Apple E-Book Price Fixing Decision Could See Return of Direct Links from Kindle and Other Apps to Their Stores

[donnaw]

Why is DOJ wasting so much time on a minor issue like this when they should be going after BIG OIL for disconnecting pump prices from barrel prices?

Remind again, why we pay THEIR salary!!!??

Because Big Oil as you call it doesn't control pump prices.

1). Big Oil owns very few of the gas stations. Those are franchises and the owners set the prices.

2). Big Oil doesn't have anything to do with the price of crude either. Crude oil is a commodity. The price fluctuates with the commodities market. And crude comes the varying 'flavors' (light-sweet, heavy, sour, etc). Each has it's own issues during refining and its own price. (what you see on TV is West Texas Sweet, or maybe Brent lite). Some are easier to refine (light sweet in particular). Refineries actually are set up for specific types of crude and have to reconfigure to refine a different type.

3). And then of course there's transportation costs that aren't included in the price you see on TV for a barrel of oil. Trust me, it costs a lot more to ship a barrel of oil from the Mid-east to a refinery in Galveston than to pipe it from wells in Texas. And keep in mind, it's usually shipped to an appropriate refinery.

So before you go all 'rant' on a tech forum about the price of gasoline and whether or not the government has anything at all to do with it you might learn a bit about the industry and commodities trading. It will help your blood pressure, I promise.

 

[Renzatic]

It didn't have to be that way though. Like I wrote earlier - they just don't want to do what it takes to (legally) and seriously compete in the space.

They do. It's ultimately nothing more than a subset library inside the ever profitable iTunes. Even if they didn't sell a single ebook, hosting them and providing payment options wouldn't cost Apple roughly as much as hosting an unpopular album. The only large(ish) monetary investment on their part would be hiring the staff to make an e-reader program capable of viewing the files.

The problem is, Apple loves their profit margins, and they wouldn't make as much as they think they deserve by competing with Amazon on a price for price basis.

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Yeah and it's a shame too. I have a few books from the iBooks store and to be honest I really like the app, mush more than the kindle app. But not being cross platform is a deal breaker for me. Unless, of course I can't find a book on Anazon and Apple has it. But that hasn't happened so far.

I'm not 100% sure of this, but I believe all Apple ebooks are hosted as basic, DRM free epub documents. In theory, you could use something like iPad Explorer to grab the files out of the iBooks folder, and upload them to your Kindle account.

It's not exactly what I'd call smooth and convenient, but I believe it is doable.

 

[jdechko]

Here we have the DOJ going after businesses, trying to make it difficult and creating backdoors to problems and security issues.

I don't necessarily have a problem with the investigation, after all, one of the jobs of congress is to regulate interstate commerce.

The government should fix Medicare and Medicaid. There's so much fraud going on there, wasting contributor's tax to support people who don't really need it while denying service to those in real need.

How about the gas monopoly? Everyone agrees to raise prices; OMG that's a conspiracy! Think of this: Why does gas obtained from other areas goes up in price when there's a problem in the Middle-East?

It's actually quite simple: follow the money. Companies and Industries spend billions of dollars each year lobbying congress and financing the campaigns of elected officials. Big Oil spends a billion dollars getting favorable senators & congressmen elected so that the senators & congressmen will create favorable market conditions for Big Oil.

By contrast, companies that don't spend money lobbying congress have little to no input in shaping policy.

 

[JAT]

That's what this is about.

This is going to be the death of Barnes and Noble. Absolutely. Maybe it should die for being an insufficient business model.

Barnes and Noble won't be able to compete in an ecosystem that is primarily books with Amazon that sells practically everything and can subsidize ebooks indefinitely until it is back to it's peak ebook market share of some 90%. Let's call it what it is; predatory pricing.

The Justice Department is fine with monopolies.

Of course, there is that appeal process that Apple is going to pursue.

This is the only thing that matters to me as a consumer.

You folks can argue over what Apple has allegedly done til you're all blue, but the fact is that Amazon has destroyed the book market on the planet. It was propped up slightly for a couple years by the Apple deal, now it will go away faster. And once the books are gone, nobody will write them much, anymore. It's an unfortunate slope.

Hope y'all like Youtube. That's going to be all media pretty damn soon.

 

[charlituna]

Amazon will be required to have a monopoly. Not to worry. Apple has moved the game along sufficiently. It will be difficult to go back. eBooks will soon be left in the wake of iBooks.

oh i don't know about that. Amazon could manage to get back their monopoly rather quickly, especially with their strong arm tactics like requiring exclusive access, holding print items for ransom etc

 

[Cartaphilus]

If by "bottom line" you mean the stock price of AMZN, it makes sense. The "bottom line" as in profits is negative, because Amazon has been operating at a loss for several quarters, and they just gave surprising guidance for an even bigger loss next quarter. This missed the last quarter, and gave lousy guidance, and on that basis, the next day, the stock made new highs over $310. Wheeeee!

