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Apple and Amazon Targeted in Probe of eBook Pricing Deals
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No, that is not what is being said. The contracts guarantee that Apple and Amazon have the BEST prices, that does not mean that the prices have to be BETTER than anybody else.
It's McDonald's saying we'll pay you $100 for a shipment of Coke, but if you start charging Burger King $90 then you have to offer it to us at $90 also.
If everybody has the same price then Apple and Amazon get the BEST price because there is no BETTER price.
it's also the most pitiful bookstore I have ever seen..in the Uk we have a choice of at least 30 books, and in true apple fashion, cost even MORE than their real life counterparts.
surely that level of robbery is what needs to be investigated?
In my mind, "Best" does NOT equal "The same." In my mind, "Best" means "Better." If we each have an identical item I would not say "my item is the best." That makes no sense to me.
Does "best price over their competitors" really sound like "the same price" to you? It doesn't to me. (Likewise, does "we got the best score over the other team" sound like a tie game?)
But I suppose (although I disagree) I can see your point. You may well be right! If the writer agrees with your usage of the word then I am the one who's wrong. We haven't been given enough information to say for sure what the original writer meant.
Language can be a bit confusing from time to time. Words can have one meaning for you and another for me.
If Apple and Amazon both have a contract with the same publisher requiring they both have a lower price than the other, the next person who buys a book will get every penny the company owns, then it will go out of business. I hope I and that customer.
I know B&N does. I swas surprised last week to see "classic" title by Lawrence Watt Evans on sale for $2.91 each at B&N. I mistakenly thought that was the normal proce, and only bought a couple that I hadn't read. Now they are back at $5.59 ("20%" off "cover price MSRP" of $6.99. Amazon doesn't carry his books.
It is interesting that a quick look at the price of titles that are shared by B&N and Apple shows the same $7.99 or $14.99 price (excluding a few items listed by B&N as on-sale at 20% off of MSRP).
I don't think it is price-fixing. With Amazon involved, there is cut throat action going on, and I suspect Amazon will move faster to undercut their competitors then the CT AG can.
Both Amazon and Apple are now subjected to the agency model, where the publishers dictate the end price that consumers pay and pocket 70% of that price with Amazon/Apple getting 30%.
The other companies are still using the older model where the publishers specify a RRP, the sellers pay a percentage of that price (usually around 50%) and can then sell to consumers for whatever they want.
The older model is superior for competition since the sellers can opt to undercut competitors, even to the point of selling at a loss.
I'm not sure why this would be investigated. If Amazon's/Apple's competitors wanted to switch to the agency model the publishers would be overjoyed (even though it's far less profitable for them) because it allows them far greater control over the pricing of their product.
The other companies are still using the older model where the publishers specify a RRP, the sellers pay a percentage of that price (usually around 50%) and can then sell to consumers for whatever they want.
The older model is superior for competition since the sellers can opt to undercut competitors, even to the point of selling at a loss.
I'm not sure why this would be investigated. If Amazon's/Apple's competitors wanted to switch to the agency model the publishers would be overjoyed (even though it's far less profitable for them) because it allows them far greater control over the pricing of their product.
What the attorney general is forgetting in his letter is that B&N take 50% of the price of the book... Apple and Amazon currently take 30%. What that means for me (my novel, Codex, is currently #15 in the UK iBookstore and #2 in UK Mysteries and Thrillers) and my publisher, Last Passage, is that the writer of the book - the person who deserves a healthy cut - gets more when dealing with Apple and Amazon.
Last Passage inform me that they are currently reviewing the B&N situation and may even pull their titles completely if the 50% isn't lowered.
I'll lose sales, sure, but they'll still have my blessing if they choose to vacate B&N. 50% to the retailer is, in my opinion, daylight robbery.
Last Passage inform me that they are currently reviewing the B&N situation and may even pull their titles completely if the 50% isn't lowered.
I'll lose sales, sure, but they'll still have my blessing if they choose to vacate B&N. 50% to the retailer is, in my opinion, daylight robbery.
Actually, both you and the publisher will typically get less under the agency model.
Under the old model the publisher would set a high RRP (usually based on the hardback version), for example $25. The retailer would pay them 50% so the publisher gets $12.50. The retailer can't sell at the full RRP since no one would pay that much. Maybe they sell it at $14.99 (in Amazon's case it was $9.99, losing money but gaining market share). Whatever the retailer sells it for doesn't make a difference to the publisher or author since they've already been paid according to the RRP.
Under the agency model the publisher dictates the end price. But they run into the same problem as the retailers and can't charge $25 since few people would pay it. So maybe they set the price at $14.99, of which they get 70%, or $10.49. The publisher makes less and so, consequently, does the author.
The publishers would have people believe that the agency model is better but money-wise it is actually worse for everyone, even the retailer who might have lost money on the sale but used that loss to make a greater profit elsewhere.
The only reason the publishers want the agency model is for control in the long-term and you can be sure that control will be exerted for their benefit and not yours.
Not quite.
Alice, Bob, and Chuck each run a newspaper stand.
Alice and Bob both have a 'most favored nation' clause in their supplier contracts with the local newspaper. They must be offered the lowest cost for the stock they buy. Chuck does not. He'll get stuck with whatever rate he's offered.
