The problem is that Apple's and the Publisher's Agency Model is potentially anti-competitive vis-a-vis Amazon. But the other problem is that without that model, the publishers might not be capable of refusing to sell ebooks to Amazon since it would potentially also be anti-competitive. But if they allow Amazon to keep doing what they were doing, Amazon would inevitably gain so much power over the market as to force the Publisher's hands regarding prices, see my post #47 and post #35 to understand what happened.
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Legal Experts Suggest Justice Department Unlikely to Win Antitrust Suit Against Apple
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The problem is that Apple's and the Publisher's Agency Model is potentially anti-competitive vis-a-vis Amazon. But the other problem is that without that model, the publishers might not be capable of refusing to sell ebooks to Amazon since it would potentially also be anti-competitive. But if they allow Amazon to keep doing what they were doing, Amazon would inevitably gain so much power over the market as to force the Publisher's hands regarding prices, see my post #47 and post #35 to understand what happened.
Apple has a lot to lose, first and foremost being their reputation. This company is very big and very powerful now. It if looks like they are abusing that position to raise prices on products consumers buy then they will not come out smelling like a rose even if they managed to win. Maybe even especially if they win. That could look way worse.
It isn't the government's job to do anyone's dirty work. It's their job to enforce the law. Rephrasing this in cynical terms isn't going to explain anything, and it sure isn't going to extricate Apple from this mess.
I keep wondering if the gov would bail out the book publishers if they ended up like all the banks and most of the car manufacturers here in the US. I also wonder why we pay so much in gas and why the gov isn't suing over that? I mean who wants to pay 5.00 a gallon? I can do without a book but I need gas to go to work and etc..
So, you're saying that Apple's 500,000 sq. ft. eBook server in N. Carolina is lower cost? $1B doesn't look like chump-change to me, especially when you start adding the cost of operations and maintenance of their eco-friendly power systems.
Another waste of taxpayer dollars...
And now the lawsuits are starting to roll in for Apple.
http://www.technobuffalo.com/news/l...patent-suit-over-smartphone-touchscreen-tech/
I think the DOJ has cast a large net in this case in order to pressure as many companies as possible into settling. I think Apple just decided that they didn't want to play the game with DOJ, and is the reason this has gotten to the point of litigation. However, filing litigation is a lot different than winning litigation. In this case, with my GED in law, I don't think Apple has much to fear.
Apple will buy the Legal Department, take it's technology and disband the department and make them sign NDA's.
You'll see what the problem is when Amazon has finished wiping out the competition and they own all pricing.
No, not really. But a good chunk of it needs to be factored into distributions costs. Walmart uses a 100% markup to distribute a book. Apple's 30% is very reasonable.
Disband the Department of Justice? I wish I kept track of the most ridiculous things ever posted here because then I would have a list to put this on the top of.
People can self-publish already.
Many books still require editors and artists, especially textbooks which require lots of graphics, formatting and the additional creation of teacher's presentation materials.
I used to date an editor for a major publisher. The amount of time and effort they had to invest to get a textbook out was crazy, and added to the up-front cost of publishing that had to be recouped.
Exactly. If the Publishers charge Amazon more for an ebook than they charge for the physical books, consumers will complain that's crazy since an ebook costs less to manufacture and distribute. But if the publishers sell ebooks at the same price as physical books, Amazon can kill the competition by selling the books cheaper since they make money on hardware sales and bookstores can't do that. In the long run the only way to avoid giving Amazon a monopoly is to employ something like the Agency Model Apple proposed. Otherwise the publishers will be in a world of pain.
That seems very elitist. Did you go to one of those fancy Eastern Ivy League universities?
