“Because it was Apple that got sued for violating the Sherman Antitrust Act, not Amazon, the federal judge who decided the case last July was able to ignore the facts on the ground,” Philip Elmer-DeWitt reports for Fortune.
“Namely, that: Amazon had monopoly control of the e-book market; Amazon kept competitors at bay by pricing publishers’ bestselling e-books below cost; [and] Amazon ruthlessly enforced its control. When challenged in 2010 by Macmillan, one of the big five publishers, Amazon simply pulled the ‘buy’ button off Macmillan’s books,” P.E.D. reports. “Apple tried to raise these facts in its defense, but U.S. District Judge Denise Cote, in the ruling that found that Apple had conspired with five publishers to raise the price of e-books, dismissed them.”
P.E.D. reports, “Her remedy, Judge Cote wrote, would ‘restore competition’ in the e-book market. This week, we got to see what restored competition looks like. To extract concessions from Hachette, the fourth largest publisher, Amazon has begun delaying delivery of some Hachette titles, removing others from its online bookstore, and in some cases — including J.K. Rowling’s new novel — refusing pre-orders altogether.””
Read more in the full article here.
MacDailyNews Take: Once again, we repeat:
Wonderful job, inept U.S. DOJ, you’ve emboldened an abusive monopolist to run amuck, you clueless wonders.
To paraphrase Scott Turow, the president of the Author’s Guild: The irony of this bites hard: our government has killed real competition in order to save the appearance of competition.
The nine most terrifying words in the English language are: I’m from the government and I’m here to help. – Ronald Reagan, August 12, 1986
Related articles:
Apple’s Star Chamber: An abusive judge and her prosecutor friend besiege the tech maker – December 5, 2013
In pretrial view, judge says leaning toward U.S. DOJ over Apple in e-books case – May 24, 2013
Lawyers have complained for years that Judge Denise Cote pre-judges cases before she enters the courtroom – August 14, 2013
U.S. Federal Puppet Denise Cote: ‘Apple’s reaction to the existence of a monitorship underscores the wisdom of its imposition’ – January 16, 2014
Judge Denise Cote denies Apple request block her friend as ‘antitrust compliance monitor’ – January 13, 2014
Antitrust monitor Bromwich rebuts Apple accusations of ‘unconstitutional’ investigation – December 31, 2013
Apple seeks to freeze its U.S. e-books ‘antitrust monitor’ – December 15, 2013
The persecution of Apple: Is the U.S. government’s ebook investigation out of control? – December 10, 2013
Apple’s Star Chamber: An abusive judge and her prosecutor friend besiege the tech maker – December 5, 2013
Apple takes aim not just at court-ordered e-books monitor, but also at U.S. District Judge Denise Cote herself – December 2, 2013
U.S.A. v. Apple: Judge Denise Cote assigns DOJ monitor in Apple ebook price-fixing case – October 17, 2013
U.S.A. v. Apple: Judge issues injunction against Apple in ebooks antitrust case; largely in line with what DOJ wanted – September 6, 2013
U.S.A. v. Apple: Judge Denise Cote says Apple needs third-party supervision after ‘blatant’ ebook price fixing – August 28, 2013
Thug.
Large publishers now realize they are working for Amazon and not the other way around.
Bo
Apple’s loss (in eBooks)… in the end leads to Amazon’s loss as well…
Publishers will rue the day… sadly not as many people read books… they would rather hear them.
Because most people are illiterate! That’s not progress.
That’s not true. People read more than ever before. Few remember how much people read before the internet.
Hint: It was less.
What the current generation is NOT very good at is communication. People read a LOT more than they used to. It’s just that they read fewer long novels.
All that being said, The pervasiveness of online video is quickly changing habits… thought there will still always be a place for words on a flat surface (be that flat surface be glass, a piece of tree, animal skin or holographic projection)
Publishers didn’t really have an option — Amazon was basically the only game in town when it started selling eReaders and eBooks, so if you didn’t agree to Amazon’s terms, you weren’t selling eBooks. I’m sure they thought this was the first step, and the second step would bring more realistic revenue. I don’t think the book publishers ever thought Amazon would undercut itself to drive more sales, and essentially kill the paper book market.
Amazon is like a drunk pirate with a pocket full of gold — he’s throwing his weight around all over the place, damn the consequences. But there will be consequences soon — even the DoJ can’t ignore what Amazon is doing to publishers it has over the barrel.
I fully expect Judge Cote’s decision to be thrown out by the Court of Appeals. It’s simply inconceivable that she flat-out dismissed Apple’s defenses regarding Amazon’s monopoly in the market, contrary to all case law precedent.
Let’s see how the morons at the DOJ worm their way out of this debacle everyone saw coming but them. Government stupidity at work.
It’s okay… The Publishers will just have to create their own channel… to everyone except Amazon…
imagine if no one allowed licensed their books to kindle?
Apple, MSFT, and *gasp* Samsung would love that… no?
You nailed it. The publishers with their own joint e-book service and no licenses to Kindle. That ought do it! A big FU to the Bozos man holding none of the cards.
