U.S. Government Warns Apple and Publishers of Antitrust Lawsuit over e-Book Pricing

[snowmoon]

Replace "Amazon" with "Apple" with regards to music and other digital content. See a connection?

No one company should dictate an industry. As I stated earlier, Apple has done this with music and now movies. With $80+ in cash reserves and a strong consumer market and a dying print industry, of course publishing houses will jump into bed with Apple. However, it's either play by Apple's rules or get out.

Name one instance where Apple used it's dominance to enter a new market by undercutting competition? Apple neither sets prices in the ebook market nor do they demand exclusivity.

 

[3282868]

Name one instance where Apple used it's dominance to enter a new market by undercutting competition? Apple neither sets prices in the ebook market nor do they demand exclusivity.

You're kidding right? The music industry is one major example (Apple lead the digital music wars and through years of growth with its iTunes eco-system become a big player in working with the industry in setting prices, in some cases exclusively, this isn't simply about undercutting). We don't know if Apple set prices or demanded exclusivity, but I certainly do not want to take anything on faith and would welcome an open and fair investigation into this matter, and not just with Apple but other e-retailers such as Amazon. We're consumers, the individuals who are paying for these services. If there is collusion I certainly want all parties held responsible.

 

[caddisfly]

As I posted above in this thread....

Here is an author's description of publishing costs vs. ebook (self-publishing). He lists the costs of all the parts of creating a book.

http://www.huffingtonpost.com/ja-kon..._b_764516.html

thanks....it still doesn't answer the question....how does anyone survive (in his own estimate) at $0.51/copy when you are selling only 2000-3000 copies.

that won't pay your food bills....and your "salary" ends up being less than a couple of dollars an hour. Why would anyone do it?

just because it is now easy and cheap to self-publish doesn't mean 't works as business. If you can put out a book with only 100 hrs invested, maybe you can get around $10 per hr.

 

[WannaGoMac]

thanks....it still doesn't answer the question....how does anyone survive (in his own estimate) at $0.51/copy when you are selling only 2000-3000 copies.

that won't pay your food bills....and your "salary" ends up being less than a couple of dollars an hour. Why would anyone do it?

just because it is now easy and cheap to self-publish doesn't mean 't works as business. If you can put out a book with only 100 hrs invested, maybe you can get around $10 per hr.

That's a completely different question as to how to be a writer as a full time job. Ebook or not, it's a difficult career path which is why most people do it while keeping their day jobs...

 

[zaphon]

thanks....it still doesn't answer the question....how does anyone survive (in his own estimate) at $0.51/copy when you are selling only 2000-3000 copies.

that won't pay your food bills....and your "salary" ends up being less than a couple of dollars an hour. Why would anyone do it?

just because it is now easy and cheap to self-publish doesn't mean 't works as business. If you can put out a book with only 100 hrs invested, maybe you can get around $10 per hr.

I take it you completely missed this GEM..

Though we're splitting the profits four ways, we're each earning only slightly less per copy sold (51 cents each) than we would on one of our own paperback books (64 cents each), and still only charging the reader $2.99.

The authors usually only get $0.64 per paperback book when they go through the publisher, and they're making $0.51 and selling the book for only $2.99 (a much lower price point than any paperback book, and oh yeah, they're splitting the profit 4 ways, if they were doing this individually they would be making 318% what they would going through the publisher). You act as if the authors are the ones making a ton of money, when in reality most don't.

 

[WannaGoMac]

thanks....it still doesn't answer the question....how does anyone survive (in his own estimate) at $0.51/copy when you are selling only 2000-3000 copies.

that won't pay your food bills....and your "salary" ends up being less than a couple of dollars an hour. Why would anyone do it?

just because it is now easy and cheap to self-publish doesn't mean 't works as business. If you can put out a book with only 100 hrs invested, maybe you can get around $10 per hr.

