"Throw in with Apple and see if we can all make a go of this to create a real mainstream e-books market at $12.99 and $14.99."
While almost every post here has been saying they don't see anything here, I have to differ. I very much see this as a collusion. This is Apple trying to get a group of book publishers to sign up to get pricing of $12.99 and $14.99 with Apple for books currently selling at $9.99 on Amazon.
Publishers are expected (by law) to be competitive and not discuss pricing as a group in any way. Whether anyone thought they were colluding, there was clearly a third party coming in here and suggesting they should look to get books selling at these prices. That breaks the law because in effect they were setting prices via a third party (Apple).
The simple fact that all of the publishers settled rather than going to court shows they didn't think they'd be able to prove to a jury that this wasn't discussing price fixing. However it is important to note that Apple is a very different party in this in that when this discussion started, they did not publish books and so will argue that they were an innocent party simply discussing prices on their store. It will be interesting to see whether they broke any laws themselves by doing this as they were not themselves a publisher fixing book prices. (They are however now a book publisher, so that may impact the trial if there is evidence they planned to be a publisher when all this went down.)
The guy is the CEO of one of the largest media conglomerates and you expect Jobs is going to snub the guy?
One thing that Apple can learn from Murdoch is that if they are planning a TV service that live sport is the key, satellite pay TV in the UK was going nowhere fast until Murdoch revolutionised it with live match of the day.
Murdoch may not be liked much but he's been very successful.
Jobs also may not have been liked much but he was very successful.
There is no conspiracy here, at least one that Apple had cajoled. Lets review the short history of ebooks. So this new ebook marked comes along that never existed in the past. The new market begins with Amazon selling ebooks at $9.99. Amazon is all about market share, so they are willing to take a low profit to begin. Amazon's high PE is present due to the presumption that Amazon will make a profit in the future. So per Steve's letter, Amazon initiated ebooks sales at less then a 30% royalty that Apple is accustomed to. So along comes Apple, with the new fangled iOS operating system on stylish readers called iPhones and iPads. Steve the CEO states to publishers, come with me, I will take my customary 30% cut, but you keep an equivalent royalty as our customers are willing to pay a premium for our reading experience. Or you can skip us and stay with Amazon, but expect them to raise their royalty with time, as per the sky high PE, Amazon will one day want to make a profit. The third option is to skip this new fangled ebook market. So the DOJ is saying Apple set the rate in which Amazon must sell other companies products. All Apple did was say we can sell through our store at a premium as our platform is awesome. I suspect that Apple did not tell Amazon to raise their prices. Do the math, 70% royalty off $12.99 is $9.01. Amazon likely began selling ebooks with a 10% royalty of $9.99, as $8.99 is quite close to $9.01. Now we know where Apple came up with the 12.99 recommendation. Steve, being Steve, tried to push it to 14.99 as he was running a profit oriented business. This is capitalism.
As everyone pointed out, there is no pricing fixing, this was business discussion around what is the correct price to sell a product on the market. I bet a similar discussion has gone on with the music and video industry, the only difference was that those two industry were raping people with their pricing and Steve came in and put some sensible pricing around those products and look what you have more sales of digital content verse people just steeling it. The only difference here is Steve felt books had a higher value than $9.99.
I hope the DOJ has more than emails like this, These are standard business discussion and company are free to set prices as the like especially in a non-regulated space such as books. There is a saying sell it as high was the market will bare. Also there is a law which does not allow you to sell something below costs which Amazon does it is call predatory pricing. To me it look like the DOJ is actually promoting this kind of pricing activity.
The simple fact that all of the publishers settled rather than going to court shows they didn't think they'd be able to prove to a jury that this wasn't discussing price fixing.
The email obviously was part of the business discussion, where SJ and perhaps the publishers were looking to create a "real mainstream ebooks market". I don't know what SJ meant by "a real mainstream ebooks market", but it clearly was meant to distinguish SJ's proposals from Amazon.
Why isn't Amazon's ebooks market a "real mainstream ebooks market"? The Amazon model vs that proposed by SJ and the publishers should be a key part of the discussion. What was the SJ vision, and why would buyers be willing to pay more for a book than what Amazon was offering? My guess is that the SJ model was designed to cover the cost and profits necessary to convert and generate ebooks and to support a vision of ebooks with active content, without which the promise of ebooks cannot come to fruition. SJ was particularly concerned with improving education.
