How Apple's Agency Model for Publishers Fails to Merit Collusion Charges

[jca666us]

Originally Posted by terrymr

The agency model isn't the problem.

The problem is that as a group the publishers decided Amazon couldn't have any more e-books unless it accepted the same deal.

I don't see how Apple has a hand in that however.

God forbid the publishers decide to set their own price! What's next, amazon telling everyone dvd's can't cost more than $9.99

[deftdrummer]

I'm a technie but also a basic consumer. What I know is that I have bought one retail book from the ibook store and that's it. The problem is that people who read in volume cannot afford to continue their reading trends with this new digital format. Two losers in this; Apple and the consumer.

On the other hand, part of me feels like the publishing industry is very comparable to the digital music industry about 4 years ago - in that it has dropped the ball with a strategy to monetize itself well into the digital future.

Did the publishing industry come out with any e-readers? Did they push app stores? Did they make a marketplace? NO. They dropped the ball and now it's "we can't make books anymore then at a profit."

I expect to see a lot of indie publishers in the very near future. The same as the music industry. You don't need binding and distribution and pulp for paper anymore. Author becomes publisher (same as apps) and 70% profits to the writer without the middle man. Seems like a no brainer to me.

All I can say with confidence is that something's gotta give because consumers are getting screwed. Or in my case...I'm just not buying e-books period.

[BaldiMac]

Originally Posted by blow45

No they are not, most are arguing that apple used it's monopoly power and colluded with publishers and that's what rendered these practices illegal.

And, yet, very few posts in this thread argue evidence of collusion. (And, of course, Apple did not have any monopoly power in the markets related to this discussion at the time of this agreement.)

No one argued that agency pricing is illegal, and please quote me one that did, or for that matter that MFN is a an illegal practice. I am waiting for a single quote.

Here is your single quote:

Here's one about the agency model being illegal:

More?

And here you are:

More:

Here's one that argues that Apple shouldn't be allowed to take 30%:

And you agreed with it:

But the topic seems to make you constantly uncomfortable and you keep twisting it around.

Please stop making this personal.

Originally Posted by Sacird

Damn you quoted me before I could fix my errors. I knew it would happen

After the Mac Pro gets axed and the eventual airification of everything, I would call it a brand new ball game for a case. I'm glad I had money to absorb the hit at least, others had to deal with some serious hoop jumping. But it is wandering way off topic, so my bad, I like to hit the cage occasionally.

Fixed error or not, Mac Pro or not, monopoly control of Apple's own OS is not cause for antitrust action. The whole point of copyright and patents is to give the rights holder monopoly control of their product.

Originally Posted by blow45

You know damn well that 4 out of the 6, or so publishers have already settled. Isn't that implicit admission of guilt for colluding to implement these prices? Are you not aware of their documented by the DOJ meetings at NY restaurants? You seem to be so well informed about this case but you 've missed that out? Why do you keep misrepresenting the case here for the average mr reader who doesn't have a background in the story and doing such a disservice to everyone?

No, settlement is not an implicit admission of guilt. From the evidence, I think it is likely that at least some of the publishers colluded, but it's far from an open and shut case. As described in the article, the fact that Apple offered publishers the same terms as they offered labels and developer is a pretty straightforward argument against collusion, at least on Apple's part.

[faroZ06]

Originally Posted by gregwyattjr

Can they please let Apple do what they wanna do? If the prices are too high, customers will let Apple know by closing their wallets.

The reason Apple is being tried is because the government thinks that they will be forcing customers to pay high prices for eBooks. They would not have the choice of buying eBooks for less. Personally, I doubt this is the case.

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Originally Posted by Icaras

That statement alone should be enough to end this conspiracy theory once and for all.

Like it or not, various governments are convinced that Apple is not playing fair. There is a not-so-tiny chance that they are correct.

You've been PC free since 2008? But you have an PC right now, according to your signature.

