Apple's Closing Arguments Concludes E-Book Price Fixing Trial

[donutbagel]

"At one point, the PowerPoint presentation the Government's lawyers were using failed to play audio, with the Judge noting that they weren't using a Mac."

Hilarious that this is noted
I gave up on PowerPoint long ago. Running the Mac version wouldn't help.

 

[vjl323]

(as much as I enjoy their products & working for them) conspired with the big publishers to increase e-book prices in a strategy to make amazon "play nice".

You may want to be careful about saying things like that - they do monitor these forums; if your employment is with them, be cautious.

 

[donutbagel]

You may want to be careful about saying things like that - they do monitor these forums; if your employment is with them, be cautious.

How would they know who he is in real life?

 

[JayCee842]

It's not obvious. Did you page through the 140 or court demonstratives to arrive at that conclusion. Amazon had no right to put publishers in the position they were with "windowed" books and setting ridiculous prices of $9.99. Apple will come out of this smelling like a rose.

Good point and well said.

 

[ConCat]

Love how it's embedded in flash

That was my first thought. Why am I reading a PDF inside flash player?

 

[Plutonius]

Only a hardcore "fanboy" would think apple did absolutely nothing wrong here.
They obviously conspired with the big publishers at driving up the e-book prices in such a manner that Amazon would either have to sign a new contract or be blacklisted by the major publishers.

That is illegal.

It sounds like you know everything that went on between Apple and the publishers. Maybe the DOJ should have called you as an expert witness .

 

[mdelvecchio]

Only a hardcore "fanboy" would think apple did absolutely nothing wrong here.
They obviously conspired with the big publishers at driving up the e-book prices in such a manner that Amazon would either have to sign a new contract or be blacklisted by the major publishers.

obviously? where's your proof. an email from jobs saying "throw in with us" (Apple)? har.

----------

Actually, it makes perfect sense to me. I'll have to read over Apple's evidence tomorrow but from what I have seen so far it seems very clear that Apple wanted to enter the eBook market and to get people on board they wanted to use Agency pricing with benefits publishers and Apple.... everyone but Amazon.

that's not a crime.

colluding with publishers to fix prices is a crime. that is only suggested, not proved.

----------

I've been following this case since day one.

oh? and where do you practice law? what's your case history?

Apple (as much as I enjoy their products) conspired with the big publishers to increase e-book prices in a strategy to make amazon "play nice".
Nobody in their right mind can deny those facts exist.

except the defense which includes all sorts of people in their right mind, like Tim Cook.

The question is whether or not a judge will "feel" for the plight of the publishers against the "presumed" harmful acts of amazon.

ah, making excuses for losing already. it's a touchy feely conspiracy against amazon!

----------

You may want to be careful about saying things like that - they do monitor these forums; if your employment is with them, be cautious.

please link to a single instance of apple "monitoring" this forum for employee activity and firing someone. one. single. instance.

 

[JoeIsInTheCloud]

Cut the fanboy crap about Powerpoint/Keynote/Windows/MacOS X and stick to the facts of the story, please. Thanks.

 

[EbookReader]

Is it collusion if 1 of the major publishers stated that without 3 other major publishers going along, they will not play ball?

http://www.scribd.com/doc/145486131/U-S-v-Apple-Et-Al-Opening-Slides

"You are absolutely correct: we've always known that unless other publishers follow us, there's no chance of success in getting Amazon to change its pricing practices."

--------------

Penguin David Shanks: "My orders from London. You must have the fourth major or we can't be in the announcement."

Apple Eddy Cue: "Hopefully this is not an issue but if it is I will call you at 4pm. It would be a huge mistake to miss this if we have 3."

"No change here, he is waiting for the others to sign. We have executables ready to sign but he wants an assurance that he is 1 of 4 before signing."

"Once previous two are signed, I will head to their offices to get this one signed."

 

[Mak47]

I've read every piece of legal document available to the public and it is crystal clear that Apple (as much as I enjoy their products) conspired with the big publishers to increase e-book prices in a strategy to make amazon "play nice".
Nobody in their right mind can deny those facts exist.

I'm quite certainly in my right mind, and my friend, those facts don't exist.

It appears to me that Apple, understanding a dissatisfaction with the status quo on the part of the publishers, made a move to jump into the ebooks market in a powerful way.

