“Amazon set the price of an e-book at $9.99, a low-ball number with a tiny, if any, margin. Critics point out that Amazon overall makes little profit on a whopping $48 billion in revenue. Amazon’s goal is to offer e-books at a huge discount and seed the e-book reader market with Kindle devices, which, in turn, will create a monopoly that forces customers to buy e-books only from Amazon,” Tom Kaneshige writes for CIO. “And it was working: Amazon quickly grabbed 90 percent of the e-book market, writes CIO.com’s consumer tech blogger Bill Snyder.”
“We can thank Apple for putting the kibosh on Amazon’s evil monopolistic scheming,” Kaneshige writes. “With the iPad, book publishers had another e-book distribution option. E-books on Apple’s iBookstore rose to the range of $12.99 to $14.99 under Apple’s agency pricing model, which allows book publishers to raise the price of an e-book while Apple takes a 30 percent cut. As a result, Amazon’s market share fell to 60 percent.”
Kaneshige writes, “The DOJ’s mission is to protect consumers against monopolies and price fixing, but in this case their approach is flawed. A quick glance at Apple’s agency model, and one might jump to the conclusion that consumers faced an e-book price hike from $9.99 to $14.99…. Dig a little deeper, and you’ll find that the DOJ’s thinking doesn’t make sense. You simply cannot break Apple’s agency model and swing the pendulum back in favor of an Amazon monopoly, all in the name of protecting consumers. The DOJ can and should penalize book publishers and Apple if it finds price collusion—after all, price fixing is illegal— but not to the benefit of Amazon and its money-losing, monopoly-building enterprise.”
Read more in the full article here.
MacDailyNews Take:
The DOJ’s accusation of collusion against Apple is simply not true. The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon’s monopolistic grip on the publishing industry. Since then customers have benefited from eBooks that are more interactive and engaging. Just as we’ve allowed developers to set prices on the App Store, publishers set prices on the iBookstore. – Apple spokesman Tom Neumayr, April 12, 2012
MacDailyNews Take: If there’s any justice left in this world, little bitch Bozos will pay for whining to the clueless DOJ.
You can send a message: If a book you want on your iPad is available in the iBookstore, buy it there, not via Amazon.
[Thanks to MacDailyNews Reader “Lynn Weiler” for the heads up.]
Related articles:
Apple: U.S. DOJ’s accusation of collusion against iBookstore is simply not true – April 12, 2012
Apple not likely to be a loser in legal fight over eBooks – April 12, 2012
16 U.S. states join DOJ’s eBook antitrust action against Apple, publishers – April 12, 2012
Australian gov’t considers suing Apple, five major publishers over eBook pricing – April 12, 2012
DOJ’s panties in a bunch over Apple and eBooks, but what about Amazon? – April 12, 2012
Antitrust experts: Apple likely to beat U.S. DOJ, win its eBook lawsuit – April 12, 2012
Why the market shrugged off the Apple antitrust suit – April 11, 2012
What’s wrong with the U.S. DOJ? – April 11, 2012
Macmillan CEO blasts U.S. DOJ; gov’t on verge of killing real competition for appearance of competition – April 11, 2012
U.S. DOJ hits Apple,major publishers with antitrust lawsuit, alleges collusion on eBook prices – April 11, 2012
U.S. DOJ may sue Apple over ebook price-fixing as early as today, sources say – April 11, 2012
I seem to find Apple in the news more often but Amazon is just as much to blame.
The DOJ is completely out of order. Typical clueless government. I hope sanity prevails. As much as I would love to see $9.99 books that should come from the publishers and not Amazon who’s only motives are their own greedy selfish monopolistic ends. Astounding that Eric Holder & his band of staff incompetents don’t already see this. Biff from BTTF needs to come and knock them on their collective heads multiple times. “Hello! HELLO!!!:
“Whose.” Come on, kids, hasn’t the tea party taught us all the importance of correct spelling yet?…
You DARE question the Neo-Con-Job corrupted Tea Party here at MDN? You have BALLS sir!
Getting back to Peter Blood’s point is my usual point that TechTardiness is Rampant. Our US government is outrageously tech-ignorant! That the DOJ initiated this investigation is a wonderful example. That Google blatantly lied to a Senate hearing last year and none of the Senators noticed, is another great example. Then there is the US government’s late and lame response to China’s hacking and cracking of government computers for well over a decade. Obama ordering RIM PlayBooks for his staff. Blatantly unconstitutional bills to censor and surveil the Internet. On and on ad nauseam.
(o_0)
I deleted the Kindle app on my iPads long ago.
Sure, everyone loves cheaper products, but Amazon was dumping product at a loss, and forcing publishers to play ball by their rules. Amazon was not only the 800 lb gorilla in e-book market, they were the ONLY gorilla. Amazon looks like a hero because their prices are initially lower, but they are unsustainable in the long term. It is so obvious that Amazon’s intention was to crush all potential competition by virtually buying the market. This activity is illegal too. The agency model, in and of itself, is quite legal and pretty normal: Publisher sets the product price and pays a commission to the seller. As ebook market grows and competition for buyers sets in more aggressive pricing takes place (barring real collusion to set prices). I hope Apple and the Publishers fight this tooth and nail.