[BaldiMac]

Originally Posted by drorpheus

Do you even read what you are arguing? Yeah it clearly applys here as well, you are failing to comprehend that the publisher has already been paid, as in he's gotten all they were looking to get in terms of their side of the deal (payment for the books purchased at the cost set BY THE PUBLISHING HOUSE)

I didn't fail to comprehend that at all. It had nothing to do with my argument.

They've seemed to have no problem with it for the last 30-40 yrs, Your the one who seems to think that Apple's model is the only way to sell anything,

I seem to think that? Weird. Since I don't actually think that. Or say that. Or even imply that.

which results in a 30% mark up in price to cover the Apple Tax or a 30% decrease in profit from picking up the Apple Tax for the consumer, no one except Apple benefits from Apple's pricing model, how do you not comprehend that?

That would make it very strange to consider that publishers colluded to implement a model that they don't benefit from.

Exactly if you read it over again you can put together exactly what I was getting at, Apple is not a bookstore, they dont purchase any books in any capacity, so being that you dont purchase any books the validity of you arguing that you have the power/name recognition to set higher prices across an entire industry which you play little to no part in is assinine, feel free not to read the emails that couldnt be more clear [blah blah blah].

Apple doesn't set any prices, let alone across an entire industry. The publishers do. That's the whole point of the agency model.

[theBB]

Originally Posted by blow45

No they are not, most are arguing that apple used it's monopoly power and colluded with publishers and that's what rendered these practices illegal. No one argued that agency pricing is illegal, and please quote me one that did, or for that matter that MFN is a an illegal practice. I am waiting for a single quote. But the topic seems to make you constantly uncomfortable and you keep twisting it around.

You cannot have monopoly power in ebook retailing when you have 0% market share.

Collusion, if one exists, is major publishers picking a business model together. I don't think the law is clear in whether this is against the law. If they colluded to set the price of bestsellers in a some genres, that would be against the law, but colluding to favor one business model? I am not sure...

[jca666us]

Originally Posted by blow45

Exactly, one of the voices of reason here. And I ll that to that that's it's preposterous to demand 30% app store type cuts, when they are providing zero development tools (as in ios) and are doing zero quality control or testing on the book itself as in the app store...

Apples and Oranges - apple has developed the iBooks authoring tools, also the iBooks app, and the newsstand.

[faroZ06]

Originally Posted by pacman7331

U know what this smells like to me?

This smells like a false accusation operation by the government to establish what Apple is alleged to have done in the guise of preventing it.

Government is full of this kind of smack.

How is this hypocrisy, as you said?

[AppleHater]

I don't really care one way or the other except I'm not happy that I'm paying as much for ebooks as hardcovers. Coincidentally or not, ebooks were cheaper before iBook came along.

It doesn't matter who wins to me, but the price should go down. I have a feeling that Apple should lose for that to happen in this case.

[Rocketman]

Originally Posted by Mystic386

The government has waltzed in and announced that they have an issue with the second deal forgetting that the first deal wasn't market lead but monopolistic abuse.

No it's worse than that. The government is looking at the two models and saying model #1 (Amazon) results in lower prices to consumers. Model #2 results in higher prices to consumers. They have tunnel vision on that point. They could care less about property rights of the IP owners. They are China in this deal.

They also don't care about the BREADTH and VARIETY of distribution. If any dealer at all sells for less that is the singular goal no matter the market impact.

After Wal-Mart bypassed the Manufacturer-Distributor-Dealer-Consumer model and replaced it with the manufacturer-consumer model resulting in most of our manufacturing base going to China and most small brick and mortar stores closing or having a bunch less variety to sell, prices dropped too.

How is your economy doing lately?

Rocketman

[AppleHater]

Originally Posted by Rocketman

No it's worse than that. The government is looking at the two models and saying model #1 (Amazon) results in lower prices to consumers. Model #2 results in higher prices to consumers. They have tunnel vision on that point. They could care less about property rights of the IP owners. They are China in this deal.

Rocketman

You lost me some where along the line of having competitive pricing is China whereas fixed pricing every where is anti-China. What's bad about retailers having sales to bring customers? Should manufacturers dictate the price like Apple to avoid the injustice? I don't get it. I thought we are living in free market, not China.

