Apple and Amazon Targeted in Probe of eBook Pricing Deals

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The Attorney General for the State of Connecticut has launched an investigation into the eBook market, targeting Apple and Amazon for deals they are striking with publishers to ensure favorable pricing. Attorney General Richard Blumenthal argues that the deals prevent other marketplaces from offering even lower prices, hampering competition.
Both Amazon and Apple have reached agreements with the largest e-book publishers that ensure both will receive the best prices for e-books over any competitors -- contract provisions known as "most favored nation" (MFN) clauses.

In letters to Amazon.Com and Apple, Blumenthal is calling on the companies to meet with his office to address these concerns. Publishers that have reached such agreements with Amazon and Apple include Macmillan, Simon & Schuster, Hachette, HarperCollins and Penguin.
Blumenthal points to a survey of a number of New York Times best sellers yielding identical pricing at Amazon, Apple, Borders and Barnes & Noble, suggesting that the uniform pricing is evidence of anticompetitive behavior fostered by Apple's and Amazon's pricing agreements with publishers.

The full text of Blumenthal's letter to Apple (PDF) is available on the Attorney General's site.

Article Link: Apple and Amazon Targeted in Probe of eBook Pricing Deals
 

sportsfan

macrumors regular
Nov 13, 2009
210
68
What BS is this?

Right now when I walk into a book store...the price of a book is stamped on the cover. This is the same price across all book stores. It has been this way forever....what's the difference?
 

Rodimus Prime

macrumors G4
Oct 9, 2006
10,136
4
Right now when I walk into a book store...the price of a book is stamped on the cover. This is the same price across all book stores. It has been this way forever....what's the difference?
Umm that is a suggested price. Book stores are free to price lower or higher than that. BN for example generally charges 10-15% below that price.
 

jav6454

macrumors P6
Nov 14, 2007
16,871
1,492
1 Geostationary Tower Plaza
WTF?! Let's see here, he have the Nook, Kindle and Kindle App and iBookStore. Why in the world would the Attorney General in Conneticut target Apple and Amazon?

We have competition here people... some politicians are beyond idiotic. If there is a same price on a book it's not because of an agreement, rather the publisher price gouging....
 

thatisme

macrumors 6502
Mar 23, 2010
485
106
United States
I think this is more a problem for the book sellers (simon, penguin etc) than their distribution partners (apple, amazon, b&n)

As evidenced with Random House (i think), they are not striking an agreement with Apple simply due to pricing concerns. So, if the distributors don't agree to the pricing terms, they are not allowed to sell the books. This, in and of itself, is anti-competitive and is on the fringe of anti-trust questioning.... The fact that all publishers are forging identical pricing agreements is evidence of collusion amongst the publishers.

Best outcome of this may be overall lower pricing for e-books
 

SaaGua

macrumors member
Apr 22, 2010
61
0
Even though the new Kindle pricing is very enticing, I feel the ebook prices are still not as competitive. Especially if you compare them to used physical books.

I wonder if Amazon has discounts/sales for selected ebook titles. Or if they lower the price after a certain time has passed... Then it would be like a used ebook pricing... :)
 

Porco

macrumors 68040
Mar 28, 2005
3,061
5,761
I wouldn't be surprised if any investigation on eBooks is shelved. Literally.
 

veggies

macrumors newbie
Jan 29, 2010
14
0
NJ
this is going to be very difficult to prevent -- as I understand it, if the publisher sets the price and all of the retailers use that price, then it can't be seen as price fixing. the Attny General needs to prove that the retailers were involved in helping to determine the prices. which, if I recall, is exactly what was being reported months ago.
 

kernkraft

macrumors 68020
Jun 25, 2009
2,456
1
Those wooden-effect shelves look dated. They looked good in the Delicious Library application before Apple decided to use the look without any permission or even correspondence; but now they look old and they smell 'ripped-off'.
 

Small White Car

macrumors G4
Aug 29, 2006
10,899
1,125
Washington DC
the publisher sets the price and all of the retailers use that price
But that's what they're saying ISN'T the case. They're saying that not all of the retailers can use that price.

This would be like McDonalds saying "Listen, Coke, we'll pay you $100 for a shipment of coke but ONLY if you charge Burger King $110. If you don't, we'll stop buying Coke and we know you need us."

Again, I DON'T KNOW that this is true. But that's what the accusation is. The issue is that McDonald's should not be allowed to tell Coke what they can and can not charge other restaurants.
 

h1r0ll3r

macrumors 68040
Dec 28, 2009
3,890
1
Maryland
Why target Apple and Amazon when the price is uniform on Borders and Barnes & Noble too? I don't understand how that works.
Nobody cares about Borders/B&N :(

Apple and Amazon are the largest out there so that's probably why they are named and not the little, itty bitty, going-out-of-business-soon retailers.
 

sportsfan

macrumors regular
Nov 13, 2009
210
68
one would think

since distribution costs are the same for everyone in an electronic medium....the price should be the same everywhere?
 

