Apple Settles State and Consumer Class Action E-Book Price Fixing Lawsuit

MacRumors · Jun 17, 2014

According to a letter filed in the Southern District Court of New York, Apple has reached an out-of-court settlement with both class action lawyers and state district attorneys over e-book price-fixing, reports Bloomberg.

Settlement details remain sealed and must be approved by the court. If approved, this agreement will end litigation ahead of a potentially costly damages trial that was slated to begin July 14. Apple faced more than $800 million in damages in this class-action antitrust lawsuit involving both consumers and states.

Steve Berman, a lawyer representing the plaintiffs, said by phone that all the U.S. attorneys general and consumers settled the case. Berman said he filed a memorandum of understanding with the court under seal, which prevents him from describing the agreement.

In an earlier decision, Apple was found guilty of conspiring to fix e-book prices in a lawsuit brought by the U.S. Department of Justice. As part of its preparations for launching the iBookstore alongside the iPad in 2010, Apple sought to weaken Amazon's hold on the industry and change the business model that governed the sale of e-books, an effort that resulted in higher prices for consumers. Apple filed an appeal in that case earlier this year.

Article Link: Apple Settles State and Consumer Class Action E-Book Price Fixing Lawsuit

John.B · Jun 17, 2014

All while Amazon wields complete monopoly power in the bookseller world. Unbelievable....

Becordial · Jun 17, 2014

Mods please delete

Tumbleweed666 · Jun 17, 2014

Glad this is out of the way, it was a slam dunk, they clearly did conspire to keep prices high, the evidence is clear for everyone to see except those who dont want to.

Amazon kept (and keeps) book prices low, people talk about a "monopoly" but it patently isn't, there are numerous places to buy books from, online or in print. The only monopoly (or to be accurate oligopoly) was the conspiracies of a handful of major publishers and Apple to keep prices high.

jasonklee · Jun 17, 2014

Tumbleweed666 said:
Glad this is out of the way, it was a slam dunk, they clearly did conspire to keep prices high, the evidence is clear for everyone to see except those who dont want to.

Amazon kept (and keeps) book prices low, people talk about a "monopoly" but it patently isn't, there are numerous places to buy books from, online or in print. The only monopoly (or to be accurate oligopoly) was the conspiracies of a handful of major publishers and Apple to keep prices high.

Indeed. Customers and authors are better served by Amazon's values than Apple's. Hopefully this has put Apple in their place.

redscull · Jun 17, 2014

But book prices have not changed. Amazon still sells books as a loss lead at the author/publisher's expense, and iBooks are still MSRP sticker priced. This whole thing accomplished nothing but putting money in lawyer's pockets.

FakeWozniak · Jun 17, 2014

Tumbleweed666 said:
Glad this is out of the way, it was a slam dunk, they clearly did conspire to keep prices high, the evidence is clear for everyone to see except those who dont want to.

Amazon kept (and keeps) book prices low, people talk about a "monopoly" but it patently isn't, there are numerous places to buy books from, online or in print. The only monopoly (or to be accurate oligopoly) was the conspiracies of a handful of major publishers and Apple to keep prices high.

The only thing the "conspirators" did was enact an agency model which keeps vendors like Amazon from instituting aggressive "loss leaders". These below-cost prices which would eventually turn into predatory contract negotiations like we have now with Hatchette and Time Warner.

And it's not over for either Apple or Amazon.

Tumbleweed666 · Jun 17, 2014

redscull said:
But book prices have not changed. Amazon still sells books as a loss lead at the author/publisher's expense, and iBooks are still MSRP sticker priced. This whole thing accomplished nothing but putting money in lawyer's pockets.

Of course book prices have changed !!! Previously Amazon was not allowed to sell books below a certain price, or loss lead. Now they are. They even had a sign on those books to the effect of "we arent allowed to sell these books below this price by the publisher". Thats gone now and prices have dropped.

Whether or not iBooks are still MSRP sticker priced is irrelevant, as long as they are cheaper on Amazon.

