Walmart keeps their prices low, even after they manage to undercut and destroy their competition. They are the best company in the world at squeezing their suppliers.
Yup, look at what they did to Rubbermaid. I don't not shop there and all attempts to open a store in NYC have been thwarted.
I avoid selling to them anymore. No matter what price I would determine they still tried to get even deeper discounts. Oddly I don't ever recall them making quality as important. Add waiting at least two months for your money and it wasn't worth it. I have other clients to take up the slot.
Keep in mind, for consumers Walmart is great. Having once been on the supplier side once, they will eat you alive if you can't continually find ways to reduce price (by choosing cheaper materials and/or by constantly switching Chinese manufacturers) or broaden your product offerings in a way that they cannot simply copy your product and offer a Walmart branded one and steal business out from under you.
Another misconception. It was only a small selection of books that were being undersold. The vast majority of ebooks were the same price across all other ebook stores.
Ignoring, of course, the fact that it was BEST SELLERS that Amazon was selling below cost. Maybe you need someone to explain to you that best sellers are the most popular books being sold - and even a modest number of titles can have a significant impact on total sales.
Not necessarily. The music industry doesn't get to set the price. Apple didn't give them that option.
Which has absolutely nothing to do with whether it's an agency model nor not.
In the agency model, the distributor gets a fixed percentage - regardless of a selling price. In a wholesale model, the publisher gets a fixed price and the distributor can sell it for whatever price they want - so the margin is variable.
You and I have exactly the same definition for an agency model which is specified in my second sentence. So you'd be of the opinion that Amazon gets better terms than Apple? Just curious.
I never said any such thing and I have no idea whether Amazon gets better terms than Apple. You see, unlike you, I refuse to comment about things I don't understand.
Whether Amazon gets better terms has nothing to do with whether Apple is using the Agency Model. The Agency Model is quite simple - Apple gets a fixed percentage of the selling price. The publisher gets the rest. Under the wholesale model, the distributor buys the item at a fixed wholesale price and can sell it for anything they wish - and therefore the margins can be any number at all.
I am pro apple and have a lot riding on them being successful, but their stance on ebooks is bad for consumers period.
They signed deals with all major publishers for agency model that gives them a 30% cut and also, gets most favor nation pricing.
Not considering other products and only talking about books - this is bad.
Before ebooks, book pricing has suggested retail pricing by publishers. Retail stores can have sales that under cut these suggested retail prices. I have not heard any publishers complain about these sale prices.
Now, enter ebooks. Amazon started having these sales and other retailers and publishers start complaining about Amazon's tactics. But this is not new tactic, this is something developed by retails from hardcover books.
Now, Apple comes in and dictates MFN pricing, so now publishers will lose money whenever any ebooks price below publisher suggested retail price. This is a big no-no for consumers. Publishers should not be liable for retail prices as by publisher agreement with DOJ, they are not supposed to be able to impose retail pricing. Otherwise, they will be able to become cartels.
Let's use a hypothetical example of selling TV- if the same agreements have been agreed to by TV manufactures with Apple. With Apple's MFN pricing, if Walmart has a black friday sale where they sell a 50" TV for $200, Apple will be able to sell the same TV for $200 and yet, get $60 profit, which the TV maker needs to subsidize to Apple, while Walmart pays the wholesale price for the TV and marks it down to $200 as part of their money losing marketing to get people to come and shop at their stores. As you can see with this example, TV manufactures will approach Walmart and prevent them from selling at a loss, which is exactly what happen to book publishers and Amazon.
I hope this TV scenario helps you all understand why DOJ is fighting against this Apple deal and how they don't want others to copy these type of deals into other biz markets.
Let's use a hypothetical example of selling TV- if the same agreements have been agreed to by TV manufactures with Apple. With Apple's MFN pricing, if Walmart has a black friday sale where they sell a 50" TV for $200, Apple will be able to sell the same TV for $200 and yet, get $60 profit, which the TV maker needs to subsidize to Apple…
Totally different; you can't use that as an example.
I never said any such thing and I have no idea whether Amazon gets better terms than Apple. You see, unlike you, I refuse to comment about things I don't understand.