JAQ

macrumors 6502
May 13, 2008
302
71
Purgatory MI
WTF?! Let's see here, he have the Nook, Kindle and Kindle App and iBookStore. Why in the world would the Attorney General in Conneticut target Apple and Amazon?
We have competition here people... some politicians are beyond idiotic. If there is a same price on a book it's not because of an agreement, rather the publisher price gouging....
Um.... it's because of an agreement, letting the publisher set the price. Now, if someone... somewhere... were selling the same digital book at a lower price, that would be competition. But if no one is (and... no one is), then it's not competition. It's fixed-price retailing. And that's illegal.
 

DrMaturin

macrumors member
Feb 8, 2008
33
0
Politics, maybe? And it's Richard, not George.

First of all, the CT AG's name is Richard, not George. Also, he's running for Senator this November so you have to wonder if there isn't more than a bit of political grandstanding going on here.
 

JAQ

macrumors 6502
May 13, 2008
302
71
Purgatory MI
since distribution costs are the same for everyone in an electronic medium....
Where do you get that strange notion? The cost of web hosting and bandwidth varies depending on where you buy it from. Electrical costs are different in different places from different providers. Tech support staff cost more or less. Etc. That's how market economies work.

As long as there isn't price-fixing going on, that is.

Also, the cost of delivery is only a tiny fraction of the selling price of a digital book. Like with any other retailer, Amazon should be able to choose to take 5% less profit on each unit, hoping to make up for that by selling 10% more. But they aren't. And neither is Apple. Or B&N. How do you explain that?
 

Consultant

macrumors G5
Jun 27, 2007
13,291
14
They should investigate Amazon for selling items below cost.

Right now when I walk into a book store...the price of a book is stamped on the cover. This is the same price across all book stores. It has been this way forever....what's the difference?
Exactly.

Apple iBookstore is just another book store.

iBooks can read non-DRM content. iOS has apps from other book stores.
 

jav6454

macrumors P6
Nov 14, 2007
16,871
1,492
1 Geostationary Tower Plaza
Um.... it's because of an agreement, letting the publisher set the price. Now, if someone... somewhere... were selling the same digital book at a lower price, that would be competition. But if no one is (and... no one is), then it's not competition. It's fixed-price retailing. And that's illegal.
If the prices are fixed across all platforms - no, no we do not.
Then you go after the Publisher setting the prices up.
 

mpacific

macrumors newbie
Sep 23, 2009
2
0
First of all, the CT AG's name is Richard, not George. Also, he's running for Senator this November so you have to wonder if there isn't more than a bit of political grandstanding going on here.
You'd think that, but he's always been a consumer watchdog. It's just his MO, always has been.
 

userexec

macrumors member
Apr 24, 2010
33
0
But that's what they're saying ISN'T the case. They're saying that not all of the retailers can use that price.
What I got out of it too. If that's really the case, then that's pretty messed up.

Even though the new Kindle pricing is very enticing, I feel the ebook prices are still not as competitive. Especially if you compare them to used physical books.
I actually prefer ebooks because they save physical space, but I had a browse through the iBookstore for the first time the other night to see if they had a title I wanted. I ended up just ordering a used copy on Amazon for a quarter of the price after shipping -_-

Can't beat the used book market.
 

RalfTheDog

macrumors 65816
Feb 23, 2010
1,396
55
Lagrange Point
But that's what they're saying ISN'T the case. They're saying that not all of the retailers can use that price.

This would be like McDonalds saying "Listen, Coke, we'll pay you $100 for a shipment of coke but ONLY if you charge Burger King $110. If you don't, we'll stop buying Coke and we know you need us."

Again, I DON'T KNOW that this is true. But that's what the accusation is. The issue is that McDonald's should not be allowed to tell Coke what they can and can not charge other restaurants.
What McDonalds is saying is, if you want us to buy coke, you can't sell it to others for less than you sell it to us. There is no problem with that. The problem I have is, when Amazon and Apple sell books for less than cost.

Remember printing and distribution of paper books costs almost nothing. The cost of paper books (and electronic) come first and foremost from editing. Then you get into marketing. The next highest cost is the royalties paid to the author (This is trivial). The cost of print and shipping falls somewhere below that (If I remember, it is far less than one dollar a book for hardback).

If Amazon or Apple sell the book for less than the cost of a paper book, they are quite likely selling it below their own cost to run the smaller competition out of business.

Apple and Amazon should be able to require the publishing houses not give their competition a better deal. I would have no problem if every store got the same price. I just don't want any store selling below their own cost.
 

RalfTheDog

macrumors 65816
Feb 23, 2010
1,396
55
Lagrange Point
Where do you get that strange notion? The cost of web hosting and bandwidth varies depending on where you buy it from. Electrical costs are different in different places from different providers. Tech support staff cost more or less. Etc. That's how market economies work.

As long as there isn't price-fixing going on, that is.

Also, the cost of delivery is only a tiny fraction of the selling price of a digital book. Like with any other retailer, Amazon should be able to choose to take 5% less profit on each unit, hoping to make up for that by selling 10% more. But they aren't. And neither is Apple. Or B&N. How do you explain that?
The problem is, Amazon (and I assume Apple) sell many of their books for less money than they paid. If Amazon buys a book from the publisher for $10, then they sell the book for $8, the smaller stores will not be able to compete, so they will go out of business. When they have no competition, They will be able to force the publisher to sell for $5 then, they can mark it up to $30.