This is going too far. To me it’s one thing if the local supermarket refuses to stock Macaroni & Cheese because Kraft won’t play ball. But refusing to sell books when you sell the majority of ebooks and a third of all books sold everywhere, well it smacks of monopoly abuse and even of censorship. Disallowing books to people who want them, even though you have them, and especially to cut off an entire publisher, is sickening. Amazon should not be empowered to decide who can buy what. And especially now that they’ve nearly destroyed the local bookseller, it’s even more incumbent on them to not abuse this power. What if they decide that books by blacks should cost double, or works by radical political thinkers should be delayed by weeks and weeks, or not sold at all. This cannot be acceptable.
I fail to see how it is ok for a local supermarket to refuse to stock a product and wrong for Amazon to refuse to stock a book.. You make it sound as if Amazon is the sole retailer for a publisher. Sure they have a large market share. Doesn’t mean the book cannot be purchased at another outlet that the publisher sells to.. ESPECIALLY for large publishers.. Pray tell how with the situation Apple helped create that there was ANY price competition between retailers since the way it was structured the publishers set the price for books to be sold.
Because most people are illiterate! That’s not progress.
It is perfectly legal for a private store to refuse to stock and sell a product for any reason. It has been done many times, when a retailer wants to make a stand against something or someone (for example, refusing to stock a certain brand whose top management is known to support, for example, gay marriage, or the right of choice=.
What is not right is when a company that has a monopoly position in some market leverages that monopoly to prevent competitors to enter the market. Like Amazon, blackmailing publishers into agreeing to Amazon’s conditions and not working with others. Same as Microsoft prohibiting OEMs to install Netscape or pay much more for Windows license.
Monopoly is NOT illegal; abuse of it is.
There is a big difference from the local supermarket refusing to stock Kraft Macaroni and Cheese based on its regular business dealings and operations vs. Amazon’s behaviors. Amazon is specifically targeting publishers who refuse to play ball, carrying its titles but removing the “Buy” button, refusing to carry new releases for some time, and using other heavy-handed tactics to force compliance with Amazon’s demands. THAT is abuse of monopoly position. A local supermarket doesn’t have a monopoly position, and even if it did, refusing to carry a particular product based on normal business dealings or some other reason (which is applied equally to all similar business arrangements) is OK.
Ok, how about if the ‘local’ supermarket is Krogers and implemented refusal across their entire chain?
Apple went about it the wrong way. You don’t collude with publishers to fix the market in order to assure that you are able to make a profit if/when you enter said market. Apple had enough cash to enter a war with Amazon, and if they did things the legal way, they would be seen as sympathetic, and a legitimate alternative to Amazon. Although, they still need to allow the ability to be able to read their books on other devices than iDevices. I do not like being locked into one ecosystem when it comes to books. That and price are my two biggest reasons for not buying books on iBooks. And with news like this coming out from Amazon, I’m more inclined than ever now to look for that alternative to Amazon.
Your point is well made. And accurate. Although it won’t be popular or acknowledged here. You’ll be thrown under the bus by the fanboys like everyone else who tries to be honest and objective. By the way, Amazon is also doing something very wrong. Two wrongs do not make a right.
“Two wrongs do not make a right.”
Three lefts do.
Fanboys? Do you refer to the anti-Apple fringe that think Apple is terrible if they don’t cure the common cold???
No dopey, I mean fanboys. Apparently that includes you. People who have no objectivity.
If Amazon hadn’t used their well paid politicos to bring the hammer down on Apple, the DOJ would never have prosecuted anyone.
Now that Amazon is doing the things Apple was accused of doing, you will not see any DOJ interference.
Apple still can get their day in court and may be exonerated.
Amazon will not need that day in court. They have already greased the palms of the people that goad the DOJ into action.
Amazon is doing far more abusive activity than Apple was even accused of doing.
Fuck a duck if you don’t like my attitude Scott, you condescending troll.
Clearly Scott, neither do you.
When all else fails, resort to name calling!
I don’t understand your point about being locked into one ecosystem. I have Kobo and Kindle Apps on my iPad?
You can read iBooks on your Kindle? Can you read an ebook bought from iBooks on a device that doesn’t run iOS? That is what I mean by being locked into one ecosystem.
Wrong conclusion. It means that iBook reading should be available on its Kindle devices (not that these are as wide-spread as iPads).
Wrong! wrong! wrong! There is a Kindle App for iOS.
But is there an iBooks app for the Kindle?
iBooks are iOS and OSX dependent. If I switch to Android, Windows, or another OS, I lose access to my entire iBooks library. Amazon is device and OS agnostic. Unless one is an ardent Apple supporter, which marketplace is one more likely to buy books from? iTunes gained tremendous market share when it launched its Windows version of the software. I would be more likely to buy from iBooks if they were accessible on other platforms than iOS and OSX, especially in light of what Amazon is currently doing to publishers and subsequently its customers.
I utilize iBooks and Kindle, though I tend to but most via Amazon for Kindle: I can read them on either my Kindle or my iPad with the app. My concern, however, is that Amazon is maintaining that cloud for me. Should they decide to alter the format enough and disable the app, I am now limited to their hardware. If they decide to “prohibit” a book, even one I have purchased, I am at their mercy. The same holds true with iBooks being at Apple’s mercy. The only true safety net is PDF, but you lose vast amounts of functionality.
This is why I tend to find places that sell EPUB formatted ebooks over iBook or Kindle formatted ones.
ob1spyker,
Yes, Apple could have gone about it differently.
