Settlement over e-Book Pricing to Undo Apple's Agency Model for Pricing?

[ScottHammet]

What About the User

The user experience is so much better in iBooks, versus the Kindle app--books feel more like books, rather than PDFs. I just hope that the Amazon pricing doesn't reduce availability of books on iBooks. Even if they cost a little more, I'll continue to buy books via iBooks, rather than Kindle.

 

[Born Again]

Go amazon!

Bet us prime users will be getting more sweet deals

Shame on u apple

Win for the consumers

 

[dashiel]

Somewhat ironic considering Amazons aggressive push to become a publisher and using their revenue from non-book sales to drive traditional publishers out of business.

Amazon will be (funding) creating the content, selling the content and selling the devices you read the content on, and let’s not forget for all the teeth gnashing about Apple controlling content Amazon has actually deleted content from users Kindles.

That being said Apple’s approach was clearly motivated to slow Amazon down a bit considering Apple’s adoption of the wholesale model in every other aspect of the iTunes store.

 

[Capt Underpants]

This is very good news for consumers. E-books have been overpriced for too damn long.

 

[transmaster]

I am already purchasing more of my books and music from Amazon. Cheaper in many cases, and at least with music a better selection of the hard to get recordings I am interested in. These purchases are indexed right into iTunes, Amazon has cloud storage, not as expansive as iTunes but it's there. I figure I can have my cake and eat it too.

 

[Swift]

Not if authors and publishers drop out of the market because they can't make enough money. Why is it inherently better for Amazon to set the price of a book rather than the publisher?

Answer: it's not.

Amazon is in many ways destructive of the authors and publishers.

Of course, if the publishers peg the prices too high, they get punished.

This is like the radical devaluation of labor represented by Walmart. They set prices too.

 

[linuxcooldude]

I thought it was if they offered a book anywhere cheaper they had to offer it to Apple for the same price?

 

[The Man]

I still think people can't separate their own wish to have cheap books, and the right of the seller/publishers to set their own prices. Yes, Amazon may set their prices, even undercutting the books they buy from the publishers. That's their right. But publishers have the right to set their own prices, not undercutting themselves, when selling their own books through the iBookstore. Pricing higher may not be good for publishers, as I believe they will sell more with lower prices, but I can separate my own feelings from the right of the seller/publishers.

 

[Gasu E.]

I have to agree this practice by Apple is pretty obviously anti-competitive.

Just the opposite. The agency model prevents a big retailer from using its market power to squeeze out smaller ones. Once the competition is squeezed out, the remaining monopoly potentially could raise prices at will.

 

[anthony11]

So Apple demands that they get the lowest price that a vendor offers to any other customer. How is this such a big deal? The US Government has had the same policy for years without outcry.

 

[John.B]

So the answer is change the agreements to give Amazon even more control of the e-book market?

 

[The Man]

Just the opposite. The agency model prevents a big retailer from using its market power to squeeze out smaller ones. Once the competition is squeezed out, the remaining monopoly potentially could raise prices at will.

That's Amazon's rights to do that thing they do. Question is, what are the rights of the publishers when they want to sell books themselves (through the iBookstore)? Can't they never set their own prices? Should they always look at how Amazon prices their books?

 

[BC2009]

So if Apple were to do the agency model without the price fixing, why wouldn't that work? If the publisher could set the price and Apple just took 30% then what incentive would the publisher have to sell at different prices on other stores? It's not like they have to ship books to Apple or Amazon but a single digital reference copy to be reproduced automatically and downloaded.

So long as publishers demanded an agency model from Amazon where they set the price or threaten to pull their books then they should be fine.

In my opinion publishers need to threaten Amazon now while they still have power -- before Amazon has put them out of business completely. They should be flocking to Apple whole heartedly because Amazon is literally overpaying for contracts with authors and undercutting them on price left and right. They won't be able to sustain another five years of this. Right now they have leverage -- they own the great content and they don't have to sell it through Amazon.

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Go amazon!

Bet us prime users will be getting more sweet deals

Shame on u apple

Win for the consumers

Until Amazon has put the publishers out of business. They'd be gone already if it wasn't for Apple.

Incidentally, if Apple is forced to play this game they can afford to give eBooks away for free and buy all the publishers if they want. Then the Kindle would be worthless. Amazon is throwing their money around in a very destructive way and people cheer because they want cheap e-books. People cheered as they bought up many products that were "dumped" into the market until the competitors went away and the prices went up. For Amazon, books are a loss-leader, but its a loss-leader that they are using to eliminate the publisher as a middle man. Maybe that's good or bad, but its going to lead to every book being either exclusive to Amazon or exclusive to Apple if Apple decides to go and start contracting authors directly as well. I'd rather live in a world where publishers exist simply because I want to see reform to allow my eBooks to be read through ANY reader. I'd rather have the eReader be a commodity and my content to be independent of it.

