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Apple Offering Concessions in European E-Book Suit as Several Publishers Settle in U.S.
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Price competition is back. HarperCollins ebooks are sold as wholesale to ebook retailers. And these retailers are able to discount.
Example: Divergent by Veronica Roth
Yesterday:
$9.99 on Amazon
$12.99 on B&N
Today:
B&N: $7.29
Amazon: $7.29
Hey look at that, retailers are competing. We win. It was $12.99. Then dropped to $9.99. Ensuing price war, it is now $7.29.
The publisher profits too since they sold it at wholesale at a much higher price than $7.29.
http://mediadecoder.blogs.nytimes.c...ents-with-amazon-and-others-on-e-book-prices/
HarperCollins Reaches New Agreements With Amazon and Others on E-Book Prices
As consumers, we win when ebook retailers are able to offer discount.
Example: Divergent by Veronica Roth
Yesterday:
$9.99 on Amazon
$12.99 on B&N
Today:
B&N: $7.29
Amazon: $7.29
Hey look at that, retailers are competing. We win. It was $12.99. Then dropped to $9.99. Ensuing price war, it is now $7.29.
The publisher profits too since they sold it at wholesale at a much higher price than $7.29.
http://mediadecoder.blogs.nytimes.c...ents-with-amazon-and-others-on-e-book-prices/
HarperCollins Reaches New Agreements With Amazon and Others on E-Book Prices
As consumers, we win when ebook retailers are able to offer discount.
http://www.idealog.com/blog/hats-off-to-amazon/
The other publishers who haven't settled yet will need to lower their prices in order to be more competitive?
Open market (low price for customers) vs. price fixing (high price for customers) indeed.
In the comment section, Mike Shatzkin (well known publishing consultant) wrote this:
http://www.idealog.com/blog/hats-off-to-amazon/
Can a company be predatory selling ebooks when it makes money on ebooks. Llose money on 25% of the sales but gain money on 75% of the sales, the overall picture is profits. It's like saying a store selling clothes is predatory when it is profitable (lose money on the loss-leader but make money on the other 75% of sales)?
The other publishers who haven't settled yet will need to lower their prices in order to be more competitive?
Open market (low price for customers) vs. price fixing (high price for customers) indeed.
In the comment section, Mike Shatzkin (well known publishing consultant) wrote this:
http://www.idealog.com/blog/hats-off-to-amazon/
Can a company be predatory selling ebooks when it makes money on ebooks. Llose money on 25% of the sales but gain money on 75% of the sales, the overall picture is profits. It's like saying a store selling clothes is predatory when it is profitable (lose money on the loss-leader but make money on the other 75% of sales)?
And, again, consumer aren't the only concern in maintaining a open market.
I suggest you read Bob Kohn's brief for another perspective.
Of course. Amazon has an exclusive on 16% of best sellers and prices many of the best sellers below cost. (The 4% of books that make up 25% of their sales!)
Only if the store selling clothes is in a monopoly position.
http://paidcontent.org/2012/09/11/the-price-drops-begin-what-do-harpercollins-ebooks-cost-now/
Sep 11, 2012 - 9:54AM
The price drops begin: What do HarperCollins ebooks cost now?
So instead of taking the "fixed" 30% commission, these e-sellers are now competing against each others for customers. As a result, their 30% commission/margin will be reduced.
Sep 11, 2012 - 9:54AM
The price drops begin: What do HarperCollins ebooks cost now?
So instead of taking the "fixed" 30% commission, these e-sellers are now competing against each others for customers. As a result, their 30% commission/margin will be reduced.
So according to you, Amazon is predatory. I guess that make all the profitable stores that use loss-leaders also predatory and should be subjected to DOJ investigation like Wal-Mart, Target, Best Buy, Frys, Safeway, Kroger, KMart. If they offer a few popular DVDs/Blu-ray below cost as loss-leaders, they are predatory even though their overall DVDs/Blu-ray are profitable (loss money on 25% of sales but make profits on 75% of sales = overall profitable).
p.s. According the court, Amazon is not predatory:
http://www.techdirt.com/articles/20...ts-public-interest-to-stop-price-fixing.shtml
Nor does it show "predatory" pricing, which was a key complaint.
