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Old Jul 10, 2013, 09:41 AM   #226
BaldiMac
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Originally Posted by EbookReader View Post
How can Amazon be profitable selling ebooks when they are "dumping"?.
Because books are not a commodity. All books are not the same. Best sellers get people in the door.
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Old Jul 10, 2013, 10:11 AM   #227
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Originally Posted by BaldiMac View Post
Because books are not a commodity. All books are not the same. Best sellers get people in the door.
And what's wrong with selling some best sellers at prices that would get customers in the door?

Dumping means losing money overall in order to drive competitors out of the market.
Loss leader means profitable because only some books lose money while many books will be profitable.


If Apple uses the LOSS LEADER strategy, would people have a problem with it?
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Old Jul 10, 2013, 11:33 AM   #228
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Amazon doesn't use "dumping", they use the "loss leader" method.
They set best seller prices at a slight loss and make up for it with other titles.
Amazon actually makes a profit with ebooks.

Amazon knows full well the feds would be all over them like white on rice if there was even a hint of illegal activity.
Especially after what just went down with Apple.
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Old Jul 10, 2013, 01:46 PM   #229
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Originally Posted by EbookReader View Post
And what's wrong with selling some best sellers at prices that would get customers in the door?
Nothing. Unless you are in a monopoly position in the market and using it as a barrier to entry to prevent competition.

Quote:
Dumping means losing money overall in order to drive competitors out of the market.
Okay. Again, books aren't a commodity. How much notoriety do you think a new bookstore is going to get if their sales pitch is "Hey, all the most popular books are more expensive here than the place that everyone already shops because we can't afford to pay you to take them while we gain our footing in the market. But, you know, the other stuff is competitively priced." Meanwhile, they have to open with a vast library because no individual items are going to sell well.

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Loss leader means profitable because only some books lose money while many books will be profitable.
Yep. That doesn't preclude it from being a predatory pricing strategy.

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If Apple uses the LOSS LEADER strategy, would people have a problem with it?
I'm sure some people would. But some people have problems with everything Apple does. I would have a problem with it if they were in a monopoly position and used it to prevent competition.
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Old Jul 10, 2013, 03:23 PM   #230
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Originally Posted by BaldiMac View Post
Yep. That doesn't preclude it from being a predatory pricing strategy.
The DoJ recently looked into Amazon for predatory pricing and found nothing. Or, at the very least, didn't find enough to warrant taking Amazon to court.

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I'm sure some people would. But some people have problems with everything Apple does. I would have a problem with it if they were in a monopoly position and used it to prevent competition.
Apple's already been there. They did it originally w/the iTMS. The iTMS wasn't designed to be profitable because Apple, at the time, made bank selling iPods. Rhapsody and the re-booted Napster couldn't match up because they needed to actually run a business by just selling music. It wasn't until Amazon got into the download music game that Apple saw an inkling of a competitor. A multitude of 'always on' devices has changed the landscaped and made streaming services viable now but back when the iTMS launched no one wanted a streaming service when it only worked with your computer.

From an interview w/Jobs:
Quote:
"Most of the money goes to the music companies," admitted Jobs.

"We would like to break even/make a little bit of money but it's not a money maker," he said, candidly.

So now we have it on record: the music store is a loss leader. Jobs said Apple would pay its dues to the RIAA, then seek to make money where it could, from its line of hardware accessories. When the conversation turned to rivals such as eTunes and Napster, Jobs said: "They don't make iPods, so they don't have a related business where they do [make money]".
emphasis mine.


Apple's M.O. for the last 15yrs or so has been to offer free/less expensive software and/or services than the competition as an incentive for people to buy Apple hardware. I'm not saying is inherently a bad thing but lets not pretend Apple always 'fights fair' and isn't willing to cut the competition off at the knees any chance it gets.
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Old Jul 10, 2013, 03:35 PM   #231
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Originally Posted by LethalWolfe View Post
The DoJ recently looked into Amazon for predatory pricing and found nothing. Or, at the very least, didn't find enough to warrant taking Amazon to court.
I'd agree with your second sentence.

