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I think a market with a multitude of e-book sellers that sell books at sustainable prices is in the long-term interests of consumers.

In that case you have to be against what the publishers did, because they had less revenue with Agency Model than with the Wholesale Model they had with Amazon.

As I said earlier, perhaps you have to read the ruling because it seems that you don't have very clear what the case was about.
 
The bottom line for me is that ebook prices went up when retailers switched to the Agency model. As a consumer I can't support something that causes prices to go up (prices are supposed to go down with increased competition, not the other way around), particularly when the price of ebooks was already too high to begin with.

In general I'm pretty much pro-Apple in every way. Aside from this and their removal of Bitcoin apps from the App Store, I've agreed with nearly all of their moves in the last decade. But this move was negative towards consumers, so I have to hope they don't win this one.

Also, if anyone out there actually thinks that the publishers are the good guys in all this, or that the Agency model is actually a good thing for ebooks, I suggest reading Joe Konrath's take on things on his blog at: http://jakonrath.blogspot.ca/
 
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In that case you have to be against what the publishers did, because they had less revenue with Agency Model than with the Wholesale Model they had with Amazon.

Way to put words in his mouth! Obviously, publishers were looking at the long term value of eBooks as a whole rather than the short term revenue decrease for best sellers.

As I said earlier, perhaps you have to read the ruling because it seems that you don't have very clear what the case was about.

Perhaps you could make your own points and provide evidence to support them rather than implying someone is ignorant of the facts just because you disagree with them.
 
The bottom line for me is that ebook prices went up when retailers switched to the Agency model. As a consumer I can't support something that causes prices to go up (prices are supposed to go down with increased competition, not the other way around), particularly when the price of ebooks was already too high to begin with.

In general I'm pretty much pro-Apple in every way. Aside from this and their removal of Bitcoin apps from the App Store, I've agreed with nearly all of their moves in the last decade. But this move was negative towards consumers, so I have to hope they don't win this one.

I think that's a completely reasonable argument. Higher prices suck. However, it's not a legal argument. The agency model is legal, as confirmed by Judge Cote.

I think your argument highlights the DOJ's line of thought in prosecuting Apple. They saw a massive change in the market that resulted in higher prices. However, they don't seem to consider that a market price set primarily by a single competitor (90% share) is not necessarily the most efficient price for the market. And the goal of a free market is efficient pricing, not lower pricing.

But the real issue (in one sentence) is whether Apple was a knowing participant in the alleged collusion between the publishers. I don't think there is any evidence that Apple was even aware of the collusion, let alone a "ringleader" or participant.

Also, if anyone out there actually thinks that the publishers are the good guys in all this, or that the Agency model is actually a good thing for ebooks, I suggest reading Joe Konrath's take on things on his blog at: http://jakonrath.blogspot.ca/

I assume you are talking about this argument here:
http://jakonrath.blogspot.com/2012/04/agency-model-sucks.html

I'd file this one under "He's a writer, not an economist." :)

He is absolutely correct that agency pricing is a negative for authors that were benefiting from Amazon's below cost pricing of best sellers in the short term. However, he doesn't seem to consider anyone else. Nor the long term effects of getting customers used to a 9.99 price point for best sellers as it decreases the value of books in the minds of consumers over time.

Even with self publishing, Amazon attempts to force the price of books under $10.00 by making it less profitable to sell book from $10-$20 than at the $9.99 price point.

My crackpot theory is that Amazon benefits from selling more books, and they don't want to see the industry succeed by finding a more profitable price point that slows down the growth of eBook unit sales.
 
In that case you have to be against what the publishers did, because they had less revenue with Agency Model than with the Wholesale Model they had with Amazon.

Not really, as I would argue that the e-books market pre Apple entering it, was inflated through unsustainable pricing. It's short-term thinking vs. long-term.

It's a complicated issue, no doubt, which is why we can spend so much time debating it. And, as is usually the case in legal cases, there is no clear 'right' or 'wrong'.

The publishers were unhappy with what Amazon was doing. Apple didn't want to enter the e-books market on Amazon's terms: what would be the point? It would have to sell e-books at a loss in many cases. It was a new service and to effectively compete it needed access to a broad catalog of e-books, thus it negotiated with the top book publishers. Did it know that it was very likely that the publishers would use Apple to re-negotiate their deals with Amazon? Sure. How could things really have played out differently? Cote and the DOJ see this as proof of a conspiracy to raise prices. I see it as common sense playing out, a correction to a model that wasn't sustainable but that was forced onto the industry by a monopolist player. There was no conspiracy needed, because it was pretty much the only way things could have played out.