However, Apple did not “collude with publishers to fix the market in order to assure that you are able to make a profit if/when you enter said market.” The publishers involved were ALREADY in “said market”. They were all already dealing with Amazon and other online book resellers — and the brick and mortar book stores too. The publishers were just negotiating with Apple to open a new avenue of sales for them — one that only paralleled Amazon’s avenue, not replaced it.
Yes, Apple was convicted in the trial. However, just because you’re convicted, it does not mean you actually did the crime.
Additionally, Apple did absolutely no price fixing. Under the contracts as they stood before the trial, Apple set no pricing at all. The publishers had absolute control over what price Apple paid for those ebooks and what price Apple could charge for them. How is that price fixing on Apple’s part?
The only clause that Apple required in the contract that the publishers didn’t like, but agreed to in the end, was a “Best Customer” clause. If the publishers allowed another entity (Amazon, B&N, etc.) to sell the book for less than they were allowing Apple to sell it, then the contract required the publishers to allow Apple to match it so that Apple’s customers could always get the best available price.
This clause did several things. It guaranteed that Apple could price match. It guaranteed that Apple’s customers would never be at a price disadvantage. It actually would *reduce* Apple’s income on the ebooks and profits from the iBookstore when lowering prices to price match. Thus it *helped* Apple’s customers and hurt Apple. But Apple implemented the clause in the contracts to the benefit of customers — not Apple, not the publishers, not Amazon or any other ebook reseller.
Unfortunately, the DOJ and Cote improperly fixated on this clause as a “Most Favored Nation” clause, which it is not. A “Most Favored Nation” clause is a proactive clause requiring the parties to do things in advance of, and in many cases independent of, a third party’s actions. In some cases the implementation of a “Most Favored Nation” clause can be illegal. A “Best Customer” clause is 100% reactive. It does not go into effect until AFTER a third party already puts the end customer at a disadvantage. Then the “Best Customer” clause steps in and levels the playing field. Isn’t that what anti trust actions are supposed to do anyway? Level the playing field? (And guess who is THE biggest user of the “Best Customer” clause in their contracts? The U.S. Government, that’s who.)
Unfortunately, Apple’s lawyers got caught up by the DOJ and Cote in a lot of minutia that had nothing to do with the underlying realities of the case. They allowed themselves to get caught up in the LEGAL system and forgot the fundamentals. Thus the DOJ was able to steer the case to make virtually everyone believe the Apple was a true conspirator attempting to raise prices and increase profits for themselves and the publishers. Apple’s lawyers never attempted to differentiate between a “Best Customer” clause and a “Most Favored Nation” clause. Apple’s lawyers never showed that Apple never had final say on book pricing. Apple’s lawyers never showed that the contracts, as written, would actually make Apple LESS money.
It only made matters worse that the publishers involved let the “bean counters” make the decision as to whether to fight the suits or not. The publishers’ accountants looked at the numbers and said, “It will cost us less money to just negotiate a settlement and pay up. The fact that the DOJ is 100% wrong does not matter. We’ll be a LOT of money ahead if we just pay up.” So they settled and paid up. The DOJ used those settlements as a set of hammers to beat on Apple at trial. “All your co-conspirators admit they conspired with you. They paid up. Apple you’re just being an unrepentant, illegal conspirator. We’re going to throw the book at you.” And Cote bought it hook, line and sinker.
Well and clearly said.
Not well, nor clearly said. I was talking about Apple making sure that if they went into the ebooks market, they were going to protect their investment and guarantee that they were going to be able to make money. I never said nor insinuated that this was about the publishers making money or that they weren’t already in the market. Of corse they were, duh! This whole arrangement with the publishers was an attack, clear and simple, against Amazon. Under Apple’s proposal, publishers were going to get less money!!! And they agreed so they could force Amazon to stop discounting books so heavily and alleviate the enormous power Amazon had on the market. They then forced Amazon to adopt the same Agency model, basically because Apple said so. How does Apple get to dictate how Amazon’s contract is structured? I saw this lawsuit coming a mile away, when word first came out about Apple’s negotiations with the publishers around the launch of iPad 1. I knew then what they were doing was wrong and it was concluded as such in court.
And please DO NOT bring up the “just because you were found guilty in court doesn’t really mean you are guilty” when all this website does is reinforce the fact that since Samsung was convicted they are most certainly guilty. If MDN is going to begin, every reference to Samung with convicted patent infringer, then please don’t use the argument that Apple’s innocent even though they’ve been found guilty. Let’s wait for the courts to say that, first.
I don’t disagree that Amazon is monopolistic in nature. I think they should be taken to court, especially in light of their current antics. I also think Apple got caught with their hand in the cookie jar, and no amount of whining is going to change that. When companies like Apple and Amazon fight for customers, aren’t we the customers supposed to benefit? How is raising the prices of ebook benefitting me? Isn’t competition good? I’ve never heard of an instance of competition coming into a market and causing the prices to go up. Have you? Have any of you? This is what Apple did, and because of what Apple did, the market overall is far worse off. I don’t know how much clearer one can get.
Wow. Hate Apple much?
Apple in NOT the monopoly here. They are the newcomer.