Tim Cook is scheduled to testify in the DOJ case against Apple. Maybe we will get the details of SJ's thinking at that time.
Apple is stupid to continue to pursue this. They were caught read handed. Screaming that they are justified because Amazon did something evil that no one can prove, no one has prosecuted, Apple hasn't acted on and that exists only in their minds is pure bullshit.
Apple needs to get their act together. Their press is being generated by being sued instead of new products. We are in MAY and the only thing they've introduced this year is bad press.
Definitely disappointed about working with Murdoch.
James Murdoch is Rupert's son. I don't see collusion. SJ does plant a seed of fear that there could be a Napster for ebooks which I doubt could ever happen. People downloaded music from Napster because it was not just free but also convenient. There wasn't a large digital music they could go to before iTunes and the other alternative was buying music on a physical medium. I'm curious though what would have been SJs terms if people were stealing ebooks and there was no Amazon with it's devices and apps. Would he be so altruistic and generous? Or would he of exploited the situation like he did with the music industry?
I'm neither a fan of Apple or Jobs, but this doesn't seem like a smoking gun to me.
However, with all of the out-of-court settlements that have been made with the other publishers, it's pretty clear that there was collusion to keep ebook prices high by Apple and pretty much the whole of the book publishing industry. If there wasn't, why did all of the other publishers knuckle under and settle out of court?
But considering the price of ebooks, you could certainly point the anti-trust finger at companies like Amazon.com and Barnes and Noble. There's no excuse for the exorbitant prices we have to pay for ebooks.
If the authors were getting the bulk of the money, I wouldn't complain, but it's the ebook distribution companies and the publishers that are in raking money buy selling a product that has almost no cost at near the same prices that hard copies cost. Something definitely stinks here.
However, with all of the out-of-court settlements that have been made with the other publishers, it's pretty clear that there was collusion to keep ebook prices high by Apple and pretty much the whole of the book publishing industry. If there wasn't, why did all of the other publishers knuckle under and settle out of court?
So you've brilliantly concluded that because the publishers settled means that Apple, who hasn't settled, is guilty. :no:
I don't think the email is the problem. I think the DoJ is trotting it out as an ancillary argument to the main one, which is: Apple negotiated with the major publishers (separately or together, who cares) to sell books on iBookStore for $12.99 or more with terms that states if they sold an ebook on Apple's store, they couldn't sell it for a lower price on a competing online bookstore (therefore raising the price for those books on Amazon, etc.).
I believe that is where the investigation is centered, or should be centered, because it is an interesting question to whether or not that is legal, especially given the scale to which Apple attempted (or succeeded) at getting publishers and content onboard.
This email is simply a distraction from the real question.
They would be a laughable bunch if they didn't have such untrammeled prosecutorial power.
While it does seem like the DOJ is reaching on this one, never underestimate the power of the US government. If Apple does manage to win watch for the leaked stories about tax evasion regarding Apple's top executives or statements from the EPA how Apple's phones cause cancer and should be avoided.
Quick you two should update your resumes just in case the board does can Tim Cook. Obviously you know things about Murdoch that Steve was unaware of.
Childish comment and unnecessary.
Never said I knew more than Jobs. I am sure Jobs knew exactly who he was dealing with. I was just commenting on being disappointed about doing business deals with the Murdochs. Granted, the Murdochs have been successful, but how that success came about is pretty questionable in certain areas of their empire.
Since the mail says nothing about NOT setting a lower limit, i.e. matching amazon pricing, in the absence of other evidence I predict this charge will fail.
I don't think the email is the problem. I think the DoJ is trotting it out as an ancillary argument to the main one, which is: Apple negotiated with the major publishers (separately or together, who cares) to sell books on iBookStore for $12.99 or more with terms that states if they sold an ebook on Apple's store, they couldn't sell it for a lower price on a competing online bookstore (therefore raising the price for those books on Amazon, etc.).
I don't think you have it quite right there. Rather, the terms were that if a competing online bookstore were to sell an ebook for a lower price, then Apple would be allowed to sell for the same lower price.