That is not illegal, nor is it even immoral by any reasonable person's measure.

The publishers were dissatisfied with Amazon's $9.99 model to begin with. They were pursuing a strategy that would essentially have killed Amazon by refusing to offer top quality new releases in the ebook format at all. Barnes & Noble was pursuing an agency model with the publishers before Apple even entered the conversation.

The fact is that content creators (the publishers) were no longer interested in Amazon's model. Ebooks did not have the market power in 2009 that they do today. They would have killed the $9.99 price point no matter what.

Apple stepping in to support the (already in development) agency model simply gave the publishers a better alternative. Now instead of windowing their high profile titles, they could release them at a price point they were comfortable with in all formats.

Apple did not require that the publishers stop doing business with Amazon. They didn't require that Amazon stop selling ebooks for $9.99, or dictate the price that publishers could sell to other retailers. They simply said they wanted equal pricing so they could remain competitive.

In the end, the publishers told Amazon they were no longer interested in their model--which they were going to do anyway, in one form or another. Amazon chose to remain in the ebooks market and agreed to pay the prices the content creators were asking. This is not collusion, it is not conspiracy and it is not illegal.

 

[EbookReader]

If Apple used Amazon strategy of selling ebook, there would be no anti trust lawsuit. Buy books at wholesale and sell it at whatever price Apple desire.

Amazon strategy: LOSS LEADERS on the new releases and best sellers. Once in the door, a lot of customers will purchase the profitable books. Net result: Overall profits.

Amazon makes profits from selling ebook since the very beginning. Read this quote:

"When Amazon launched its Kindle device, it offered newly released and bestselling e-books to consumers for $9.99. At that time, Publisher Defendants routinely wholesaled those e-books for about that same price, which typically was less than the wholesale price of the hardcover versions of the same titles, reflecting publisher cost savings associated with the electronic format. From the time of its launch, Amazon's e-book distribution business has been consistently profitable, even when substantially discounting some newly released and bestselling titles."

Why Apple didn't want to use this wholesale/discount/loss leader strategy: The margin is very low because the market is very competitive. Some retailers will use discount to gain market share etc...If Apple prices the ebook too high, customers might price shop.

Apple strategy: how do I get my 30% margin? and at the same time stop Amazon from offering discount. How to make Amazon price be the same as Apple price and eliminate pricing competition?

And guess what? Apple did made that happen. Customers were screwed from the higher prices for new releases / best sellers.

 

[HiRez]

Actually, it makes perfect sense to me. I'll have to read over Apple's evidence tomorrow but from what I have seen so far it seems very clear that Apple wanted to enter the eBook market and to get people on board they wanted to use Agency pricing with benefits publishers and Apple.... everyone but Amazon.

Apple agreed to go along with it, yes. But the key is the DOJ is asserting it was Apple's idea, and they dragged/coerced all the publishers into it. That is not the case it all, as the evidence clearly shows it was the publishers who wanted the agency model, and indeed they were already pushing it long before Apple had any plans to be in ebooks. And the record shows Apple did not desire higher prices, they wanted lower prices for consumers. It's laughable that a company with 0% of the market, trying to enter a market where one company has 90% of the market, can be brought up on antitrust charges. If there was a case to be had, they went after the wrong company.

 

[EbookReader]

Apple agreed to go along with it, yes. But the key is the DOJ is asserting it was Apple's idea, and they dragged/coerced all the publishers into it. That is not the case it all, as the evidence clearly shows it was the publishers who wanted the agency model, and indeed they were already pushing it long before Apple had any plans to be in ebooks. And the record shows Apple did not desire higher prices, they wanted lower prices for consumers. It's laughable that a company with 0% of the market, trying to enter a market where one company has 90% of the market, can be brought up on antitrust charges. If there was a case to be had, they went after the wrong company.

what if that company with 0% market share want

1) to eliminate retail price competition ("the prices will be the same") so it can effectively compete on price
2) guarantee 30% margin

and to get there, it needs at least 4 Major Publishers on board. And these 4 Major Publishers will only get on board if Apple could guarantee that they are not alone. In other word, 1 Publisher with 12% market share won't get Amazon to move away from $9.99 but 5 Publishers with 60% market share will be large enough that Amazon will have to raise the price of best sellers to $12.99 / $14.99.