The problem there: the evidence showed that Amazon was "consistently profitable." And, to show predatory pricing, "one must prove more than simply pricing below an appropriate measure of cost" but also that the company will jack up prices down the road. And all of the comments failed to do that:
Oh, and finally, the court points out that swinging back the blame to Amazon is meaningless for the purpose of this case, anyway, because even if the court accepted that Amazon was price fixing too, that doesn't make it okay for the publishers to price fix themselves. Think of it as the "two wrongs don't make a right" rule.
oh, Barnes and Noble is also predatory because it is pricing some ebooks below cost as loss-leaders.
http://paidcontent.org/2012/09/11/the-price-drops-begin-what-do-harpercollins-ebooks-cost-now/
So if a store has "monopoly position" (let's say 80% share of the market), it can't use loss-leader? It should let its competitors use loss-leaders. It is only fair for competitions to increase market share at its expense?
What logic is this?
It's like saying Itunes (which has around 80% share of the digital market) is not allowed to use loss-leaders while Itunes competitors like Amazon/GooglePlay can. I know using Itunes is a bad example because I don't think Apple use loss-leader as a retailer before. I could be wrong. But assuming that Itunes do use loss-leader, is it okay to prevent Itunes from doing so? And is it fair for consumers that Itunes stop using loss-leader? (aka, getting a good deal).
Anyway, if Amazon has a monopoly on ebook (say 80% market share) and it raises prices. Two things will happen
1) DOJ investigation for abusing its monopoly power
2) competitors will spring up overnight because there is very "low barrier" to entry. Amazon buys book for $10 and sell for $14. Google or Apple could buy book for $10 and sell for $12, undercutting Amazon by $2.
Amazon will lose market share. And it will be forced to lower price if it wants to be competitive.
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You are, once again, mischaracterizing my argument. I am not arguing that alleged collusion between the publishers was legal or justified. It is not.
However, I do believe that the market dynamics that existed before the agency agreements were signed were also bad. Amazon's pricing policy led to a 90+% share of the ebook market. I disagree with the court that the threat of high prices in the future is the only negative consequence of predatory pricing.
Despite your repeated attempts to equate loss leaders with predatory pricing, they are not the same thing. Predatory pricing "is the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors."
To me, Amazon's combination of exclusivity and loss leader pricing among the best selling ebooks on the market both eliminate competition and create a barrier to entry to the market. Further evidenced by the fact that they still maintain a dominant market share despite a lack pricing advantage!
And, yes, the same behavior that is wrong for a monopolist is perfectly fine for a non-monopolist. That's a fundamental issue with antitrust law.
http://www.ftc.gov/bc/antitrust/predatory_pricing.shtm
You left out this part about predatory pricing.
Predatory pricing "is the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors. If competitors or potential competitors cannot sustain equal or lower prices without losing money, they go out of business or choose not to enter the business. The predatory merchant then has fewer competitors or is even a de facto monopoly, and purportedly could then raise prices above what the market would otherwise bear.
Amazon competitors in ebook selling are
Microsoft/B&N
Apple
Rakuten (KOBO)
Sony
There is virtually no barrier to entry to selling ebook. Anyone can set up a website and sell book directly.
But let's assume that Amazon drove Apple/Google/Microsoft/Rakuten out of the ebook business because to these companies, very low profit margin isn't their thing.
Amazon, with its 80%+ market share, then raise the price (the second part of predatory pricing). For example, buy the ebook at $10 and sell it at $14.
What's to stop Apple/Google/Microsoft/Rakuten from buying ebook at $10 and sell it at $12?
Nowhere does it say that a store with monopoly market share can't discount or do loss-leader. FTC definition of predatory pricing.
As for Amazon exclusivity, can you name me a few famous "exclusive" novels?
