Amazon’s bogus anti-Apple crusade

“You may remember that Amazon helped persuade the U.S. Department of Justice to sue Apple in April 2012, claiming that Apple conspired with five of the nation’s largest publishers to fix the price of e-books at a level different than what Amazon had set,” Kathleen Sharp reports for Salon. “Amazon, the web’s biggest retailer, had been selling published books at a money-losing rate of $9.99. Why? To get us to buy its Kindle e-book reader, and to dominate the e-book market. Amazon’s strategy worked. According to court documents, the firm soon controlled 90 percent of the e-book market.”

“This meant that publishers — who had invested in the writing, production, promotion and distribution of these books — couldn’t sell their wares at the recommended retail price of $14.99. Nor could brick-and-mortar stores match Amazon’s money-losing discounts,” Sharp reports. “Amazon’s product-dumping and predatory pricing helped bankrupt many small-town bookstores. Yet, neither publishers nor independent booksellers sued Amazon, even though they might have had a good case (as we’ll soon see).”

“Every year, the ‘Library & Book Trade Almanac,’ an authority in the field, reports annual sales by book category. It 2008, when Amazon had a lock on the market, it reported that the average price of an adult fiction e-book in the U.S. in was $8.71. In 2009, as more people self-published books, the average dropped to $8.21. In 2010, when Apple introduced its agency model for e-books, the price dropped 14 percent to $7.06. And when publishers were up and running against Amazon in 2011, the average price of an e-book sank by an astonishing 32 percent — to $4.83. “That’s a steal,” said Al Greco, a professor of marketing at Fordham University,” Sharp reports. “The almanac has yet to publish final figures for 2012. But Digital Book World Daily, another expert, reports that e-book prices for fiction in 2012 ranged from $4 to $7. ‘My feeling is that the DOJ didn’t see these numbers,’ said Greco. Which gets to the heart of this bizarre case: The numbers show that, far from hurting the market, the publishers’ and Apple’s agency model actually helped it.”

Much more in the full article – very highly recommended – here.

MacDailyNews Take: The current U.S. DOJ is plainly inept and the judge in this case is obviously nothing more than a stupid puppet.

Lady Elaine Fairchilde (left), Judge Denise Cote (right),or vice versa
Lady Elaine Fairchilde (left), Judge Denise Cote (right), or vice versa

Related articles:
In pretrial view, judge says leaning toward U.S. DOJ over Apple in e-books case – May 24, 2013
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23 Comments

    1. Unfortunately the numbers are averaging the ebook market as a whole.. The resulting lower price may just as well been affected by the increase over time of ‘free’ ebooks and self-published works in the total ebook market.. If a report had narrowed the pricing down to specifically books published in both physical and electronic formats from only the publishers involved I believe the pricing would show to be equivalent or higher than that set by Amazon prior to the Apple collaborating to have publishers set ‘retail’ prices.. Prior to collaborating, publshers still set prices and got a guaranteed amount per book based on the contract. It was up to the retailer to set their own price. In Amazon’s case they sold some books for less than ‘market’ price possibly losing some money per sale in the process. It is an accepted practice for retailers to have loss leaders to help sales of other products. What happened, maybe unintentionally, was that EVERYONE was now forced to sell at the same price. This removed the retailer’s ability to differentiate themselves from other booksellers and just as arguably be significant in pushing some booksellers out of business.

  1. Aided and abetted in this comedy of errors by the Socialist-in-Chief with a vendetta and an agenda against free market economics. Under a free market capitalist system, price is a determinant of market supply and demand not state sanctioned price controls.

    We might as well revert to communism if the state decides what price Walmart should sell eggs at or Apple should sell iBooks at. The harm to consumers is the withdrawal of choice as authors choose not to publish in the iBookstore due to prices being set too low by the state and therefore not remunerative of the effort put in to write the book.

    1. That makes two winning contributions for you in the past couple of hours. I’m shocked and amazed. Keep it up. I may reverse my opinion and become one of your fans. Jeepers, I think Hannah has been right all along!

    2. Nut – please at least go back to school and learn what “socialist” actually means. And then don’t use it anyway, since it doesn’t apply.

      Also, please take your political claptrap elsewhere.

      Lastly, the quality of your thinking is shown, quite nicely, by your use of the word “revert”. This word means to go back to a previous state… obviously not possible for the US. I think this is an excellent indication of the lack of thinking in your banal and bombastic blunderings.

    3. It’s nothing as noble as a political and social ideology. It’s a crass, Chicago-style payoff. Amazon gave the Obama campaign organization in-kind technical assistance worth millions of dollars. It’s simply pay back.

      1. It’s like this scene you night remember:

        Don Corleone: “Some day, and that day may never come, I will call upon you to do a service for me. But until that day, consider this justice a gift….”

        Google called for Obama to do that service, and it was done.