Apparently investors are aware of how long Standard Oil lost money before it achieved a virtual monopoly in many markets and raised its prices to generate massive profits.

 

[charlituna]

Simple Fix to Piss off the Judge: Reject the Kindle App for Some Other Issue.

Very difficult to do without someone successfully claiming it was a trumped up reason in order to violate the court order

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Are you kidding? Even the publishers didn't protest the fines because thy knew the DoJ had Jobs red-handed.

Not true. They agreed to settle because they figured the fines would be less than the legal fees. No admission of guilt by anyone was in those deals.

 

[donnaw]

1) The laws don't define a "percentage" of anti-competitive behavior for prosecution (iBooks is probably a very small percentage of Apple's total revenue). It wouldn't be unfathomable to think that iBooks makes up a similar percentage of Apple's total revenue as underpriced books do for Amazon. If we treat all anti-competitive behavior the same, Amazon should be investigated as well.

2) Amazon has other goods & services that can cover the loss from one line of business. That's how/ why predatory pricing works. Long-term overall losses make for a poor business strategy.

3) Law is hard, which is why I'm glad I'm not a lawyer or judge. But I do remember a little bit of Anti-Trust stuff from college. I don't know a lot about Amazon's operation, but it does seem to me like anti-competitive behavior (abusing monopoly power).






It sounds to me like they want to shut the iBookstore down for 5 years. If you terminate Apple's agreements, and don't allow them to make new ones, then Apple can't distribute books.

1). I never said anything about percentages. What I did say that was that if Amazon was being anti-competitive I was pretty sure someone would bring it up. Come on, after all this don't you think Apple is trying to do something!

2). As I said I read the finding to say that Apple can't enter into NEW agreements for 5 years. That may mean that their old agreements they used prior to the price fixing can still stand. If so, they do not have to close the store. Of course they may decide to any way, or perhaps it does mean that they have to close the store. However, I find it hard to believe the court would do that. If that was the intent the court would probably simply state it as such. But I may be wrong, I'm not a lawyer either but I have had a lot of experience interrupting laws and legal agreements. And of course, if that was the intent I'm guessing Apple could get that portion overturned on appeal. I can't see the courts ordering the iBookstore simply shut down. Time will tell.

 

[JAT]

Why would I want to pay more for a book then someone wants to sell it to me for? If person A wants to sell it to me for $6 and person B wants to sell it to me for $10, why do you honestly think it's bad to buy it for $6, and I should instead pay $10? Especially since both people already paid the publisher the amount they were required to pay.

Why? Perhaps you want to buy a book next year. Or the year after that. If everyone sells below cost, that may be the last book available for you to buy. I hope it's a good one.

 

[snowmoon]

To tun afoul of anti-trust there needs to be two elements, a monopoly and anti-competitive abuse.

Please tell me how a store with tops 20% market share is a monopoly or even a major player against an intrenched player like Kindle with 60% or more of the market? Amazon who ties it's online storefront to every other service it sells via "prime" and loss-eaders to undercut competition and prevent other players from entering the market.

The DOJ went after the wrong company here, even if Apple had been 100% in the wrong the penalties are egregiously out of proportion to the "harm" done. The DOJ has handed the Kindle the whole market on a silver platter, crippling the only viable competition. I would love to see the prosecutors portfolio and that of their families.

 

[charlituna]

Because Apple doesn't spend any money lobbying or massaging politicians testicles. Amazon does. Thats how things work in this country unfortunately. They see Apples massive pile of money, and then they see how little Apple spends on political garbage, and it makes Apple a huge target

Possibly true. Apple does lobby but not nearly as much as other companies and probably not as long as Amazon has.

In the end this comes down to folks screaming at the DOJ that "Apple" raised prices without considering that Amazon has unfairly 'dumped' etc. And the DOJ doesn't want to look like they don't care about the consumers. But basically forcing a whole store to shut down (and apparently they want to include all forms of media not just books) is not the way to do it. Limiting MFN power, ending exclusivity deals (or at least limiting them to no more than a couple of months), ending/limiting windowing etc is how to be fair to both sides.

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In truth, blame the Sherman Anti-Trust act (1890), which never envisioned anything beyond the 19th century.

I would have to agree with this.

 

[Renzatic]

This is the only thing that matters to me as a consumer.

You folks can argue over what Apple has allegedly done til you're all blue, but the fact is that Amazon has destroyed the book market on the planet. It was propped up slightly for a couple years by the Apple deal, now it will go away faster. And once the books are gone, nobody will write them much, anymore. It's an unfortunate slope.

