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Apple Found Guilty of Conspiring to Fix Prices in E-Book Trial [Updated]
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I get what you're saying, and I actually agree. For all the talk of prices raising by the major publishers, average prices actually dropped, and each publisher priced their ebooks quite differently. Seriously, go look at the government's own chart. The reality is, when everyone switched to agency, the prices went from being fixed at almost the same level to wildly different between each publisher. That's a good thing. It means the publishers, if they think they have similar-enough books, can price differently and compete on price. The fact that prices diverged much more after agency is actually a sign that the publishers didn't agree on anything, thus no collusion occurred. They agreed on the agency model, yes. But they didn't fix prices between their companies to all sell their ebooks at the same level.
*citation needed*
(I suppose it would be lower, but you gotta show me how it would be meaningfully lower)
This is actually a loss for the consumer. Most of the costs that go into a book are present in the ebook as well. Paper and ink are cheap, writing, editing, promoting is where the majority of costs are found.
When Amazon was selling their ebooks at $9.99 they were selling them at a loss knowing full well that they would make up the difference in other areas, and that competitors would be unable to match those prices. In the longterm the publishers are going to lose money, now this won't be a big deal if you only read NY Times Bestsellers like James Patterson or Stephen King; however, if you enjoy reading the works of smaller named, midlist authors, then you're going to be out of luck because the publishers will not have the resources to pay the big names as well as the smaller authors who don't bring in enough money.
In my opinion, Amazon's cutthroat pricing is more harmful than Apples collusion.
When Amazon was selling their ebooks at $9.99 they were selling them at a loss knowing full well that they would make up the difference in other areas, and that competitors would be unable to match those prices. In the longterm the publishers are going to lose money, now this won't be a big deal if you only read NY Times Bestsellers like James Patterson or Stephen King; however, if you enjoy reading the works of smaller named, midlist authors, then you're going to be out of luck because the publishers will not have the resources to pay the big names as well as the smaller authors who don't bring in enough money.
In my opinion, Amazon's cutthroat pricing is more harmful than Apples collusion.
The average in that chart was an industry average inclusive of companies who did not collude. The point of the chart I believe was to illustrate that those who *did* collude all miraculously moved significantly higher in price than the average.
You may have inferred that, but I did not imply it. In other posts I have referred specifically to the settlements, so I'm well aware of the situation. If you want to pick and choose what to reply to and remain in ignorance of everything else, don't expect to be taken very seriously.
Why though? Amazon's e-book practice is the same as any traditional retail business—they sell certain titles at a loss (i.e. they take the hit), but publishers are paid the same. When you buy a pair of shoes on-sale, it's the retailer who marked down the price and is taking the hit. Those shoes have already been bought at whatever price the retailer negotiated with the manufacturer.
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Well I apologize for that accusation then, but this point you could have included in your certain implication that Apple unfairly bore the brunt of the blame.
You include other ridiculous statements in your lengthy post too: "I will grant you, but there's no evidence he encouraged collusion." "Encouragement" isn't the bar at which guilty in this case is set at.
I think the distinction is the whole point of the trial. There is a big difference between the allegation that Apple went to each publisher and said "Will you do it if everyone else does?" and the evidence that publishers used Apple as a hub.
I think this verdict was reasonable. I also think it would be reasonable if it is overturned on appeal. I have no doubt that collusion occurred, but I see a lot of conjecture and little evidence as to the role that Apple played.
However, I do think this verdict is bad for the book market.
I agree.
As I said, I agree that the request from the publisher for guarantees of critical mass demonstrate collusion by this publisher. What we don't see are Apple's reaction to this request. If Apple came back and said "If you sign, I've got three more who will agree to sign," then that's a problem. If Apple says, "we've signed three, are you in or out," I don't see that as a problem. But we never see that part of the conversation.
Not in the long term, no. As an author/publisher you hate Amazon's pricing, for the reasons stated by publishers over and over again. It lowers the perceived value of ebooks to the point where nobody wants to buy them anymore, either eventually from the undervaluing, or when Amazon raises prices again because they've driven out all competition from the market. You certainly can't afford to sell hard copies anymore.
Small publishers, and low-volume works in particular are hit hard by this. The end result is simply less authors, less books.
oh my god! that is really embarrassing moment for apple, their high class image has been blown into bits.
All fair enough. Though at least to me, "Will you do it if everyone else does?" is certainly acting in a very hub-like fashion.
What do you not understand about Amazon buying and paying the publisher for the books? The publishers get payed the price the publisher asks for, they lost zero money, if they don't like the way Amazon sells their books, they can quit selling them to Amazon, in return losing their biggest customer/account.