The difference being this:
The ability to sell at a lower price is granted by the vendor (publishers), not Apple.
Quote:
Originally Posted by silverpraxis
I believe that is where the investigation is centered, or should be centered, because it is an interesting question to whether or not that is legal, especially given the scale to which Apple attempted (or succeeded) at getting publishers and content onboard.
This email is simply a distraction from the real question.
Thoughts?
I believe this email is the foundation upon which they will base their real question. That is, was it legal for Apple to secure the right to always sell at the lowest available price? To me, this sounds like neither price fixing nor collusion.
I believe the other side of this case, where the publishers already settled, is where price fixing and collusion were primary concerns. After all, what is wrong with Apple making the same pitch (with similar suggested price points) to the various publishers? How Apple arrived at those suggested price points and whether they were used by each individual publisher doesn't seem relevant.
Other than the DOJ I think you may be the only one that thinks this email is evidence of (illegal or deceptive or fraudulent) "collusion" at all.
Seriously? There's no price-fixing going on here. There's a business deal being discussed about how to compete and present and sell a product in the market. You're imagining things. That said, there may be a place for you in the USDoJ.
Actually, you can't discuss prices when speaking to another distributor about prices in the U.S. When I was in the CD-ROM business and negotiating a distribution deal with a potential partner, the one thing the lawyers told us we were never permitted to discuss is what price they were going to sell it for. The minute you discuss prices in that context, it can be construed as price fixing.
Having said that, what's very confusing about this whole thing is that the Supreme Court ruled a few years back that manufacturers can set minimum selling prices (not just minimum advertised prices). It's one of the reasons you rarely see (for example) discounts on Nikon cameras or Sony TVs anymore. (In the case of Nikon, like Apple, they set the wholesale price so high, it's almost impossible to discount anyway.) What photo dealers have been doing rather than discounting, is to throw in some accessories to make it a better deal.
So if the Supreme Court ruled that manufacturers can have minimum selling prices, which in essence, is the list price, then why can't book publishers also set minimum selling prices which happens to be the list price?
The problem with all this is that the Agency Model does raise prices to the consumer. On the other hand, it will keep publishers in business. Generally, consumer trade book publishing is a very low margin business in the first place - most publishers make 10% net or less.
What the DOJ doesn't seem to realize is that if Amazon is permitted to continue to sell products at below or slightly above cost, it's going to be put competitors out of business. Amazon has shown that it is willing to lose money for years in order to gain market share. But once the competitors are out, Amazon will raise prices, so consumers will get screwed anyway.
In the non-Agency model, the publishers will probably get more charging Amazon wholesale than they will from Apple charging "list" and paying them 30%. But what the publishers are concerned about is lowering the perceived value of a book. Amazon's pricing could erode their print sales or force them to lower prices on print. In normal physical sales, they get 40% to 55% of cover price, depending upon whether they're selling to a retailer directly or a distributor and the quantity of the same title in the same order.
So Apple wants to sell eBooks at a higher price than Amazon...soo where is the story here DOJ?
Nobody would have a problem have that. Apple users could pay the going rate for publishers with a 30% Apple tax added on. Neither I nor the DoJ would have a problem with that. This letter is a piece of evidence... it isn't a case. When you combine this discussion (hey, all you publishers, we are going to allow you to set your own prices... as long as that price is $12.99) with their actual implementation is where the DOJ got interested. Apple added in that any of the booksellers that signed on were not allowed to sell their e-books at a lower price on competitor sites...
So the end effect would be Amazon prices going to $12.99 because that's the price Apple effectively set and got all the publishers to collude together and agree on. Whether that last statement is true or not is not what I'm arguing, I'm just pointing out that that is the DoJ's side of the case.
My take is I'm glad the DoJ stepped in and stopped it before all the publishers 'independently' decided to raise their prices above current market prices. I don't think their case against Apple will hold. Apple has terrific lawyers, and as long as they can claim the publishers independently agreed to set their prices they can argue Apple out of the mix. They can also argue that nobody was 'forced' to use Apples system. That would of course mean that the publishers colluded with each other- but they've all already admitted that. It was a pretty good setup. All publishers agree to raise prices... all publishers actually raise prices across all platforms simultaneously... when asked if they colluded to raise prices their argument would be 'no, we simply had to do that by the TOS in our Apple contract' Kind of cute, but they didn't get away with it and its a good thing it did not happen.
