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Old Dec 19, 2012, 01:40 PM   #1
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Apple Notifies European Publishers of 5-Year Halt to 'Most Favored Nation' E-Book Clause




As noted by SetteB.IT, Apple has notified its European publishing partners for the iBookstore that it has suspended the "most favored nation" clause of its book-selling contract for a period of five years. The clause had prevented publishers from selling their books to other distributors at prices lower than those offered to Apple.

The arrangement had been the subject of an antitrust investigation by the European Commission and a settlement in that case was officially approved last week.
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Apple hereby notifies you that, until December 18, 2017, with respect to any book sold in the European Economic Ares (EEA), Apple will no longer apply nor enforce any retail price parity (also know as retail price MFN) provisions in your eBook Distribution Agreement (e.g. Section 5(b) of the Agreement). The change is being made pursuant to a settlement between Apple and the European Commission to resolve case number 49847. The European Commission investigation of Apple's eBook business is now closed. The European Commission has signaled that it will not challenge any other term of our ebook distribution agreement.
Apple notes that the EEA where the new directive applies includes Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom.

Apple worked with publishers to facilitate a landmark shift in the business model for selling books, shifting to an "agency model" in which publishers set retail prices and distributors such as Apple receive a negotiated share of that retail price, similar to how the App Store operates. Under the previous wholesale model in which distributors were allowed to set their own retail prices, Amazon was able to hold a dominant share of the market as it sold books at or below cost in order to entice customers into visiting the site to purchase other products and services.

A key part of the agency model was Apple's "most favored nation" clause guaranteeing that Apple received the best possible pricing from publishers. The move effectively meant that all major distributors offered very similar pricing on books, but with the elimination of that clause publishers are now free to negotiate with distributors, a move that will likely to allow market leaders like Amazon to gain better pricing than smaller rivals.

Article Link: Apple Notifies European Publishers of 5-Year Halt to 'Most Favored Nation' E-Book Clause
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Old Dec 19, 2012, 01:43 PM   #2
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Did Apple Win?

It is good that apple is doing this. It's too bad that they had to make a Federal Case out of it.
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Old Dec 19, 2012, 01:45 PM   #3
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Now, I have to pay more to buy an eBook on Amazon? That's too sad.
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Old Dec 19, 2012, 01:48 PM   #4
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If this results in more expensive Ebooks in the Swedish iBooks Store I'll be pissed. I just wish we'd find our balls and exit EU.
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Old Dec 19, 2012, 01:49 PM   #5
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Good! This shouldn't be there in the first place.
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Old Dec 19, 2012, 01:59 PM   #6
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Hooray! This should result in less expensive ebooks. That "agency model" is what kept the price of so many ebooks so high.
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Old Dec 19, 2012, 02:01 PM   #7
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Now, I have to pay more to buy an eBook on Amazon? That's too sad.
No, it means that you may buy it at the same price that you will find it on iBook store or maybe lower if amazon or others can get it at a lower cost to them or decide to sell it to a loss to get you to buy from them. It's a consumer win IMO
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Old Dec 19, 2012, 02:02 PM   #8
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This is only good publishers, not consumers

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Originally Posted by iphone495 View Post
Good! This shouldn't be there in the first place.
So you are saying price match is a dumb idea; because it is better to pay more if BestBuy cannot get the product at the same low price as WallMart ?
http://www.bestbuy.com/site/Payment-...at204400050011

To give you an example:
I bought the BluRay Movie "Leap Year" from ColumbiaHouse.com for $8.89, and on iTunes it costs $14.99 (both are 1080p). Because publishers can charge Apple more than what they charge the company which nowadays runs the ColumbiaHouse web-site. BUT THIS GOOD ?
And don't tell me the 30% which Apple is charging is causing the difference, because as you may know brick-and-mortar stores typically operate with overhead of about 50% - and not to rip you off; but just to make a profit to stay in business (Borders comes to mind).