They are offering to sell the books at the publishers price ( but still argue to keep that price down).
Apple believes in trying to the best for the customer. They are not focused on squeezing money from the customer. A fair price, yes
Just saying.
I do not hate Apple, I just don’t agree what they did here. If they wanted to use the agency model that’s fine. Make your agreement with the publishers and let it be that. Let the free market decide if your way or Amazon’s way is better. AND, if what Amazon is doing is monopolistic then take it up with the DOJ. Don’t create a situation that puts you in the crosshairs instead of Amazon. That’s not good business. And please, ultimately Apple does what’s best for Apple. Nothing Apple did here was done with the benefit of the customer in mind.
Re: ob1spyker. The publishing industry faces difficult economic times. Their motto is “flat is the new up”. Whatever money they make, they earn on a relatively few “new” and “best-selling” titles. These are the same titles that Amazon has chosen to sell at prices _below_ the price Amazon buys them from publishers for. In other words, Amazon is undercutting the publishers on the few books that make the publishers any real money.
By selling books outright to Amazon on what is called the “wholesaler basis”, legal title for the books passes to Amazon, and Amazon is entitled to do whatever they want with them, even sell them at a loss. But obviously, no one can sell products at a loss indefinitely, so it is apparent that Amazon has a strategic plan to make _more_ money later. (You can figure it out, if you think about it.)
I think the real problem is that the folks running the publishing industry never anticipated Amazon would do what they did. (But I believe Amazon has aspirations to replace the publishers, so Amazon does not mind spoiling the traditional publishing business.)
Apple basically points out that the publishers should be selling their titles on the agency basis. It is how Apple sells music on iTunes. (Incidentally, it is also how Amazon sells most of the products it sells.) This means the seller is a middleman, with legal title for titles remaining with the publishers (until the title is sold), and the seller entitled to receive an appropriate commission upon the sale of someone else’s property.
You asked for an example of competition coming into a market and causing prices to go up. (Hint: it depends on whether the reference prices were appropriately low (ie, due to fair competition) or not (ie, due to unfair competition) in the first place.) I believe the original anti-trust legislation over 100 years ago targeted Standard Oil, whose modus operandi was to under-price local independent gas stations until they were driven out of the market, at which time Standard Oil raised prices.
Anyway, the whole Amazon v Apple e-book case boils down to this: Who should have the right to establish prices for e-books — the publishers or Amazon? If it is the publishers, do they have the right to correct their business error in choosing to sell their e-books to Amazon on the wholesaler basis, and instead move Amazon to the agency basis of selling these goods?
It seems to me the DOJ is basically saying: “Sorry, publishers, you blew it; you made a bad business decision by selling your e-titles to Amazon on the wholesaler basis. but you do not have the legal right to change your mind and sell these books to Amazon on the agency basis. The big mistake was for the publishers to think of e-books as they did for paper-books. However, the dynamics of selling digital products is so completely different from selling physical books, that the publishers’ failure to recognize the difference but them in a terribly disadvantaged position.
Raising what price? I could still find the same ebook in iBooks at prices from free to ten dollars/pounds.
The ONLY books that might have gone up slightly were new release/best sellers, and even then were often discounted.
You’re clearly blind to the actual, documented reality of the situation, and you’re continuing to look an even bigger idiot by trying to deny the reality.
And any of the prices were still significantly less than buying a physical book.
Your analysis is completely skewered by the fact that publishers sold their books on average for a higher price in the iBookstore than on Amazon, which priced new releases at BELOW COST.
You ask how Apple and Amazon fighting for customers, and Apple in fact raising prices on eBooks benefits you? Here’s how:
1. Having competition, even if at a higher price, guarantees survival of the new electronic book format.
2. If Amazon continues to sell books at below cost, publishers will cease selling to Amazon because they will lose money. Not making money in eBooks is better than losing money in eBooks.
3. Choice. Do you really want Amazon to be the only retailer of eBooks and be at Amazon’s mercy as far as format, price, device selection, etc.? What if Amazon decides tomorrow to change its format and kill its iOS app so you can’t use your iPad and have to buy a Kindle?
4. Future innovations are driven by competition. Why would Amazon develop new ways to deliver information and eBooks, including new types of content, without competition driving it to find a new advantage?
Lower prices is not the only measure of benefit to consumers.
Agree on all points, but the best customer clause DID ensure that apple would never be selling books at a loss, which is what caused the appearance of a raise in prices. My opinion.
Apple has fixed costs for running the iBookstore. If the 30% that Apple would have collected under the original contracts was less than the fixed operating costs of the site, then Apple would have lost money on that book.
Think of it this way, if the publisher allowed Amazon or B&N to give certain books away for free, then the contract would allow (and effectively force) Apple to price match (or else everyone would buy from Amazon and B&N) and give the books away for free too. Thus Apple’s 30% is zero. Apple loses money on those ebooks.
It is a miss-perception that Apple getting 30% of each sale guarantees that Apple won’t lose money.
The mistake here is that it was not the publishers selling the ebooks at Amazon for $9.99.. It was Amazon setting that price, which has been shown to be at a loss to what Amazon acutally paid the publisher. As such it would be highly unlikely that the price would be set at $0 by the publisher ensuring that Apple WILL make money no matter what.