Whether Amazon gets better terms has nothing to do with whether Apple is using the Agency Model.
If one is true then the other must be too JR.
If Apple is contractually obligated under an "agency model" to sell a particular song for no less than $1.29 and send 30% to the publisher then Amazon could not sell that same song under the same agency contract terms for .99. They logically must be getting a better deal from the same publisher on the same song. The other explanation would be that Apple isn't under a strict agency model in the first place. Can you come up with a rational third explanation? There may be but I can't think of it.
Ignoring, of course, the fact that it was BEST SELLERS that Amazon was selling below cost. Maybe you need someone to explain to you that best sellers are the most popular books being sold - and even a modest number of titles can have a significant impact on total sales.
Ok, and? Compete on another level, make that best seller in your store more desirable than the one in Amazon's. Is that impossible to do?
Ok, and? Compete on another level, make that best seller in your store more desirable than the one in Amazon's. Is that impossible to do?
That's extremely difficult to do. How would you suggest that a different company sell exactly the same book for 50% more and keep a large fraction of the customers?
It's different when you're selling different products, but when it's the same book, it's almost impossible to justify a significant premium.
If Apple is contractually obligated under an "agency model" to sell a particular song for no less than $1.29 and send 30% to the publisher then Amazon could not sell that same song under the same agency contract terms for .99. They logically must be getting a better deal from the same publisher on the same song. The other explanation would be that Apple isn't under a strict agency model in the first place. Can you come up with a rational third explanation? There may be but I can't think of it.
Nonsense. If Apple has an Agency Model contract that says that they sell the music and then send 70% of the revenue to the publisher, that says absolutely nothing about what Amazon can do. Why in the world would you think that Agency Model itself requires everyone to get the same price? An Agency Model simply says that Apple sells the song, keeps 30% and sends the rest to the publisher. It says nothing at all about what any other company in the industry might do.
Again, you're not referring to the Agency Model. You're referring to a Most Favored Nations clause - which can occur in any contract - Agency OR Wholesale. The concept is entirely unrelated to the Agency Model itself.
Nonsense. If Apple has an Agency Model contract that says that they sell the music and then send 70% of the revenue to the publisher, that says absolutely nothing about what Amazon can do. Why in the world would you think that Agency Model itself requires everyone to get the same price? An Agency Model simply says that Apple sells the song, keeps 30% and sends the rest to the publisher. It says nothing at all about what any other company in the industry might do.
Again, you're not referring to the Agency Model. You're referring to a Most Favored Nations clause - which can occur in any contract - Agency OR Wholesale. The concept is entirely unrelated to the Agency Model itself.
I don't think Amazon and Apple are under the same agency model terms if the publishers are requiring agency model pricing. :no:
Logically Amazon would have to have been offered better terms than Apple if the publishers are stipulating only an agency model for music. Perhaps only Apple has to agree to restrictive agency prices while Amazon is offered a more flexible wholesale model. Or as I already alluded to maybe Apple's agreement only calls for 30% of the revenue to go the the publishers regardless of the price Apple chooses to sell them for , and Apple is the one setting the prices. That wouldn't be a textbook agency model would it?
That's extremely difficult to do. How would you suggest that a different company sell exactly the same book for 50% more and keep a large fraction of the customers?
It's different when you're selling different products, but when it's the same book, it's almost impossible to justify a significant premium.
C'mon, really? We're talking about Apple here. They excel at making the extremely difficult look easy and obvious. Now if you were to tell that Apple can't also compete with Amazon's cross platform readability then I'd agree with you. The truth is that I'm actually surprised that Apple couldn't find a way to make their option the more attractive one.
I am pro apple and have a lot riding on them being successful, but their stance on ebooks is bad for consumers period.
They signed deals with all major publishers for agency model that gives them a 30% cut and also, gets most favor nation pricing.
Not considering other products and only talking about books - this is bad.
Before ebooks, book pricing has suggested retail pricing by publishers. Retail stores can have sales that under cut these suggested retail prices. I have not heard any publishers complain about these sale prices.