Steve's letter is pretty straightforward and tells the publishers they have three bad choices, and they should pick his choice- the least bad of the three. Apples effective policy then fixes the price of books across other platforms.
In the end, Apple is still free to sell books on its platform for $12.99 and sell the same books to Apple users that sell elsewhere for $9.99. Apple is not free to sell books for $12.99 and tell publishers they must raise their prices to a minimum of $12.99 on those other platforms as well. Its all good.
So Apple wants to sell eBooks at a higher price than Amazon...soo where is the story here DOJ?
No they want to sell it at the same exact price as Amazon. So if Amazon buys a ebook at $9.99 and sells it for that price then publishers made their money and Amazon takes the loss, now if that same ebook is sold for $9.99 through the iBookstore then Apple gets it's 30% and the publishers take the loss.
No they want to sell it at the same exact price as Amazon. So if Amazon buys a ebook at $9.99 and sells it for that price then publishers made their money and Amazon takes the loss, now if that same ebook is sold for $9.99 through the iBookstore then Apple gets it's 30% and the publishers take the loss.
But the publishers are using the agency model in both circumstances and are therefore incurring the same 30% loss at Amazon. The publishers are free to set a higher list price (effective in both stores) and hope to maintain current profits, but market demand will react accordingly and book sales will reflect the higher price point. If sales remain strong, then the price is reasonable as their is sufficient demand. This is why people argue that the market can police itself.
If the market truly works the way people insist it does, then artificially raising prices will adversely affect both manufacturers (publishers) and consumers (readers) as demand plummets. Since demand remains strong, arguably indicating that lower price points were primarily serving vendors (i.e. Amazon dumping to gain marketshare), the increase in prices is (by basic principles of capitalism) justified.
But the publishers are using the agency model in both circumstances and are therefore incurring the same 30% loss at Amazon. The publishers are free to set a higher list price (effective in both stores) and hope to maintain current profits, but market demand will react accordingly and book sales will reflect the higher price point. If sales remain strong, then the price is reasonable as their is sufficient demand. This is why people argue that the market can police itself.
If the market truly works the way people insist it does, then artificially raising prices will adversely affect both manufacturers (publishers) and consumers (readers) as demand plummets. Since demand remains strong, arguably indicating that lower price points were primarily serving vendors (i.e. Amazon dumping to gain marketshare), the increase in prices is (by basic principles of capitalism) justified.
Wrong Amazon uses the wholesale model. Buy at one price sell at another.
Comments
"Throw in with Apple and see if we can all make a go of this to create a real mainstream e-books market at $12.99 and $14.99."
While almost every post here has been saying they don't see anything here, I have to differ. I very much see this as a collusion. This is Apple trying to get a group of book publishers to sign up to get pricing of $12.99 and $14.99 with Apple for books currently selling at $9.99 on Amazon.
Publishers are expected (by law) to be competitive and not discuss pricing as a group in any way. Whether anyone thought they were colluding, there was clearly a third party coming in here and suggesting they should look to get books selling at these prices. That breaks the law because in effect they were setting prices via a third party (Apple).
The simple fact that all of the publishers settled rather than going to court shows they didn't think they'd be able to prove to a jury that this wasn't discussing price fixing. However it is important to note that Apple is a very different party in this in that when this discussion started, they did not publish books and so will argue that they were an innocent party simply discussing prices on their store. It will be interesting to see whether they broke any laws themselves by doing this as they were not themselves a publisher fixing book prices. (They are however now a book publisher, so that may impact the trial if there is evidence they planned to be a publisher when all this went down.)
Will be interesting to watch how this progresses.
Quote:
Originally Posted by TBell
The guy is the CEO of one of the largest media conglomerates and you expect Jobs is going to snub the guy?
One thing that Apple can learn from Murdoch is that if they are planning a TV service that live sport is the key, satellite pay TV in the UK was going nowhere fast until Murdoch revolutionised it with live match of the day.
Murdoch may not be liked much but he's been very successful.