DOJ evidence:

"You are absolutely correct: we've always known that unless other publishers follow us, there's no chance of success in getting Amazon to change its pricing practices."

--------------

Penguin David Shanks: "My orders from London. You must have the fourth major or we can't be in the announcement."

Apple Eddy Cue: "Hopefully this is not an issue but if it is I will call you at 4pm. It would be a huge mistake to miss this if we have 3."

"No change here, he is waiting for the others to sign. We have executables ready to sign but he wants an assurance that he is 1 of 4 before signing."

"Once previous two are signed, I will head to their offices to get this one signed."

 

[thefourthpope]

I'm so bored with this I can't even read the whole thing. But did Apple really use iCal "screenshots" in court? That's middle school stuff!

Oh, and obviously they worked with publishers to raise prices. That's what businesses that want to make money (read: all businesses) try to do, raise prices.

 

[Poisednoise]

I've not been following this as closely as some people on this forum, but it seems to me that a major factor which the DoJ don't seem to take into account is historical. Book publishers are accustomed to having fixed price agreements, and the idea that they would only come on board (for instance) if they were all in accordance should not be seen as unusual. Even in the relatively recent past,, publishers have set the price for a book, which booksellers have then been legally bound to adhere to (http://en.wikipedia.org/wiki/Fixed_book_price_agreement: "Historically, most countries with a significant book industry have known an FBPA since the 19th century."). Amazon completely threw this model away, and for instance in the UK it's only been relatively recently (1995) that the law has caught up with what was becoming common practice. The US has been the minority case in never really having had an FBPA, but then of course they've never had a significant stake in publishing either.

If the publishers and Apple did collude, then clearly that's illegal in the US, and the DoJ have a case: I'm not denying that. But a historical perspective may help to understand how, if it did occur, it may have come about, and why the publishers in particular would not have seen it as unusual.

 

[NoNothing]

Only a hardcore "fanboy" would think apple did absolutely nothing wrong here.
They obviously conspired with the big publishers at driving up the e-book prices in such a manner that Amazon would either have to sign a new contract or be blacklisted by the major publishers.

That is illegal.

I think only a hardcore Apple hater would even begin to think that after the evidence was presented. Especially since the average cost paid for ebooks went down after the transition stabilized.

 

[EbookReader]

I think only a hardcore Apple hater would even begin to think that after the evidence was presented. Especially since the average cost paid for ebooks went down after the transition stabilized.

http://www.digitalbookworld.com/201...-as-big-publishers-continue-to-dominate-list/
DOJ Has Huge Impact on Best-Seller Pricing

It’s hard to say what the overall affect has been on the larger ebook market but on the top best-sellers, the effect has been obvious and significant:

– The average price of an ebook best-seller this week is $6.95 (virtually unchanged from last week when it was $6.94), just over half of what it was last summer before the discounting began (though discounting is only one of the factors that has led to this phenomena).

The DOJ Charts the eBook Market Before & After Agency

http://www.the-digital-reader.com/2...gitalReader+(The+Digital+Reader)#.UZRZVbW-YZC

If you have ever doubted whether agency pricing resulted in an increase in ebook prices, I have a chart that should interest you.

The US Dept of Justice filed new docs this week in their case against Apple and its 5 co-conspirators. The filing is titled Plaintiff’s Proposed Findings of Fact and Conclusions of Law, and this 103 page PDF lays out the arguments that the DOJ plans to make should this case go to trial.

The filing includes details on how the DOJ believes the conspiracy came about, and it includes emails that the various publishers sent to each other as well as other evidence.

Mixed in with the dry legal arguments were a number of charts which were created by Richard Gilbert. He’s the Emeritus Professor of Economics at Berkeley University, and his charts show how the average price of ebooks increased when the 5 publishers adopted agency pricing.

Look at the 5 Publishers who Colluded
Look at the 1 Major Publisher who did not (Random House) who continued to use wholesale
Look at the Price from Self-Publishing / none Major

 

[NoNothing]

And guess what? Apple did made that happen. Customers were screwed from the higher prices for new releases / best sellers.

