Apple is lone holdout in DOJ e-book pricing case after Macmillan settles

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  • Reply 21 of 59
    hill60hill60 Posts: 6,992member

    Quote:

    Originally Posted by trumptman View Post


     


    Apple wants their margins. They want it everywhere. They made a deal to keep them because Amazon will take more than 30% profit on some books, if publishers don't discount them.



     


    Ain't dat da truth!

  • Reply 22 of 59
    dasanman69dasanman69 Posts: 13,002member
    starbird73 wrote: »
    I agree. But at what point does amazon start making money? Can they survive indefinitely with this model?

    Plenty of companies do just well with razor thin margins. Wall Street seems to like companies that thread water and keep their nose just above water.
  • Reply 23 of 59
    gatorguygatorguy Posts: 24,176member

    Quote:

    Originally Posted by charlituna View Post


     


    If you are correct then why did Amazon have a favored nation clause since they opened their ebook sales that gave them control over what other stores could charge by way of denying them the right to discount below Amazon. 



    I wasn't aware that Amazon ever had that type of agreement with the publishers. Are you certain you didn't confuse them with Apple?

  • Reply 24 of 59
    dasanman69dasanman69 Posts: 13,002member
    charlituna wrote: »
    Basically my argument. Let each store set their terms and those that are okay with them be okay with them. The only real collusion is the favored nation clauses so ban those. I would also say, to benefit customers, put a limit on exclusive deals for all media if not ban them. Say no more than six months, no renewals or extensions. 

    Most favored nation is Apple's idea you know.
  • Reply 25 of 59
    dasanman69dasanman69 Posts: 13,002member
    john.b wrote: »
    Yeah, Apple should just wave the white flag and let Amazon own the e-book market.  I mean, it's not like Amazon is selling tablets or anything...

    /sarcasm

    Can you read Amazon's ebooks on a iPad?
    Can you read a iBook ebooks on a Kindle?
    One isn't forced to own a Kindle to buy a ebook from Amazon. See the difference?
  • Reply 26 of 59
    nelsonxnelsonx Posts: 278member

    Quote:

    Originally Posted by agramonte View Post


    nice, done... you have to be pretty stupid, young or just to into Apple not to understand why this needs to happen. But I think those are qualities the new iOS era has brought into the Apple community.



     


    No, you just need to be an Apple shareholder, like the majority of people around here.

  • Reply 27 of 59
    froodfrood Posts: 771member

    Quote:

    Originally Posted by lilgto64 View Post



    why not room for both model?



    or is letting the owner of the content have any say whatsoever in the price of their product now a bag thing? I suppose if you want to buy everything from Amazon and WalMart with no other option whatsoever, then maybe so.


     


    There is room for both models.   Apple can sell ebooks to iPhone users and people trapped in the Apple ecosystem for 30% higher than the exact same ebook that Amazon and other competitors sell for 30% less.  I have no problem with that at all.  When Apple tries to raise prices for *everyone* by 30% by getting suppliers to agree to that, that is a problem.


     


    That's where the anticompetitive behavior comes in.  Apple got all the publishers to agree to selling their products on Apple's ecosystem at the higher 30% price.  Apple then pulled an Apple along the lines of "Well, we can't set the price and tell you you're not allowed to sell anywhere else- because that would meet the legal definition of price fixing, so what we're going to is this.  You set the (high) price for your product on the Apple ecosystem.  We can't tell you you can't sell anywhere else, but if you sell anywhere else for less than the price you have listed on the Apple ecosystem, we'll kick you out of our store."


     


    Publishers would have loved this.  It is basically price fixing that a good lawyer can dance around for years to come.  End result:  Apple users would pay 30% more for ebooks which they would of course be happy with because Apple is the best thing ever.  Amazon users and everyone else as well would have to pay the price that Apple effectively sets as well.  Big win for Apple of course, nobody else can compete on them on price, and since they own the ecosystem no one can compete with them on delivery either.


     


    If Apple wants to *compete* in the ebook market, traditional ways of competing would be to offer something better (or perceived to be better) that users are willing to pay more for; or to offer the exact same product at a *lower* price.   Offering the exact same product at a much higher price and preventing suppliers from offering that product to anyone else at a lower price is- well- price fixing, no matter how well they dance around the technicalities.