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Apple's already been there. They did it originally w/the iTMS.
No, they didn't. There was no loss leaders that I'm aware of outside of a couple freebies of the week.
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Old Jul 11, 2013, 02:01 AM   #232
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http://www.publishersweekly.com/pw/b...book-case.html

“Here we have every necessary component,” Cote ruled of her decision to analyze the case as a per se violation. “With Apple’s active encouragement and assistance, the Publisher Defendants agreed to work together to eliminate retail price competition and raise e-book prices, and again with Apple’s knowing and active participation, they brought their scheme to fruition.”

In the final analysis, the case wasn’t even close. In its defense, Apple had argued on three main points, and lost soundly on all three.

First, Apple argued that there was no conspiracy to raise prices, and that it was the publishers who in fact raised prices. Cote was thoroughly unmoved by this argument.

“Apple is correct that the conspiracy required the full participation of the Publisher Defendants if it were to achieve its goals. It is also correct that the Publishers wanted to change Amazon’s pricing policies and to raise e-book prices,” Cote observed. “But, those facts do not erase Apple’s own intentions in entering into this scheme. Apple did not want to compete with Amazon on price and proposed to the Publishers a method through which both Apple and the Publishers could each achieve their goals.”

Cote added that the record is “equivocal” on whether Apple itself desired higher e-book prices, but “unequivocal” that Apple “embraced higher prices.”

Apple’s second line of defense was that Amazon and other retailers actually embraced the agency model, as evidenced by their adoption of agency deals nearly identical to Apple’s, contracts which even included MFN’s. Cote soundly rejected that argument as well.

“The issue is not whether an entity executed an agency agreement or used an MFN, but whether it conspired to raise prices,” she wrote. “Amazon was adamant in its support of retail price competition and lower prices. It did not relinquish its control over retail pricing easily.”

And last, Apple sought to show that the e-book market suffered no ill-effects, and in fact, that its agreements were pro-competitive. Again, Cote was completely unmoved. As she did in her approval of the initial three settlements with publishers, she stressed that even if Amazon was foreclosing competition through low pricing, that does not justify collusion.

“This trial has not been the occasion to decide whether Amazon’s choice to sell NYT Bestsellers or other New Releases as loss leaders was an unfair trade practice or in any other way a violation of law,” the judge wrote. “If it was, however, the remedy for illegal conduct is a complaint lodged with the proper law enforcement offices or a civil suit or both. Another company’s alleged violation of antitrust laws is not an excuse for engaging in your own violations of law.”

In the final analysis, Cote concluded, “it is essential to remember that the antitrust laws were enacted for ‘the protection of competition, not competitors.’”

. . . .

“Apple is liable here for facilitating and encouraging the Publisher Defendants’ collective, illegal restraint of trade. Through their conspiracy they forced Amazon (and other resellers) to relinquish retail pricing authority and then they raised retail e-book prices. Those higher prices were not the result of regular market forces but of a scheme in which Apple was a full participant.”
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Old Jul 11, 2013, 03:22 AM   #233
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Originally Posted by BaldiMac View Post
No, they didn't. There was no loss leaders that I'm aware of outside of a couple freebies of the week.
W/o knowing how much Apple pays for each track/album how can you be certain there are no loss leaders? Besides that, look at Jobs' quote again. Apple designed the iTMS to make little-to-no profit selling songs because they knew they'd make a lot of profit selling iPods.
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Old Jun 27, 2014, 04:55 AM   #234
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Originally Posted by I.Love.Apple View Post
Fixing margins/prices is illegal. Is not it clear? Today Apple decided to fix margins at 30% tomorrow they may prefer 300%. And did you really notice the drop in quality of e-books when profit margins were reduced?
You miss my point, it is illegal but it shouldn't be that's my point.

If apple decided to charge 300% profit on an ebook do you really think people would buy? That's my point, we'll still only pay what we think something is worth, companies will try to add value to increase the price but we'll still only pay what it's worth.

It's not just the quality of the ebook or product that's affected but cutting margins, it's quality of service too, and other small businesses can't compete with big businesses so they go bust, which means people lose jobs, cutting margins is bad, adding value is good.
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