Hope y'all like Youtube. That's going to be all media pretty damn soon.

DOOM 'N GLOOM!

Right. Amazon didn't destroy the ebook market, and hasn't put that much of a dent in hardcover book sales. All they're ultimately guilty of is selling digital goods for a good deal less than physical ones, which the publishers didn't like.

Authors still make a profit. Hell, the publishers actually made more money when Amazon was supposedly screwing everyone over than they did while colluding with their fellow competitors. As long as Amazon isn't undercutting ebooks to the point they're a buck 99, they're hardly destroying the market.

Though if there is one silver lining for the AMAZON R EVIL contingent, it's that Amazon did lose a fairly hefty chunk of the marketplace during the whole collusion affair. Apple now controls roughly a quarter of the ebook market. B&N and Borders around 10% each. Amazon is a majority player, but can't be considered a monopoly anymore.

 

[Oletros]

1) The laws don't define a "percentage" of anti-competitive behavior for prosecution (iBooks is probably a very small percentage of Apple's total revenue). It wouldn't be unfathomable to think that iBooks makes up a similar percentage of Apple's total revenue as underpriced books do for Amazon. If we treat all anti-competitive behavior the same, Amazon should be investigated as well.

2) Amazon has other goods & services that can cover the loss from one line of business. That's how/ why predatory pricing works. Long-term overall losses make for a poor business strategy.

3) Law is hard, which is why I'm glad I'm not a lawyer or judge. But I do remember a little bit of Anti-Trust stuff from college. I don't know a lot about Amazon's operation, but it does seem to me like anti-competitive behavior (abusing monopoly power).

Amazon was investigated, ebook division was profitable since day one so no predatory pricing.

It sounds to me like they want to shut the iBookstore down for 5 years. If you terminate Apple's agreements, and don't allow them to make new ones, then Apple can't distribute books.

No, the DoJ proposal doesn't restrain Apple of doing new contracts

 

[BaldiMac]

One doesn't have much to do with the other except power plays.

Apple could have entered the market by pricing the same way as Amazon does and just lowering their 30% take.

There is no LAW that Apple has to take 30% - that's their own internal figure that they don't want to change.

Would that mean less profit - maybe very little or even none on SOME books - yes. But they could have successfully entered the market.

It would mean a loss for Apple. I don't find it reasonable for the court to claim that competition is upheld when new competitors have to maintain below cost pricing to enter the market.

You're missing one thing: Apple wanted 30% of the cut which led to the raising of the prices and insisted on a no "most favoured nations" clause which prevented Amazon reducing its prices. That's the illegal part....

I'm not missing anything of the sort. The judge specifically said that agency pricing, an MFN clause, price caps, and simultaneous negotiations were all legal alone or in combination.

"The prices will be the same," Jobs assures him. "The publishers are actually going to withhold their books from Amazon.""

http://tech.fortune.cnn.com/2012/05...ly-going-to-withhold-their-books-from-amazon/

I don't understand why this quote is continually brought up as damning evidence. Was Jobs supposed to be unaware of the MFN clause in the contract? The one that the judge said was legal.

 

[Oletros]

This is the only thing that matters to me as a consumer.

You folks can argue over what Apple has allegedly done til you're all blue, but the fact is that Amazon has destroyed the book market on the planet. It was propped up slightly for a couple years by the Apple deal, now it will go away faster. And once the books are gone, nobody will write them much, anymore. It's an unfortunate slope.

Hope y'all like Youtube. That's going to be all media pretty damn soon.

Not only that, they have destroyed the book market in the Local Group

 

[charlituna]

No, the truly illegal part were all the parties involved colluding to fix prices. A most favored nation clause is perfectly legal.

As is, according to Cote, agency terms. In fact there is nothing illegal about anything Apple was doing according to Cote. Even that they were doing all of it together.

And yet, without clear proof 'with no doubt' she ruled that Apple was the ringleader of a game to raise prices etc.

And not the DOJ is going way over the top to punish Apple and put Amazon basically back in total control of ebooks and who knows what else. If this was just about pricing they could be looking at limiting the various terms (I won't repeat the details I've already mentioned a couple of times in other posts as I'm sure you already read it)

 

[Renzatic]

It would mean a loss for Apple. I don't find it reasonable for the court to claim that competition is upheld when new competitors have to maintain below cost pricing to enter the market.

How much should an ebook cost? The nominal price for an ebook was $10 under Amazon's reign of terror. Around $12 during the collusion scandal. In your opinion, should ebooks cost as much as hardcover novels?

How much is too much? How low is too low?