Rocketman · Jun 17, 2014

article said:
Apple sought to weaken Amazon's hold on the industry and change the business model that governed the sale of e-books, an effort that resulted in higher prices for consumers. Apple filed an appeal in that case earlier this year.

As a publisher who sets a firm wholesale price on the books I publish I welcomed the agency model Apple proposed. It "raised prices to consumers" by protecting "copyright owners' rights to set wholesale prices to above cost".

Amazon wanted to sell loss leader products and transfer the cost reductions to copyright owners and not compensate them for their work since under the Amazon model the owner gets a percentage of actual sale price, even if it is $1 or $0.

That's a ripoff.

The fact they exploited a wrinkle in regulator attitudes (not written down) and thus gave civil plaintiffs a foothold based on the arbitrary and monologue rulings of regulators, means this country, in fact, does not operate under the rule of law.

It's also an example of the majority squashing the minority.

Rocketman

cite (pdf):
http://www.v-serv.com/usr/ATFE-03-16-09.pdf

Tumbleweed666 · Jun 17, 2014

FakeWozniak said:
The only thing the "conspirators" did was enact an agency model which keeps vendors like Amazon from instituting aggressive "loss leaders". These below-cost prices which would eventually turn into predator contract negotiations like we have now with Hatchette and Time Warner.

I'm all for aggressive loss leaders. Yes please.

re leading to predatory contract negotiations its the same wording that music studios used to try and prevent music being sold except on a physical CD at $15 a pop.

BaldiMac · Jun 17, 2014

Tumbleweed666 said:
Glad this is out of the way, it was a slam dunk,

The settlment is contingent upon the appeal of the DOJ case.

they clearly did conspire to keep prices high, the evidence is clear for everyone to see except those who dont want to.

Care to post this clear evidence? I've been asking in every post on this topic. The best I get is "agency pricing bad" or "mfn bad". Even though the judge herself said that they are legal alone or in combination.

Amazon kept (and keeps) book prices low, people talk about a "monopoly" but it patently isn't, there are numerous places to buy books from, online or in print. The only monopoly (or to be accurate oligopoly) was the conspiracies of a handful of major publishers and Apple to keep prices high.

Amazon was certainly a monopoly as defined by the FTC prior to Apple's entry into the eBook market and arguably still is today.

http://www.ftc.gov/tips-advice/comp...ws/single-firm-conduct/monopolization-defined

FakeWozniak · Jun 17, 2014

Tumbleweed666 said:
I'm all for aggressive loss leaders. Yes please.

re leading to predatory contract negotiations its the same wording that music studios used to try and prevent music being sold except on a physical CD at $15 a pop.

I'd love to pay next to nothing for my entertainment too.

However, nobody sees the sustainability there. If Amazon keeps it up for a while, authors and publishers will eventually go away. Then short sighted folks will eventually complain about how there's nothing but crap for entertainment.

Regarding the music comparison, some would say the music offerings today are crap because the price competition took the motivation away from artists.

The artists want a fair days wage for a fair days labor too.

Tumbleweed666 · Jun 17, 2014

BaldiMac said:
Care to post this clear evidence? I've been asking in every post on this topic. The best I get is "agency pricing bad" or "mfn bad". Even though the judge herself said that they are legal alone or in combination.

[/url]

Do you not agree that "agency pricing" set a low water mark below which books could not be legally sold by Amazon? (If not, what do you think agency pricing was?)

How is that not keeping prices higher, if Amazon were literally not allowed to discount them?

BaldiMac · Jun 17, 2014

Tumbleweed666 said:
Do you not agree that "agency pricing" set a low water mark below which books could not be legally sold by Amazon? (If not, what do you think agency pricing was?)

No. Publishers could set any price they like on Amazon under agency pricing.

How is that not keeping prices higher, if Amazon were literally not allowed to discount them?

That's the fundamental misunderstanding that people like you who think there is clear evidence against Apple bring up again and again. Agency pricing is legal. Judge Cote confirmed that it is legal in her ruling against Apple.