Jobs also may not have been liked much but he was very successful.
There is no conspiracy here, at least one that Apple had cajoled. Lets review the short history of ebooks. So this new ebook marked comes along that never existed in the past. The new market begins with Amazon selling ebooks at $9.99. Amazon is all about market share, so they are willing to take a low profit to begin. Amazon's high PE is present due to the presumption that Amazon will make a profit in the future. So per Steve's letter, Amazon initiated ebooks sales at less then a 30% royalty that Apple is accustomed to. So along comes Apple, with the new fangled iOS operating system on stylish readers called iPhones and iPads. Steve the CEO states to publishers, come with me, I will take my customary 30% cut, but you keep an equivalent royalty as our customers are willing to pay a premium for our reading experience. Or you can skip us and stay with Amazon, but expect them to raise their royalty with time, as per the sky high PE, Amazon will one day want to make a profit. The third option is to skip this new fangled ebook market. So the DOJ is saying Apple set the rate in which Amazon must sell other companies products. All Apple did was say we can sell through our store at a premium as our platform is awesome. I suspect that Apple did not tell Amazon to raise their prices. Do the math, 70% royalty off $12.99 is $9.01. Amazon likely began selling ebooks with a 10% royalty of $9.99, as $8.99 is quite close to $9.01. Now we know where Apple came up with the 12.99 recommendation. Steve, being Steve, tried to push it to 14.99 as he was running a profit oriented business. This is capitalism.
As everyone pointed out, there is no pricing fixing, this was business discussion around what is the correct price to sell a product on the market. I bet a similar discussion has gone on with the music and video industry, the only difference was that those two industry were raping people with their pricing and Steve came in and put some sensible pricing around those products and look what you have more sales of digital content verse people just steeling it. The only difference here is Steve felt books had a higher value than $9.99.
I hope the DOJ has more than emails like this, These are standard business discussion and company are free to set prices as the like especially in a non-regulated space such as books. There is a saying sell it as high was the market will bare. Also there is a law which does not allow you to sell something below costs which Amazon does it is call predatory pricing. To me it look like the DOJ is actually promoting this kind of pricing activity.
Quote:
Originally Posted by realwarder
The simple fact that all of the publishers settled rather than going to court shows they didn't think they'd be able to prove to a jury that this wasn't discussing price fixing.
No it doesn't.
Why isn't Amazon's ebooks market a "real mainstream ebooks market"? The Amazon model vs that proposed by SJ and the publishers should be a key part of the discussion. What was the SJ vision, and why would buyers be willing to pay more for a book than what Amazon was offering? My guess is that the SJ model was designed to cover the cost and profits necessary to convert and generate ebooks and to support a vision of ebooks with active content, without which the promise of ebooks cannot come to fruition. SJ was particularly concerned with improving education.
Tim Cook is scheduled to testify in the DOJ case against Apple. Maybe we will get the details of SJ's thinking at that time.
Apple is stupid to continue to pursue this. They were caught read handed. Screaming that they are justified because Amazon did something evil that no one can prove, no one has prosecuted, Apple hasn't acted on and that exists only in their minds is pure bullshit.
Apple needs to get their act together. Their press is being generated by being sued instead of new products. We are in MAY and the only thing they've introduced this year is bad press.
James Murdoch is Rupert's son. I don't see collusion. SJ does plant a seed of fear that there could be a Napster for ebooks which I doubt could ever happen. People downloaded music from Napster because it was not just free but also convenient. There wasn't a large digital music they could go to before iTunes and the other alternative was buying music on a physical medium. I'm curious though what would have been SJs terms if people were stealing ebooks and there was no Amazon with it's devices and apps. Would he be so altruistic and generous? Or would he of exploited the situation like he did with the music industry?
However, with all of the out-of-court settlements that have been made with the other publishers, it's pretty clear that there was collusion to keep ebook prices high by Apple and pretty much the whole of the book publishing industry. If there wasn't, why did all of the other publishers knuckle under and settle out of court?
But considering the price of ebooks, you could certainly point the anti-trust finger at companies like Amazon.com and Barnes and Noble. There's no excuse for the exorbitant prices we have to pay for ebooks.