The newspaper offers the following rates per paper:
Alice $1.00 per paper
Bob $1.25 per paper
Chuck $1.50 per paper
Since Alice is being charged $1.00 per paper, Bob's 'most favored nation' clause kicks in, and he gets his papers for $1.00 as well. Chuck still has to pay $1.50 each. Then Chuck negotiates down to $1.00. Alice and Bob's prices don't change. After showing he is managing significant sales, Chuck negotiates down to $0.95. Now both Alice's and Bob's 'most favored nation' clauses kick in, and their rate is reduced to $0.95.
As you can see, Chuck, as a competitor to Alice and Bob is not necessarily charged *more*. He just won't be charged *less*.
Actually, it does.
If your product and your competitor's product are indistinguishable from one another, and nobody else has a better product, *both* of you have the best product available.
If you and your competitor both have the same price for a product, and nobody else has a better product, *both* of you have the bet price for the product.
I sell Book A for $5.99.
You sell Book A for $5.99.
Fred sells Book A for $6.99.
What is the best price? (I'll give you a hint. It starts with $5.99.)
By the logic you used above, the 'best tool for the job' must, by your own definition, be a one-off, because otherwise there are other tools which are equally good at the job.
I'm sure that's at the heart of this. Although as an avid reader and friend of many authors, perhaps this is in Connecticut's and the nation's best interest.
My only question is, why aren't the publishing houses included in this investigation?
I'm an Apple consumer and investor. But I like this investigation.
Price fixing is not good and its unfair to smaller businesses that can't get in on the deal.
There is nothing wrong with an investigation like this. Perhaps the investigation will reveal price fixing did not occur. That's okay. That's the difference between an investigation and a charge. Many people believe investigations are only warranted when the outcome is already known . They consider it simply a means of gathering evidence for "what we all know happened". That's a dangerous way to operate. It leads to similar thinking about trials.
Price fixing is not good and its unfair to smaller businesses that can't get in on the deal.
There is nothing wrong with an investigation like this. Perhaps the investigation will reveal price fixing did not occur. That's okay. That's the difference between an investigation and a charge. Many people believe investigations are only warranted when the outcome is already known . They consider it simply a means of gathering evidence for "what we all know happened". That's a dangerous way to operate. It leads to similar thinking about trials.
Perhaps the Attorney General(s) should invest their efforts in why Gas stations seem to always have the exact same price? Nah, they would rather spend time on ebooks!
It is about time somebody had a look into this sort of thing. Despite the fact that digital distribution destroys all the overheads of a traditional retail business model, iTunes and iBooks still seem to charge more for movies, music and books than I pay for them in Fopp/HMV clearouts etc.
Whilst there is competition in the online music sphere, no one can get me FLACs/wavs as cheaply as I can buy them instore and rip them. Having looked into ebooks' pricing I think I'll stick with the physical equivalent for the time being.
Whilst there is competition in the online music sphere, no one can get me FLACs/wavs as cheaply as I can buy them instore and rip them. Having looked into ebooks' pricing I think I'll stick with the physical equivalent for the time being.
The publisher set the price in both cases so 70% will be higher than 50%. Why would they choose $25 in one case and $15 in the other?
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.
Apple is NOT the largest book seller.
Apple?
Why would you assume that for Apple, which operates on the 'agency model,' in which Apple get 30% of retail price? Wasn't that the big Amazon-Apple debate before the iPad came out?
Why would you assume that for Apple, which operates on the 'agency model,' in which Apple get 30% of retail price? Wasn't that the big Amazon-Apple debate before the iPad came out?
Yes but thats not the agreement Apple has. Apple's deal is you can't sell to someone else for less then you sell to us. It's perfectly fair and legal to say your not going to pay more for something then anyone else. In fact it's actually illegal for the sellers to charge different prices unless they can show a valid reason (more volume=less overhead).
Price fixing is when retailers collude to set a price not when they just use the MSRP.
That is because eBooks actually cost more to produce the regular books due to the scale of manufacturing.
Yes, but we're not talking about your mind, we're talking about what is being investigated. I've dealt with these "favored nation" deals a multitude of times due to government contracts.
He does politicize a lot of things, and lately he has been preying on the technologically impaired.
He went after Google with the whole wifi data thing, when there clearly and obvioulsy was nothing wrong with what Google did, and it was also obvious that Google didn't intend to do it in the first place.
Now this. This isn't as clear-cut as the Google case, but it doesn't make a lot of sense. When's someone going to go after the cell phone cartel? Does anyone really care that Amazon and Apple are dictating the prices that publishers sell at? The prices have already been pushed down by Apple and Amazon more than competition alone ever could.
I used to like Blumenthal, but I'm growing to hate him.
A number of years ago, in a pander to parents who don't understand anything about combustion, he banned the piccolo pete fireworks/sparklers right before July 4, requiring a recall of all of the fireworks/sparklers in late June. The fact was, those were some of the safest sparklers out there, even though they did have an open flame at the end, which technically violated Connecticut's over-the-top sparkler regulations. All they did was emit a loud shriek, and it was completely safe to light them off 4 or 5 at a time.
OTOH, he did do some really good work in fighting to require a Midwestern coal power plant to reduce emissions because they were floating into Connecticut, as well as work with greenhouse gas emissions.
Here is a different take on the investigation: http://dailybarrage.com/2010/08/04/blumenthals-antitrust-investigation-against-apple-amazon/
The lowest price means that their competitors can not be charged less. They do not have to be charged more.