Cote: "If Apple is suggesting that an adverse ruling necessarily implies that agency agreements, pricing tiers with caps, MFN clauses, or simultaneous negotiations with suppliers are improper, it is wrong. As explained above, the Plaintiffs have not argued and this Court has not found that any of these or other such components of Apples entry into the market were wrongful, either alone or in combination."

This case isn't about agency pricing. The case is about whether Apple colluded with publishers to raise prices.

Tumbleweed666 · Jun 17, 2014

FakeWozniak said:
I'd love to pay next to nothing for my entertainment too.

However, nobody sees the sustainability there. If Amazon keeps it up for a while, authors and publishers will eventually go away. Then short sighted folks will eventually complain about how there's nothing but crap for entertainment.

Who is saying "next to nothing" ?? And why is the entertainment industry any different than any other one, artists get paid based on what people want to freely pay. How else would it work? Some government based scheme? Or as Apple wanted a cartel of suppliers who strong armed the public into paying what they decided?

FakeWozniak said:
Regarding the music comparison, some would say the music offerings today are crap because the price competition took the motivation away from artists.

Thats risible because if you go back to some of the great music of the 30's 40's those artists lived and died in poverty. Anyway I think more would say that artists whose driving force is money are the ones who produce the crap.

FakeWozniak said:
The artists want a fair days wage for a fair days labor too.

Except they werent getting it from the labels were they? From time immemorial labels have been ripping off artists left right and centre.

----------

BaldiMac said:
No. Publishers could set any price they like on Amazon under agency pricing.

Publishers could, but Amazon couldnt ! Thats the point surely?

silentbob007 · Jun 17, 2014

Rocketman said:
As a publisher who sets a firm wholesale price on the books I publish I welcomed the agency model Apple proposed. It "raised prices to consumers" by protecting "copyright owners' rights to set wholesale prices to above cost".

Amazon wanted to sell loss leader products and transfer the cost reductions to copyright owners and not compensate them for their work since under the Amazon model the owner gets a percentage of actual sale price, even if it is $1 or $0.

That's a ripoff.

The fact they exploited a wrinkle in regulator attitudes (not written down) and thus gave civil plaintiffs a foothold based on the arbitrary and monologue rulings of regulators, means this country, in fact, does not operate under the rule of law.

It's also an example of the majority squashing the minority.

Rocketman

cite (pdf):
http://www.v-serv.com/usr/ATFE-03-16-09.pdf

Isn't the solution simple though? Don't sell on Amazon.

FakeWozniak · Jun 17, 2014

Tumbleweed666 said:
Who is saying "next to nothing" ?? And why is the entertainment industry any different than any other one, artists get paid based on what people want to freely pay. How else would it work? Some government based scheme? Or as Apple wanted a cartel of suppliers who strong armed the public into paying what they decided?

I think you are missing the point or just don't want to acknowledge it. Do you understand that selling below cost is unsustainable? I'm prepared for another non-answer...

BaldiMac · Jun 17, 2014

Tumbleweed666 said:
Publishers could, but Amazon couldnt ! Thats the point surely?

No, that's not the point. As I explained in my last post. Agency pricing is legal.

Agency pricing allows the supplier to maintain control over retail pricing instead of the retailer. The retailer simply gets a percentage. It's how apps are sold in the various app stores. I provided you a direct quote from the judge that ruled against Apple confirming that it's legal. How much more confirmation do you need?

gnasher729 · Jun 17, 2014

jasonklee said:
Indeed. Customers and authors are better served by Amazon's values than Apple's. Hopefully this has put Apple in their place.

That's the most ridiculous, short-sighted, ignorant statement that I have seen in a long time. Amazon is currently involved in using its monopoly position to force publishers like Hachette and Time Warner to do what Amazon wants, by removing the products of these companies from their website.

Surely customers and authors are really well-served by products disappearing from Amazon because Amazon is busy blackmailing the publishers.