     


    DoJ called them out on it.  All the suppliers fessed up quietly and are off the hook, 'yeah, we kinda knew, woulda been too good to be true.'  I agree Apple should do the same without much fanfare.  Minimal/no harm done.  The alternative is to spend a ton of money on lawyers, get boatloads more bad press, and have the public  perception of them (outside of the Apple fan circles) shifting ever more towards 'Apple, the new Microsoft'   And in the end, even if they 'win' and can claim they never met the strict definition of price fixing, their dream of not-quite-technically-price-fixing but supplying existing goods at higher prices to everyone will never be allowed to be implemented.

  • Reply 28 of 59
    trumptmantrumptman Posts: 16,464member

    Quote:

    Originally Posted by jragosta View Post




    Funny thing - I don't notice any facts to back up your rant.



    It is public knowledge that Apple's direct profits on iTunes are minimal (no one ever said that Apple doesn't care about it). The gross margins in ITMS are 30%. From that, you subtract all the costs of hosting, advertising, support, etc to get the operating margin. Both numbers are far, far lower than Apple's margins on other products.



    Apple obviously wants iTMS. It is probably also profitable (at a much lower level than most of their product). It is NOT, however profitable enough to be justified as a standalone business, at least not for Apple.



    The nonsense about Amazon is ridiculous, too. The fact that Apple has lots of cash does not mean that Amazon can't be guilty of anticompetitive behavior.


     


    There are plenty of facts there. The ebook market is less than $2 billion a year. That is a fact. Apple has $137 billion in cash. That is a fact. iTMS profits are 30% regardless of competitors or media type. That is a fact. Apple made this deal with publishers because they wanted to keep their margins at 30%. That is a fact as well.


     


    My "rant" is backed up by the facts and your rant is backed up by delusions contrary to the facts. It is not Amazon being pursued by the DOJ. Amazon did not change the model for all publishers and demand price increases and controls.


     


    Quote:

    Originally Posted by tundraboy View Post



    @trumptman You don't make sense. You're saying Amazon is not out to clear out their competitors because their pockets are not deep enough to get Apple to lose $137 billion. Well, guess what? They don't need deep pockets now because the feds are doing the clearing out for them. Sure Apple wants the profits. Amazon does too and they'll be making more than 30% margins once they've sewed up the eBook retailing AND publishing industries.


     


    Apple is a competitor. The claim is that Amazon is using the federal government to dictate to Amazon yet whatever Amazon could pay to lobby or distort the government into doing it's bidding, Apple could spend ten times more to avoid or to bend the government to doing it's own will. This is about what is right and letting the marketplace work, plain and simple.

  • Reply 29 of 59
    solipsismxsolipsismx Posts: 19,566member
    trumptman wrote: »
    Apple is a competitor. The claim is that Amazon is using the federal government to dictate to Amazon yet whatever Amazon could pay to lobby or distort the government into doing it's bidding, Apple could spend ten times more to avoid or to bend the government to doing it's own will. This is about what is right and letting the marketplace work, plain and simple.

    You lost me here. Are you saying Apple is wrong because they could spend more lobbying than Amazon or they are wrong because they aren't spending more on lobbying?
  • Reply 30 of 59
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by anonymouse View Post


    The DoJ continues on its crusade to gut an industry and hand it over to Amazon. There is either gross stupidity or rank corruption at work here.



    Apple wants 30% margin on books. Amazon is happy with break even or slight loss. Under Apple's model Amazon would also receive 30% margin. Amazon shouldn't mind making that much profit, but they do, because they know they would never be able to compete against Apple's ecosystem. From the DoJ perspective they think jacking the price of books by 30% across the board is bad for consumers. Consumers of course agree. They are now conditioned to believe that they are entitled to books at wholesale cost. They don't want to pay the markup they used to pay before they started shopping at Amazon. The fair price for retail book purchases, of course, is probably somewhere between 30% and 0% but Apple can't change their price structure as that would open a can of worms for their other app store and in app purchasing fees that they charge software developers.

  • Reply 31 of 59
    Look at the the different models at this site:

    http://www.teleread.com/publishing/the-math-of-publishing-a-book-in-print-or-electronic-format/

    Everyone has a choice where to buy their book Amazon, Barnes and Noble or Apple just as much as where they want to buy bread and toothpaste.

    Walmart works on razor thin, discounted margins for some product and higher margins for others. That is what Amazon does as well. If 7-11 has an agency model for Twinkies that raises the actual price overall, should we have to pay more at Walmart, Krogers or another place? WE decide where to buy our products so if buying a book for a bit more at Apple to support them over Amazon fine.

