European Regulators Reportedly Set to Approve Apple E-Book Settlement Proposal

Here's how I see eBooks on iOS devices.

With music - the iPod is ubiquitous for playing music. And if you don't have an Apple device - it's easy enough to get music onto whatever you have

However eBooks from the iBookstore can't be read on anything other than iOS devices. And there's a LOT more competition for eReaders/tablets than there are for music players.

A book on Amazon - even though it's proprietary can be read on any computer, android, iOS and I assume Windows 8 phone/tablet/device

A book from the iBookstore can ONLY be read on an iOS device.

For this reason - Apple isn't likely to "own" this space.

How is there 'bulk' purchasing for e-books? It's a file you buy once and sell many of. For physical media, sure, but for digital, I don't think it applies. I feel the agency model is better for digital, particularly for small/self publishers (for one author's view on the benifits of self publishing and evil stupidity of the 'big 6' publishers, visit http://jakonrath.blogspot.com/)
The big publishers still price their e-books at physical book prices, thinking to reap massive profits, but will eventually realize that the poor numbers aren't due to people not using e-readers, but because customers aren't willing to pay for such a huge markup.

Shmet said:

How is there 'bulk' purchasing for e-books? It's a file you buy once and sell many of. For physical media, sure, but for digital, I don't think it applies. I feel the agency model is better for digital, particularly for small/self publishers (for one author's view on the benifits of self publishing and evil stupidity of the 'big 6' publishers, visit http://jakonrath.blogspot.com/)
The big publishers still price their e-books at physical book prices, thinking to reap massive profits, but will eventually realize that the poor numbers aren't due to people not using e-readers, but because customers aren't willing to pay for such a huge markup.

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It's the same content. So why should it be less? Further - why is it ok for Apple to reap tremendous profits with their hardware - but customers/posters here will balk at paying the regular price for an ebook?

Until physical books no longer exist (and that's a long time off) - it still costs the publisher to publish a book because of all the marketing, typesetting, legal fees, distribution of physical media, etc that are associated with publishing. Also charging less for eBooks vs physical books undervalues the content and undermines physical books as well. It doesn't make good business sense if you're a publisher.

I never bought a book from iBook store, since it's impossible to "Escape" from Apple "Ecosystem", unlike Kindle

As you said, apple makes those profits on hardware. Each sale is for something that has to be built each time for each sale. An e-book (or any other digital media) on the other hand, only needs to be 'built' once.

Physical books require editing, typesetting, cover art, printing, binding, sales to bookstores, shipping and buy backs from the bookstores (and other things I'm sure I'm leaving out). This is used to justify the cost (and how little the author actally gets from each sale). An e-book only needs the editing, typesetting (formatting) and cover art, which are already done for the physical version. After that, its just place it online and sell it over and over again.

Oletros said:

Publishers are paid FULL price

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Actually, this is NOT true. At least, not for small publishers such as my company.

Yes, we set the retail prices for our ebooks. But when Amazon discounts those prices, they pay us an amount based on that discounted price — not our original retail price.

Shmet said:

As you said, apple makes those profits on hardware. Each sale is for something that has to be built each time for each sale. An e-book (or any other digital media) on the other hand, only needs to be 'built' once.

Physical books require editing, typesetting, cover art, printing, binding, sales to bookstores, shipping and buy backs from the bookstores (and other things I'm sure I'm leaving out). This is used to justify the cost (and how little the author actally gets from each sale). An e-book only needs the editing, typesetting (formatting) and cover art, which are already done for the physical version. After that, its just place it online and sell it over and over again.

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Right - so explain how the VALUE of the product is diminished? It's not. It's the same content.

SimonTheSoundMa said:

Large retailers, especially multinationals with large purchasing power bully most publishers in to lowering their prices. Retailers will even go as far as paying what they want, not what the publisher wants.

This happens with publishers, record labels, electronics manufacturers, farmers to name a few industries.