But again, even it there were a conspiracy, the situation it created is more beneficial to the long-term interests of consumers I think than the unsustainable model that went before it. So why did the DOJ go after the small, new entrant and not after the monopolist? Probably because it felt price fixing was easier to legally prove and would sit better with the public ("we fight to keep prices low!" is a pretty easy sell). But that doesn't make it the right decision.
 
Not really, as I would argue that the e-books market pre Apple entering it, was inflated through unsustainable pricing. It's short-term thinking vs. long-term.
It's a complicated issue, no doubt, which is why we can spend so much time debating it. And, as is usually the case in legal cases, there is no clear 'right' or 'wrong'.

The publishers were unhappy with what Amazon was doing. Apple didn't want to enter the e-books market on Amazon's terms: what would be the point? It would have to sell e-books at a loss in many cases. It was a new service and to effectively compete it needed access to a broad catalog of e-books, thus it negotiated with the top book publishers. Did it know that it was very likely that the publishers would use Apple to re-negotiate their deals with Amazon? Sure. How could things really have played out differently? Cote and the DOJ see this as proof of a conspiracy to raise prices. I see it as common sense playing out, a correction to a model that wasn't sustainable but that was forced onto the industry by a monopolist player. There was no conspiracy needed, because it was pretty much the only way things could have played out.

But again, even it there were a conspiracy, the situation it created is more beneficial to the long-term interests of consumers I think than the unsustainable model that went before it. So why did the DOJ go after the small, new entrant and not after the monopolist? Probably because it felt price fixing was easier to legally prove and would sit better with the public ("we fight to keep prices low!" is a pretty easy sell). But that doesn't make it the right decision.


Well, it is clear what you think, we will see what the appellate court say.

Still waiting a single proof of the market was not sustainable. Or a single proof that Amazon did anything illegal.
 
The bottom line for me is that ebook prices went up when retailers switched to the Agency model. As a consumer I can't support something that causes prices to go up (prices are supposed to go down with increased competition, not the other way around), particularly when the price of ebooks was already too high to begin with.

You are exactly the audience then that the DOJ was after. I think the "prices are supposed to go down" point of view is pretty simplistic. Especially given that e-book prices were artificially low before the agency model was introduced. And it also appears to be betting on Amazon perpetuating pricing e-books below or at cost indefinitely, which isn't realistic in my opinion.

I'd also be interested to learn why you think e-book prices were already too high to begin with? Are you talking about the fact that if you already 'have' a book, the extra costs of creating an e-book are low and 'bits' don't cost any money? (not taking into account hosting, etc.)
 
Well, it is clear what you think, we will see what the appellate court say.

Still waiting a single proof of the market was not sustainable. Or a single proof that Amazon did anything illegal.

You think a retailer can sell a product at a loss indefinitely? Wall Street isn't counting on this. Based on the valuation of Amazon stock (which, market logic dictates, is a reflection of existing assets and future earnings) it expects Amazon to make serious money at some point in the future. Which will be hard to realize without raising prices, as Amazon's operations are already quite lean.

I'm not the first to argue that Amazon's pricing can be construed as predatory, aimed at getting as much market share in the short-term, driving competitors out of business. That's not allowed under antitrust law. Persecuting this practice though would probably be unpopular, as it would lead to price increases in the short-term and the more competitive market it would make possible in the future is hard to make tangible. People are biased to the short-term in general.

Edit: As for what the appellate court says, for my philosophical argument it is irrelevant. They either agree or disagree with my reasoning. They will apply the law as it is, in their view. I'm talking about what I think the law ought to be. Take for example a country in which the laws forbid homosexuality. Even its constitution doesn't protect this particular right. If a gay person in such a country is prosecuted and there is sufficient legal evidence of his act, a judge will have to convict the person if he is to apply the law. That still doesn't make it right.
 
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You think a retailer can sell a product at a loss indefinitely?

Ebook division was profitable so yes, they can sell SOME e-books at a loss indefinitely.

DoJ concluded that wasn't any predatory pricing but it seem that some companies are guilty even they were found innocent.
 