Now, enter ebooks. Amazon started having these sales and other retailers and publishers start complaining about Amazon's tactics. But this is not new tactic, this is something developed by retails from hardcover books.
Now, Apple comes in and dictates MFN pricing, so now publishers will lose money whenever any ebooks price below publisher suggested retail price. This is a big no-no for consumers. Publishers should not be liable for retail prices as by publisher agreement with DOJ, they are not supposed to be able to impose retail pricing. Otherwise, they will be able to become cartels.
Let's use a hypothetical example of selling TV- if the same agreements have been agreed to by TV manufactures with Apple. With Apple's MFN pricing, if Walmart has a black friday sale where they sell a 50" TV for $200, Apple will be able to sell the same TV for $200 and yet, get $60 profit, which the TV maker needs to subsidize to Apple, while Walmart pays the wholesale price for the TV and marks it down to $200 as part of their money losing marketing to get people to come and shop at their stores. As you can see with this example, TV manufactures will approach Walmart and prevent them from selling at a loss, which is exactly what happen to book publishers and Amazon.
I hope this TV scenario helps you all understand why DOJ is fighting against this Apple deal and how they don't want others to copy these type of deals into other biz markets.
Nope. Walmart (w90% TV market share) offers a tv at $200 at a loss ($60 below cost) as an every day low price. Of course no one else can sell for a loss and remain in business for long. New competitors can't even get in the game to compete. Apple comes along and says hey if you let Walmart sell for $200, then we'll sell it for 200. We still get our $60 though. So the prices rise. Why does Walmart get to say $200 is the fair market price?
[...]Why does Walmart get to say $200 is the fair market price?
This has nothing to do with fair market price. This has to do with the fact that you cannot have sales/discounts due to MFN. Publishers are not allow to dictate retail prices due to agreements with DoJ. With Apple's agency model and MFN, the net results are that publishers are dictating prices as they are retaliating against retailers who are selling below Suggested Retail ebook prices. If it was not for MFN, DoJ could care less about Apple and their agreements with publishers.
In music, Apple does not have emusic MFN with the music studios. DoJ never went after Apple for music.
I don't think Amazon and Apple are under the same agency model terms if the publishers are requiring agency model pricing.
Logically Amazon would have to have been offered better terms than Apple if the publishers are stipulating only an agency model for music. Perhaps only Apple has to agree to restrictive agency prices while Amazon is offered a more flexible wholesale model. Or as I already alluded to maybe Apple's agreement only calls for 30% of the revenue to go the the publishers regardless of the price Apple chooses to sell them for , and Apple is the one setting the prices. That wouldn't be a textbook agency model would it?
Why are you two arguing about this?
The reality is that Apple signed a contract with book publishers using agency model with MFN. For music, Apple does not have MFN, so others are free to undercut Apple prices. Nothing to do with agency model vs wholesale model.
The DoJ is pissed at Apple for destroying or bypassing the agreements that the DoJ and book publishers have agreed to in the past, which is that they cannot create a cartel for book pricing. With Apple's agreement with publishers for agency model and MFN, that will enable publishers to act like cartels.
This has nothing to do with fair market price. This has to do with the fact that you cannot have sales/discounts due to MFN. Publishers are not allow to dictate retail prices due to agreements with DoJ. With Apple's agency model and MFN, the net results are that publishers are dictating prices as they are retaliating against retailers who are selling below Suggested Retail ebook prices. If it was not for MFN, DoJ could care less about Apple and their agreements with publishers.
In music, Apple does not have emusic MFN with the music studios. DoJ never went after Apple for music.
Yes, I can understand how someone could argue against MFN. On the surface, you might think it creates illegal pricing agreements, but it's not clear how insisting that everyone get the same price creates unfair competition. In any event, MFNs have been found to be legal up to the Supreme Court, so there's no inherent problem with MFNs.
In any event, it's irrelevant. MFNs have absolutely nothing to do with the Agency Model - that's just Gatorguy throwing out crap to try to confuse the issue. You can have an MFN under Wholesale Model, as well. It is completely orthogonal to the issue of whether the Agency Model should be legal.