Reminds me of MicroSloth gave away (free, if someone needs it spelled out) copies of its software until there was practically no competition, then made up for the loses soon after.
If you think that Apple doesn’t know if it can cover it’s expenses at 30% than you really don’t know Apple. Apple is only paying for the infrastructure, they are not paying for product, and with all the experience they have with the business model, they know what their expenses are and what their GP% needs to be to make a profit.
After reading this again I think the perspective is wrong.. Under the Agent model the outlets never have the product purchased in lots so there is no initial outlay to consider as would be the case under the wholesale model.. Thus Apple would NEVER lose money under the Agent model.. If the ebook price is $0 they would GAIN $0.
Agents get commissions on sales. That is how agency works. What’s the big deal?
The appearance of an “increase” in e-book prices was due to the fact that Amazon was (at least temporarily…) selling publishers’ e-books at prices below levels desired by publishers, and which were not sustainable in the long-run (since they were below cost). Stop those loss-leader sales, and average prices appear to rise. It is not appropriate to include “loss leader” sales as a reference for fair-market price levels.
“Best-customer” or “MFN” clauses are standard contract terms. They are given to customers in similar classes of trade. The clauses basically guarantee that all customers in a class of trade (say, large wholesalers) will receive the same deal that might be offered to any one of them. It prevents “sweetheart” deals to some customers but not others. It keeps the playing field level.
Suppose you sell ice cream, as does a similar shop down the street. You both buy ice cream from a local creamery. You assume both shops pay the same price for the same type of ice cream. Then you find out that the creamery has been offering lower prices to the shop down the street. You are upset because you are paying more for the same ice cream and the same quantities. You threaten to buy from another supplier — unless you get the same “best price” offered to any similar customer in your class of trade (ie, retail shops doing a certain amount of business). “Best-customer” or “MFN” clauses are routine. In fact, it is discriminatory to offer different prices to _similar _customers (ie, without cause, or justification), anyway. So I don’t see what the big deal is.
Not completely true, because the publisher sets the price for the book, and Apple marks it up. If the publisher set a price below cost, then Apple would sell it at such price plus its markup. The publisher still sold the book below its cost.
Problem is there was never any evidence of apple colluding with anyone. They simple offered everyone the same deal.
No collusion was ever proven. Apple simply demanded from the publishers that they would not set the agency price for offerings through Apple any higher than the same book would be offered through other retail agents. End of story.
SJ did make the unfortunate guess as to the ultimate e-book pricing in an e-mail to one publisher. That guess is not proof of collusion or a monopoly. It’s a sketch as to what the future might hold.
That Apple was forced into a court where the “judge”, prior to the presentation of testimony or evidence told them “the DOJ had a pretty strong case, why don’t you just plea out and save me some time” is a travesty, deserving far more outrage than it has gathered so far. That act, along with her crony appointment of a monitor who is so unqualified he had to outsource the work should be the basis for her removal from the bench.
Apple didn’t collude with anyone to fix prices, they arranged for the use of the industry-standard agency model.
And nobody’s forcing you to get your ebooks from Apple’s iBooks on an iDevice either, I have four different ereaders on my phone and pad in order to read books from various sources.
The fact that some publishers use Adobe DRM on their ebooks, forcing a purchaser to use Bluefire, and no other reader, should worry you far more.
But you’re clearly too stupid and ignorant of the reality behind Apple’s attempt to prevent monopolies like Amazon’s that it’s clearly a wate of time trying to explain it.
Your point is incorrect, and the Court of Appeals is going to throw out Judge Cote’s decision. Apple did not abuse any monopolistic power; Apple entered into agreements with the publishers using fairly standard business contract terms regarding pricing structures. There were no demands from Apple to the publishers.
What really happened is that the publishers took the opportunity provided by Apple opening the iBookstore to fight back against Amazon, which Amazon didn’t like, so Amazon complained to the DoJ. I suspect the publishers are gathering evidence against Amazon now, having become wiser to Amazon’s modus operandi, and they are planning their own DoJ complaints against Amazon with significant evidence of abuse of a monopoly.
1 quit doing business w Amazon, I have. 2 Amazon contributes to obamanation. Think about it.
Ob1spyker,
I agree that Apple should’ve gone about things differently (in hindsight). I disagree, however, that they NEED to allow their books to work on devices other than their own. Why should they? They sell compelling devices. Along with their iTunes Store offerings, the ecosystem continues to grow and their business prospers. They have worked hard to become the company they are now. The choice is simple: remain in the Apple ecosystem or take your chances with another company’s device and “ecosystem.”
I find it hard to believe that so many people ignore the fact that the Apple contract specifying an Agency model and the MFN clause actually removed ALL pricing competition since it basically made it so that no matter where you purchased your ebook it would cost the same.
With physical book publishing it made sense that stores could set the price of the product directly – either as a loss leader or to move inventory that simply wasn’t moving. With digital books that model no longer makes sense and Amazon was and is using pricing to cheat authors and publishers. Customers gain temporarily low prices on various content at expense of publishers and content creators. The agency model increases control of the content creators and helps ensure greater diversity of content by properly rewarding creators. If I write a book and value it at $20, I’ll earn based on the market agreeing or disagreeing with my valuation of my work. Versus Amazon saying my work is only worth $10 say and impacting my current and future net.