 

[Anaemik]

I read to many....

Good for you! To a class of kids? Or perhaps to the blind or the elderly? Either way, I applaud your efforts to help keep literacy alive!

 

[KPOM]

So if Apple were to do the agency model without the price fixing, why wouldn't that work? If the publisher could set the price and Apple just took 30% then what incentive would the publisher have to sell at different prices on other stores? It's not like they have to ship books to Apple or Amazon but a single digital reference copy to be reproduced automatically and downloaded.

I think the agency model, by design, means that the producer sets a fixed price. The agency model without price fixing is sort of like a boat that doesn't float.

http://www.guardian.co.uk/technology/2012/mar/12/amazon-ebooks-business-model

So long as publishers demanded an agency model from Amazon where they set the price or threaten to pull their books then they should be fine.

That's exactly what they did. They demanded the agency model from Amazon.

 

[CapnJackGig]

I buy all my e-books from Amazon anyway since with iBooks you're restricted to Apple's own devices. Amazon has better sales, better selection, and a wider range of devices to read them on. That the settlement will benefit both me as a consumer and the place I buy the books from is a very good thing. Glad to see Apple get a beatdown over this anti-consumer policy of theirs.

 

[IJ Reilly]

Somewhat ironic considering Amazons aggressive push to become a publisher and using their revenue from non-book sales to drive traditional publishers out of business.

A big presumption. If Amazon is in fact engaging in predatory pricing, then they'd run afoul of the antitrust laws too.

 

[KPOM]

I buy all my e-books from Amazon anyway since with iBooks you're restricted to Apple's own devices. Amazon has better sales, better selection, and a wider range of devices to read them on. That the settlement will benefit both me as a consumer and the place I buy the books from is a very good thing. Glad to see Apple get a beatdown over this anti-consumer policy of theirs.

If you read the Guardian article I linked to, it is the publishers, not Apple, who the DOJ is seeking to beat down. Apple agreed to the agency model since they were the newcomer to the market, and unlike Amazon their business model doesn't support them selling content at a loss.

As a consumer, it is in your long term interest for there to be a healthy market with multiple players. It doesn't benefit you if Amazon gains control over the market, since at that point they will have less incentive to price books competitively, or at a level that sustains an adequate supply.

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A big presumption. If Amazon is in fact engaging in predatory pricing, then they'd run afoul of the antitrust laws too.

Not necessarily. Anti-dumping laws are not particularly strong in the US (not that I'm against that).

Ultimately, who gets hurt in all of this are the authors, who don't get paid as much if their publishers lose margin. Perhaps the market will eventually develop to a point where authors can realistically sell content directly to e-retailers, much as how the app market has developed, but books are a bit more complicated than apps. For starters, there is still demand for physical books. For various reasons, publishers still serve a vital role, and it isn't necessarily in the customer's interest for a single party like Amazon to get too much control, and be able to use the force of the DOJ to get them to negotiate its way out of contracts with publishers that it didn't like.

 

[firewood]

I demand as part of the settlement every penny back that I was overcharged for ebooks

How were you overcharged for any ebook? If the price listed by any publisher was higher than you thought the book was worth, then why would any intelligent person ever click the "buy" button ???

 

[bobob]

Amazon's employee working conditions make working at Foxconn sound pretty darn good.

 

[Yujenisis]

So, the biggest beneficiary of the government's anti-trust action is: a big corporation with 65% of the market.

I'd argue this benefits customers directly and Amazon only indirectly. Every one of us will enjoy lower prices that comes with a competitive eBook market.

As far as I know, the only reason why Apple went with the Agency model was to attract publishers to their platform. Where's the benefit for Apple or customers now that they publish on iBooks? There isn't.

This is a win for everyone - even Apple who will be able to sell more eBooks because of lower pricing. Anyone I know who is savvy, knows eBooks are cheaper on Amazon even if they prefer Apple's iBook app (myself included).

 

[kiljoy616]

So the price of text book is about to shoot up, great.

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I don't get this wholesale model. In the Netherlands, publishers set the price of books. It's their asset, it's their choice to price high or low. Why should books be sold wholesale and then discounted if publishers want certain books to carry higher price? Don't get me wrong, I don't like high prices, but I don't see anything wrong with the agency model. Why does Amazon get to decide what prices Apple iBooks are sold at? Who decides what price is the "standard" and which is too high for consumers? I'm confused. I do think lower is better, but still I don't get the suit.

Lets see you have socialized medicine, we have 50 million uninsured people and climbing. Your country probably has better ethical controls over pricing, here its cowboy shoot from the hip capitalism. I see prices shooting up from this ruling not going down but I like to be wrong.

I liked the model that was now. text books where still better than when I went to school when my average physical book was 120 dollars and every two semester new ones came out and you could not reuse the old one.