[theBB]

In its rush to seem unbiased, Macrumors is quoting Chris Martucci, who seem to conflate different issues when he asks "If that’s not price-fixing, I’m not sure what is." If you follow Martucci's logic, using an agency model along with the most favored nation status is price fixing, so it is illegal. Yet, that is not what DOJ is arguing. Otherwise, why bother with 30 more pages of briefings. (The publishers are free to price their bestsellers below the bestsellers from another publisher, so I doubt you can call this price fixing.)

The argument is whether competitors have illegally came together to agree on a common business model. If you look at the list of "evidence" to prove the conspiracy, it is fairly short and mostly about the "defendant publishers". The remaining commentary about Apple's refusal to sell books from a publisher who has not accepted the agency model or contracts that go into affect if at least three other publishers agree to a similar contract or its offers of getting higher prices or publishers sending supportive emails about a competitor facing a common enemy sound quite legal by themselves. The only smoking gun, if there is one, is communications between CEOs about whether they are all going to move towards the new pricing model. That may be enough to get them and Apple punished, but then again it may not be. Considering the defense has not put together its files that show them in the best light possible (as opposed to the worst light possible in the prosecutors' complaints ), the case does not look very iron clad to me.

[jameskatt]

The best thing for publishers is to publish their works directly - at lower prices than is available at Amazon.

They should charge a high price at Amazon. Then charge a lower price on their own store.

[appsforkids]

I really wish iBooks was more like the App Store, just pay your dues and publish your content. Don't make artists use a middle man.

[BaldiMac]

Originally Posted by jameskatt

The best thing for publishers is to publish their works directly - at lower prices than is available at Amazon.

They should charge a high price at Amazon. Then charge a lower price on their own store.

While I agree in principle, realistically, this model would require them to go DRM free. I'm all for it, but I have a feeling that the publishers are more scared of DRM free than they are of Amazon.

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Originally Posted by appsforkids

I really wish iBooks was more like the App Store, just pay your dues and publish your content. Don't make artists use a middle man.

Apple already allows you to self publish to the iBookstore through iBooks Author. No dues or middle man necessary.

[IJ Reilly]

I appreciate the effort to restore some balance to the article. But was it really? I don't see the equity of balancing the Wall Street Journal with a blogger. I also don't see the equity of adding a rebuttal to his argument, as though it could not be presented without qualification. It's also painfully clear that MR added this update because this blogger had taken them to task for the lack of balance in the original article. Ironic. I know that MR had at one time at least some pretentions towards journalism, but I believe the approach taken here shows why they remain mostly a fan site.

[skellener]

Originally Posted by jca666us

Apples and Oranges - apple has developed the iBooks authoring tools, also the iBooks app, and the newsstand.

Every Kindle eBook is available on any Kindle, iOS, Mac, Windows, Android, Blackberry, Windows Phone with Kindle Apps. So even if you ditched your iPhone for an Android or Windows Phone, or just want to read on your computer, you are set. I'm talking about books here, not interactive magazines and the like. Apple doesn't even support all the devices they make.

[wovel]

Originally Posted by skellener

Every Kindle eBook is available on any Kindle, iOS, Mac, Windows, Android, Blackberry, Windows Phone with Kindle Apps. So even if you ditched your iPhone for an Android or Windows Phone, or just want to read on your computer, you are set. I'm talking about books here, not interactive magazines and the like. Apple doesn't even support all the devices they make.

I never understood why anyone would buy a standard book from the iBookstore. I would even pay a little more from Amazon (which has never been an issue anyway). On top of everything else, the kindle app on iPad and iOs is a lot better than iBooks.

[RobertMartens]

Originally Posted by macthetiger85

I don't think Apple has ever sold a product below cost, in fact they are known for high margins.

In 1996 they sold they pre-iMac All-in-One Performa 475 about 200 dollars below cost to dump about 2 billion dollars in inventory. It was a bloody mess, losing 700 million dollars in one quarter but it worked.

They moved on with the G3 and then the iMac

And the rest is history.

