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

[Renzatic]

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)

This is what gets me the most. WHY would the DoJ give preferential treatment to Amazon over Apple in this situation? What do they have to gain by allowing an (alleged) market monopoly controlled by one entity to take precedence over a virtual one controlled by many through price fixing?

Why would the DoJ go out of their way to specifically punish Apple based upon, to paraphrase you, flimsy evidence?

 

[charlituna]

The Agency model use by Apple is fundamentally different from the Wholesale model used by Amazon.
Amazon doesn't take a percentage cut. They bought the ebook rights in bulk at wholesale rates and sold at any price they wanted.

Unless the publishers forced new terms that allow them to set limits on Amazon's price control. Which they could have done with or without Apple in the picture. That's a detail that many overlook so they can cry Evil Apple

 

[Antares]

What infrastructure has Apple supplied here above and beyond allowing Amazon to sell their App? Apple's systems and servers would not be used to process the transaction or transfer the file.

It's not about Infrastructure. I'm trying to think of an analogy... Imagine if Best Buy was required to have links to Amazon on their website or even proivde a way for people to buy directly from Amazon while you are physically inside a Best Buy store. That is basically what this is.

Best Buy wants you to buy from Best Buy not Amazon. If people can buy from Amazon from within a Best Buy Store, Best Buy should get a cut of the revenue that Amazon is getting. Just like Apple should get a cut of any app's in-app purchases.

This is simple good business. Why would you help a competator get sales and you get nothing in return? Apple allows the Kindle app on their store which has links for people to buy their books from Amazon. Apple is facilitating sales to Amazon while getting no compensation in return. Why would any business do this?

 

[Oletros]

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

That quote tries to prove that there was no single evidence of wrongdoing? Really?

 

[charlituna]

But you like Apple driving the price of eBooks up higher than they should be?

than they should be? According to who? You? There is no right price other than the one that the market will bear.

And even then Apple didn't drive them up, they gave publishers limited control and the publishers raised prices. Apple never mandated that the prices had to be higher. They gave the publishers the control and the publishers could set prices (within those limits) to what they thought they could sell at. If consumers don't like the prices they don't have to pay them and when sales suck the publishers figure out that they need to adjust.

 

[BaldiMac]

Proof point?

Not sure what you mean. Maybe you are arguing a different point than I am. I was arguing that the court's reasoning doesn't allow for Apple to successfully enter the market.

 

[Oletros]

This is simple good business. Why would you help a competator get sales and you get nothing in return? Apple allows the Kindle app on their store which has links for people to buy their books from Amazon. Apple is facilitating sales to Amazon while getting no compensation in return. Why would any business do this?

Are you saying that Microsoft deserves a cut from Apple when someone buys from iTunes?

 

[charlituna]

Bottom line is Amazon's eBook experience is substantially better than iBooks,

I disagree. But that's the beauty of the system. I can buy what I want, you can buy what you want.

BTW, The illegal part is saying that the publishers could not allow the books to be sold for less anywhere else.

Not according to Cote. She said MFNs are fine. Not illegal at all. So Apple, Amazon (yep Amazon has one too) can keep them.

 

[Renzatic]

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.

So Apple supposedly took the effort to enter an entirely new market, hire lawyers, broker deals, and supposedly engage in underhanded tactics...

...to sell a bunch of books at cost.

And considering Apple got their 30% cut, if that's the case, then the publishers were losing about as much per book under the agency model as they were under wholesale.

I don't know the price resellers paid per ebook, but I'm pretty sure it was a good deal less than $12.50.

 

[Tysknaden]

The real problem was Amazon destroying the market with dumping prices.
I do not see, what is wrong with allowing publishers to decide over their books prices, as Apple did. On the contrary: it did repair a destroyed system.

 

[Rafterman]

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

Um, yeah, that's the way to get a lenient ruling - piss off the judge. Or better yet, force people who use iPad's (and especially iPad Minis) to read Kindle books, to buy Kindles instead of iPads. Great business strategy.

Not to mention this little legal principle called "contempt of court".

 

[charlituna]

No, Amazon sells SOME books under wholesale. This is a perfectly legitimate business practice done in just about every business out there.

But when they do that AND it hurts other companies that is not so legitimate.

Amazon has a ton of products that make a very healthy profit so if they lose a bit on a fraction of their ebooks it's not a big deal.