The consequesnces:
http://video.cnbc.com/gallery/?video=3000083835&play=1
Transcript:
♪♪ ♪♪ accusing them of conspireing to fix the prices of e-books. three publishers have settled. amazon is bucking the trend announcing plans to go ahead and lower the cost of e-books. will they come out the big winner? joining us for a special edition of today's hot file, we have our man on the street, john carney, and our man on the beat, jon fortt, cnbc's tech corresponden i want to start with you, carney. usually have a contrarian view on this sort of stuff. is this revolutionary? wasn't this always in the hopper we would have to see prices come down at some point? oh, yeah. this is going to bring prices down. publishers aren a lot of trouble, frankly. their business model for years is now going to be broken. i think we're going to see a lot of major publishers, you know, have to change the way they operate. they're just not going to be able to charge what they used to, which means they have to cut costs going all the way back. and quite a few of them will likely just go out of business entirely. so, jon fortt, what's wrong with the agency model? that's what steve jobs was championing, set the price and that's how it's going to be. what's wrong with that? i don't think there's anything wrong with that. was arguing there was anything wrong with the agency model itself. i think they were saying all the publishers getting together and deciding to go to it in the way they did could be wrong. in this case it doesn't matter if it'ong or not. now that three of the publishers has effected the agency model is dead, i think who gets hurt the most are the publishers, main line authors and bookstores get hurt. apple, apple's fine. they don't need books anymore to sell ipads. that's really what this was about for them. i want to say i don't think it's really going to hurt authors. i think it could help them. being able to sell more directly to customers, the e-book revolution is just beginning. people aren't going to need that large filter system of the publishing houses anymore. they're going to sell directly to customers. it could be more profits. yeah. yeah. i'm sorry to jump in. i'm not supposed to, but i'm going to slap my own wrist. who needs the publishers, guys? people still need publishers. you look at what's happened with music artists, the most popular artists don't need the labels. just like the most popular authors don't need the publishers. and kind of the pele just starting out who really don't have anything going on who are writing e-book novels and might go viral, they don't need them either. it's the people in the middle who need that marketing exposure who might not have the savvy or the dollars to put behind it. they need some kind of vehicle. and if the publishers are struggling, it's going to be harder for some authors to find that. no doubt the book seller will get hurt. we have one in mind, barnes & noble, what happens to barnes & noble? carney, start with you. i think barnes & noble has a lot of trouble trying to come up with a way to make people come into the stores. the differential between an e-book pricing and a physical book is going to get even bigger. and that's going to put even more of a challenge into their business. many thanks, john carney. jon fortt. barnes & noble gets hurt a lot. if i were them, i'd be looking to do a deal with somebody like google. they need to partner up with somebody who can help them with some funding, with some fire power to go up against amazon because they don't have the money. all right. guys, thank you. we have to leave it there.
http://video.cnbc.com/gallery/?video=3000083835&play=1
Transcript:
♪♪ ♪♪ accusing them of conspireing to fix the prices of e-books. three publishers have settled. amazon is bucking the trend announcing plans to go ahead and lower the cost of e-books. will they come out the big winner? joining us for a special edition of today's hot file, we have our man on the street, john carney, and our man on the beat, jon fortt, cnbc's tech corresponden i want to start with you, carney. usually have a contrarian view on this sort of stuff. is this revolutionary? wasn't this always in the hopper we would have to see prices come down at some point? oh, yeah. this is going to bring prices down. publishers aren a lot of trouble, frankly. their business model for years is now going to be broken. i think we're going to see a lot of major publishers, you know, have to change the way they operate. they're just not going to be able to charge what they used to, which means they have to cut costs going all the way back. and quite a few of them will likely just go out of business entirely. so, jon fortt, what's wrong with the agency model? that's what steve jobs was championing, set the price and that's how it's going to be. what's wrong with that? i don't think there's anything wrong with that. was arguing there was anything wrong with the agency model itself. i think they were saying all the publishers getting together and deciding to go to it in the way they did could be wrong. in this case it doesn't matter if it'ong or not. now that three of the publishers has effected the agency model is dead, i think who gets hurt the most are the publishers, main line authors and bookstores get hurt. apple, apple's fine. they don't need books anymore to sell ipads. that's really what this was about for them. i want to say i don't think it's really going to hurt authors. i think it could help them. being able to sell more directly to customers, the e-book revolution is just beginning. people aren't going to need that large filter system of the publishing houses anymore. they're going to sell directly to customers. it could be more profits. yeah. yeah. i'm sorry to jump in. i'm not supposed to, but i'm going to slap my own wrist. who needs the publishers, guys? people still need publishers. you look at what's happened with music artists, the most popular artists don't need the labels. just like the most popular authors don't need the publishers. and kind of the pele just starting out who really don't have anything going on who are writing e-book novels and might go viral, they don't need them either. it's the people in the middle who need that marketing exposure who might not have the savvy or the dollars to put behind it. they need some kind of vehicle. and if the publishers are struggling, it's going to be harder for some authors to find that. no doubt the book seller will get hurt. we have one in mind, barnes & noble, what happens to barnes & noble? carney, start with you. i think barnes & noble has a lot of trouble trying to come up with a way to make people come into the stores. the differential between an e-book pricing and a physical book is going to get even bigger. and that's going to put even more of a challenge into their business. many thanks, john carney. jon fortt. barnes & noble gets hurt a lot. if i were them, i'd be looking to do a deal with somebody like google. they need to partner up with somebody who can help them with some funding, with some fire power to go up against amazon because they don't have the money. all right. guys, thank you. we have to leave it there.
My thoughts on this issue:
At the core of the issue is the Most Favored clause.
