruit first. While in the process of prosecuting Apple, Amazon information my come to light and allow the DOJ to move right on into Amazon.
The brief claims that consumers have overpaid for ebooks in the thousands due to the alleged collusion, but that simply can't be proven. In the old model, the retailer sets the price which isn't set in stone. How can the DoJ prove that the prices would not have increased regardless? Once Amazon had killed off/weakened most of its competitors, nothing would shave kept them from increasing prices. In fact, because Amazon was selling the books at a loss, it is much more likely that the prices would increase and not stay the same or drop.
Since no one has a crystal ball, speculation is not allowed in courts.
yup, Apple and the publishers are price fixing. and consuemr prices went up. ok, bust 'em.
but ... Amazon was "dumping" with essentially a monopoly control of the market, in order to drive its competitors out of the business. why isn't the DOJ going after them for that too?
Who are these "competitors"? Amazon pretty much revolutionized the eBook, they didn't have competition. They then figured out that money can be made in selling eBooks cheaper than paper books simply by selling in volume. In turn, the lower priced eBooks would generate interest in the platform and sell Kindles. Everyone was still getting paid the same since Amazon was still buying at the normal price. The problem was publishers never expected eBooks to take off. Once they did and started cutting into the paper sales, publishers were concerned their antiquated business model losing money. Well the publishers were already in too deep to do anything to slow eBooks (like raise prices) because they had no other eBook distributor. Well along comes Apple trying to get the iPad off the ground. They approach the publishers and offer them an alternative. The only way iBook could work though is if Amazon was not able to keep selling low cost eBooks because people would just keep buyingnfrommAmazon. THey conspired and fixed the prices. Amazon had no choice but to except because Apple is a power house and Amazon knew they would lose all the publishers. Bottomline Amazons method was good for everyone. Apples is not simply because prices went up for The consumer.
Only on Apple Insider will someone try to insinuate "feelings" about Amazon are involved.
Typical apologist attitude.
It was the other person who brought up the idea of feelings about Google and Amazon.
... but, of course, you missed the irony in that post... twice.
Thanks for that. That's the distinction that I didn't quite understand.
If I understand you correctly then this means that Apple only asked, the publishers complied.
The publishers therefore knew better (and why most if not all have negotiated a settlement) but went along with the agency model anyway. Apple didn't hold a gun to their heads.
The odd things is that the publishers were actually making more with Amazon's wholesale model than when they went to the agency model. Amazon typically paid half the cover price of the hardback edition for an ebook, so on a $28 hardback, the ebook cost Amazon $14. Amazon then sold the book at a loss for 9.99.
Under the agency model, that ebook was priced at 14.99, and the publisher took 10.50 while Amazon took 4.50. Hence, the publisher made 10.50 under agency when it was making 14 under the wholesale.
I wonder why? Perhaps the hardcover sales represented the minority of book income.
I know many people here are Apple fans...but look at this objectively.
Since Apple's price fixing with publishers (and make no mistake, that's what the "minimum book price" is exactly), the cost of new novels for eBooks has gone up from $9.99 to nearly $20. It is literally cheaper for me to go to the local brick & mortar store and buy a brand new hardcover than to download an eBook.
There's nothing wrong with Apple's agency model. The problem is with them mandating a minimum (high) book price that no one can undercut. That, quite literally, eliminates competition.
If Google or Amazon did this, the lot of you would be screaming bloody murder. Time for some objectivity, no?
You are indeed correct. Only Apple fanbois would stand up for a company that is breaking the law and ripping you off at the same time. Seriously people, wake up. Apple is just another company that wants your money. They are not your friend you protect no matter what they do.
You are indeed correct. Only Apple fanbois would stand up for a company that is breaking the law and ripping you off at the same time. Seriously people, wake up. Apple is just another company that wants your money. They are not your friend you protect no matter what they do.
Hmmm... I wonder if this is the type of objectivity that Asherian was talking about...
With that said, agency like models aren't per se illegal. Take for instance Apple's other products. Apple sets the price, retailers like Target, Best Buy, and Walmart fall in line on price. You might get a dollar variation here and there, but it is rare. There can only be one reason for that. Further, you can't honestly tell me the oil companies aren't getting together on pump pricing.
I think Scott Turow (Harvard law grad, famous author, and President of the Author's Guild), sums the issue up nicely. He states, ?The irony of this bites hard: our government may be on the verge of killing real competition in order to save the appearance of competition. This would be tragic for all of us who value books and the culture they support?.
Amazon was killing competition by using its market dominance in selling traditional books to force pricing on e-books by denying publishers the ability to sell hard copies if Amazon didn't agree to undervalue the selling price of e-Books. Considering Amazon's dominant market position, that was anti-competitive. It used it's dominant position in one market to further advance its position in another market. That is what Microsoft got in trouble for doing when it used its Windows dominance to advance Internet Explorer at the expense of Netscape. That is the essence of how anti-competitive behavior works. Using one's dominance in one area to gain an advantage in another area.
Assuming everything the government says is true, how was what Apple did anti-competitive?Apple didn't use its market dominance in any area to force the publishers on board. If anything, the opposite is true. Publishers originally were hesitant to make a deal with Apple (go back and read the news stories prior to ibooks being announced). Apple simply gave publishers what music companies have wanted a long time from Apple: the ability to set their own prices. Amazon could have blown this up by simply refusing to deal with the publishers. This is what it originally did. Some publishers, however, jumped from Amazon. Amazon blinked first after a short period of time.
Let us look at other facts. Apple makes its money selling hardware and very little on selling e-Books. On its hardware, Apple allows competitors like Amazon to offer applications like the Kindle that compete with Apple's own offerings. Amazon has something like 70 percent of the e-Book market (largely because of its former shady practices that it used to tie people into the Kindle), and it recently announced it sold more e-books than traditional books. Last I checked Apple had around 20 percent of the e-Book market.
If things go back to Amazon's preferred method, publishers will really be hurting as Amazon will again force the price of e-Books down below the profitability margin to further try and solidify its lead in the e-Book market at the expense of competitors like Apple and the paper based book market. This will be a bigger problem now that traditional book sales are really hurting.
In the world of music, musicians used to make money on the sale of their music. Except for a few artists, this is no longer the case. They make no money on the sale of music. They, however, can afford to lose money on music sales because the sale of music is largely used to promote concerts where the real money is made. In the world of books, authors cannot afford to lose money on the sale of books as book authors typically don't do concerts. Amazon's model will likely put the hurting on authors like Turow.
uh, no, I don't know what you're reading, but from the complaint itself
This says in black and white that the price paid to the retailer MUST be the same. This is how the agency model works, the retailers must sell their book at a set retail price. Granted, the book publishers could agree to sell books to a retailer for less money than someone else, but the RETAIL price that consumers pay on the books had to be the same.
This is limiting competition.
Phil
Of course they do.... Money! Huge penalties against the biggest company on Earth!
If the gubment wanted cash off Apple, they would allow Apple a reduced-tax-break for bringing their cash pile back into the country.