Someone like Borders, Barnes and Noble, lacks that. So when they buy at the same wholesale and have to sell at the same under price to get a sale, they are losing money they can't make up. And then when they also lose money on print books cause no one is buying them in favor of the cheap ebooks they lose more money. And so on.

If that isn't price dumping and/or predatory pricing what is. And Amazon should have already been investigated over it.

 

[kmichalec]

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.

What on earth are you talking about??? The author/publisher is still getting paid the same regardless of what the companies sell it for, so it's not like people would just stop writing books because of the lower sale prices. And even in the worst case scenario, if the cheaper price causes the more expensive company to go out of business, the first company is still in business. They may not need to sell the books at a cheaper price to undercut anyone anymore, and so the price may go back up to normal, but they are still selling books.

How does one company selling a book cheaper than another company equal the death of all books in your mind??

Where do you people come up with this stuff??

 

[charlituna]

So, you think each and every publisher couldn't foot the bill for a 2 week trial with the DOJ?

You forget about the costs of the weeks of preparation.

 

[samcraig]

Best Buy wants you to buy from Best Buy not Amazon. If people can buy from Amazon from within a Best Buy Store, Best Buy should get a cut of the revenue that Amazon is getting. Just like Apple should get a cut of any app's in-app purchases.

In reality this is what happens anyway People use Best Buy to browse and then go to Amazon or elsewhere to buy. One of Best Buy's biggest challenges...

Not sure what you mean. Maybe you are arguing a different point than I am. I was arguing that the court's reasoning doesn't allow for Apple to successfully enter the market.

I was asserting that Apple didn't have to "lose" money to compete.

The real problem was Amazon destroying the market with dumping prices.
I do not see, what is wrong with allowing publishers to decide over their books prices, as Apple did. On the contrary: it did restore a destroyed system.

There's nothing wrong with letting publishers decide prices. That's not the point. The point is that it's illegal to collude to make that happen.

Further - as a consumer - one would want to see variance in the marketplace - not have the same price no matter where you go.

Even further (if you read this thread I posted more on this) publishers actually made more money before the collusion. Amazon might sell to "us" for less money than they paid for the book - but publishers were not losing revenue on eBooks because of Amazon. They DID make less money (in cases) moving to the agency model.

 

[charlituna]

I give up, yes, she even started to write the ruling when she was in her twenties

Clearly you missed the numerous articles quoting the judge saying that she had total faith that the DOJ would make their case with no doubts. BEFORE the trial started

If that isn't prejudging and bias, what is. After those very public statements she should have been replaced if only so the DOJ wouldn't face appeals from Apple if they lost citing bias. A brand new judge who keeps his/her mouth shut would have nixed that gambit

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If monopolies were against the law, then Apple would have been in trouble long ago for their monopoly on Macs, Mac OS X and iOS

No they wouldn't. As proven doing the whole Psystar thing, the market is personal computers not Macs. And in regards to iOS it would be smart phones, tablets (or even mobile computing devices) not iPhones/iPads

 

[BaldiMac]

So Apple supposedly took the effort to enter an entirely new market, hire lawyers, broker deals, and supposedly engage in underhanded tactics...

...to sell a bunch of books at cost.

No, they refused to. That was the point.

And considering Apple got their 30% cut, if that's the case, then the publishers were losing about as much per book under the agency model as they were under wholesale.

I don't know the price resellers paid per ebook, but I'm pretty sure it was a good deal less than $12.50.

It was in one of the DOJ sldes that Amazon was paying $12.50 for many of the best sellers that they resold at $9.99.

http://www.scribd.com/doc/145487919/Opening-Slides-from-DOJ-in-the-U-S-v-Apple-Et-Al

Slide 12

 

[Oletros]

Clearly you missed the numerous articles quoting the judge saying that she had total faith that the DOJ would make their case with no doubts. BEFORE the trial started

If that isn't prejudging and bias, what is. After those very public statements she should have been replaced if only so the DOJ wouldn't face appeals from Apple if they lost citing bias. A brand new judge who keeps his/her mouth shut would have nixed that gambit

I know that it has been explained to you several times. If you don't want to grasp what reality is and now what tour fantasy world is I won't waste the time.

You can repeat all the times you want, it won't be more right.

 

[charlituna]

I've never understood why Apple thinks it deserves a 30% cut from big names like Amazon, Netflix, Google, etc.

They don't. Not in total. But if the company gets the business because of the iOS then a 'referral' fee isn't out of line. If the company gets the business because someone found them outside the app, whatever.