Apple wanted to sell book but wanted the price to be always the same price as other online e-sellers. Apple however does not want to be in the book selling business and figure out the pricing. The solution to that concern is simple. The publishers set the price of the book on the store and Apple gets a 30% cut. Apple does not care what the publisher sets for the price.
The kicker is that at $9.99 a book that was less than what the publisher think is a good price for the book based on their view of what it should cost to recover the costs of publishing the book. The publishing process has lots of fees, so while you might think write and sell is all that happens there is a lot more. The $9.99 price brings the average price they need to maintain to make good money.
When Amazon was the king of books, the publisher could raise the price of a book to get more from Amazon, however Amazon would take less profit, no profit or even a loss of the book to maintain the $9.99 price. The publisher was actually happy with the price and Amazon sold more e-book readers.
When the Apple contracts kicked into gear, the publishers wanted to list the books on iBooks, but the publishers wholesale price of the book was higher than the Amazon price. However with the "Most favored" clause in the contracts they were obligated to let Apple sell the book at $9.99 and take the 30% commission of $9.99 with a payment of the remaining being 70%.
Here is the kicker, with the Apple pricing model and store model it was the publishers who were taking the loss not Apple. The Amazon model, always paid the publisher the price they set even if it was more than what Amazon eventually priced the book. The Apple model had the publisher set the price and Apple get's 30%.
The publishers did not want to take a loss, they liked the Amazon model. It was working, but how can you ignore iBooks? They took Steve Job's advise and forced Amazon to price books at their prices to allow them to put then on iBooks and not take the hit on their margins and not be forced to see books through iBooks at a loss.
The Amazon model works well for Print books and have to manage the physical books more like traditional inventory. The management of traditional inventory has risks and other costs that don't relate to e-books. The e-Book is not as cheap to produce as you might think, especially with DRM. Another method of dealing with e-books needed to be vetted. The Apple model turns the publisher into the seller with the e-book seller as as passthrough and marketing front.
The Apple model is actually better for the e-retailer, in that they have less risk, which is why Apple likes this model.
In the end the Amazon model was not likely going to last forever, the publishers don't want someone selling the books for less that what they price on the wholesale market. The Apple model is good for the e-seller because it creates less risk because there is no real inventory.
The real loser is all of this is the consumer. The e-book is over priced, not because it costs less but because it has no potential resale. It is hard to pass the e-book on to friends. If someone likes a book they might tell a friend but there is no way to pass a book to a friend after you have read the book. (Well no legal way). Amazon knows this which is why they sold the books so cheap.. they where going to sell more copies of the same e-book and likely another Kindle in the process.
Apple is not using iBooks to drive the sale of the iOS device. They just want to have a books store to have a complete package. However they don't want to have the highest prices. Which is why all this started.
The real villain here is the publisher. They need to understand better how to deal with e-book and understand they if they price then right then they will sell more and make more money. The problem is that book publishing is old and traditional and the e-book is new and confusing to all the guys in the leather chairs at the tops of those high buildings.
I think they probably did fix prices, but not because of Apple telling them to fix the prices, but because Apple told them you can't afford to not be in our store and if you want to be in our store, you have to take the risk on pricing not us. They publishers did not want to take less than what they were getting from Amazon. They had to force Amazon to raise prices so that when they sold the books on iBooks they made the same profit.
Publishers wanted to force Amazon to raise e-book prices. However Amazon was the only real e-book seller in the USA. So when iBooks was released the publishers finally had the leverage they need. They would stop letting Amazon sell their books and sell then (at their risk) at a higher price on iBooks. They won because they get a place to sell e-books (now with Apple) and Amazon who depends heavily on e-books had no choice to agree or loose the catalog they needed for the Kindle.
At the core of the issue is the Most Favored clause.
Apple wanted to sell book but wanted the price to be always the same price as other online e-sellers. Apple however does not want to be in the book selling business and figure out the pricing. The solution to that concern is simple. The publishers set the price of the book on the store and Apple gets a 30% cut. Apple does not care what the publisher sets for the price.
The kicker is that at $9.99 a book that was less than what the publisher think is a good price for the book based on their view of what it should cost to recover the costs of publishing the book. The publishing process has lots of fees, so while you might think write and sell is all that happens there is a lot more. The $9.99 price brings the average price they need to maintain to make good money.
When Amazon was the king of books, the publisher could raise the price of a book to get more from Amazon, however Amazon would take less profit, no profit or even a loss of the book to maintain the $9.99 price. The publisher was actually happy with the price and Amazon sold more e-book readers.