Ebook division was profitable so yes, they can sell SOME e-books at a loss indefinitely

How profitable? How did they account for the massive Amazon infrastructure that the eBook division relies on?
 
Ebook division was profitable so yes, they can sell SOME e-books at a loss indefinitely.

DoJ concluded that wasn't any predatory pricing but it seem that some companies are guilty even they were found innocent.

I would be interested in where you base the first statement on. I don't know what the second one means.
 
I would be interested in where you base the first statement on. I don't know what the second one means.

http://ia601206.us.archive.org/6/items/gov.uscourts.nysd.394628/gov.uscourts.nysd.394628.113.0.pdf

Page 39, last paragraph

Second, the Complaint asserts that Amazon’s e-books business was “consistently profitable.” Moreover, to hold a competitor liable for predatory pricing under the Sherman Act, Case 1:12-cv-02826-DLC Document 113 Filed 09/06/12 one must prove more than simply pricing “below an appropriate measure of . . . costs.” Brooke Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 222 (1993). There must also be a “dangerous probability” that the alleged predator will “recoup[] its investment in below-cost prices” in the future. Id. at 224. None of the comments demonstrate that either condition for predatory pricing by Amazon existed or will likely exist. Indeed, while the comments complain that Amazon’s $9.99 price for newly-released and bestselling e-books was “predatory,” none of them attempts to show that Amazon’s e-book prices as a whole were below its marginal costs. See Ne. Tel. Co. v. Am. Tel. & Tel. Co., 651 F.2d 76, 88 (2d Cir. 1981) (“[P]rices below reasonably anticipated marginal cost will be presumed predatory.”).
 
...

But the real issue (in one sentence) is whether Apple was a knowing participant in the alleged collusion between the publishers. I don't think there is any evidence that Apple was even aware of the collusion, let alone a "ringleader" or participant....

Let me paste this again, to see if it can provide an answer to your question:

Jobs who came up with the pricing scheme.
“Throw in with Apple and see if we can all make a go of this to create a real mainstream e-books market at $12.99 and $14.99,” wrote Jobs.
Two days later, HarperCollins signed a deal with Apple that made agency pricing its standard model for all e-book sellers.
The DOJ also alleges that when Random House resisted the shift to the agency model, Jobs threatened to block the publisher’s e-book application from being distributed through the Apple app store. After Random House gave in, the Apple exec in charge of its e-books deals wrote to Jobs saying that part of the reason the publisher ultimately agreed was “the fact that I prevented an app from Random House from going live in the app store.
Another document uncovered by the DOJ shows Random House’s top executive saying his company had been counseled by Apple to withhold e-books from Amazon in order to get the company to accept agency pricing.

BTW, while Amazon did have cheap prices on bestsellers, many of the independent ebook sellers sold other titles for less (sometimes as much as 30% less) than Amazon.

Which meant that before Apple changed the market dynamics, comparison shopping was a useful endeavor for a potential purchaser.

After Apple entered the market, all prices moved up and became more or less uniform.

Uniform prices meant no more comparison shopping, thus no more independent ebook sellers. Get it?
 
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Let me paste this again, to see if it can provide an answer to your question:

I'm not sure why you pasted it again. I read it the first time. Nothing that you quoted is illegal.

BTW, while Amazon did have cheap prices on bestsellers, many of the independent ebook sellers sold other titles for less (sometimes as much as 30% less) than Amazon.

Which meant that before Apple changed the market dynamics, comparison shopping was a useful endeavor for a potential purchaser.

After Apple entered the market, all prices moved up and became more or less uniform.

Uniform prices meant no more comparison shopping, thus no more independent ebook sellers. Get it?

Yep. That is the result of agency pricing. Which Judge Cote confirmed as a legal business practice. Again, nothing illegal there.

Cote: "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."

Likewise, sharing certain information with other publishers during negotiations is also legal.

Cote: "It is also not illegal for a company to adopt a form “click-through” contract, negotiate with all suppliers at the same time, or share certain information with them."

----------


As we've discussed before, the DOJ used an unprecedented definition of predatory pricing that looked at eBooks "as a whole" in a non-commodity market. I have quoted multiple decisions that show that pricing of a product below marginal costs is all that is required to meet that individual requirement of a predatory pricing claim.

And, more specifically, to the question you were responding to, you have no idea what the DOJ's parameters were in making this claim such as the amount of profit and the accounting for infrastructure costs.
 