Also read this: http://jessiemac.com/blog/2010/08/09/i-am-a-writer-should-i-get-a-book-deal-self-publish-or-self-distribute/

 

[Macboy Pro]

So they'd rather publishers not be compensated fairly for their work? Um....

Did you read the article?

 

[Winni]

See above if you actually want to understand *why* e-books can (and sometimes do) cost more than their dead-tree versions.

Sorry, but I think you are trying to excuse the inexcusable. I have four eBooks published in the Amazon Kindle store and except for my own work and the Scrivener license, there were no costs involved.

In the past I also had printed works published and know the involved price difference.

Amazon revolutionized the publishing business -- they made it possible for all authors to get their work published on a global scale at almost zero cost. WITHOUT NEEDING TO GO THROUGH A PUBLISHING HOUSE.

So please pardon me when I call ******** on the argument that eBooks can even cost more than a printed version. I also say that it's ******** when somebody wants to make you believe that publishing an mp3 file costs more than publishing a CD, or that publishing an mp4 file costs more than shipping BluRay discs. It's like saying that the delivery of an eMail costs more than sending a hand-written letter. It's pure nonsense, plain and simple.

The truth is that publishing houses, record labels and disk manufacturers are quickly becoming obsolete and desperately try to uphold their no longer needed business models and services.

 

[GrayApple]

No, it's called the Agency Model, where everything you've just talked about can't happen.

READ the article before posting.

With the Agency Model, retailers cannot compete with each other on price. That's the problem that the US Government (and several others around the world) have with the Agency Model.

The other issue to note is that books sold using the Agency Model don't sell as well as those that aren't - largely because retailers can't discount them. We've yet to see the Agency prices go down though. Another victory for the "free market".

But you still forget the other option:
Don't buy eBooks. If eBook sales dropped, apple and others would have to reconsider the agency model. There is always a choice to buy or not buy a product until the government gets involved. I will continue to buy eBooks that are reasonably priced, which are usually older or independent books and buy physical copies of new books until pricing goes down.

 

[marcusj0015]

Apple, you better be real ****ing careful, especially after what those regulators did to Ms for a decade.

 

[IJ Reilly]

This isn't good! The government should not dictate what a company charges for it's products/services. If you are dissatisfied with Apple's pricing, you should buy your e-books from Amazon! If they overcharge, use Kobo or Barnes and Noble. If they overcharge, refuse to buy e-books until the pricing goes down.
It's called the free market.

Actually, no. Colluding to fix prices has been prohibited by antitrust laws for over a century because by definition price fixers are attempting to thwart a free market. If the government has a case here, then Apple has a problem.

Another thing many people don't seem to understand about competition suits brought by the government is that very few go to a court filing, let alone to trial. Virtually all of them are settled through a consent decree, where the company agrees to change some offending practices, signs the piece of paper and walks away. I'd expect this one to go that route. It isn't a big deal unless Apple decides to fight it right into a courtroom. Bad idea, ask Microsoft.

 

[GrayApple]

Actually, no. Colluding to fix prices has been prohibited by antitrust laws for over a century because by definition price fixers are attempting to thwart a free market. If the government has a case here, then Apple has a problem.

Another thing many people don't seem to understand about competition suits brought by the government is that very few go to a court filing, let alone to trial. Virtually all of them are settled through a consent decree, where the company agrees to change some offending practices, signs the piece of paper and walks away. I'd expect this one to go that route. It isn't a big deal unless Apple decides to fight it right into a courtroom. Bad idea, ask Microsoft.

As I stated in my last post, you still have a choice to or not to buy eBooks. There is always a choice.

 

[IJ Reilly]

Apple, you better be real ****ing careful, especially after what those regulators did to Ms for a decade.

Apple does need to be careful but not so much with the regulators. Microsoft's antitrust wounds were self-inflicted. The final settlement of the case (in the U.S. at least) was very favorable to the company; they had to change very few practices and give back nothing they'd gained illegally. Microsoft's strategic blunder in dealing with the DoJ was to believe that they could beat the rap. The moment they allowed the case to go to a Finding of Fact, they'd lost, big. Those findings laid out in detail how Microsoft had abused their market power. They were used by a whole string of companies in private litigation, costing Microsoft billions in settlements, and infinitely in terms of reputation.