Contrary to your assertion, “ALL pricing competition” is not removed. Pricing competition is imposed by the market compared to other works as the work and distribution are digital.
Amazon has used its pricing, distribution and business tactics to kill off traditional book sellers, to harm publishers and content creators, and to give consumers artificially lower prices on select works as cover for their detrimental behavior. I’ve stopped buying anything from Amazon.
I believe the ‘loss-leader’ was used by Amazon to promote sales of their Kindle hardware much as how ‘loss-leaders’ are used by other retailers to move other types of products so it still does make sense when the books are ebooks. Valuation is a personal concept.. What I value something and what you might value the identical item differ, as such we would both purchase the item if the item is priced such that matches or is lower than the valuation we place. If the price is higher it is unlikely that either of us would make the purchase, if it falls between our respective valuations one of us will make the purchase the other will not.. In this manner we will search for the best price matching or lower than our valuations. If ALL outlets have the same price you will get the nice clean divide of purchases. If you do not price correctly you will not have maximized profits. If you delay too long in changing your price you may also lose sales to competing products.. The Agency pricing actually is more risky in some ways to the Author/Publisher since it is a single price.
In the vein of being customer first they NEED to allow me to purchase and/or read iBooks content via competing platforms. They don’t because it benefits Apple. I can’t really begrudge them that, it is their right. However I have to take umbrage with it when repeatedly on this site and other pro Apple sites it is repeatedly remarked that Apple is focused on the customer and what’s best for them. This situation is not best for me or for others like me, it is best for Apple.
The most damning condemnation of Judge Denise Cote is the metadata from the PDF file of her decision – 80% of it was written in the 2 weeks before the trial even began! Yes, that’s right folks, she decided against Apple before she even heard the evidence.
My evidence:
http://tech.fortune.cnn.com/2013/07/10/apple-ebook-verdict-appeal/
http://www.reuters.com/article/2013/05/23/us-usa-apple-ebooks-idUSBRE94M19A20130523
http://tech.fortune.cnn.com/2013/05/24/apple-ebooks-antitrust-judge/
Other evidence of her general stupidity and fuck-nuttery.
http://tech.fortune.cnn.com/2013/08/14/apple-ebook-judge-cote-2/
http://tech.fortune.cnn.com/tag/judge-denise-cote/
Buy local, not from amazon.
I think the DOJ will take a hard look at this, and then file suit…. against Apple
The only one that can defeat the witch of the DOJ is the ruler of Harry Potter!
lol.
🙂
You have a point. At least this story made the national news on CBS.
We are not, nor have been for sometime, a nation of laws.
Amazon will get by with whatever it wants so long as it has the right friends. Apple, clearly, does not have the right friends. It has been sent an unmistakable message that says, “Nice little company you’ve got here. It’d be a real shame were anything unfortunate to come along and befall it.”
Why won’t Apple undercut Amazon in books by …say….”Amazon_Price – 10%”? It’s a pittance as far as Apple is concerned. They can afford to drive them out of business and then buy Amazon when its in its last throes.
Because apple doesn’t have the market share. As little as that matters in smartphone profits, it’s a pretty important if you want to drive a market leader into trouble.
Thats my whole point. They have no market share.
1.Give low prices.
2.GET the market.
3.Amazon will try to keep market by lowering the price
4.Apples lowers it more…..market moves toward Apple
5.Amazon lowers it further ……and so on till it goes broke
6.Apple lost a lot of money but it was a mere pittance.
7.Apple buys Amazon
8.Bozos out on his arse living in a homeless shelter.
Amazon Prime and lending. Apple offers neither and can’t, as it would kill actual book sales (in favour of locking users into your ecosystem, but it’s not a viable strategy in the longterm other than for propping up margins NOT made on individual book sales).
Cote and Bromwich should be investigated by the feds.
Yes, and both the GW Bush and Obama administrations should be impeached and tried for treason for trampling the US Constitution via their unconstitutional surveillance invasion of US citizen privacy on US soil.
But that’s not gonna happen either. ‘Screw Thy Customer’ continues to rule the current age. As I always point out, customer retribution is the inevitable response…
The Obama DOJ is not about insuring a competitive market. It is about punishing successful companies with lots of money. Successful capitalist enterprises. That is what Apple is. So it must be punished. Obama may call off the dogs if Apple gives billions to a homey or brings home it’s overseas cash and donates it to Obama. That is what Obama is about. Himself.
Wow, it must be BOLD day around here. Let’s see if I can end it with a (not visible to you) ending bold tag…
Not, I bold, I simply wanted to point out just how stupid #MyStupidGovernment really is by [pun] emboldening Amazon to further screw over publishers, as opposed to Apple, who were offering publishers COMPETITION with Amazon rather than MONOPOLY from Amazon.
Yes DOJ and Cote. You’re bloody stupid. Look at what you’ve accomplished. There’s no saving face.
Odd.. The Publishers never needed to compete with Amazon since they were not the ones selling the books. Just because Apple does not want to expend the effort to price the media themselves and just take 30% off the top should not allow them to create a situation where it ends up forcing other retailers to move to the same model and hurting price competition as well as the consumer.
