Apple Rebuts Antitrust Charges Over E-Book Pricing

I have to agree with Apple on this. I never understood the hoopla behind this case.

Amazon is usually cheaper anyway.

Popcorn at the ready, this is gonna be fun. I don't see the DOJ getting up that hill!

Of course they won't be found guilty.

I've seen this time and again.

The Judge has an iPad or Macbook, thinks he's all cool for owning it, has a big ol' boner for Steve Jobs because it's "The cool thing"

Dismisses the case, never even hears the argument and Apple goes scot free

With Barry in the WH anything is possible. Look how they've gone after Gibson Guitar.

They want money

Clearly, the DOJ never heard the phrase "you can't litigate your way to profitability." Apple is on top of the capitalistic heap now without any help from the government. The administration doesn't give a crap about e-books. They want a fine or financial settlement.

Apple Innocent?

I think it is pretty obvious Apple presented a way for Publishers to set ebook prices and benefit Apple at the same time.

Who was the loser when this "agency model" was introduced -purchasers of ebooks!

Apple can make doing wrong, sound right.

Mr. Gates said:

Of course they won't be found guilty.

I've seen this time and again...

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Sound like my grandpa who says he's seen it all, over and over. Of course, if one were to actually study the law and the charges, it might not be so easy to write it off as 'good ole boy deal' but it just might reveal facts that preclude such a snap judgement. If someone has more facts than the DOJ charge so far has released, share, please.

All those pretty white boys Apple can do no wrong. . .

Publishers also determined their own revenue per book prior to the agency model. The difference now, is that the customer pays more and Apple (or Amazon) gets a larger percentage of the overall price.

If Amazon wants to forgo their profits and pass the savings along to the customer (while still allowing the publisher to determine their own profit per book), they should have that option (and as customers, so should we).

The fact that paperbacks on Amazon are now cheaper than ebooks just highlights how ridiculous the agency model is. If a publisher wants to make $7.99 per book, they should sell the book to Amazon for $7.99 and allow Amazon to determine their own revenue by choosing the final price payed by the customer (as per the wholesale model). Apple had no right to require publishers to change their relationship with Amazon, just so Apple (not the publisher) could increase their own profits.

MacRumors said:

An Apple spokeswoman...

Apple spokesman Tom Neumayr:

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Oops

Wrong just the Amazons e-books. Do you think the entire world buys from Amazon? They had over 90% of the market before the change because other retailers stayed out of the market because they couldn't make a profit. It actually hurt everyone but Amazon. Publishers and Authors sold fewer books because of a limited market with only one supplier, Amazon who kept them from even direct selling because they would be undercut on their own product. The book stores have been run out of business, and people who don't buy trust or care for or maybe have never even been on Amazon's site would not have access to the ebooks because of market limitations. If publishers and Authors can be in more stores they sell more and make release more books. If they do not do well they don't which means theres less books to buy.

Apple had no right to require publishers to change their relationship with Amazon, just so Apple (not the publisher) could increase their own profits.[/QUOTE]

Of course they had every right. Its called negotiation. That's like saying that since AT&T has your companies business, Verizon can't say I'll offer you better terms if you come to us, but only if you switch these services too. The key is these companies deserve to make business decisions that increase their bottom line just like Amazon does. They are actually making less on each e-book but selling many more because Amazon is not the only player any more. The market is thriving now

copyright owner has the copy price setting rights...

If letting the copyright owners set the prices is illegal, we need to change the law.

chrono1081 said:

Amazon is usually cheaper anyway.

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That's impossible.

The Agency model means that book x sold under the agency model will be the same price on all retailers (i.e. Amazon, Apple, Nook, Kobo, etc.).

If you're talking about non-agency books, then yes, Amazon is very competitive.

I've been reading many threads on this and here's what I've come up with...

Nobody is disputing that Amazon was trying to corner the market on e-books by selling below cost, correct?

That sure puts Amazon in a bad light morally, regardless if they found a way to corner the market legally or not.

In addition, nobody is disputing that Apple helped raise prices and reduce pricing competition for e-books by working with publishers to deploy the agency model for e-books and becoming a party to contracts that insisted nobody could undercut Apple on e-book pricing, correct?

That also puts Apple in a bad light morally, regardless if they found a way to prevent pricing competition legally or not.

I'm also seeing a lot of anger directed toward the DOJ. People say they might not win. Well, isn't that how a democratic system works? If we knew they were going to win ahead of time wouldn't we be living in a dictatorship?

There are also people saying that the e-book market isn't worthy of our tax dollars. Well why not? If the DOJ has evidence of wrongdoing isn't it their job to go after it?

Then there are people angry with the DOJ because they want lower gas prices. I'm not sure I see the connection. I don't think lowering gas prices is as simple as directing the DOJ to open a case with charges they can't backup with sufficient evidence.

Anything I'm missing here?

Wow

This whole suit and thread is like TNT, they know drama

http://www.youtube.com/watch?v=8of00uEVRRA

Daveoc64 said:

That's impossible.

The Agency model means that book x sold under the agency model will be the same price on all retailers (i.e. Amazon, Apple, Nook, Kobo, etc.).

If you're talking about non-agency books, then yes, Amazon is very competitive.

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I have no clue what agency/non-agency is but every book I plan on buying has always been cheaper on Amazon, sometimes as much as 50%.

how can it be an antitrust case when i can buy books in so many ways from so many different outlets? wamart, amazon, borders, apple, and on and on.

EricNau said:

Publishers also determined their own revenue per book prior to the agency model. The difference now, is that the customer pays more and Apple (or Amazon) gets a larger percentage of the overall price.

If Amazon wants to forgo their profits and pass the savings along to the customer (while still allowing the publisher to determine their own profit per book), they should have that option (and as customers, so should we).