Putting a link to go outside of IAP would be like publishers sending reps onto stores and grabbing folks that are picking up a book and telling them to order direct from the publisher. Even though the customer may have discovered the book because the store put it on display

 

[kmichalec]

Clearly you missed the numerous articles quoting the judge saying that she had total faith that the DOJ would make their case with no doubts. BEFORE the trial started

OH MY GOD! She made that statement AFTER she had already reviewed the physical evidence, which happens ahead of time in a bench case like this! The only part that hadn't started yet is the lawyers arguing in person back and forth in front of her and putting witnesses on a stand. She even prefaced he comments with "Based on the evidence presented so far..." (paraphrasing). Please reread the article!!!

 

[Renzatic]

Someone like Borders, Barnes and Noble, lacks that. So when they buy at the same wholesale and have to sell at the same under price to get a sale, they are losing money they can't make up. And then when they also lose money on print books cause no one is buying them in favor of the cheap ebooks they lose more money. And so on.

Amazon and ebooks are basically doing to B&N, Borders, and the rest the same thing iTunes and digital music did to record stores. Remember those? There used to be about 15 of them within a 5 mile radius of my house. Now there's one. The rest have long since closed. Just about everyone buys or streams their music online now.

If you want a good old fashioned CD, about your only choice these days is Wal-Mart. Pretty soon, you'll be doing the same thing for hardcover books.

Amazon is putting the physical bookstores out of business because they have a better business model for the internet age. They have no mall locations, only warehouses. They don't have to train employees for customer service, only shipping and handling. They're a catalog and digital goods company, able to do what old physical stores used to do at far lower costs. In this day and age, that business model gives them a huge advantage.

You don't have to like it. I know I personally miss record stores, and I know I'm gonna miss book stores when they're gone. But that's progress. The way of the world. You can't punish Amazon for being able to offer the same thing at lower prices, and succeeding at it where others have failed.

 

[charlituna]

Unless, of course I can't find a book on Anazon and Apple has it. But that hasn't happened so far.

Outside of books, mostly textbooks, created with iBooks Author you won't find it.

But you will find books that are only on Amazon, because Amazon got the publishers to agree to never sell on another platform. The whole Hunger Games trilogy comes to mind. And according to rumor, also the Harry Potter ebooks. Supposedly Amazon agreed to putting them up in Kindle format so long as no other retailer could have them. It could only be Amazon and her own site.

 

[Renzatic]

It was in one of the DOJ sldes that Amazon was paying $12.50 for many of the best sellers that they resold at $9.99.

http://www.scribd.com/doc/145487919/Opening-Slides-from-DOJ-in-the-U-S-v-Apple-Et-Al

Slide 12

Answer me this. I order x amount of copies of the latest, hottest, bestselling hardcover book from the publishers for $20. I order the same amount of that ebook from them at $12.50.

I turn around and sell the hardcovers at my store for $29.95. I sell the ebooks for $9.99 as a way to draw attention to that side of my business.

Is what I'm doing illegal?

 

[charlituna]

The only part that didn't begin was the part where Apple tried to get up in front of her and say, "No I didn't. Pay no attention to the email from Jobs which caught us red handed".

That email did no such thing, unless you want to believe that Apple was guilty and everything is proof of that.

Red Handed would be an email or other document from anyone at Apple saying they wanted and were trying to get all the publishers together to agree to the same terms en masse and to bully every other retailer into agreeing to the same terms or lose the titles.

No such item exists. Instead we have a slanted interpretation of an email sent to one publisher that makes zero mention of anyone else involved that, if read without prejudice, is nothing more than one executive trying to convince another to sign a deal by laying out the state of things and how this proposed deal is a good idea.

 

[BaldiMac]

I was asserting that Apple didn't have to "lose" money to compete.

OOOooooh! You were asking me for proof to my point. Sorry, I misunderstood. I thought that meant that you thought I proved your point. My bad.

Two things.

1) My reasoning is that Apple currently operates the iTunes Store with a single digit profit margin despite 30% gross margins. I don't think it's realistic to assume that they could operate profitably with drastically smaller margins in the eBook market.

2) My fundamental disagreement with the DOJs perspective on Amazon is that I don't believe that the book market should be treated as a commodity market. Expecting competition even just among best sellers at a loss is unhealthy. To be clear, I don't think the DOJ is wrong to treat the market this way. I just disagree with them.