Last edited by bergert; Dec 19, 2012 at 02:06 PM. Reason: added markup comment
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Old Dec 19, 2012, 02:11 PM   #9
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So you are saying price match is a dumb idea; because it is better to pay more if BestBuy cannot get the product at the same low price as WallMart ?
http://www.bestbuy.com/site/Payment-...at204400050011

To give you an example:
I bought the BluRay Movie "Leap Year" from ColumbiaHouse.com for $8.89, and on iTunes it costs $14.99 (both are 1080p). Because publishers can charge Apple more than what they charge the company which nowadays runs the ColumbiaHouse web-site. BUT THIS GOOD ?
And don't tell me the 30% which Apple is charging is causing the difference, because as you may know brick-and-mortar stores typically operate with overhead of about 50% - and not to rip you off; but just to make a profit to stay in business (Borders comes to mind).
Is it fair that apple gets to set terms of pricing for every company, removing a companies ability to loss lead, while ultimately leading to increased consumer pricing across the board.

EU and USA don't seem to think so.
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Old Dec 19, 2012, 02:17 PM   #10
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So you are saying price match is a dumb idea; because it is better to pay more if BestBuy cannot get the product at the same low price as WallMart ?
http://www.bestbuy.com/site/Payment-...at204400050011

To give you an example:
I bought the BluRay Movie "Leap Year" from ColumbiaHouse.com for $8.89, and on iTunes it costs $14.99 (both are 1080p). Because publishers can charge Apple more than what they charge the company which nowadays runs the ColumbiaHouse web-site. BUT THIS GOOD ?
And don't tell me the 30% which Apple is charging is causing the difference, because as you may know brick-and-mortar stores typically operate with overhead of about 50% - and not to rip you off; but just to make a profit to stay in business (Borders comes to mind).
Each business should negotiate its own price and then set its own price to the public , how business should work.
In your example if apple haven't negotiated a good price or wish to make a certain margin and they want to sell at £14.99 then you as a consumer have a choice to pay less with another company or more with apple , I see nothing wrong with that
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Old Dec 19, 2012, 02:35 PM   #11
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Originally Posted by MacRumors View Post
Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom.
Well, not really in Austria, France, Germany, Greece, Italy, Netherlands, Portugal, and Spain where the EU isn't bothered by book price fixing and local governments actually require it.
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Old Dec 19, 2012, 02:37 PM   #12
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Excellent, I'm sick of ebooks costing more than dead tree books, and apple are totally to blame with their anti consumer anti competition crap. Most favoured nation? Wtf?

And usually these forums are so full of "competition is the only way to do things, anything else is amoral"..
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Old Dec 19, 2012, 02:42 PM   #13
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Now, I have to pay more to buy an eBook on Amazon? That's too sad.
No one says that.
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Old Dec 19, 2012, 02:47 PM   #14
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you assume there is a market

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Each business should negotiate its own price and then set its own price to the public , how business should work.
In your example if apple haven't negotiated a good price or wish to make a certain margin and they want to sell at £14.99 then you as a consumer have a choice to pay less with another company or more with apple , I see nothing wrong with that
but there is none. All media is controlled by a handful of publishers. And they sell for one price to Apple, and for another one to Amazon. And as they are scared sh**less, Apple gets the highest price.

And as long as as the physical media costs less- I will buy physical media and not download. And this is what publishers are really afraid of: if iTunes costs the same (god forbid) many MORE would choose it- simply because a download is more convenient. And today publishers also get paid (very well by the way) for "selecting" and "promoting". But with iTunes, you don't need to scout "talent". Producers can directly sell to consumers. So the middle-man called publisher may be cut out eventually. And like every species faced with extinction they fight back.

And this "fear" does justify higher prices for download. Because you see nothing wrong publishers giving iTunes prices which are not competitive: i.e. 50%-100% over the cost of physical media.

Disclaimer: I am meber of ColumbiaHouse.com since 1992, and buy too much from them (> $500 in 2012).
PS: when ColubmiaHouse had music, I built my collection for about $6 per disc- on iTunes the same albums cost $9.99 today
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Old Dec 19, 2012, 02:47 PM   #15
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Who cares? iBooks has been a disaster anyway. Much like Maps and Match. Only a fool would buy an e-book that's tied to only one maker's devices.
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Old Dec 19, 2012, 03:01 PM   #16
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but there is none. All media is controlled by a handful of publishers. And they sell for one price to Apple, and for another one to Amazon. And as they are scared sh**less, Apple gets the highest price.