I'm fairly sure publishers dislike it because it lowered the perceived value of *physical books*, a product they want to hold on to, not e-books. Someone earlier remarked how the publishers might make *less* money under Apple's system vis a vis e-books.
Otherwise, your statement paints a very strange consumer demand graph implying e-books are some sort of Veblen good (hilarious).
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Obviously, you are missing something since the publishers allegedly just colluded to make less money.
Obviously, you are missing something since the publishers allegedly just colluded to make less money.
He's more or less right though. They colluded with that last point in mind, not purely profits on e-books: "if they don't like the way Amazon sells their books, they can quit selling them to Amazon, in return losing their biggest customer/account." They simply wanted more control over e-book pricing, as well as dealing with the implications of cheaper e-books on physical books. Publishers certainly suffer no immediate loss when *Amazon* sells at a lost.
The publishers still make the majority of their money from physical books. However, if Amazon goes back to selling New Releases for under $10, people will again start to buy their ebooks from Amazon. The problem is that bookstores, mostly brick and mortar stores, cannot compete with that kind of cutthroat pricing. When Borders went under it caused plenty of problems and downsizing within the publishing world because they sold a lot of books, and when they went bankrupt they lost a lot of revenue. The same thing will happen when other bookstores wind up going under because everyone is buying ebooks. That leaves the publishers in a very bad situation because for one it means there will be fewer brick and mortar stores to sell their books, and also for anyone to compete with Amazon they would have to be willing to sell their products at a loss. The result would be more downsizing.
Now WalMart sells the most books from what I know, but they do not sell many midlist authors, so if the publishing industry needs to rely on only WalMart, Target, and Sears to sell physical books then why sign midlist authors when you do not have a place to sell them.
If you read between the lines the publishers would rather charge higher ebook prices, which causes you to buy a physical copy of the book, not because they are trying to rip you off, but because it is better for their industry when brick and mortar stores prosper.
The same (physical stores going under) would happen if everyone were buying e-books through Apple, or through a combination of Apple and Amazon, non? I still don't follow, unless you're saying the publishers' end goal is to have e-books priced equivalently to physical ones. And that last point sounds very anti-consumer for me (artificially preserving a dying business model), and in the end would validate the goals of this ruling.
And yes, competing with Amazon is difficult, but I think the point is how *NOT* to do it is via collusion.
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Amazon is actually a very interesting business case. Their rise was accomplished with massive expansion through capital investment alone, rather than growing more traditionally through reinvesting profit. The original business plan was to not make any profit for five years, and when they finally did, it came in at a trickle. To this day, they make hardly any profit, still focused mainly on rapid growth. At the time, the business model was viewed as insanity, and arguably it still is. That's why there's only one Amazon. Anyone else trying it fails. Arguably, it remains to be seen if Amazon will be a success, too. Can they survive as a company if they do raise their prices enough to make a decent profit?
Don't get me wrong, I like Amazon. But I wouldn't want to be a shareholder. Amazon's P/E is insane. As a customer, though, they're great. I've used my Prime membership so much that I'm certain they've lost money on me. I almost feel guilty. Almost. The reality is they can't possibly sustain their prices forever, and meanwhile they've become a monopoly, which isn't good for other businesses in their wake, which isn't good for the customer. That's why I don't feel guilty that they've lost money on me with all that free shipping and video streaming.
They're not being Saints, their profit margin is larger with a physical book. That's why they prefer selling books and not ebooks.
Yes, but they would not be sold at a loss meaning that it would not stifle competition. Barnes and Noble and WalMart regularly offer 30% off of New Releases, which is more competitive with an ebook priced at $14.99 than it is at $9.99.
Ma and Pa shops are going under, but the ones that are making it are doing so because they are also selling used books, which is another argument for physical books over ebooks.
Yes I know I know. I'm just deploring the "I want the cheapest price no matter what" attitude which, IMO, is very short-sighted and basically comes at a significant human cost, overseas (cheap labour, unsafe work conditions, environmental impact, etc.) as well as at home. (job losses, business closures and lower median incomes)
That's what I was criticizing. Don't care which companies happen to be involved.
Meh, I don't see how. But I'm sure you do. So, how will this be bad for the book market?
Price fixing involves actual, you know, price fixing.
All Apple did was insist they had the best possible price for their consumers. It was the publishers who decided to raise prices on everyone as a result, not Apple. Apple simply got the same (higher, in this case) price as everybody else. It could very well have been at $9.99, or $19.99, or $0.99. At no time did Apple dictate pricing.
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According to the government's slide, average publisher prices went down.
I don't think that I anointed them saints. I was just saying that if the market for an ebook is set at a loss then publishers will not be able to sign some of the smaller named authors.