Before that they used to just bury their excess inventory. Literally

[skellener]

Originally Posted by wovel

I never understood why anyone would buy a standard book from the iBookstore. I would even pay a little more from Amazon (which has never been an issue anyway). On top of everything else, the kindle app on iPad and iOs is a lot better than iBooks.

Yup. And slightly off topic, I bought an audiobook from iTunes long ago. It was really crappy low sample rate audio, but that's what they had at the time. While later I found the same audiobook on Audible available at the low sample rate like iTunes, but also in various other formats including the top one - enhanced. I wrote to Apple and asked if I could get a newer better quality version. I mean their audiobooks are basically right from Audible. They replied "No - we do not offer higher quality downloads to previous purchased audiobooks.". Needless to say, I NEVER purchased another one from iTunes, and in fact went back to Audible and repurchased the same one - again and many others and have never even considered getting another one from iTunes. Same goes for Kindle books. I'm sold. I'm never going to the iBookstore.

[Mystic386]

Originally Posted by Rocketman

No it's worse than that. The government is looking at the two models and saying model #1 (Amazon) results in lower prices to consumers. Model #2 results in higher prices to consumers. They have tunnel vision on that point. They could care less about property rights of the IP owners. They are China in this deal.

They also don't care about the BREADTH and VARIETY of distribution. If any dealer at all sells for less that is the singular goal no matter the market impact.

After Wal-Mart bypassed the Manufacturer-Distributor-Dealer-Consumer model and replaced it with the manufacturer-consumer model resulting in most of our manufacturing base going to China and most small brick and mortar stores closing or having a bunch less variety to sell, prices dropped too.

How is your economy doing lately?

Rocketman

So it'll be an interesting case with a negotiated settlement after many years then.

As for our economy. It's doing poorly and likely to get much worse before it gets better. We have record numbers leaving the country. Not good.

We have a government hell bent on keeping inflation down to next to nothing and the worldwide downturn has helped. With income falling they are now cutting costs by wholesale government cuts to balance the books.

If you do this to a business it's a downward spiral to death.

Today for the first time I think we need a change in leadership. We can certainly do much better.

[Bonte]

Is Walmart a most favored nation? I think so, if an item is to expensive they just remove it from there stores, i don't see a difference with Apple policy exept that Apple's is in writing and Walmart is in practice.

[mrklaw]

Once again, apple are the masters of misleading simplicity.

First, it is not their standard model, it is merely the same revenue share model they are using for the app store. It isn't the same as being used in their music store or TV/movie store, where they set retail prices. There is no precedent saying apple have a preferred model - if anything, the original itunes store would be their 'standard' model, and ibooks pricing is a move away from that.

Second, the app store does not have terms that require publishers to not sell their products more cheaply on other platforms. If you want to write Angry Birds iOS and sell it for $1.99, and also sell it on Android for 99c, you can. With ibooks you can't. While the headline rev share is the same, the model overall is not.

[bsolar]

Originally Posted by BaldiMac

As described in the article, the fact that Apple offered publishers the same terms as they offered labels and developer is a pretty straightforward argument against collusion, at least on Apple's part.

That's only if you ignore a part of the DoJ claims. Just one example from the excellent The Verge analysis, emphasis mine:

The DOJ says Apple "knowingly served as a critical conspiracy participant" by promising all the publishers the exact same deal and keeping everyone informed about the status of negotiations. When Penguin explicitly said that it wouldn't sign unless at least three other companies signed, Apple "supplied the needed assurances."

[alhedges]

Originally Posted by BaldiMac

I'm not sure the distinction that you are trying to make. The term "monopoly" is routinely used in the discussion of antitrust laws to refer to companies that abuse their market power.

http://www.ftc.gov/bc/antitrust/mono...n_defined.shtm

Monopolies are addressed in Sec. 2 of the Anti-Trust Act. The current action pertains to Sec. 1 of the Act. Here's what it says:

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court.

There is no "monopoly" requirement here; the fact that Apple had zero market share in e-books doesn't matter if Apple did, in fact, collude with the publishers.