Nope. Walmart (w90% TV market share) offers a tv at $200 at a loss ($60 below cost) as an every day low price. Of course no one else can sell for a loss and remain in business for long. New competitors can't even get in the game to compete. Apple comes along and says hey if you let Walmart sell for $200, then we'll sell it for 200. We still get our $60 though. So the prices rise. Why does Walmart get to say $200 is the fair market price?
Why don't you show us the evidence behind your claim that Walmart sells TVs for $200 that cost them $260 as an every day low price?
C'mon, really? We're talking about Apple here. They excel at making the extremely difficult look easy and obvious. Now if you were to tell that Apple can't also compete with Amazon's cross platform readability then I'd agree with you. The truth is that I'm actually surprised that Apple couldn't find a way to make their option the more attractive one.[/quote
How in the world did you make the jump from hardcover best sellers (which is what was being discussed) to Apple's eBooks?
The issue that we were discussing was your suggestion that other publishers shouldn't worry about Amazon selling best sellers below cost because they could always offer some other reason for the customers to buy. That is, of course, ridiculous.
Yes, I can understand how someone could argue against MFN. On the surface, you might think it creates illegal pricing agreements, but it's not clear how insisting that everyone get the same price creates unfair competition. In any event, MFNs have been found to be legal up to the Supreme Court, so there's no inherent problem with MFNs.
In any event, it's irrelevant. MFNs have absolutely nothing to do with the Agency Model - that's just Gatorguy throwing out crap to try to confuse the issue. You can have an MFN under Wholesale Model, as well. It is completely orthogonal to the issue of whether the Agency Model should be legal.
Why don't you show us the evidence behind your claim that Walmart sells TVs for $200 that cost them $260 as an every day low price?
C'mon, really? We're talking about Apple here. They excel at making the extremely difficult look easy and obvious. Now if you were to tell that Apple can't also compete with Amazon's cross platform readability then I'd agree with you. The truth is that I'm actually surprised that Apple couldn't find a way to make their option the more attractive one.[/quote
How in the world did you make the jump from hardcover best sellers (which is what was being discussed) to Apple's eBooks?
The issue that we were discussing was your suggestion that other publishers shouldn't worry about Amazon selling best sellers below cost because they could always offer some other reason for the customers to buy. That is, of course, ridiculous.
It was a hypothetical response to another user's hypothetical comment.
In any event, it's irrelevant. MFNs have absolutely nothing to do with the Agency Model - that's just Gatorguy throwing out crap to try to confuse the issue.
.
JR, you were the one that brought MFN up. I never mentioned it, so if anyone was trying to throw "that crap out to confuse things" it was you sir. Not saying that's what you intended of course.
JR, you were the one that brought MFN up. I never mentioned it, so if anyone was trying to throw "that crap out to confuse things" it was you sir. Not saying that's what you intended of course.
Are you really this confused?
You started babbling about Amazon and said that publishers would have to give Amazon the same price that they gave Apple if Apple had an Agency Model contract with them.
I simply mentioned MFN to point out that you were talking about MFN rather than Agency Model. IOW, I was trying to clear up the confusion in your head, but I guess that's not possible.
Comments
Yup, look at what they did to Rubbermaid. I don't not shop there and all attempts to open a store in NYC have been thwarted.
Keep in mind, for consumers Walmart is great. Having once been on the supplier side once, they will eat you alive if you can't continually find ways to reduce price (by choosing cheaper materials and/or by constantly switching Chinese manufacturers) or broaden your product offerings in a way that they cannot simply copy your product and offer a Walmart branded one and steal business out from under you.
Ignoring, of course, the fact that it was BEST SELLERS that Amazon was selling below cost. Maybe you need someone to explain to you that best sellers are the most popular books being sold - and even a modest number of titles can have a significant impact on total sales.
Which has absolutely nothing to do with whether it's an agency model nor not.
In the agency model, the distributor gets a fixed percentage - regardless of a selling price. In a wholesale model, the publisher gets a fixed price and the distributor can sell it for whatever price they want - so the margin is variable.