The fact that paperbacks on Amazon are now cheaper than ebooks just highlights how ridiculous the agency model is. If a publisher wants to make $7.99 per book, they should sell the book to Amazon for $7.99 and allow Amazon to determine their own revenue by choosing the final price payed by the customer (as per the wholesale model). Apple had no right to require publishers to change their relationship with Amazon, just so Apple (not the publisher) could increase their own profits.

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Why then does the government stop the Chinese from dumping their steel in the USA. By your logic, if the chinese wish to subsidize the American consumer with lower priced steel at the expense of our industry, so be it.

Amazon is out to destroy everybody. The management of amazon does not even care about amazon. They are just doing it to maximize their stock options with help from the shysters of WS. Under the guise of pre planned sales of their stock options, they are benefitting in ways that in the end will screw the long term investor, while destroying companies and countless number of jobs.

where do you want to work?

For a publisher? As an editor or author? For Apple? There's lots of good careers there. And Apple expanded the market, they didn't collapse it.

You know, Amazon is pretty cool, but I don't want them mucking about in things that actually matter. Work at Amazon, and you can get to run not a manufacturing, design or creative business, but a warehouse.

The world's warehouse, the same business model as Wal-Mart, does bring lower prices. It also brings cheap labor, no labor unions, tons of poorly-paid drones and "greeters," and mom and pop out of business; it's really helped to dismantle America. Back in the '80s, I believe, 60 Minutes did a piece exposing Wal-Mart during the time when they put "Made in America" over every other item. Turns out, they were lying most of the time. More and more was being made in the lowest-cost labor countries. If you go for the lowest price at the expense of everything else, you end up with all the factories in China and a great, bleeding hole at the center of the American Dream.

I don't know who the hell at DoJ made this case, but it's really stupid. Or... maybe not. Where was the case against the music labels when they insisted on higher prices in iTunes? When they gave music at the prices Apple wanted to Amazon, at the same time as they undid their DRM. Was Apple monopolistic at that time? Well, they had control of pricing, and the labels wanted to charge more for big hits, and to sell you the occasional older number for .69. Jobs eventually gave them control of pricing, but he got the music DRM-free.

So, did the labels "collude" against Apple, and against lower pricing? Maybe, but hey, that's the market.

And hey, who do you think complained? Why, Amazon, of course. All the homage to the champions of low-cost, and you know what? They had been keeping 70% of those low, low prices. Apple keeps 30%.

jaison13 said:

how can it be an antitrust case when i can buy books in so many ways from so many different outlets? wamart, amazon, borders, apple, and on and on.

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The problem is that you cannot benefit from the competition that an open market offers with the agency model.

The publisher sets the price of a specific book through the agency model, with the retailer (e.g. Amazon) prohibited from changing that price to offer a competitive edge over a different retailer (e.g. Apple). The retailer and the publisher then receive a fixed cut from each sale.

In a traditional model (as used by virtually every other product sold - online or offline, digital or physical), the retailer pays the publisher (or producer of the product - e.g a farmer) a wholesale price. It's up to the retailer what the final price to the consumer should be. They could even sell it at a loss to bring in business in other areas (e.g. to boost sales of ebook readers).

Publishers can't really compete with each other - if you want to read "The Girl With The Dragon Tattoo", it's only available from one publisher. With the Agency model, retailers can't compete with each other and due to the nature of the market, neither can publishers. What does that leave for consumers to choose between?
This makes the pricing system even more complex when compared to other markets. If Coca Cola started fixing their prices, then retailers could still discount Pepsi products.

Why do they think this is antitrust?

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Swift said:

For a publisher? As an editor or author? For Apple? There's lots of good careers there. And Apple expanded the market, they didn't collapse it.

You know, Amazon is pretty cool, but I don't want them mucking about in things that actually matter. Work at Amazon, and you can get to run not a manufacturing, design or creative business, but a warehouse.

The world's warehouse, the same business model as Wal-Mart, does bring lower prices. It also brings cheap labor, no labor unions, tons of poorly-paid drones and "greeters," and mom and pop out of business; it's really helped to dismantle America. Back in the '80s, I believe, 60 Minutes did a piece exposing Wal-Mart during the time when they put "Made in America" over every other item. Turns out, they were lying most of the time. More and more was being made in the lowest-cost labor countries. If you go for the lowest price at the expense of everything else, you end up with all the factories in China and a great, bleeding hole at the center of the American Dream.

I don't know who the **** at DoJ made this case, but it's really stupid. Or... maybe not. Where was the case against the music labels when they insisted on higher prices in iTunes? When they gave music at the prices Apple wanted to Amazon, at the same time as they undid their DRM. Was Apple monopolistic at that time? Well, they had control of pricing, and the labels wanted to charge more for big hits, and to sell you the occasional older number for .69. Jobs eventually gave them control of pricing, but he got the music DRM-free.

So, did the labels "collude" against Apple, and against lower pricing? Maybe, but hey, that's the market.

And hey, who do you think complained? Why, Amazon, of course. All the homage to the champions of low-cost, and you know what? They had been keeping 70% of those low, low prices. Apple keeps 30%.

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Yes, Apple is doing a service to the US. We will finally have electronic books within easy reach. Real books should be eliminated as they waste paper, have many drawbacks, and are not needed!

If Obama had invested in stock for companies like Apple instead of giving out stimulus money, the US government would have made a lot of money (approx 600% gain on AAPL). Of course, that was never their government model

chrono1081 said:

I have no clue what agency/non-agency is but every book I plan on buying has always been cheaper on Amazon, sometimes as much as 50%.

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Sadly, this isn't possible for e-books. The agency model insures they're the same price everywhere.