Uniform prices meant no more comparison shopping, thus no more independent ebook sellers. Get it?

I don't, to be honest. The agency model did definitely hurt quite a few independents because they had to negotiate contracts on their own rather than buy wholesale. But others saw growth. And besides, the agency model itself was not found to be illegal so if the ruling stands, it may very well be reintroduced after the cool down period.

But ultimately, let's not forget that before the agency model was introduced, all the independents together were reaching only 10% of the market (with Amazon owning the remaining 90%). Thus the impact of their price differentiation (the ability for the general consumer to do comparison shopping) was minimal at best. And if they had become a significant threat to Amazon, they would never have been able to continue to compete on price as Amazon has the resources to match or undercut however low the independents go.
 

That doesn't tell me much. The DOJ asserts that something is the case, without any (public) evidence, as support for its complaint. It's true that Amazon wasn't on trial but if you assert something, it would be nice to provide some actual evidence. Especially if pretty much the entire industry (which does have its own agenda, I know) disputes it.

And then we're not even talking about the fact that the DOJ's and Cote's interpretation of predatory pricing is unconventional. Nor the fact that it may very well be that (if Amazon's e-book business was indeed in the black) this was primarily through its own self-published e-books on which it earned significant margins. And in fact this is supported by the fact that Amazon, under its post-settlement contracts with publishers who settled, can no longer make a loss on each of their catalogs as a whole and under these conditions it hasn't been able to lower its prices to the pre-iBooks level.
 
That doesn't tell me much.

Yes, I was expecting this, even when facts are in front of your face you negate them

I will leave the discussion, in your world Apple is innocent of any wrongdoing even if it has been founds guilty and Amazon is guilty even if it has been found innocent. It is better not argue against someone that just have faith.
 
Yes, I was expecting this, even when facts are in front of your face you negate them

I will leave the discussion, in your world Apple is innocent of any wrongdoing even if it has been founds guilty and Amazon is guilty even if it has been found innocent. It is better not argue against someone that just have faith.

Again, an unsubstantiated claim is not a 'fact'. It's an appeal to an authority whose judgment in this argument I questioned. So of course I won't just accept it. And I would have been surprised if you hadn't expected this (which, like your statement, is an easy after-the-fact score).

With regards to your second statement, for as far as your statement concerns the book industry, you're partly right. That's what this whole debate is about, after all. We disagree on the interpretation in the ruling of the circumstantial evidence. That, however, doesn't mean that I can see no wrong in Apple or have an unshakable faith in the company. That's just a simple emotional play from your part and I try to use arguments, not emotional appeals. As these often point in the wrong direction.

I'm perfectly aware that Apple cares about Apple first and foremost, as I've argued before. It's just that in this case, Apple's self interest (and that of the publishers) lines up with the long-term interests of consumers, in my opinion.

I'm happy to agree to disagree. But I don't think the ad hominems are necessary in a mature discussion.
 
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Facts?

Yes, I was expecting this, even when facts are in front of your face you negate them

I will leave the discussion, in your world Apple is innocent of any wrongdoing even if it has been founds guilty and Amazon is guilty even if it has been found innocent. It is better not argue against someone that just have faith.

So if I get you right... If you are convicted for breaking a law, you are wrong and you deserve punishment. And that's a fact?
 
Some more support for Apple:

http://tech.fortune.cnn.com/2014/03/05/apple-economists-ebook-amici/

It should be clear by now that legal 'right' and 'wrong' are not like black and white. Laws, rules and regulations are created by humans and can be/become misaligned with the general opinion of the public. That doesn't mean that we should disobey laws that we don't agree with. It means we should see if we can muster enough support to push through new/amended legislation that corrects the wrongs.

In addition, in many legal cases, both the proof and the law can be interpreted in many different ways. Thus you'll have diverging opinions on a case between legal experts (take for example the dissenting opinions for Supreme Court rulings - though one could argue that in the US in general, politics play a way too strong role in the legal sphere; judges should not be politicians), while they all have access to the same facts and legal framework. There's nothing wrong with this however. In fact, this debate is what drives the refinement of the laws, rules and regulations and ensures that, eventually, they will more closely align with the always evolving opinions of the population.
 
Well, this is new! Has Apple ever filed a formal appeal about anything?! No! Of course not! They get along so well with everyone!
 
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