I never said any such thing and I have no idea whether Amazon gets better terms than Apple. You see, unlike you, I refuse to comment about things I don't understand.
Whether Amazon gets better terms has nothing to do with whether Apple is using the Agency Model. The Agency Model is quite simple - Apple gets a fixed percentage of the selling price. The publisher gets the rest. Under the wholesale model, the distributor buys the item at a fixed wholesale price and can sell it for anything they wish - and therefore the margins can be any number at all.
I am pro apple and have a lot riding on them being successful, but their stance on ebooks is bad for consumers period.
They signed deals with all major publishers for agency model that gives them a 30% cut and also, gets most favor nation pricing.
Not considering other products and only talking about books - this is bad.
Before ebooks, book pricing has suggested retail pricing by publishers. Retail stores can have sales that under cut these suggested retail prices. I have not heard any publishers complain about these sale prices.
Now, enter ebooks. Amazon started having these sales and other retailers and publishers start complaining about Amazon's tactics. But this is not new tactic, this is something developed by retails from hardcover books.
Now, Apple comes in and dictates MFN pricing, so now publishers will lose money whenever any ebooks price below publisher suggested retail price. This is a big no-no for consumers. Publishers should not be liable for retail prices as by publisher agreement with DOJ, they are not supposed to be able to impose retail pricing. Otherwise, they will be able to become cartels.
Let's use a hypothetical example of selling TV- if the same agreements have been agreed to by TV manufactures with Apple. With Apple's MFN pricing, if Walmart has a black friday sale where they sell a 50" TV for $200, Apple will be able to sell the same TV for $200 and yet, get $60 profit, which the TV maker needs to subsidize to Apple, while Walmart pays the wholesale price for the TV and marks it down to $200 as part of their money losing marketing to get people to come and shop at their stores. As you can see with this example, TV manufactures will approach Walmart and prevent them from selling at a loss, which is exactly what happen to book publishers and Amazon.
I hope this TV scenario helps you all understand why DOJ is fighting against this Apple deal and how they don't want others to copy these type of deals into other biz markets.
Originally Posted by ProApple
Let's use a hypothetical example of selling TV- if the same agreements have been agreed to by TV manufactures with Apple. With Apple's MFN pricing, if Walmart has a black friday sale where they sell a 50" TV for $200, Apple will be able to sell the same TV for $200 and yet, get $60 profit, which the TV maker needs to subsidize to Apple…
Totally different; you can't use that as an example.
How about Amazon's Kindle daily deals in which the average of 4 ebooks are on sale for $1.99, $2.99?
If one is true then the other must be too JR.
If Apple is contractually obligated under an "agency model" to sell a particular song for no less than $1.29 and send 30% to the publisher then Amazon could not sell that same song under the same agency contract terms for .99. They logically must be getting a better deal from the same publisher on the same song. The other explanation would be that Apple isn't under a strict agency model in the first place. Can you come up with a rational third explanation? There may be but I can't think of it.
Ok, and? Compete on another level, make that best seller in your store more desirable than the one in Amazon's. Is that impossible to do?
That's extremely difficult to do. How would you suggest that a different company sell exactly the same book for 50% more and keep a large fraction of the customers?
It's different when you're selling different products, but when it's the same book, it's almost impossible to justify a significant premium.
Nonsense. If Apple has an Agency Model contract that says that they sell the music and then send 70% of the revenue to the publisher, that says absolutely nothing about what Amazon can do. Why in the world would you think that Agency Model itself requires everyone to get the same price? An Agency Model simply says that Apple sells the song, keeps 30% and sends the rest to the publisher. It says nothing at all about what any other company in the industry might do.
Again, you're not referring to the Agency Model. You're referring to a Most Favored Nations clause - which can occur in any contract - Agency OR Wholesale. The concept is entirely unrelated to the Agency Model itself.
I don't think Amazon and Apple are under the same agency model terms if the publishers are requiring agency model pricing. :no:
Logically Amazon would have to have been offered better terms than Apple if the publishers are stipulating only an agency model for music. Perhaps only Apple has to agree to restrictive agency prices while Amazon is offered a more flexible wholesale model. Or as I already alluded to maybe Apple's agreement only calls for 30% of the revenue to go the the publishers regardless of the price Apple chooses to sell them for , and Apple is the one setting the prices. That wouldn't be a textbook agency model would it?