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So if Apple were to do the agency model without the price fixing, why wouldn't that work? If the publisher could set the price and Apple just took 30% then what incentive would the publisher have to sell at different prices on other stores? It's not like they have to ship books to Apple or Amazon but a single digital reference copy to be reproduced automatically and downloaded.

So long as publishers demanded an agency model from Amazon where they set the price or threaten to pull their books then they should be fine.

In my opinion publishers need to threaten Amazon now while they still have power -- before Amazon has put them out of business completely. They should be flocking to Apple whole heartedly because Amazon is literally overpaying for contracts with authors and undercutting them on price left and right. They won't be able to sustain another five years of this. Right now they have leverage -- they own the great content and they don't have to sell it through Amazon.

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Until Amazon has put the publishers out of business. They'd be gone already if it wasn't for Apple.

Incidentally, if Apple is forced to play this game they can afford to give eBooks away for free and buy all the publishers if they want. Then the Kindle would be worthless. Amazon is throwing their money around in a very destructive way and people cheer because they want cheap e-books. People cheered as they bought up many products that were "dumped" into the market until the competitors went away and the prices went up. For Amazon, books are a loss-leader, but its a loss-leader that they are using to eliminate the publisher as a middle man. Maybe that's good or bad, but its going to lead to every book being either exclusive to Amazon or exclusive to Apple if Apple decides to go and start contracting authors directly as well. I'd rather live in a world where publishers exist simply because I want to see reform to allow my eBooks to be read through ANY reader. I'd rather have the eReader be a commodity and my content to be independent of it.

Excellently states. But do people understand why its bad, no they are to short sighted to understand.

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So the answer is change the agreements to give Amazon even more control of the e-book market?

Different government, who knows where we as a nation are going, all I know is I have the money not to worry about it.

 

[IJ Reilly]

Not necessarily. Anti-dumping laws are not particularly strong in the US (not that I'm against that).

The way I phrased my statement, necessarily. Predatory pricing is illegal under the antitrust laws. Easy to prove? Hardly -- but illegal just the same, by definition. If you can prove it.

When talking about antitrust laws it is also worth keeping in mind that they are enforced almost entirely on a complaint basis. The government rarely takes up a case without fielding a complaint of unfair competition made by a competitor. Amazon has some big, powerful competitors, such as... Apple. If Apple could demonstrate claims of predatory pricing by Amazon, you can bet they'd be talking to the government lawyers about them.

Anyway, this investigation seems to have turned out exactly the way I thought it would.

 

[Rocketman]

The story here is the government interfering with legal private contracts with each party gaining benefits for slight but customary restrictions.

The government wants to globalize and export jobs (from the US since it is US regulators) in the virtual world like it did to manufacturing and retail under Clinton.

Regulators are in a monologue with themselves and get away with this because their standard of justice in court (their own court) is presumption of correctness.

If the court was not self-owned and the standard of justice was preponderance of the evidence they could NEVER do this.

This administrative law legal standard is directly contradictory to at least two aspects of the founding documents, the right to redress and the standards of justice, and probably others.

Rocketman

http://www.v-serv.com/usr/ATFE-03-16-09.pdf

 

[charlituna]

I demand as part of the settlement every penny back that I was overcharged for ebooks, I demand this from the publishers who manipulated the price, not from the vendor who was forced into this system by the publishers working on collusion.

you weren't overcharged. the publishers set the price and you agreed to pay it.

overcharged would like if you were buying fruit and the price was $1 a pound but they rigged the scale so your 5 pounds of fruit said on the scale it was 8 pounds of fruit.

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Of most concern to regulators, Apple's agreements with the publishers included "most favored nation" clauses that prevented publishers from selling their books through any other retailers at lower prices than offered through Apple's iBookstore.

This is the issue and this is what might be cut. Not the agency model or really the prices, should the publishers choose to keep the same price on all sources. So in the end there could be no change at all.

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That's the one thing that's really put me off ebooks: why pay more than the PB book price when I can buy it at a used book store for less?

Often you aren't paying more than the PB price. You are paying the trade paper price same as if you bought the book new. Sucks perhaps but there it is.

And for some of us we'd rather buy a book fresh than buy one you spilled coffee in, another student wrote in etc. so for us the value of the copy being fresh is worth the price paid.

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I bet they'll set a recommended MRSP and charge Apple and Amazon 70% of that price, but they'll be free to undercut the MRSP if they wish. That would be the simplest way to adapt the agency model to something that isn't anti-competitive.

That is basically what Amazon did and the publishers hated it. They didn't want their titles being used as a loss leader to get folks to come shop at Amazon. Plus they felt that it devalued the titles and made it hard to get any sales in other markets because of the 'high' price

Which is why when Apple said 'you get to pick the price, change it as much as you want etc and we get 30% of whatever you choose' they jumped