Most of Amazon 150,000 exclusive novels are from indie authors and 99% of these don't sell very well. If Itunes has 150,000 exclusives CDs from indie bands nobody ever heard of or buy, is that such a big deal?
p.s. Exclusive is not illegal. A lot of stores have exclusive all the time. Netflix has some exclusives, Hulu has some exclusive. HBO has some exclusive. These are used to differentiate themselves from their competitors. Apple/B&N/Google/Sony/KOBO can have exclusives too if they want.
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Apple joins the EBOOK PRICE WARS.
http://paidcontent.org/2012/09/11/apple-is-already-fighting-amazon-in-the-ebook-price-wars/
Apple is already fighting Amazon in the ebook price wars
http://paidcontent.org/2012/09/11/the-price-drops-begin-what-do-harpercollins-ebooks-cost-now/
Ebook price drops begin — and Apple is discounting, too
-----list of 12 titles and prices from different e-sellers
This will mean a lower margin (as compared to 30% commission) for every e-sllers. But at least the e-sellers (Amazon/Apple/Google/B&N/Sony/Kobo) are now competing to the benefit of e-book buyers.
http://paidcontent.org/2012/09/11/apple-is-already-fighting-amazon-in-the-ebook-price-wars/
Apple is already fighting Amazon in the ebook price wars
http://paidcontent.org/2012/09/11/the-price-drops-begin-what-do-harpercollins-ebooks-cost-now/
Ebook price drops begin — and Apple is discounting, too
-----list of 12 titles and prices from different e-sellers
This will mean a lower margin (as compared to 30% commission) for every e-sllers. But at least the e-sellers (Amazon/Apple/Google/B&N/Sony/Kobo) are now competing to the benefit of e-book buyers.
You are just ignoring significant parts of my argument and making up others to continue to make the same points again. Loss leaders do not equal predatory pricing. Exclusive is not illegal. However, when a monopoly as defined by the FTC engages in these actions, they can be anti-competitive and subject to antitrust law.
As far as my claim of Amazon exclusivity, I wasn't talking about 150,000 indie authors. As I said, 16 of the top 100 best sellers are exclusive to Amazon. According to Amazon.
http://www.businesswire.com/news/home/20120404005426/en/16-Top-100-Best-Selling-Paid-Kindle-Books
And the first three of those were not able to gain a significant foothold in the ebook market until after the agency agreements were implemented. Seems to support my argument more than yours.
If only if it were that easy. Not having access to the top ebook reader and being unable to make any money from most of the best selling books seems like some pretty big barriers to me!
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If Amazon violate antitrust law, then it would sue. It's that simple. Can you point out where a company with dominant market share isn't allowed to use loss-leader or exclusive? (link please?)
Amazon wouldn't be so ignorant of the law. They must have at least 1 smart lawyer right?
Why do they continue to use loss-leader and exclusive if this is against anti-trust law?
Why would Itunes? (the dominant seller of digital music)?
And Itunes had exclusives too and these exclusives "songs" also did well on Itunes Top 100. I bet Netflix exclusives also did well on Netflix Top 100 too.
How would you know that Google/Apple/B&N would not got a foothold in the ebook selling without agency? Amazon got 90% because it got no competitor in the beginning. As more competitors join, its market share would decrease.
Look at Itunes as the dominant player in digital music. Amazon MP3 Store competed and take away market share by using lower price. If Apple wants to take away Amazon ebook market share, it could have done the same thing. Compete against Amazon ebook by competitive prices. Instead, Apple got greedy and made it so that prices are the same everywhere. The end of retail competition for ebook.
Itunes is the leader for music with around 70-75% but Amazon and Google are competitors too. Does that mean Itunes is forbidden from exclusives? or using a loss-leader strategy?
Itunes do have exclusives by the way. Netflix, Hulu too.
You're arguing that Amazon shouldn't be allowed to do exclusives and loss-leader. Well according to the USA government, they can. If they can't, Amazon would have been sued for anti-trust violation.