C'mon, really? We're talking about Apple here. They excel at making the extremely difficult look easy and obvious. Now if you were to tell that Apple can't also compete with Amazon's cross platform readability then I'd agree with you. The truth is that I'm actually surprised that Apple couldn't find a way to make their option the more attractive one.
Nope. Walmart (w90% TV market share) offers a tv at $200 at a loss ($60 below cost) as an every day low price. Of course no one else can sell for a loss and remain in business for long. New competitors can't even get in the game to compete. Apple comes along and says hey if you let Walmart sell for $200, then we'll sell it for 200. We still get our $60 though. So the prices rise. Why does Walmart get to say $200 is the fair market price?
Quote:
Originally Posted by jungmark
[...]Why does Walmart get to say $200 is the fair market price?
This has nothing to do with fair market price. This has to do with the fact that you cannot have sales/discounts due to MFN. Publishers are not allow to dictate retail prices due to agreements with DoJ. With Apple's agency model and MFN, the net results are that publishers are dictating prices as they are retaliating against retailers who are selling below Suggested Retail ebook prices. If it was not for MFN, DoJ could care less about Apple and their agreements with publishers.
In music, Apple does not have emusic MFN with the music studios. DoJ never went after Apple for music.
Quote:
Originally Posted by Tallest Skil
Totally different; you can't use that as an example.
Okay fine, but the ebook case still stands and Apple supporters don't seem to understand where the DoJ is coming from.
Quote:
Originally Posted by Gatorguy
I don't think Amazon and Apple are under the same agency model terms if the publishers are requiring agency model pricing.
Logically Amazon would have to have been offered better terms than Apple if the publishers are stipulating only an agency model for music. Perhaps only Apple has to agree to restrictive agency prices while Amazon is offered a more flexible wholesale model. Or as I already alluded to maybe Apple's agreement only calls for 30% of the revenue to go the the publishers regardless of the price Apple chooses to sell them for , and Apple is the one setting the prices. That wouldn't be a textbook agency model would it?
Why are you two arguing about this?
The reality is that Apple signed a contract with book publishers using agency model with MFN. For music, Apple does not have MFN, so others are free to undercut Apple prices. Nothing to do with agency model vs wholesale model.
The DoJ is pissed at Apple for destroying or bypassing the agreements that the DoJ and book publishers have agreed to in the past, which is that they cannot create a cartel for book pricing. With Apple's agreement with publishers for agency model and MFN, that will enable publishers to act like cartels.
Originally Posted by ProApple
Okay fine, but the ebook case still stands and Apple supporters don't seem to understand where the DoJ is coming from.
Right, because it's ludicrous predatory nonsense meant to give Amazon a complete monopoly and kill everyone else.
Yes, I can understand how someone could argue against MFN. On the surface, you might think it creates illegal pricing agreements, but it's not clear how insisting that everyone get the same price creates unfair competition. In any event, MFNs have been found to be legal up to the Supreme Court, so there's no inherent problem with MFNs.
In any event, it's irrelevant. MFNs have absolutely nothing to do with the Agency Model - that's just Gatorguy throwing out crap to try to confuse the issue. You can have an MFN under Wholesale Model, as well. It is completely orthogonal to the issue of whether the Agency Model should be legal.
Why don't you show us the evidence behind your claim that Walmart sells TVs for $200 that cost them $260 as an every day low price?
Oh, you can't - you simply made it up.
JR, you were the one that brought MFN up. I never mentioned it, so if anyone was trying to throw "that crap out to confuse things" it was you sir. Not saying that's what you intended of course.
Are you really this confused?
You started babbling about Amazon and said that publishers would have to give Amazon the same price that they gave Apple if Apple had an Agency Model contract with them.
I simply mentioned MFN to point out that you were talking about MFN rather than Agency Model. IOW, I was trying to clear up the confusion in your head, but I guess that's not possible.