    Apple always has and always will compete, but not at the cost to the consumer or free market. If someone hates Amazon and their discounts so much, get their own investors and do the same thing to them. It is a question of who wants to do business by that model or not, anyone could do the same thing.

    Apple is more than likely to be here in 15 years than Amazon, just let the consumer decide.
  • Reply 32 of 59
    dasanman69dasanman69 Posts: 13,002member
    mstone wrote: »
    Apple wants 30% margin on books. Amazon is happy with break even or slight loss. Under Apple's model Amazon would also receive 30% margin. Amazon shouldn't mind making that much profit, but they do, because they know they would never be able to compete against Apple's ecosystem. From the DoJ perspective they think jacking the price of books by 30% across the board is bad for consumers. Consumers of course agree. They are now conditioned to believe that they are entitled to books at wholesale cost. They don't want to pay the markup they used to pay before they started shopping at Amazon. The fair price for retail book purchases, of course, is probably somewhere between 30% and 0% but Apple can't change their price structure as that would open a can of worms for their other app store and in app purchasing fees that they charge software developers.

    Why does Amazon have to do it Apple's way? Who the hell is Apple to dictate how Amazon should run their ebook business? This is one time that Apple's ecosystem loses on. Why would I buy a ebook from the iBook store and be locked into only ever reading it on a iOS device when I can buy the same one for Amazon for less and across multiple platforms? Since Apple is late to this game and doesn't want to play by other people's rules it would benefit them to even the playing field.
  • Reply 33 of 59
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by dasanman69 View Post



    Why does Amazon have to do it Apple's way? 


    They don't. The agreement was that if the publishers allowed Amazon to sell the book for less then Apple was entitled to sell the book for the same price as Amazon. The problem is one for the publishers because Apple still would get the 30% margin. The loss would be entirely the publishers', and Amazon's, because they would still be making zero profit.

  • Reply 34 of 59
    dasanman69dasanman69 Posts: 13,002member
    mstone wrote: »
    They don't. The agreement was that if the publishers allowed Amazon to sell the book for less then Apple was entitled to sell the book for the same price as Amazon. The problem is one for the publishers because Apple still would get the 30% margin. The loss would be entirely the publishers', and Amazon's, because they would still be making zero profit.

    So the publishers have to take a loss because Apple can't compete?
  • Reply 35 of 59
    trumptmantrumptman Posts: 16,464member

    Quote:

    Originally Posted by SolipsismX View Post




    Quote:

    Originally Posted by trumptman View Post



    Apple is a competitor. The claim is that Amazon is using the federal government to dictate to APPLE yet whatever Amazon could pay to lobby or distort the government into doing it's bidding, Apple could spend ten times more to avoid or to bend the government to doing it's own will. This is about what is right and letting the marketplace work, plain and simple.




    You lost me here. Are you saying Apple is wrong because they could spend more lobbying than Amazon or they are wrong because they aren't spending more on lobbying?


     


    Sorry about that, my fingers typed the wrong "A" word. image


     


    The claim regarding DOJ and them doing the bidding of Amazon aka "clearing the marketplace" for them is completely unproven. My point is that Apple is the type of that could afford to play that game stronger, longer and in a more expensive fashion than Amazon could ever do.


     


     


    Quote:

    Originally Posted by dasanman69 View Post




    Quote:

    Originally Posted by mstone View Post



    Apple wants 30% margin on books. Amazon is happy with break even or slight loss. Under Apple's model Amazon would also receive 30% margin. Amazon shouldn't mind making that much profit, but they do, because they know they would never be able to compete against Apple's ecosystem. From the DoJ perspective they think jacking the price of books by 30% across the board is bad for consumers. Consumers of course agree. They are now conditioned to believe that they are entitled to books at wholesale cost. They don't want to pay the markup they used to pay before they started shopping at Amazon. The fair price for retail book purchases, of course, is probably somewhere between 30% and 0% but Apple can't change their price structure as that would open a can of worms for their other app store and in app purchasing fees that they charge software developers.




    Why does Amazon have to do it Apple's way? Who the hell is Apple to dictate how Amazon should run their ebook business? This is one time that Apple's ecosystem loses on. Why would I buy a ebook from the iBook store and be locked into only ever reading it on a iOS device when I can buy the same one for Amazon for less and across multiple platforms? Since Apple is late to this game and doesn't want to play by other people's rules it would benefit them to even the playing field.