Or Amazon was screwing consumers all along by grossly over charging for the vast majority of titles. That is why a handful of months after the iPad came out, the average price paid for an ebook was 5-10% less. But why let facts get in the way of a good rant?

----------

http://www.digitalbookworld.com/201...-as-big-publishers-continue-to-dominate-list/
DOJ Has Huge Impact on Best-Seller Pricing

It’s hard to say what the overall affect has been on the larger ebook market but on the top best-sellers, the effect has been obvious and significant:

– The average price of an ebook best-seller this week is $6.95 (virtually unchanged from last week when it was $6.94), just over half of what it was last summer before the discounting began (though discounting is only one of the factors that has led to this phenomena).

Image






The DOJ Charts the eBook Market Before & After Agency

http://www.the-digital-reader.com/2...gitalReader+(The+Digital+Reader)#.UZRZVbW-YZC




Image

Look at the 5 Publishers who Colluded
Look at the 1 Major Publisher who did not (Random House) who continued to use wholesale

The DOJ truncated their last chart right at the point prices were starting o driven down by competitive pressures. There is another chart in the Apple slides showing the continued time line.

 

[Simplicated]

Only a hardcore "fanboy" would think apple did absolutely nothing wrong here.
They obviously conspired with the big publishers at driving up the e-book prices in such a manner that Amazon would either have to sign a new contract or be blacklisted by the major publishers.

That is illegal.

Care to tell me how obvious it is?

 

[EbookReader]

Or Amazon was screwing consumers all along by grossly over charging for the vast majority of titles. That is why a handful of months after the iPad came out, the average price paid for an ebook was 5-10% less. But why let facts get in the way of a good rant?

----------



The DOJ truncated their last chart right at the point prices were starting o driven down by competitive pressures. There is another chart in the Apple slides showing the continued time line.

can you show that chart in the Apple slides then that continue after January 2011? Did it return to the ~$8.20 level before the price fixing?

Before the price fixing for the 6 Major Publishes: around $8.20
After the price fixing for the 5 Major Publishers: around $10.20 from April 2010 to January 2011

With the exception of Random House, who did not price fixed, and continued to be at around $8.20. Random House prices is a good example of the retail prices if the price fixing didn't happen.





Also this chart:

http://www.digitalbookworld.com/201...-as-big-publishers-continue-to-dominate-list/
DOJ Has Huge Impact on Best-Seller Pricing

Before the settlement: agency pricing
After the settlement: the 5 Publishers who have now settled and now letting retailers discount, prices for best sellers dropped.

PRICE FIXING: 30% guaranteed margin for all ebook retailers
SETTLEMENT / GET RID OF PRICE FIXING: retailers now are able to compete on prices, discount, loss leaders etc... Retailers are passing their part of their margin into customers in the form of savings, discounts etc..

When stores compete, customers win.
When stores can't compete (30% margin for all), customers are screwed.

 

[Mackan]

I love how our DOJ has time to waste suing Apple over something it never did,

I think they go to trial to find out, and present their case together with evidence. But apparently that is a waste, because you already know Apple is innocent? Please elaborate, oh holy one.

 

[paradox00]

Is it collusion if 1 of the major publishers stated that without 3 other major publishers going along, they will not play ball?

http://www.scribd.com/doc/145486131/U-S-v-Apple-Et-Al-Opening-Slides

"You are absolutely correct: we've always known that unless other publishers follow us, there's no chance of success in getting Amazon to change its pricing practices."

--------------

Penguin David Shanks: "My orders from London. You must have the fourth major or we can't be in the announcement."

Apple Eddy Cue: "Hopefully this is not an issue but if it is I will call you at 4pm. It would be a huge mistake to miss this if we have 3."

"No change here, he is waiting for the others to sign. We have executables ready to sign but he wants an assurance that he is 1 of 4 before signing."

"Once previous two are signed, I will head to their offices to get this one signed."

Guess what happens when you cherry pick statements? Context is missed. The Agency model isn't illegal. Nor is a publisher only choosing to agree to it after other publishers also have also agreed to it. What's illegal, is conspiring together to make Amazon adopt the same model and raise prices.

You, like the DoJ, are taking one statement (out of context) and linking to other unrelated and out of context statements to tell the story you want to tell. The only statement remotely indicative of collusion is the first one, and quite frankly, that's a stretch. "Following" doesn't necessitate collusion.