    4. BLN, I tend to enjoy your non-political posts and snark. In this instance, you are just plain wrong!

      Free Markets are not driven by supply and demand, they are driven by PROFIT. Nice that you paid attention to your 3rd grade Junior Achievement teacher, but much like the rest of your tirade, saying it doesn’t make it reality.

      Read and ponder this a moment, leave your politics at the door, this isn’t a R or D issue: http://www.tradereform.org/2012/01/why-free-market-economics-is-a-fraud-2/

      I agree BTW that the DOJ got it completely wrong Apple’s actions benefitted the consumer AND the publishers. Where you are wrong is assigning blame to a political ideology, or everyone’s favorite punching bag Barrack. Lets face the fact that it was lobbying, campaign contributions and crony capitalism that advanced this case. Amazon spends Double digit MILLIONS annually securing their “influence” in our corrupt government. They speak DOLLARS, not liberal or conservative. We have equal opportunity crony’s in both parties at ALL levels of government sadly enough.

      1. As an economist I can tell you, the author of that treatise you linked to, hasn’t a clue about economics, macro or micro. He literally is spouting twaddle. Free markets do not require everyone to have everything equal but that millions of free sellers and free buyers come to uncoerced agreements about their own values in trades, nothing more.

        1. Let’s just give you that as a nice, theoretical, utopian idea. Then – what constitutes “free”? I suggest an initial couple of conditions are a well-educated, functioning intelligence and a profound sense of ethics.

          So in a world where
          – mind-blisteringly greedy and powerful sociopaths are very prepared to kill people with their poisonous and unsafe products (e.g. tobacco)
          – and a population of consisting largely of ignorant, not too bright sheep can be brainwashed into thinking the crap is desirable (e.g. tobacco),
          – and the whole society is arranged around finding ultimate meaning in owning “stuff”,

          that talk of a “free market” in a possible coming future is a laughable idea.

          1. I find the basis for your arguments lacking. First of all, the increased health risk of tabocco products is real, but actually on the order of less than half a percentage point greater in contracting cancer and other deleterious effects. The sale of a product that has been sold for centuries—predating the discovery of those deleterious effects, products that people want and demand—can hardly be characterized as you do. I am not a user of that product line, but I will not deny those who choose to use it. It’s is THEIR choice. . . Not yours. Nor is your distaste about “owning stuff” germain to the reality of economics. That is exactly what a free market is all about. . . a market absent coercion from meddling busy bodies like YOU!

  2. I have to wonder why any of this is even worth messing with for Apple. It isn’t like they make any real money with ebooks. They should just say screw you to Cote and withdrew from the market completely.

  3. One thing that is definately more stupid than the DOJ in this case is how Steve Jobs handled negotiations for iBook pricing. Even with all the qualifiers, in the end he conspired with industry leaders to raise and fix prices. What are regulators to do? Say it was ok under the circumstances and watch every industry decide to see if it is ok for them to do the same? Do you want to set this precisent? What other industries do you think it would be ok for the executives to all decide that consumers were paying too little and band together in a deal to raise prices? At the very least, it was extremely bad judgement on Steve’s part.

    1. This would be an excellent comment and conclusion except that every single premise is wrong. Try again after actually getting facts. And if you aren’t embarrassed by what you just wrote at that time, then stay silent so as to not contribute yet more ignorance to the internet.

  4. It’s about time someone wrote about Amazon’s monopolistic-price dumping. Amazon took a page right from JD Rockefeller in how to get rid of your competition.

    Getting the DOJ to do their bidding, THAT’S a new one.

  5. my god!

    how stupid is our society. our gov.
    gov. should not get involved in any business or market!
    they can not handle it.
    they do not understand it!

    otherwise why is our economy so kaputt and/or we reached Roman/Greek-like Decadence and within 250 years?!

    otherwise why do we have the worst Western infrastructure?

    otherwise, why is America,
    that got big on inventiveness so uninventive lately?
    that got big on freedom, such a police state?
    that got big on free enterprise, so controlled, killing small biz?
    that got big on ideas, kills inventiveness like iPhone with by wasting billions in courts when a child can see Samsung or others’ blatant copying?
    that got big on freedom from taxes, taxes its law-abiding hard-earning citizens to death?
    that got big on exceptionalism, is so mediocre now?

    the answer is always:
    the gov. is incompetent.
    has not right to screw with any of our freedom on any level.

    the whole eBook case against Apple is so stupid, immature, unprofessional, unjust, it stinks and proves how silly and ignorant our gov. incl. the most stupid Judge Denise Cote is!

    who can we break & punish the only firm we have, the only one in the Black, the only Made in USA brand loved around the world?!
    our Schadenfreude is so astonishingly grand, we waste so much energy & $ we could use smartly elsewhere, in courts, in punishing Apple but bailout banks that cheat?!

    Amazon fixed eBook prices in 80s at $10 and bankrupted small publishers and authors, but Apple is punished for allowing authors to survive at reasonable $15 eBooks/iBooks?

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