Walmart has been doing this for many years. They also send a huge portion of money to China.
If you supply Wal-Mart and they see your company is profitable their conclusion is that they are paying too much. If they are your main customer, you are doomed.
“MacDailyNews Take: If there’s any justice left in this world, little bitch Bozos will pay for whining to the clueless DOJ.
You can send a message: If a book you want on your iPad is available in the iBookstore, buy it there, not via Amazon.”
Go one step further and cancel your Amazon account and tell them why.
Go another step further, and buy the hard copy at your local bookseller.
They pay taxes and in other ways support your local community. Amazon doesn’t, and unless you live in the same city as an Apple Store, Apple doesn’t either. Plus you will be able to share or donate it when you are finished with it. And it will still be readable a few years down the road.
Awhhh, these poor Americans can’t afford the extra $2.99 to pay what the publishers want for their publications. It’s about time for the government to step in and correct this travesty, that deprives these poor Americans from buying everything dirt cheap.
Price dumping (selling a product at an unprofitable price so low that it puts the competition out of business (or prevents them from entering the market) is illegal in the United States.
The DOJ knows this, that is where the word clueless comes from.
I’d buy ibooks from Apple IF it had a Mac OS reader. Now some people assert that no one reads books on their Macs, only on their iPhones and iPads – but a Mac reader is needed for people that do study and writing, e.g. students researchers. You have the ebook open in one panel, and you write in another panel. I can only say that Apple’s refusal to offer a Mac OS reader for iBooks must be Steve Jobs’ bloody mindedness that his stance is the only correct stance. Seriously, how much effort would it take for Apple to create a reader for Mac. And if Apple are withholding a reader for Mac simply to force me to buy an iPad and iPhone – well, I have those already, but I’m not buying Apple’s iBooks. I now have over a few hundred Kindle books, and now I am entrenched in the Amazon system. The take home lesson is that Steve Jobs was not always right. I’m also looking forward to a 7″ iPad so I can read my Kindle books.
Clueless: Jobs was never wrong with you being right.
Calibre – not pretty like Apple software but it’s free and can make ePubs out of pdf or doc or txt files, etc..
With Apple banking on iCloud to give you access to all your music, photos, video and books on all your devices, I’m sure that an integrated reader of some sort is coming for the Mac.
If this goes through, Amazon will never see cheap books again and neither will the consumer. The publishers will charge a higher rate to everyone and Amazon will have nothing to put on their Kindles. What the heck are they goof for then, maybe a coaster for your drinks.
Most e-books are overpriced compared to a hardbound or paperback. The key issue here is sharing. A paperback I can give to someone else to read and I can sell it – maybe not at a high price but I can. So far, I prefer the Kindle app over the iBooks app because I can read the books (such as The Missing Manual) also on my Mac.
Everyone is down on Amazon’s book market practices, but couldn’t the same be said of what Apple did to the music market with iTunes? As Amazon’s $9.99 was hurting the big publishers, Apple’s $.99 songs hurt the record companies. Why is Apple good in the case of music and Amazon bad in the case of books?
No one really accuses Apple or the labels of selling songs at a loss or even at much of a discount in an effort to grab market share or push out competitors. The controversy between iTunes and labels had more to do with busting up albums so that the consumer could purchase just the songs they wanted. iTunes has flourished because of its unique eco-system, not because of price dumping.
Agreed. The “Apple is always right and everyone else is always wrong” rants on this site get a little hard to take sometimes. And I own and love many Apple products (including my iPad with the Kindle app).
Kind of makes me wonder…is it that everyone seems to think Apple is right…or is it that Apple thinks (and agrees) that everyone else here is right? Maybe sequence of causality is best viewed from a different perspective. Just a thought.
That’s a revisionist memory on your part RoaringMac, Apple populated the planet with MP3 players of it’s own design and got people who previously pirated songs on line to pay 99 cents per song. The record companies were losing money in droves to pirates because CD sales were down dramatically remember. Entertainment companies like SONY could easily have mimicked Apple and created their own echo system but they chose to stay with traditional models. There were also tons of other music sites that tried and failed with the rental and sales model. Apples success in this arena was due to careful planning and delicate negotiations, not creating a monopoly situation by creating it’s own e-reader and setting a below market price for product to squeeze producers and other competitors out. To this day you still have the option to buy other MP3 players and purchase or rent music from other sites. The $.99 song came about as a reasonable medium in price elasticity. It was low enough to attract buyers away from piracy and potential law suits but still high enough for record companies to make a profit and pay the artists. The problem lies with the record companies who continued to push an outdated business model on a new distribution channel. 3 or 4 good songs on a a 15- 20 song CD doesn’t fly as well when the customer has the option to unbundle the album and pick and choose the songs they wanted. So rather than respond by creating a high quality product, they whined about not having the ability to set a higher price on popular songs and putting a sale on less popular songs, all while giving Amazon a price break on the entire distribution catalog so they could under cut Apple. How’s did that work out for the record companies?