When the Apple contracts kicked into gear, the publishers wanted to list the books on iBooks, but the publishers wholesale price of the book was higher than the Amazon price. However with the "Most favored" clause in the contracts they were obligated to let Apple sell the book at $9.99 and take the 30% commission of $9.99 with a payment of the remaining being 70%.
Here is the kicker, with the Apple pricing model and store model it was the publishers who were taking the loss not Apple. The Amazon model, always paid the publisher the price they set even if it was more than what Amazon eventually priced the book. The Apple model had the publisher set the price and Apple get's 30%.
The publishers did not want to take a loss, they liked the Amazon model. It was working, but how can you ignore iBooks? They took Steve Job's advise and forced Amazon to price books at their prices to allow them to put then on iBooks and not take the hit on their margins and not be forced to see books through iBooks at a loss.
The Amazon model works well for Print books and have to manage the physical books more like traditional inventory. The management of traditional inventory has risks and other costs that don't relate to e-books. The e-Book is not as cheap to produce as you might think, especially with DRM. Another method of dealing with e-books needed to be vetted. The Apple model turns the publisher into the seller with the e-book seller as as passthrough and marketing front.
The Apple model is actually better for the e-retailer, in that they have less risk, which is why Apple likes this model.
In the end the Amazon model was not likely going to last forever, the publishers don't want someone selling the books for less that what they price on the wholesale market. The Apple model is good for the e-seller because it creates less risk because there is no real inventory.
The real loser is all of this is the consumer. The e-book is over priced, not because it costs less but because it has no potential resale. It is hard to pass the e-book on to friends. If someone likes a book they might tell a friend but there is no way to pass a book to a friend after you have read the book. (Well no legal way). Amazon knows this which is why they sold the books so cheap.. they where going to sell more copies of the same e-book and likely another Kindle in the process.
Apple is not using iBooks to drive the sale of the iOS device. They just want to have a books store to have a complete package. However they don't want to have the highest prices. Which is why all this started.
The real villain here is the publisher. They need to understand better how to deal with e-book and understand they if they price then right then they will sell more and make more money. The problem is that book publishing is old and traditional and the e-book is new and confusing to all the guys in the leather chairs at the tops of those high buildings.
I think they probably did fix prices, but not because of Apple telling them to fix the prices, but because Apple told them you can't afford to not be in our store and if you want to be in our store, you have to take the risk on pricing not us. They publishers did not want to take less than what they were getting from Amazon. They had to force Amazon to raise prices so that when they sold the books on iBooks they made the same profit.
Publishers wanted to force Amazon to raise e-book prices. However Amazon was the only real e-book seller in the USA. So when iBooks was released the publishers finally had the leverage they need. They would stop letting Amazon sell their books and sell then (at their risk) at a higher price on iBooks. They won because they get a place to sell e-books (now with Apple) and Amazon who depends heavily on e-books had no choice to agree or loose the catalog they needed for the Kindle.
Problem is that it was probably the only way they where able to even do it. I don't see how publisher will continue to loose money and still provide up front support for writers. Maybe Amazon will become the new central publisher after all the rest are gone. Any way you look at it it all smells bad to me. Just look at college text and never one word from Government. Or how about Cable companies budding and again nothing.
Because the population of voters are mentally challenge and care about the dumbest things possible. Like voting in people that just pass a law to teach Creationism in public schools Tenn. If voters vote for these people why would you think those same people are going to fix anything really broken.
http://www.msnbc.msn.com/id/2009529...ighway-system-badly-need-repair/#.T4crDu0ijQM
Real problems require real solutions, we are not voting those people in who can fix real problems. So we get this, its simple and hurts no one that matters.
Sure we may get owned in the future, but its not controversial or political suicide so lets waste time and money on it.
I love that everyone has an opinion on whether Apple's been naughty despite not knowing the law or precedent. Then again, the same bunch are expert programmers, graphic designers or network admins when the thread calls for it.
While I'm comfortable with EU competition law, my knowledge of US antitrust ends at the schools of theory and areas which have had an effect within the EU.
While I'm comfortable with EU competition law, my knowledge of US antitrust ends at the schools of theory and areas which have had an effect within the EU.
You understand that Amazon buys the books and sells them? Apple is not buying any books or anything from the publishers. The reason they're being sued is because they got together with the 6 big pub houses and tried to fix thier prices to choke out amazon because of there buying leverage. Apple does the same thing with parts and parts suppliers for there igadgets.
Are you talking about ebooks or paper books?
What buying leverage does Apple have in ebooks? Amazon still has 61% of the market in the US. Apple has 7%.
http://www.the-digital-reader.com/2012/03/20/bowker-amazon-dominates-the-world-ebook-market/
http://www.flickr.com/photos/59991790@N02/7001278467/sizes/l/in/set-72157629630447801/