----------

As I stated in my last post, you still have a choice to or not to buy eBooks. There is always a choice.

That logic cuts no mustard under the antitrust laws. Apple and the publishers might argue that the relevant market is for "books" generically, but the government it appears is looking at ebooks as a separate market. I think they are different enough that the government has a strong point to make here.

 

[bsolar]

As I stated in my last post, you still have a choice to or not to buy eBooks. There is always a choice.

And having this choice is relevant in which way exactly? It's obvious that with artifically higher prices some comsumers will not buy. This doesn't mean price fixing is allowed

With your logic there would be no price fixing regulation at all, you have always the choice of not buying something unless is essential to your life.

 

[zoetmb]

Well said, jlc.

People are acting as if access to ebooks is some kind of inalienable human right. It's a luxury product (i.e. non-essential) and, if you don't like the price, vote with your feet and put your money elsewhere.

That's the language Apple and the book producers understand and why, absent unique conditions (like monopolies), the free market works.

If you want prices to go down, then don't buy 'em!

That's not what this is about. It's about multiple players in the industry colluding to "fix" prices. It's not about Apple per se. It's that in the agency pricing model, Apple agrees in advance to charge what the publisher wants. However, where I do agree with you that it's ridiculous for the government to get involved (see my other post) is that the Supreme Court ruled a few years ago that manufacturers can set minimum selling prices. While that's not quite the same thing, since it's rare for a retailer to charge more than list, for all practical purposes it's the same thing.

 

[skellener]

U.S. Government Warns Apple and Publishers of Antitrust Lawsuit over e-Book Pricing

They need warn ISPs and cell carriers about antitrust lawsuit over network pricing too! Talk about collusion!

 

[babyj]

I'm lost as to what Apple and the book publishers have done wrong - the publishers set the price and Apple takes a cut. Surely the publishers have the right to set the price they want for their products?

It's not the same as them setting a fixed retail price, they're saying they want x for the product and then the retailer adds their margin. Personally I think the prices of ebooks are far too high but again, that's the publishers right.

Reckon the real issue here is that there has been a major change in the sales model for media and the law and law makers are playing catch up and no necessarily getting things right.

 

[jlc1978]

The reason for that is that ebooks are usually considered an ancillary right or a subright and instead of the usual 10-12% royalty back to the author, it can be 50%. And in the cases where the publisher wasn't granted the ebook rights in the first place and now they want it, they usually also have to pay another advance which has to be earned out. There are cases where the agent/author are holding back ebook rights for themselves. That is a bad precedent that will kill traditional publishing: what difference does it make whether the end result is a printed page or an ebook? The publisher is (or should be) buying the right to the intellectual property.

Not really - without getting into a discussion of is IP law correct - the owner of the IP has a right to decide how to license it. A publisher buys a license that covers a specific use and needs to pay to use it in a different matter. if they want broad terms they simply pay more; but most are probably unwilling to shell out a more money just to get unlimited licensing.

This is not new - it happened when video tape / DVD / CD distribution of content came into being - content owners didn't give up those rights so they want to paid for using their content, just as the actors want a cut of that as well. In some cases it's resulted in background soundtracks being redone to eliminate expensive period music - such as was done with Tour of Duty on the DVD release and in others may prevent the release of all or some of the material on DVD simply because they can not clear the rights at a cost that is profitable to produce the DVD.

Distribution is just a small part of publishing - the front end production (editing, illustrating, etc.) are far more important and aren't going to die soon. All you'll have is a two-tier system - first rate editors / illustrators making a decent living and a whole bunch of people trying to break in or get buy cutting each other's throats on pricing driving down price and quality overall.

 

[camnchar]

I'm a huge, huge Apple fan, and so I'm going to give Apple benefit of the doubt for now. But if the allegations are true, then go government attorneys.