And as long as as the physical media costs less- I will buy physical media and not download. And this is what publishers are really afraid of: if iTunes costs the same (god forbid) many MORE would choose it- simply because a download is more convenient. And today publishers also get paid (very well by the way) for "selecting" and "promoting". But with iTunes, you don't need to scout "talent". Producers can directly sell to consumers. So the middle-man called publisher may be cut out eventually. And like every species faced with extinction they fight back.

And this "fear" does justify higher prices for download. Because you see nothing wrong publishers giving iTunes prices which are not competitive: i.e. 50%-100% over the cost of physical media.

Disclaimer: I am meber of ColumbiaHouse.com since 1992, and buy too much from them (> $500 in 2012).
PS: when ColubmiaHouse had music, I built my collection for about $6 per disc- on iTunes the same albums cost $9.99 today
Where's the evidence that apple get charged higher prices , just because they charge more ? Maybe apple have high margins or just think they can get away with a higher price
As a consumer I don't care if I want something and I can get it cheaper from amazon vs apple I'll buy it from amazon. I've no reason to be loyal to any multi national faceless corporation
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Old Dec 19, 2012, 03:14 PM   #17
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Who cares? iBooks has been a disaster anyway. Much like Maps and Match. Only a fool would buy an e-book that's tied to only one maker's devices.
What I find amusing is there is nothing stopping people from finding PDFs of books in Google by doing a search for a book and choosing advanced search File:PDF and then converting the PDF using Calibre to ePub. True, you might not be able to find all your books, but I bet a lot will be available in PDF somewhere.

Then your issue of it working on any device is solved.
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Old Dec 19, 2012, 03:40 PM   #18
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What I find amusing is there is nothing stopping people from finding PDFs of books in Google by doing a search for a book and choosing advanced search File:PDF and then converting the PDF using Calibre to ePub. True, you might not be able to find all your books, but I bet a lot will be available in PDF somewhere.

Then your issue of it working on any device is solved.
Thanks for detailing how to steal eBooks.
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Old Dec 19, 2012, 03:46 PM   #19
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Germany has book prices fixed by law, so doesn't really make a difference here.
Same applies to France, Italy, Spain and a couple of others.

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Old Dec 19, 2012, 03:53 PM   #20
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Germany has book prices fixed by law, so doesn't really make a difference here.
Same applies to France, Italy, Spain and a couple of others.

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So you actually don't have a Kindle or haven't used the Kindle Software?

Fixed book pricing seems to only apply to hardcopies - or could you detail why the Kindle editions are cheaper?
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Old Dec 19, 2012, 04:13 PM   #21
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Where's the evidence that apple get charged higher prices , just because they charge more ? Maybe apple have high margins or just think they can get away with a higher price
As a consumer I don't care if I want something and I can get it cheaper from amazon vs apple I'll buy it from amazon. I've no reason to be loyal to any multi national faceless corporation
Ironically this is why you have to download iBooks separately and it is not included (though App Store reminds you). This was the same case with Windows and Internet Explorer.
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Old Dec 19, 2012, 04:41 PM   #22
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I'm really confused

From an self-published author's perspective how this will impact me? If now I have a book at 10 dollars in the store from which I get 7 dollars per book, how would the new measure affect the price of my book?

Is this means that my book will be sold at the regular price + VAT in E.U.?

This new move is really confusing, can someone please explain it to me?
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Old Dec 19, 2012, 05:41 PM   #23
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Meanwhile, Amazon continues to do the very thing that Apple got in trouble for doing. And when Amazon "price matches" and lowers the publisher's list price, the publisher only gets paid based on that lower price.
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Old Dec 19, 2012, 05:53 PM   #24
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So you are saying price match is a dumb idea; because it is better to pay more if BestBuy cannot get the product at the same low price as WallMart ?
http://www.bestbuy.com/site/Payment-...at204400050011

To give you an example:
I bought the BluRay Movie "Leap Year" from ColumbiaHouse.com for $8.89, and on iTunes it costs $14.99 (both are 1080p). Because publishers can charge Apple more than what they charge the company which nowadays runs the ColumbiaHouse web-site. BUT THIS GOOD ?
And don't tell me the 30% which Apple is charging is causing the difference, because as you may know brick-and-mortar stores typically operate with overhead of about 50% - and not to rip you off; but just to make a profit to stay in business (Borders comes to mind).
No... you really don't get it. This isn't even remotely the same thing. For one, we have capitalism and free commerce in the usa. Fixing costs and prices is more akin to communism. Which is also why it's not legal in the USA.