 

[paradox00]

PRICE FIXING: 30% guaranteed margin for all ebook retailers
SETTLEMENT / GET RID OF PRICE FIXING: retailers now are able to compete on prices, discount, loss leaders etc... Retailers are passing their part of their margin into customers in the form of savings, discounts etc..

When stores compete, customers win.
When stores can't compete (30% margin for all), customers are screwed.

Bold text doesn't make the Agency model illegal. It simply moves the competition up to the publisher level. I'm not sure if you've been paying attention lately but Microsoft and Sony just released the details of their next generation consoles. The Xbox One is going to cost $499 everywhere and the PS4 is going to cost $399 everywhere. OMG PRICE FIXING, and what the deal with car dealerships? They all list their new cars at the same price. The customers are getting screwed!!! Well, perhaps they are... but it's not illegal.

Yes, an increase in costs is bad for customers, but quite frankly so is Amazon holding a monopoly on the market. I'm not sure why the impact on customers is frequently brought up when thee real question is simply, was something illegal done?

 

[TMay]

can you show that chart in the Apple slides then that continue after January 2011? Did it return to the ~$8.20 level before the price fixing?

Image

Before the price fixing for the 6 Major Publishes: around $8.20
After the price fixing for the 5 Major Publishers: around $10.20 from April 2010 to January 2011

With the exception of Random House, who did not price fixed, and continued to be at around $8.20. Random House prices is a good example of the retail prices if the price fixing didn't happen.





Also this chart:

http://www.digitalbookworld.com/201...-as-big-publishers-continue-to-dominate-list/
DOJ Has Huge Impact on Best-Seller Pricing

Before the settlement: agency pricing
After the settlement: the 5 Publishers who have now settled and now letting retailers discount, prices for best sellers dropped.
Image











PRICE FIXING: 30% guaranteed margin for all ebook retailers
SETTLEMENT / GET RID OF PRICE FIXING: retailers now are able to compete on prices, discount, loss leaders etc... Retailers are passing their part of their margin into customers in the form of savings, discounts etc..

When stores compete, customers win.
When stores can't compete (30% margin for all), customers are screwed.

I buy all kinds of stuff from Amazon: Tools, electronics, printed books; but I have yet to purchase any ebooks from Amazon. Just not interested in my subsidizing Amazon's Kindle and ebook pricing with incremental increases in my other purchases.

Because that is exactly how Amazon's ebook pricing works; someone else's purchase of some unrelated product is supporting Amazon's bestseller ebook pricing. If all Amazon sold were books and other closely related items (see Barnes and Noble), then I might be more sympathetic to wholesale pricing. In fact, a witness for Barnes and Noble stated in court that they could not sustain the negative pricing competition with Amazon.

 

[TMay]

I'm not saying anyone who disagrees with me is a hardcore fanboy.
I am saying there are plenty of hardcore fanboys.
I've seen kids & adults alike act childish with their beliefs. And they will, until the day they are dead, continue with false beliefs.
Those are fanboys.
Fanboys are those who follow a product, manufacturer or a person to such an extent that they are loyal to that entity. The entity can never do wrong...even when all evidence points to the contrary.



I've been following this case since day one. I've read every piece of legal document available to the public and it is crystal clear that Apple (as much as I enjoy their products) conspired with the big publishers to increase e-book prices in a strategy to make amazon "play nice".
Nobody in their right mind can deny those facts exist.
That is why the DOJ brought forth this case.
The question is whether or not a judge will "feel" for the plight of the publishers against the "presumed" harmful acts of amazon.

Thank you for your second post on this site.

Calling (some) people here fan boys in the context of just having joined the forums and within the first two posts is bold. Just what I would expect a fan boy to do; hence, you qualify as a fan boy, of Amazon I'm guessing. Congratulations and welcome!

Your desire to convince the readers and posters here of the soundness of your arguments is admirable albeit ultimately unsatisfying for yourself. We have already staked out positions, as you have.

Might as well count me as an Apple fan boy while you are at it. I'm not seeing the evidence supporting Apple's collusion. I would say that this is Apple giving us a tutorial in 100% legal hard ball.