Example right now. Major retailers in the UK have forced to price of milk down to below cost price for the farmers. Many record labels have gone bust because online retailers would not pay full wholesale price.

Smaller companies also form group purchasing organisations so they can have collective buying power, whih again allows them to either buy at discount or bully manufacturers or distributors.

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This is how retail works. What would you suggest? Fixed pricing so there is no competition amongst retailers? or prices set by manufacturers/publishers/etc? I don't see how that benefits me as a consumer. Large retailers like Amazon or Tesco will always undercut the smaller retailers because of their buying power and economies of scale.

I'm a book person. I don't like the way Amazon has driven many small independent book shops out of business, but I also like to get a discount if I can.

What we need is a return to the old co-operative movement IMO were smaller retailers band together to strengthen their buying power. In the milk example you quote why don't the milk producers join together and sell their milk collectively through a co-operative rather than each farm selling their own milk. With fewer producers the retailers would be forced to pay more because they have to offer fresh milk or they would lose customers in droves.

In this case Apple has said repeatedly that they make no money from iTunes sales so ok why not sell the iBooks for what they buy them for plus a few cents extra to compete with Amazon.

What the European Regulators Should Do Next

As a very small UK publisher, what drives me mad is that if I want to sell my book directly through the iBooks store I have to have an American tax ID. I have enough difficulties dealing with one tax authority and I need another like a hole in the head.

Yes, I could go through an aggregator, but why should I give someone a cut for doing almost nothing? Also, if my experiences dealing with Amazon are anything to go by, it puts one at a considerable disadvantage to have an indirect relationship with the vendor.

comment by a poster on engadget

Anti competitive? You really need to read up on the Agency Model that Apple was pushing. An analogy if you will, the Apple gas station sells gas for $6 a gallon. You decide that's too expensive and drive up the street to find it's still $6 a gallon. You drive all over and find it's $6 a gallon anywhere you go because no one else is allowed to compete and sell gas cheaper than Apple. So instead of just competing in the market, they sought to change the market so they didn't have to compete. Which is more anti competitive?


Fix pricing is okay if Congress allow it. If the publishers want to fix prices, they just need to lobby Congress to change the law to allow them to fix prices.

Before the price fixing, you can "comparison shopping" on the various ebook store and get the best deal. Some stores will price it lower, some stores higher.

After the price fixing, the prices of identical book are the same at every stores. (see the $6 a gallon for gas at every stations in a 200 miles radius). Retail competition is eliminated.

How would you feel if every items being sold at competing stores like Target, Wal-Mart, Best Buy etc...are at the same price? with each of these store get 30% commission for each item?

That TV you want: same price everywhere
That dishwasher: same price everywhere
That Levi Jeans: same price everywhere
That sofa: same price everywhere
That computer: same price everywhere
That SD card: same price everywhere
That Nikon camera or that Canon camera: same price everywhere

etc...

Might as well pick the NEAREST store since it will save you some money on gas since it doesn't matter what store you go to, they will charge you the same price.

I wonder why Congress doesn't allow price-fixing. It would eliminate retail competition which would be VERY good for business. Higher profits and all. Businesses should lobby Congress to change the law and allow price fixing since it will mean higher profits for them since they don't need to compete anymore.

samcraig said:

Right - so explain how the VALUE of the product is diminished? It's not. It's the same content.

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The value of the story doesn't change, but the packaging and distribution does. If I'm paying $25 for a new release hardback book, part of that price goes to cover the materials and labor to make that book and get it to the store. Lets say that additional cost amounts to $10. So the the value of the story is then $15. If I'm purchasing the story online, why should I pay the extra cost associated with a hardback version intead of the actual value of the story?

Shmet said:

The value of the story doesn't change, but the packaging and distribution does. If I'm paying $25 for a new release hardback book, part of that price goes to cover the materials and labor to make that book and get it to the store. Lets say that additional cost amounts to $10. So the the value of the story is then $15. If I'm purchasing the story online, why should I pay the extra cost associated with a hardback version intead of the actual value of the story?