If the authors were getting the bulk of the money, I wouldn't complain, but it's the ebook distribution companies and the publishers that are in raking money buy selling a product that has almost no cost at near the same prices that hard copies cost. Something definitely stinks here.
So you've brilliantly concluded that because the publishers settled means that Apple, who hasn't settled, is guilty. :no:
I don't think the email is the problem. I think the DoJ is trotting it out as an ancillary argument to the main one, which is: Apple negotiated with the major publishers (separately or together, who cares) to sell books on iBookStore for $12.99 or more with terms that states if they sold an ebook on Apple's store, they couldn't sell it for a lower price on a competing online bookstore (therefore raising the price for those books on Amazon, etc.).
I believe that is where the investigation is centered, or should be centered, because it is an interesting question to whether or not that is legal, especially given the scale to which Apple attempted (or succeeded) at getting publishers and content onboard.
This email is simply a distraction from the real question.
Thoughts?
While it does seem like the DOJ is reaching on this one, never underestimate the power of the US government. If Apple does manage to win watch for the leaked stories about tax evasion regarding Apple's top executives or statements from the EPA how Apple's phones cause cancer and should be avoided.
Quote:
Originally Posted by razorpit
Quick you two should update your resumes just in case the board does can Tim Cook. Obviously you know things about Murdoch that Steve was unaware of.
Childish comment and unnecessary.
Never said I knew more than Jobs. I am sure Jobs knew exactly who he was dealing with. I was just commenting on being disappointed about doing business deals with the Murdochs. Granted, the Murdochs have been successful, but how that success came about is pretty questionable in certain areas of their empire.
Quote:
Originally Posted by silverpraxis
I don't think the email is the problem. I think the DoJ is trotting it out as an ancillary argument to the main one, which is: Apple negotiated with the major publishers (separately or together, who cares) to sell books on iBookStore for $12.99 or more with terms that states if they sold an ebook on Apple's store, they couldn't sell it for a lower price on a competing online bookstore (therefore raising the price for those books on Amazon, etc.).
I don't think you have it quite right there. Rather, the terms were that if a competing online bookstore were to sell an ebook for a lower price, then Apple would be allowed to sell for the same lower price.
The difference being this:
The ability to sell at a lower price is granted by the vendor (publishers), not Apple.
Quote:
Originally Posted by silverpraxis
I believe that is where the investigation is centered, or should be centered, because it is an interesting question to whether or not that is legal, especially given the scale to which Apple attempted (or succeeded) at getting publishers and content onboard.
This email is simply a distraction from the real question.
Thoughts?
I believe this email is the foundation upon which they will base their real question. That is, was it legal for Apple to secure the right to always sell at the lowest available price? To me, this sounds like neither price fixing nor collusion.
I believe the other side of this case, where the publishers already settled, is where price fixing and collusion were primary concerns. After all, what is wrong with Apple making the same pitch (with similar suggested price points) to the various publishers? How Apple arrived at those suggested price points and whether they were used by each individual publisher doesn't seem relevant.
Quote:
Originally Posted by MJ1970
Other than the DOJ I think you may be the only one that thinks this email is evidence of (illegal or deceptive or fraudulent) "collusion" at all.
Seriously? There's no price-fixing going on here. There's a business deal being discussed about how to compete and present and sell a product in the market. You're imagining things. That said, there may be a place for you in the USDoJ.
Actually, you can't discuss prices when speaking to another distributor about prices in the U.S. When I was in the CD-ROM business and negotiating a distribution deal with a potential partner, the one thing the lawyers told us we were never permitted to discuss is what price they were going to sell it for. The minute you discuss prices in that context, it can be construed as price fixing.
Having said that, what's very confusing about this whole thing is that the Supreme Court ruled a few years back that manufacturers can set minimum selling prices (not just minimum advertised prices). It's one of the reasons you rarely see (for example) discounts on Nikon cameras or Sony TVs anymore. (In the case of Nikon, like Apple, they set the wholesale price so high, it's almost impossible to discount anyway.) What photo dealers have been doing rather than discounting, is to throw in some accessories to make it a better deal.
So if the Supreme Court ruled that manufacturers can have minimum selling prices, which in essence, is the list price, then why can't book publishers also set minimum selling prices which happens to be the list price?