Incorrect comparison. Apple NEVER sold a song for less than it paid for the right to sell it (70% of the selling price). Amazon was paying $16 for many of the books they sold for $9.99. They made up the difference by charging more for items with less competition. Amazon took that $6 out of the pockets of other customers.
I can’t fathom the reasons why eBooks often are not priced any lower than paper books. All Amazon, Apple, and other e-book distributors need to worry about is a fixed infrastructure cost with very little extra costs related to actually selling copies.
In contrast the cost structure of paper bookstores is very different. Books need to be printed, they get damaged, may not be sold, may only be partly refundable if not sold, they occupy shelf space, and there is a variable cost almost proportional to the number of copies sold (small economies of scale may exist, though, but not the same way as for eBooks), not to mention a huge and often very slow administration.
In both cases, books need to be written (authors need to be paid), edited and layed out, so that part of the expertise and cost is common to both modes of distribution.
Bottom line: eBooks should cost less than paper books. Any other arguments are secondary and artificial.
I can’t fathom the reasons why eBooks often are not priced any lower than paper books.
Of course @vanfruniken! The press, storage and shipping costs for physical books are huge. ALL of that is cut out of the process. Of course that makes eBook worth far LESS than physical books.
I am all for variable prices for books as there is no single cost for every book. It’s crazy to expect a book the size of War and Peace to cost the same as a Winnie The Pooh book. Research, imagination and writing time, drafting and editing time, layout time, required hardware, all contribute to every ebook’s real value.
I am also for a very healthy profit to book writers.
But GOUGING customers with FAKE INFLATES book prices is what’s going on. It’s that same old Spirit of the Age in our post-capitalist biznizz culture: Screw Thy Customer.
With time this market will ‘normalize’ as the public demands realistic pricing and the product providers conform. Then again, there are blatant dicks like the members of the RIAA and MPAA who refuse to live in reality, willing to ruin the world to rule the world for the sake of a buck. That’s not capitalism.
I disagree with your notion that all other arguments are ‘artificial’, that’s a little silly, no?
I agree with you that costs to both the publisher and the retailer are reduced when distributing eBooks, but I think you’re wrong to assume that it is that fact that determines pricing in this country.
All products have a certain value, and the goal of manufacturers and producers is to find the right price at which consumers will buy en masse.
I believe a good book, which will likely keep me occupied for a week or possibly more depending on my lack of free time, should cost about $15. I think everyone involved in the producing and distributing of said eBook should enjoy in the profits. If 14.99 is too much, don’t buy it. The publisher will adjust its prices in order to find that sweet spot at which point consumers with adopt a product.
On a completely separate note, people pay delivery surcharges all the time for convenience. Whether ordering food, or clothes off the Internet. The ability to instantly download a book and begin reading it while I’m on the DC Metro is ALMOST priceless. To that argument I’d much rather pay the same if not maybe slightly more for that convenient copy than take time out of my busy schedule in order to navigate a complex and unintuitive Barnes & Noble bookstore. So to me, the value of an eBook is actually higher than that of brick and mortar bought book.
Also, the fact that I can have it on all of my iOS devices, with correct page synching, the ability to Redownload, and (hopefully on iBookstore soon) the ability to temporarily share make an eBook endlessly more valuable than a physical copy.
So I don’t think the idea that just because it costs less to make means it should be cheaper. Cheaper movies are the same price at the theater. And furniture isn’t sold at 10% above cost, but rather a set price that the manufacturer hopes it will sell for. In this country, your fixed and variable costs are important, but those facts are ‘secondary’ and ‘artificial’ when considering the price of a product.
For many years jobs in the US have migrated to China and the rest of the world because the consumers in the US want everything to be cheap, cheap, cheap. This practice has come back to bite the US in the butt and in this economic downturn the US is hankering for the jobs that it had foolishly gave up in its blind worship of cheapness.
The culture of making everything cheap is not sustainable in the long-term. Cheapness tends to commoditizes talent and worthiness of labor; lowers quality and standard of products; leads to wastefulness; takes away the appreciation and value of products and finally results in shortages and wastefulness in raw material utilization; and destroys the environment. Consumers have to realize the consequences of their greed and never mind attitude. Short-term aggrandizement and instant gratification will only lead to long-term long-lasting pain. This is the weakness of the US and it is now reaping the cost of what it had sowed. The US, which was a premier country 2 decades ago, is now in the cesspit of indecision and loss of direction.
I can only predict that the US will disintegrate into another civil war and breakup of the union in our lifetime.