 

[IJ Reilly]

I'm lost as to what Apple and the book publishers have done wrong - the publishers set the price and Apple takes a cut. Surely the publishers have the right to set the price they want for their products?

It's not the same as them setting a fixed retail price, they're saying they want x for the product and then the retailer adds their margin. Personally I think the prices of ebooks are far too high but again, that's the publishers right.

Reckon the real issue here is that there has been a major change in the sales model for media and the law and law makers are playing catch up and no necessarily getting things right.

The big issue I expect is that Apple requires the publishers to not undercut them on price if they sell the same ebook through another retailer. At least on the face if it, this looks like anticompetitive pricing.

 

[jlc1978]

Sorry, but I think you are trying to excuse the inexcusable. I have four eBooks published in the Amazon Kindle store and except for my own work and the Scrivener license, there were no costs involved.

In the past I also had printed works published and know the involved price difference.

As I pointed out in an earlier post; there's a cost, not a price, difference. You may chose to set a lower price, perhaps because you feel you will make more money overall that way; or want to make sure more people can afford your book. In the end, however, the consumer decides if your book is worth the asking price, regardless of what it costs to make.

While I'd like to see them sell for less, in the end it comes down to is an electronic copy more or less valuable to the consumer than paper? Depending on how you plan to use it the answer could be yes or no.

 

[bungiefan89]

This isn't good! The government should not dictate what a company charges for it's products/services. If you are dissatisfied with Apple's pricing, you should buy your e-books from Amazon! If they overcharge, use Kobo or Barnes and Noble. If they overcharge, refuse to buy e-books until the pricing goes down.
It's called the free market.

No, dude, you're missing the point. This is collusion, price fixing... this is a situation where the companies that are supposed to be competing with each other in a fair free market suddenly decide to cooperate with one another and all jack up the price on everyone at the same time.
It's bad for consumers, bad for competition, and bad for the free market.

 

[sw1tcher]

This isn't good! The government should not dictate what a company charges for it's products/services. If you are dissatisfied with Apple's pricing, you should buy your e-books from Amazon! If they overcharge, use Kobo or Barnes and Noble. If they overcharge, refuse to buy e-books until the pricing goes down. It's called the free market.

But it's not a free market when AAPL and the publishers collude to fix prices.

The publishers have denied acting jointly to raise prices, according to the Journal. They have told investigators that the shift to an "agency pricing model" enhanced competition in the industry by allowing more electronic booksellers to thrive.

Under the "agency model", publishers would set the price of the book and Apple would take a 30 percent cut. Apple also specified that publishers could not let rival retailers sell the same book at a lower price.

Amazon Inc, the early pioneer in e-books, had sold many new best sellers at $9.99 to encourage consumers to buy its Kindle electronic readers. But the company's pricing strategy had ruffled the feathers of many publishers.

 

[econgeek]

But it's not a free market when AAPL and the publishers collude to fix prices.

That's not "Fixing prices". Fixing prices is when you try to keep prices high.

The part you bolded was Apple making sure their price was the lowest possible.

The sad thing is, Apple did the right thing here, and created competition.

Apple is setting it up so the publishers will be obsolete faster and people will just publish directly on the iBookstore. Apple gets their %30 (which is cheap compared to what publishers take) And the authors get a massive %70...

Apple did the right thing, so OF COURSE they are getting investigate for "anti-trust".

Anti-trust is just code for "we're going to punish anyone who actually competes". It is total nonsense laws and they should be struck down (they're unconstitutional on the face.)

The sad thing is, so many people fall for this kind of propaganda.

I mean you have to spin real hard to make people believe that Apple working to lower prices is actually raising prices-- but they believe it!

 

[sw1tcher]

People who complain about the increase in prices are forgetting the fact that Amazon was selling a lot of ebooks at a loss in order to get people to buy their kindles.

And? If someone wants to sell something at a loss, it's their perogative.