----------

silentbob007 said:
Isn't the solution simple though? Don't sell on Amazon.

Amazon is in a monopoly position. Companies are forced to sell through Amazon, or face major financial consequences. And when Apple tried to provide an alternative, you saw how that ended.

jasonklee · Jun 17, 2014

gnasher729 said:
That's the most ridiculous, short-sighted, ignorant statement that I have seen in a long time. Amazon is currently involved in using its monopoly position to force publishers like Hachette and Time Warner to do what Amazon wants, by removing the products of these companies from their website.

Surely customers and authors are really well-served by products disappearing from Amazon because Amazon is busy blackmailing the publishers.

----------

Amazon is in a monopoly position. Companies are forced to sell through Amazon, or face major financial consequences. And when Apple tried to provide an alternative, you saw how that ended.

So? Amazon's is looking out for the consumer by lowering prices, how is that a bad thing? They're fighting the greedy corporations and writers. Apple was just looking to inflate prices so they could get their cut.

sofila · Jun 17, 2014

Funny to see all these " consumers" willing to pay more just to show off how rich they are.
I probably live on another planet, that one where you have to earn the money you want to spend

John.B · Jun 17, 2014

silentbob007 said:
Isn't the solution simple though? Don't sell on Amazon.

But Amazon is, for all intents and purposes, "the market". That's what defines a monopoly under anti-trust law. Or it used to, before Ms. Cote and Mr. Holder redefined it to suit their own purposes.

jasonklee said:
So? Amazon's is looking out for the consumer by lowering prices, how is that a bad thing? They're fighting the greedy corporations and writers. Apple was just looking to inflate prices so they could get their cut.

No, Amazon is driving other retailers out of business by lowering prices. Then Amazon, owning the market, "makes their cut" by squeezing the content creators into operating at a loss.

If you think Jeff Bezos is "looking out for the consumer", you are sadly mistaken. He's trying to claw back profits from his suppliers because Wall Street won't allow him to run AMZN at a loss forever.

BaldiMac · Jun 17, 2014

jasonklee said:
So? Amazon's is looking out for the consumer by lowering prices, how is that a bad thing? They're fighting the greedy corporations and writers. Apple was just looking to inflate prices so they could get their cut.

sofila said:
Funny to see all these " consumers" willing to pay more just to show off how rich they are.
I probably live on another planet, that one where you have to earn the money you want to spend

Funny to see all these "consumers" who can't see beyond their own wallet. How much more did an average consumer on a tight budget pay under agency pricing? $5? Maybe $10? Going by the amounts of the refunds that people have posted, probably less than that. Personally, I didn't buy a single eBook.

I think that encouraging quality and diversity of content is a good thing. I think that consolidating all the power over an industry as culturally important as the book industry in a corporation like Amazon is bad.

As much as the anti-Apple position would like to pretend that Apple actions resulted in an increase in price over the price established by a free market, the reality is that the pre-Apple market rate was set by Amazon, and Amazon alone. The post-Apple market rate was set by dozens of competing publishers. I prefer a more competitive market.

I also think it was hypocritical of the DOJ to go after an alleged conspiracy of publishers that made up 40% of the market and then turn around and approve the merger of the top 2 publishers to give them control of more than 30% of the market.

John.B · Jun 17, 2014

sofila said:
I probably live on another planet, that one where you have to earn the money you want to spend

Furthering your analogy:

So I decide you "earn" too much money, and I decide to pay you less because you have no where else to ply your wares but through me because I drove your other options out of business by running at loss for a period of time. You're good with that, right?

mw360 · Jun 17, 2014

sofila said:
Funny to see all these " consumers" willing to pay more just to show off how rich they are.
I probably live on another planet, that one where you have to earn the money you want to spend

How are you going to earn that money when there are no other jobs other than at Amazon? (Don't be surprised to learn they don't pay well.)

Apple Settles State and Consumer Class Action E-Book Price Fixing Lawsuit

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