By the way, columbia house is OWNED by the studio... buying from columbia house is almost like buying direct from the content creator in MOST cases. Thus, they make MORE money than you buying the movie from a retailer because it's their movie, made and manufactured by them. That was the case with all the CD clubs back in the day too. The bulk of thier offerings were from their own labels.

Apple didn't just rig the cost of items, but the retail price. Why should anyone not be able to get a sale price on an ebook because apple price fixed an entire industry?? MOST of the time, when Amazon sells a book or ebook cheaper than a competitor, they take a loss on margin to do so. Apple is more than free to let publishers set retail prices if they want... and they are also free to keep a 30% cut.... but that means apple isn't giving you a sale ever. When apple has a promotional price on anything, the content owner is taking a hit, not apple... this is not the same with regular retailers.

Price matching is only smart business. Say best buy's cost on a movie is $9, and they sell it for $19.99... a competitor has it on sale for $9.99... would it be better to make 99 cents and match a price, or totally lose a sale and make $0? And if best buy wants a better wholesale price, they can always elect to buy a larger volume of an item to get that price. That's free enterprise. This is how wal-mart became the behometh it is. They would buy massive bulk of items, sell them cheap, pack their stores, while most other items were not big savings. Over time, they managed to dominate all categories to always have the highest volume of sales and thus the best costs. Any retailer if free to buy in bulk for better costs.

Trying to compare brick and mortar stores to digital media is like apples and oranges. Brick retailers sold their souls years ago by signing contracts with companies for shelf space. Manufacturers would pay a guaranteed amount of money for a certain percentage of square footage or premium space (such as an end cap or have their products at a certain height like on a tv wall). This guaranteed the store money even if they didn't sell the merchandise. The down side to this model is that other products get hidden and don't sell as well or they can't carry certain brands or products because of shelf space agreements and then people turned to discount stores that only sold items at the best price, with less variety such as target or walmart who sells 20 tv models vs 150 at a big box electronics store. Best Buy slit their wrists with those kind of deals, as well as all the major department stores years ago leasing space to designers like polo and tommy hillfiger. Space that used to house other cheaper merchandise that sold better. So look at Target, you will see 10 shelves of Neutrogena products... but maybe 5 facings of a lesser known brand. Target will never having the volume or buying power of the lesser brand because they can't give it any more space because other companies bought the space. You have less choice, but you're probably buying the neutrogena anyway.

Digital media is a different beast... there is no shelf space, no inventory, nothing. Amazon might get a better cost on an ebook because they can negotiate taking larger shipments of print books... but so could someone like Barnes & Noble... who fails to grasp the strategy of volume over margin.

What Apple did wasn't just fix costs, but prices. They made ebooks the same price no matter where you bought them. Consumers did not benefit from it at all. Imagine if they did this in regular retail... you would never need a price matching policy because everything would cost the same. Stores wouldn't be competitive because they'd all have the same price, so who cares where you shopped? That's communism.
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Old Dec 19, 2012, 10:25 PM   #25
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Meanwhile, Amazon continues to do the very thing that Apple got in trouble for doing. And when Amazon "price matches" and lowers the publisher's list price, the publisher only gets paid based on that lower price.
where you get this from?

Amazon pay the wholesale price (example $11) and it doesn't matter to the publisher if Amazon put it on sales for $15, $11 or $8. They would get $11 in each case.


With the price fixing between the publishers, Amazon is forced to take a 30% commission on each sales and can't discount.

Example: ebook price is $14.99 (Amazon takes $4.49 as the agent).

This ebook price is the same at every other retailers (Amazon, Apple, Google, B&N, Kobo, Sony etc..).
It's price fixing at the retail level and both the Department of Justice and EU Antitrust commission filed anti trust lawsuit. Most publishers have settled. In the EU, they didn't pay any fines. In the USA, the 3 settled publishers agreed to pay $52 million restitution to ebook buyers.
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