 

[charlituna]

Perhaps you should read something about the actual incident and why this was a slam dunk for the DoJ. There was nothing remotely legal with the way Jobs went about it. And are you implying that Apple is not in the eBook market?

"In a note to a publishing executive nervous about sticking it to Amazon (AMZN), Jobs wrote:

NOTHING in that email proves anything about Apple colluding etc. Merely that Jobs responded to a nervous executive with what he felt was the state of the game.

 

[Oletros]

As is, according to Cote, agency terms. In fact there is nothing illegal about anything Apple was doing according to Cote. Even that they were doing all of it together.

And yet, without clear proof 'with no doubt' she ruled that Apple was the ringleader of a game to raise prices etc.

If you want to believe it, perhaps the 160 pages of the ruling is just an Lorem Ipsum

http://www.nysd.uscourts.gov/cases/show.php?db=special&id=306


But hey, there was no single evidence, the judge made up the case

 

[JAT]

DOOM 'N GLOOM!

Right. Amazon didn't destroy the ebook market, and hasn't put that much of a dent in hardcover book sales. All they're ultimately guilty of is selling digital goods for a good deal less than physical ones, which the publishers didn't like.

Not in total, perhaps. (I didn't say "ebook market", they essentially created that) But it moved it from your local street to a new location:

www.amazon.com

Makes Walmart look benefactor-ey to small towns. BTW, in my observation, hardcovers have gone back up in price at Amazon. Back when they were working to trash B&M stores, they used very low pricing. Hence: doom n gloom.

 

[donnaw]

Very difficult to do without someone successfully claiming it was a trumped up reason in order to violate the court order

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Not true. They agreed to settle because they figured the fines would be less than the legal fees. No admission of guilt by anyone was in those deals.

Nobody ever admits guilt. Never. But they had the email from Jobs documenting in bullet form no less on the exact strategy. That's pretty damning. Had the DoJ not had this I'm sure the publishers would have fought more.

No, they caved without a whimper.

Here's the text of Jobs email:

"In a note to a publishing executive nervous about sticking it to Amazon (AMZN), Jobs wrote:

As I see it, [Conspiring Publisher] has the following choices:

1. Throw in with Apple and see if we can all make a go of this to create a real mainstream ebooks market at $12.99 and $14.99.

2. Keep going with Amazon at $9.99. You will make a bit more money in the short term, but in the medium term Amazon will tell you they will be paying you 70% of $9.99. They have shareholders too.

3. Hold back your books from Amazon. Without a way for customers to buy your ebooks, they will steal them. This will be the start of piracy and once started, there will be no stopping it. Trust me, I've seen this happen with my own eyes.

Maybe I'm missing something, but I don't see any other alternatives. Do you?"

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NOTHING in that email proves anything about Apple colluding etc. Merely that Jobs responded to a nervous executive with what he felt was the state of the game.

Nothing about it proves colluding? Are you serious? He sent the exact same email to all 5 of the big publishing houses. It's the very definition of collusion. And it shows that Jobs was at the center of the round table.

Even if you don't believe it it's obvious the court found it so.

 

[samcraig]

It would mean a loss for Apple.

Proof point?

 

[charlituna]

"The prices will be the same," Jobs assures him. "The publishers are actually going to withhold their books from Amazon.""

Despite the visual phrasing, Jobs didn't say that in the sense that it is implied. There is a firm cut between the statements that removes what Jobs was replying to when he made the second comment. Which could have been anything including Walt asking what would happen if Amazon doesn't agree to the publishers terms, which could be very different since Apple is offering them an alternative. To which Jobs replies that they will just not sell on Amazon anymore. Which is not an admission of guilt about anything but a simple truth. The publishers would not longer have Amazon as the only major option and don't have to play by Amazon's terms anymore.

 

[snowmoon]

If you want to believe it, perhaps the 160 pages of the ruling is just an Lorem Ipsum

http://www.nysd.uscourts.gov/cases/show.php?db=special&id=306


But hey, there was no single evidence, the judge made up the case

If Apple is suggesting that an adverse ruling necessarily
implies that agency agreements, pricing tiers with caps, MFN
clauses, or simultaneous negotiations with suppliers are
improper, it is wrong. As explained above, the Plaintiffs have
not argued and this Court has not found that any of these or
other such components of Apple’s entry into the market were
wrongful, either alone or in combination.

There you go..... from the judge.

 

[BaldiMac]

How much should an ebook cost? The nominal price for an ebook was $10 under Amazon's reign of terror. Around $12 during the collusion scandal. In your opinion, should ebooks cost as much as hardcover novels?

How much is too much? How low is too low?

I don't know. Amazon was buying best sellers for around $12.50. Pricing after Apple entered the market was right around there. That's about half the cost of a hardcover.