The problem with all this is that the Agency Model does raise prices to the consumer. On the other hand, it will keep publishers in business. Generally, consumer trade book publishing is a very low margin business in the first place - most publishers make 10% net or less.
What the DOJ doesn't seem to realize is that if Amazon is permitted to continue to sell products at below or slightly above cost, it's going to be put competitors out of business. Amazon has shown that it is willing to lose money for years in order to gain market share. But once the competitors are out, Amazon will raise prices, so consumers will get screwed anyway.
In the non-Agency model, the publishers will probably get more charging Amazon wholesale than they will from Apple charging "list" and paying them 30%. But what the publishers are concerned about is lowering the perceived value of a book. Amazon's pricing could erode their print sales or force them to lower prices on print. In normal physical sales, they get 40% to 55% of cover price, depending upon whether they're selling to a retailer directly or a distributor and the quantity of the same title in the same order.
Quote:
Originally Posted by PBRSTREETG
So Apple wants to sell eBooks at a higher price than Amazon...soo where is the story here DOJ?
Nobody would have a problem have that. Apple users could pay the going rate for publishers with a 30% Apple tax added on. Neither I nor the DoJ would have a problem with that. This letter is a piece of evidence... it isn't a case. When you combine this discussion (hey, all you publishers, we are going to allow you to set your own prices... as long as that price is $12.99) with their actual implementation is where the DOJ got interested. Apple added in that any of the booksellers that signed on were not allowed to sell their e-books at a lower price on competitor sites...
So the end effect would be Amazon prices going to $12.99 because that's the price Apple effectively set and got all the publishers to collude together and agree on. Whether that last statement is true or not is not what I'm arguing, I'm just pointing out that that is the DoJ's side of the case.
My take is I'm glad the DoJ stepped in and stopped it before all the publishers 'independently' decided to raise their prices above current market prices. I don't think their case against Apple will hold. Apple has terrific lawyers, and as long as they can claim the publishers independently agreed to set their prices they can argue Apple out of the mix. They can also argue that nobody was 'forced' to use Apples system. That would of course mean that the publishers colluded with each other- but they've all already admitted that. It was a pretty good setup. All publishers agree to raise prices... all publishers actually raise prices across all platforms simultaneously... when asked if they colluded to raise prices their argument would be 'no, we simply had to do that by the TOS in our Apple contract' Kind of cute, but they didn't get away with it and its a good thing it did not happen.
Steve's letter is pretty straightforward and tells the publishers they have three bad choices, and they should pick his choice- the least bad of the three. Apples effective policy then fixes the price of books across other platforms.
In the end, Apple is still free to sell books on its platform for $12.99 and sell the same books to Apple users that sell elsewhere for $9.99. Apple is not free to sell books for $12.99 and tell publishers they must raise their prices to a minimum of $12.99 on those other platforms as well. Its all good.
No they want to sell it at the same exact price as Amazon. So if Amazon buys a ebook at $9.99 and sells it for that price then publishers made their money and Amazon takes the loss, now if that same ebook is sold for $9.99 through the iBookstore then Apple gets it's 30% and the publishers take the loss.
Quote:
Originally Posted by dasanman69
No they want to sell it at the same exact price as Amazon. So if Amazon buys a ebook at $9.99 and sells it for that price then publishers made their money and Amazon takes the loss, now if that same ebook is sold for $9.99 through the iBookstore then Apple gets it's 30% and the publishers take the loss.
But the publishers are using the agency model in both circumstances and are therefore incurring the same 30% loss at Amazon. The publishers are free to set a higher list price (effective in both stores) and hope to maintain current profits, but market demand will react accordingly and book sales will reflect the higher price point. If sales remain strong, then the price is reasonable as their is sufficient demand. This is why people argue that the market can police itself.
If the market truly works the way people insist it does, then artificially raising prices will adversely affect both manufacturers (publishers) and consumers (readers) as demand plummets. Since demand remains strong, arguably indicating that lower price points were primarily serving vendors (i.e. Amazon dumping to gain marketshare), the increase in prices is (by basic principles of capitalism) justified.
Wrong Amazon uses the wholesale model. Buy at one price sell at another.