If you violate anti-trust law, the DOJ will take action. According to the DOJ, Amazon hasn't violate anti-trust law by using loss-leader or exclusives for ebooks. Same with Itunes as the dominant digital music seller.
You're arguing that Amazon has violated anti-trust law. That's your opinion. But the DOJ disagree with you.
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Here's the FTC view on predatory pricing. Can you tell me if Amazon has violated it?
If Amazon does, then you just have to be patience for it will be a matter of time before the DOJ goes after Amazon.
http://www.ftc.gov/bc/antitrust/predatory_pricing.shtm
low prices benefit consumers UNLESS
1) dominant retailer
2) knock rivals (Apple/Google/B&N/Microsoft/Sony/Kobo) out of the market
3) and then raise price to above-market levels for a substantial time
If Amazon does all the 3 noted above, I would like nothing less than having the DOJ goes after Amazon. After all, this would harm consumers (you, me and everyone else).
If Amazon does, then you just have to be patience for it will be a matter of time before the DOJ goes after Amazon.
http://www.ftc.gov/bc/antitrust/predatory_pricing.shtm
low prices benefit consumers UNLESS
1) dominant retailer
2) knock rivals (Apple/Google/B&N/Microsoft/Sony/Kobo) out of the market
3) and then raise price to above-market levels for a substantial time
If Amazon does all the 3 noted above, I would like nothing less than having the DOJ goes after Amazon. After all, this would harm consumers (you, me and everyone else).
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Of course, I'm sure you know it's never that simple.
I'm not sure why you continue to bring up iTunes, as the markets have very little in common. (And iTunes only has around a 30% share of the digital music market.)
Because they didn't get much of a foothold with agency pricing.
Amazon has never taken market share from iTunes.
Which, once again, is not illegal. As we've talked about many, many times.
That's not true as I mentioned above.
Yep. But they don't have 90% of the music market
Again, absence of charges is not proof of innocence. That's just ridiculous. And, as I said, I disagree with the courts view of the impact of Amazon's pricing strategy on the market. As do other people with knowledge and experience in the field. See the amicus brief from Bob Kohn.
Exactly.
4) marginal costs are undercut to the point that the ebook business in unsustainable for a certain segment that consumers find valuable.
As pointed out by Kohn, the goal of the free market is efficient pricing, not necessarily lower pricing.
So, you don't want the DOJ to go after Amazon until AFTER all competition has been eliminated. I'd prefer they do something before that happens.
http://www.infozine.com/news/stories/op/storiesView/sid/53454/
$69 Million to Consumers for E-book Price Fixing Allegations
$69 Million to Consumers for E-book Price Fixing Allegations
http://www.engadget.com/2012/11/06/eu-regulators-accept-apple-and-book-publishers-offer-of-cheaper/
http://www.reuters.com/article/2012/11/06/net-us-eu-apple-publishers-idUSBRE8A50SA20121106?
Good observation by Rabiddog
Anti competitive? You really need to read up on the Agency Model that Apple was pushing. An analogy if you will, the Apple gas station sells gas for $6 a gallon. You decide that's too expensive and drive up the street to find it's still $6 a gallon. You drive all over and find it's $6 a gallon anywhere you go because no one else is allowed to compete and sell gas cheaper than Apple. So instead of just competing in the market, they sought to change the market so they didn't have to compete. Which is more anti competitive?
http://www.reuters.com/article/2012/11/06/net-us-eu-apple-publishers-idUSBRE8A50SA20121106?
Good observation by Rabiddog
Anti competitive? You really need to read up on the Agency Model that Apple was pushing. An analogy if you will, the Apple gas station sells gas for $6 a gallon. You decide that's too expensive and drive up the street to find it's still $6 a gallon. You drive all over and find it's $6 a gallon anywhere you go because no one else is allowed to compete and sell gas cheaper than Apple. So instead of just competing in the market, they sought to change the market so they didn't have to compete. Which is more anti competitive?