You miss the point. The publishers saw Amazon coming. They knew e-books were the future and could see that Amazon was becoming the only seller and was developing the capability of setting the price they would give to publishers. At the time of the iPad introduction Amazon was selling e-books at a loss, to keep other players out of the market.
Now Amazon is playing out what they feared and the DOJ has put their backs to the wall by restoring Amazons monopoly power.
Isn’t this also the reason Apple decided to enter the ebook market with the initial expectation of using wholesale pricing? Do you really think Apple could not have gone head to head with Amazon with the kind of cash reserve and constantly repeated iDevice owners being ‘shoppers’? Between the two of them should Apple have gone wholesale ebook prices would have been kept low in competition between two competitors that would have a REALLY hard time getting rid of the other AND publishers would still be getting a great STABLE revenue based on contract regardless of what Apple and Amazon end up pricing the ebooks at.. If they price too high other ebook outlets would be able to compete much easier. Win on all sides there. Publishers would maximize profits by playing Apple off Amazon, Both would have to keep things affordable to slow any 3rd party entries And consumers would get good prices. Move to ebooks is smoothed and less resources/costs would have to go into producing hardcopies of books which leads to less waste in the book industry via returns of unsold copies.. More efficient..
Incorrect. We’re talking about the prices the sales company pays for the publisher’s books. Obviously, the publisher wants to be paid more. Therefore, they want options in the marketplace, therefore competition in the marketplace. The NEVER want a monopoly as the monopolist will pay whatever the hell they feel like at the moment.
But obviously, this is a semantic question. I’ll accept your explanation as well. In the end, it’s up to the retailers to decide how to run their business and the publishers to decide how to run their business. With competition in the system, there are pressures to lower the prices for customers while treating the supplies, publishers in this case, as well as possible so that they provide you the retailer with better, more timely product than they provide the competition. And so forth.
I suspect there are better experts than I around here who could better dissect the situation.
Exactly, if you understood that I was pushing for Apple having also gone wholesale the publishers would be getting good wholesale prices since Apple is large enough to compete long term with Amazon. All the publishers would have to do is play Apple off Amazon to make sure neither will unfairly press the publisher to excessively low wholesale prices.
You are breathtaking. At the time of the iPad introduction, the publishers were charging Amazon about $15 per book as the wholesale price. Amazon was selling those e-books at $10, primarily as a ploy to raise an artificial barrier for other potential e-book sellers. Your proposal is that Apple should have also elected to enter that market and start bleeding too. That’s just silly.
The publishers well knew that once there were no e-book competitors, Amazon would be in a position to dictate terms, conditions and wholesale pricing, since they would monopolize the retail book sales arena. Today, Amazon is the largest physical book seller and they are the largest e-book seller. And guess what? They are trying to dictate terms, conditions and wholesale pricing. And the DoJ, by their brilliant blindness that made them unable to see a true monopolist when they were looking it straight in the face has left the publishers powerless.
Here’s a little secret. A book is not a book is not a book. They are not an interchangeable commodity. Each publisher runs a string of authors, who produce unique works. They are always in a monopoly position for the works of a particular author. And they can never be in collusion to create a monopoly for all books. It’s the nature of the beast. It is their right to set the retail price for an authors works. It is not the right of the Government to require them to sell to a retailer that will cause long term damage to their business and it is not in the interests of the people to have the publishing industry damaged by the greed of a single retailer. Now that the Government has placed Amazon in the position of being the strongest player and Amazon is acting like the bully they were sure to become, how is the Government going to clean the mess up?
This is not about your ideation of what should have happened, or how lazy Apple was. It is about whether laws were broken. The publishers all chose to plead out, so the law was never tested in their cases. Apple chose to stand and fight, only to find the judgement had been written before the first day of the trial. The question now is how far Amazon will be able to go in bringing the publishing industry to obey the authority granted them by the Government.
I don’t think I said anything about Apple matching Amazon’s pricing.. They each have their own formats.. And I think the iBook format is better in a few ways over Kindle’s.. That said the ebooks sold via iBooks should make use of that and add features that are useful to the reader and be sold possibly at a slim profit or break even for a while (e.g. purchased at $15, sell at $15). If Apple is too lazy to create the iBook ‘experience’ what will make it worth any more than any other ebook sold anywhere else? They have the audience and the proprietary format I’m just saying if they want to compete work for it w/o having to (or having the appearence of) collusion. An example of why I purchase some books from B&N over Amazon though the price may not be discounted as deeply is that B&N has worked with publishers to have exclusive added content (CD/Extra chapters/etc) for the same MSRP. B&N continues to have my business BECAUSE they add value to the product. The book is otherwise the same author and publisher.. I feel Apple could do the same and compete w/o exactly matching Amazon’s price.
You’re quite right and Hachette does not need to sell to Amazon at all just as Amazon does not need to purchase from them. For all we know the Hachette titles in question may be extremely slow movers so Amazon just decided not to reduce or not even have inventory until it is ordered. It is completely the right of Amazon to not agree to hold onto inventory that may not turnover quickly and just take up precious warehouse space. Amazon is first and foremost a Logistics company.. That is their strength even Apple pales in comparison with only a fraction of the total items Amazon deals with. There is no part of this where the law is broken. If the physical books are a pressure point simply remove it from the equation.. Hachette can just say no more physical books for sale to Amazon and just deal with them for only ebooks like they do with Apple. Apple had the largest marketshare for smartphones and tablets when they entered those markets and recently eaten into by others. What makes you think Amazon might not encounter the same with ebooks when Apple enters and actually competes with Amazon?
