Penguin appeases EU regulators by ditching e-book deal with Apple
The European Commission on Thursday announced that it has reached an agreement with book publisher Penguin, ending its antitrust probe against the company.
The European Union's legislative arm officially approved the conditions it and Penguin reached in April, the commission announced in a press release. Per the terms of those conditions, Penguin will not make any agreements that would allow it, and not a retailer, to set prices on titles.
The agreement brings to an end the so-called "most favored nation" pricing agreement Penguin had with Apple, which allowed the publisher to set content pricing as long as it didn't sell said content to another retailer for less.
Major book publishers and Apple had agreed to an "agency model" of pricing when the iPad with iBooks debuted. That was a change from the "wholesale model" they had before with book sellers like Amazon, which were allowed to resell e-books at or below cost.
Apple's e-books deals found the company under fire on both sides of the Atlantic. Apple and the accused publishers outside of Penguin reached a settlement in Europe in December, but Apple fought an antitrust suit from the U.S. Department of Justice in its home country.
But Apple lost that case, as a judge found that the iPad maker had conspired with book publishers to raise the price of e-books. Apple has appealed the decision, but if the ruling stands, one estimate published Thursday speculates that Apple could pay nearly $500 million in damages.
The European Union's legislative arm officially approved the conditions it and Penguin reached in April, the commission announced in a press release. Per the terms of those conditions, Penguin will not make any agreements that would allow it, and not a retailer, to set prices on titles.
The agreement brings to an end the so-called "most favored nation" pricing agreement Penguin had with Apple, which allowed the publisher to set content pricing as long as it didn't sell said content to another retailer for less.
Major book publishers and Apple had agreed to an "agency model" of pricing when the iPad with iBooks debuted. That was a change from the "wholesale model" they had before with book sellers like Amazon, which were allowed to resell e-books at or below cost.
Apple's e-books deals found the company under fire on both sides of the Atlantic. Apple and the accused publishers outside of Penguin reached a settlement in Europe in December, but Apple fought an antitrust suit from the U.S. Department of Justice in its home country.
But Apple lost that case, as a judge found that the iPad maker had conspired with book publishers to raise the price of e-books. Apple has appealed the decision, but if the ruling stands, one estimate published Thursday speculates that Apple could pay nearly $500 million in damages.
Comments
Quote:
Originally Posted by Robin Huber
Is the EU actually working for Amazon?
This is not about Amazon. It might be easier to understand if we try not to see everything as Apple v. the world.
The problem is the "most favored nation" clause. Apple will always lose in court over this.
Apple enabled publishers to start making money again in an environment that had been distorted by Amazon's bullying tactics.
The economy loses, we all lose. Once again.
It has everything to do with Amazon, most retail distortions these days have something to do with them.
They were always making money, the only one that makes more money with the agency model is it vendor not the publishers and they actually lost money because sales went down after the price increase.
Apple should start dumping Penguin books for 99c in Europe, now that they have been given the green light to set any price they want.
It's not as if iBooks are a vast moneymaker anyway.
What can Penguin and the EU do about it, they are the one's who forced this situation?
Time to kill off Amazon in Europe and move people back to iOS.
Quote:
Originally Posted by Robin Huber
Is the EU actually working for Amazon?
Ha! No.
Quote:
Originally Posted by herbapou
The problem is the "most favored nation" clause. Apple will always lose in court over this.
This is common in vendor relations and contracts: http://www.deloitte.com/assets/Dcom-UnitedStates/Local Assets/Documents/AERS/us_aers_CRC_Most Favored Nation_120211.pdf
...which makes it even easier to understand how this arrangement would make perfect sense for Apple as a requirement from e-book sellers.
Quote:
Originally Posted by hill60
Apple should start dumping Penguin books for 99c in Europe, now that they have been given the green light to set any price they want.
It's not as if iBooks are a vast moneymaker anyway.
What can Penguin and the EU do about it, they are the one's who forced this situation?
Time to kill off Amazon in Europe and move people back to iOS.
Interesting idea. In fact, Apple could offer all New York Times bestsellers for free for a year for anyone with an iTunes account and effectively destroy Amazon's e-book business.
This seems to be what the law allows.
And in the end consumes could lose out in this. Apple could decide that they don't want to change their terms and will drop all appropriate titles. Which means the consumers will be denied choice etc. unless the EU has the gall to claim they can force Apple to sell items and the terms they will use. Which would not go over well.
Price dumping would get them into trouble and they have no contract to sell said titles as the EU just voided it.
Nope, cause Amazon also has a MFN nd would just match said offer.
Quote:
Originally Posted by Crosslad
So Apple were guilty of raising e-book prices. Does everyone think Amazon were going to continue selling e-books at a loss after they had wiped out the competition who were trying to make a legitimate profit?
This is a myth, as are the sentiments that "Apple was helping publishers"
Selling books at 12.99 on the Apple store yielded publishers zero more dollars than selling on Amazon for 9.99, since Apple was guaranteed 30%. As a matter of fact the only thing Apple did was guarantee that publishers would get a HUGE loss if they competed and sold books for 9.99 on the Apple store.
The potential for Amazon to raise prices after wiping out the competition isn't a realistic possibility and probably one of the criteria for not having regulatory concern. Quality Steel production requires hundreds of million or even billions of dollars in capital investments and tremendous amounts of intellectual know how. In the textbook 'steel dumping' scenario, selling steel at a loss will cause competition to close their factories and not invest in new ones, and they then lose all people with the skill sets to build quality steel. At that point the dumper can raise prices astronomically. Nobody can build a billion dollar steel plant overnight and they won't be able to find people who have the know-how.
Ebooks have almost zero barrier to entry. Any e-commerce site can be converted to carry 'e-books' in no time. Amazons pricing is so tough to beat that it likely has prevented more venues from opening stores- but that is actually a great thing for consumers. If the Amazon doomsday scenario of raising prices occurred, new bookstores would open virtually overnight as the pricepoint would spur plenty of new entrants to the market.
Besides it is unlikely even in the Amazon doomsday scenario that they would raise prices by something crazy like 30% overnight. People arguing that Apple *actually* raising prices 30% overnight preemptively to avoid an improbable scenario that Amazon *might* raise prices a smaller amount just aren't providing a realistic argument to anyone without a bias toward all things Apple.
Did you forget that Apple settled in the EU as well?
Quote:
Originally Posted by charlituna
Price dumping would get them into trouble and they have no contract to sell said titles as the EU just voided it.
Price dumping, what price dumping?
Apple is free to set whatever price they want in Europe and there is not a damn thing Penguin can do about it.
Quote:
Originally Posted by Robin Huber
Is the EU actually working for Amazon?
Absolutely! The entire world is working for Amazon and conspiring against poor and innocent Apple!
Quote:
Originally Posted by charlituna
Price dumping would get them into trouble and they have no contract to sell said titles as the EU just voided it.
The EU only forced them to nullify certain conditions of the agreement. Apple still has an agreement in place to sell their books.