     


    This is a very well made point. Also Amazon has been an innovator in ebooks with their Kindle line. They've been very open and, in my opinion provide the best solutions and ecosystem for reading ebooks. Apple's problem with them is that they have out-Apple'd Apple. They have Kindles in all flavors just like Apple had iPods. They offer their reader on all manner of platforms. It wasn't the recording companies that dicated to Apple back in the day, it was Apple that told them that singles at $.99 and albums for no more than $9.99 were in their best interest.

  • Reply 36 of 59
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by dasanman69 View Post




    Quote:

    Originally Posted by mstone View Post



    They don't. The agreement was that if the publishers allowed Amazon to sell the book for less then Apple was entitled to sell the book for the same price as Amazon. The problem is one for the publishers because Apple still would get the 30% margin. The loss would be entirely the publishers', and Amazon's, because they would still be making zero profit.




    So the publishers have to take a loss because Apple can't compete?


    I'm not saying 30% is a fair markup but that is in keeping with Apple's app store markup. I actually think it should be less but I'm not really involved except as a consumer. The only reason Apple gets away with 30% in apps is because they have an exclusive for iOS devices and somewhat in Mac hardware. I seriously doubt they get 30% in movies or music from the big studios as there are many places to download those medias. But they don't disclose the margins on those medias either. It probably would have been better if Amazon had originally structured their ebook prices with some profit built in as Apple would have quietly matched the price and not publicize the deals, but Apple is not going to sell ebooks for zero margin like Amazon so they tried to structure the arrangement differently than other media downloads.


     


    It will be interesting to see how this turns out. Strictly from a technical or legal definition, it is against the law to sell your retail items at a loss in order to create a monopoly. It is not like Amazon has their ebooks temporarily on sale. That is their everyday, no profit, price so there is some question whether Amazon's pricing model is even legal.

  • Reply 37 of 59
    dasanman69dasanman69 Posts: 13,002member
    trumptman wrote: »
    It wasn't the recording companies that dicated to Apple back in the day, it was Apple that told them that singles at $.99 and albums for no more than $9.99 were in their best interest.

    Exactly, and I'm sure no one here said "Who the hell is Apple to tell the record companies at what price to sell songs and albums?" Now Amazon sets the ebook market and people only complained when Apple decided to sell ebooks. Now all of a sudden there's cries of "Amazon has a monopoly", where were those cries pre-iPad?
  • Reply 38 of 59
    dasanman69dasanman69 Posts: 13,002member
    mstone wrote: »

    It probably would have been better if Amazon had originally structured their ebook prices with some profit built in as Apple would have quietly matched the price and not publicize the deals, but Apple is not going to sell ebooks for zero margin like Amazon so they tried to structure the arrangement differently than other media downloads.

    It will be interesting to see how this turns out. Strictly from a technical or legal definition, it is against the law to sell your retail items at a loss in order to create a monopoly. It is not like Amazon has their ebooks temporarily on sale. That is their everyday, no profit, price so there is some question whether Amazon's pricing model is even legal.

    Do you seriously believe Amazon sells every ebook at cost or below cost? No they do not. Most ebooks sell for the same price across all ebook stores. It's some of the best sellers that they're willing to take a loss on in hopes that the consumer purchases even more from them.
  • Reply 39 of 59
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by dasanman69 View Post




     Most ebooks sell for the same price across all ebook stores. It's some of the best sellers that they're willing to take a loss on in hopes that the consumer purchases even more from them.



    I had not done a comparison before but after a quick look at Nook vs. Kindle prices they are largely the same as you say although I found a few that were marginally more expensive on Nook and several that were not available on Kindle. I wonder if you have any links to support that either/both stores are not selling at break even or a loss. As far as I know they don't release information like that.

  • Reply 40 of 59
    dasanman69dasanman69 Posts: 13,002member
    mstone wrote: »
    I had not done a comparison before but after a quick look at Nook vs. Kindle prices they are largely the same as you say although I found a few that were marginally more expensive on Nook and several that were not available on Kindle. I wonder if you have any links to support that either/both stores are not selling at break even or a loss. As far as I know they don't release information like that.

    So you seen for yourself that Amazon does not have a stranglehold on the ebook market like many here would like one to believe.
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