From the original post: “To extract concessions from Hachette, the fourth largest publisher, Amazon has begun delaying delivery of some Hachette titles, removing others from its online bookstore, and in some cases — including J.K. Rowling’s new novel — refusing pre-orders altogether.”
The Harchette titles in question are pending new releases. Amazon sells 1/3 of all physical books sold. Not really an option for any publisher to not sell through the Amazon de facto monopoly. And Amazons wholesale cost of e-books is tied to the price of physical books.
As I said, the publishers saw Amazon coming and tried to restructure their business arrangements to protect themselves. The DoJ tied the hands of the publishers and is still trying to tie the hands of Apple. Amazon knows the fix is in and is acting accordingly. They can’t continue with books as a loss leader forever, but instead of raising their retail price to at least their cost, they’re trying to bully the publishers into selling to them at a loss.
The crux is a high dependence on using Amazon as the reseller here.. There are many other outlets for online purchases of books and ebooks available. What exactly do you want the outcome to be? The government forcing a private reseller to buy product they may not want at a set minimum price? Amazon has a large share of the market due to its logistics efficiency and offers of free shipping to many places. This allows them to cut costs in certain areas concerning physical products and keep turnover high. This is of value to publishers as well as consumers.. Its time Publishers stopped blaming Amazon and work on creating relationships with all the other outlets physical and online out there.. Amazon has never as far as I know bound any Publisher to an exclusive relationship.. Why continue unless you really feel Amazon is your best bet and you don’t feel you have to resources to reach outside of that? The big Publishers provide the product but are so dependent on Amazon’s rate of consumption of their product that it is hard to let go.. It’s time to let go if they feel the compromises they have to make are too high.
“What exactly do you want the outcome to be? The government forcing a private reseller to buy product they may not want at a set minimum price?”
Poor Amazon. No, the problem is that the Government has forced the publishers to not pursue their preferred business model, the one in which Amazon could have waled away from the deal if they didn’t like it.
Amazon doesn’t think JK Rowlings next release is worth the warehouse space? Really!
In other news: Amazon ruthlessly enforced its control. When challenged in 2010 by Macmillan, one of the big five publishers, Amazon simply pulled the “buy” button off Macmillan’s books.
You need to stop being so obvious, first Apple, then the publishers need to work harder, now you’re cheering because “Why continue unless you really feel Amazon is your best bet and you don’t feel you have to resources to reach outside of that?” That is exactly the outcome Amazon was going for. Given the extent of your replies, I can only assume you are getting paid by the word.
The problem of is not truly the Agency model, it was the way it was implemented that was the true problem in this case. The Agency model used this time set price caps so that Apple does not embarrass itself from overly high prices in comparison, a MFN clause that would force Publishers to lose money unless they got EVERYONE using ALL formats of ebooks into the Agency model, and finally the apparent collusion proved between the major publishers to force the Agency Model on the retailer market lest access be lost to over 60% of the mainstream published books. I believe the outcome of the case does not eliminate the Agency model in the long term and that is fine. The Publishers are allowed to pursue the Agency model individually and at different times as implied by the staggered periods each Publisher was given. What I took the most offense with was the exact same pricing points across ALL ebook formats. This puts other formats at a disadvantage especially the open ones since the result will be the majority of the market being controlled by Kindle and iBook. Best solution to have the most competition may have been Agency model for proprietary formats and Wholesale for open formats (e.g. formats not exclusive to one company’s ereader device/app).
“Amazon doesn’t think JK Rowlings next release is worth the warehouse space? Really!”
Well, looking at figures for her prior book “Casual Vacancy”, sales were good but not amazing sales dropping off after the first month till the paperback was released.
“In other news: Amazon ruthlessly enforced its control. When challenged in 2010 by Macmillan, one of the big five publishers, Amazon simply pulled the “buy” button off Macmillan’s books.”
Once again Macmillan is not under exclusive contract to Amazon. Why did they not just give up and pull their entire line from Amazon? Either there was something in the relationship that they found valuable or Macmillan is masochistic. It may be these big publishers just fear losing genre sales to each other, which now that I think about it was competition eliminated between publishers by the implemented Agency model.
Off the top of my head I imagine the benefits of selling to Amazon would include 1) shipping product to a handful of distribution points from which Amazon itself would distribute to its other distribution points as opposed the having to handle logistics to ship to a much larger number of distribution points yourself. 2) dealing with 1 customer to purchase vs. dealing with hundreds. 3) higher volume of sales with less effort and expense compared to other options. There are definitely other reasons and that is a pro/con decision that each Publisher balances on their OWN for a relationship with Amazon.
Amazon needs to be thrown to the DOJ lions as they should have been in the first place. Hatchette should get involved with Apple’s appeal and throw Amazon under the bus. Amazon is not immune from being prosecuted and I think there is some pretty convincing evidence here.
Judge Cote and Judge Koh . . . Bought and paid for!
One gets the impression that judge Cote lacks critical thinking skills
Simple is call god complex for amazon