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Do you breakdown everything you pay for like that? Just curious. It's a built in cost. The product is the product.

I probably don't. In fact I'm sure I don't. But in this case I do.

If the product is the product and the product is the story, then why is a paperback version of a book less than the hardback? Nothing has changed about the story. Only the cost of the materials and shipping has decreased. If this is the case, then shouldn't an e-book, which has no materials or shipping cost, be less expensive?

Visit baen.com. This publisher sells their new e-books DRM-free for only $6, compared the $25 list price for the hardback version.

http://www.guardian.co.uk/books/2012/dec/14/european-commission-apple-ebook

Readers should prepare for plunging ebook prices after the European Commission yesterday accepted commitments from Apple and four major publishers to stop restricting the sale of cheap ebooks.

The commission has been investigating the publishers Hachette Livre, HarperCollins, Simon & Schuster and Macmillan, together with Apple, over "a suspected concerted practice aimed at raising retail prices for ebooks in the European Economic Area", in breach of EU antitrust rules. It found that Amazon and other retailers were faced with "what we suspect was a concerted and coordinated demand" by the four publishers to agree to the so-called agency model, which allows publishers rather than retailers to set the prices of ebooks, and said that "the coordination of commercial behaviour between competitors – here, with the help of Apple – is forbidden by our competition rules".

"Our strong suspicion is that this was part of a global strategy to restrict competition at retail level and achieve higher prices," said Joaquin Almunia, vice president of the commission responsible for competition policy. "Whatever the publishers' initial concerns about retail prices, dealing with this situation through collusion is not acceptable. Our preliminary conclusion was therefore that this behaviour could possibly constitute an infringement."

To settle the case, Apple and the four publishers offered a range of commitments to the commission that will include the termination of current agency agreements, and, for two years, giving ebook retailers the freedom to set their own prices for ebooks.

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Now that Apple has settled with the EU, will Apple also settle with the DOJ?

http://www.nytimes.com/2012/12/14/t...dealt-a-setback-over-e-book-pricing.html?_r=0

Jean-François Bellis, a lawyer in Brussels who represented Microsoft in its own multiyear European antitrust case, said Mr. Almunia’s settlement in the e-book case reflected his preference for fast, inexpensive solutions to corporate attempts to abuse market dominance.

“This is something indeed that was expected,” Mr. Bellis said. “I am seeing more and more that the commission is resorting to settlements. This is a more practical approach than fines and lengthy prosecutions.” Apple benefits from the resolution because it will not have to pay a fine, Mr. Bellis said.

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More reason to settle with the DOJ?

Following up to the post I made at the top of this page.

I currently have about $150 in iTunes credit. There's a book I want to read. Instead of using my iTunes credit - I'm buying it on Amazon. Why? Because while it won't "cost" me anything to buy it through Apple - I am stuck only reading it on my iPad. Instead - if I buy it on Amazon - I can read it on my iPad, Skyrocket (phone) or Kindle. And so can my wife (on any of her devices).

I doubt it will happen - but Apple really should create apps for other devices if they hope to compete.

Look like Penguin is settling with the DOJ

http://www.latimes.com/business/la-fi-ebooks-penquin-20121219,0,274808.story

U.S. settles with Penguin Group in e-book price-fixing lawsuit
The proposed settlement would leave Apple and Macmillan as the only defendants in a suit accusing Apple of conspiring with publishers to raise e-book prices.

"Since the department's settlement with Hachette, HarperCollins, and Simon & Schuster, consumers are already paying lower prices for the e-book versions of many of those publishers' new releases and bestsellers," Jamillia Ferris, chief of staff and counsel at the Department of Justice's Antitrust Division, said in a statement. "If approved by the court, the proposed settlement with Penguin will be an important step toward undoing the harm caused by the publishers' anticompetitive conduct and restoring retail price competition so consumers can pay lower prices for Penguin's e-books."

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