well said. i was going to say Apple should be reamed by DOJ, what they did is called collusion, price fixing.
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Book Pricing Lawsuit Reveals More Details of Apple's Negotiations, Including Steve Jobs Email
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well said. i was going to say Apple should be reamed by DOJ, what they did is called collusion, price fixing.
31 State Attorneys General are on board because almost every state in the US is broke and they smell money. This has nothing to do with consumer protection.
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It's a shame your checkpoints and random searches all stem from far right wing ideologies and legislation, and then always blame it on socialist or socialism. At what point? When the business decides to compete in the market they enter, not conspire with all the major components to lock in price and lock out or minimize competition. Apple can play just like all the other book and ebook retailers by opening a wholesale account and start buying books. Apple just wants it there way or no way at all.
Another fine selective abstraction, you forgot to mention that it is only there beauty hq, they own families and families of brands, and are still headquartered in Ohio.
Procter & Gamble Co will move its skin care, cosmetics and personal-care headquarters from Ohio to Singapore to be closer to the growing Asian market, and the president of the group will leave rather than move.
http://www.reuters.com/article/2012/05/10/procter-beauty-idUSL1E8GA7A920120510
I expressed concerns on both political extremes. I didn't ascribe it to one or the other party or person. Who is responsible is self-evident by researching enabling legislation and regulations and executive orders. I am concerned about the fact it is occurring at all and hope for change.
I wonder just how much P&G IP is still actually owned in the US. It appears all major IP owners own it offshore and license it to US companies now.
Rocketman
Obviously you have a solid understanding of the case, but I believe your arguments are flawed.
In the beginning, there were no other competitors. Amazon had the market cornered because they used ebooks as loss leaders to sell Kindles and bring people into the Amazon ecosystem for additional purchases. You say that Apple was wrong to try to eliminate competition based on price, but Amazon did the same thing with their model. How could anyone else compete based on price when the market leader was selling at a negative margin? Price had to be removed as a factor and that's what Apple tried to do with their model. I have yet to see any proof that Apple attempted to force or coerce publishers into their model or away from Amazon. The email cited in this article is nothing more than Steve Jobs presenting the case for his business model, which he believed to be superior. That's not collusion, it's not price fixing, it's not illegal in any way.
Also, you insinuate that a regulated market is the norm in the US. That's not supposed to be the case. Markets are intended to operate freely, except in extreme cases when some regulation might be necessary. The ebooks market is not regulated beyond standard business law.
The laws are supposed to be anti-monopoly. Monopolies are not a reward. For a free market to survive, competition is necessary. Amazon did not win their customers fair and square. They won them by selling their product at a loss, thereby preventing anyone else from entering the market. A monopoly means that there is no competition, it's not good for anyone other than the monopoly.
Monopolies are bad. Competition and competitors are good. It's a fundamental rule of the free market. Price is not the only factor in competition. Innovation, job creation and economic participation are all factors to consider as well.
Apple did not force competition on a narrower set of product attributes. They attempted to force it to a wider set of attributes. Quality and variety of content, driving publishers to a new medium that wasn't always seen as profitable not to mention varying devices and methods of access.
Amazon's model allowed one kind of competition. Price. And no one could or would be willing to compete based on price when the market leader happily sold their products at a negative margin. What would be the point.
It can't be said that customers only cared about price. There were no other viable options at the time. Customers had not experienced a competing product and thus couldn't make a decision based on any competing factors--let alone price.
In the beginning, there were no other competitors. Amazon had the market cornered because they used ebooks as loss leaders to sell Kindles and bring people into the Amazon ecosystem for additional purchases. You say that Apple was wrong to try to eliminate competition based on price, but Amazon did the same thing with their model. How could anyone else compete based on price when the market leader was selling at a negative margin? Price had to be removed as a factor and that's what Apple tried to do with their model. I have yet to see any proof that Apple attempted to force or coerce publishers into their model or away from Amazon. The email cited in this article is nothing more than Steve Jobs presenting the case for his business model, which he believed to be superior. That's not collusion, it's not price fixing, it's not illegal in any way.
Also, you insinuate that a regulated market is the norm in the US. That's not supposed to be the case. Markets are intended to operate freely, except in extreme cases when some regulation might be necessary. The ebooks market is not regulated beyond standard business law.
The laws are supposed to be anti-monopoly. Monopolies are not a reward. For a free market to survive, competition is necessary. Amazon did not win their customers fair and square. They won them by selling their product at a loss, thereby preventing anyone else from entering the market. A monopoly means that there is no competition, it's not good for anyone other than the monopoly.
Monopolies are bad. Competition and competitors are good. It's a fundamental rule of the free market. Price is not the only factor in competition. Innovation, job creation and economic participation are all factors to consider as well.
Apple did not force competition on a narrower set of product attributes. They attempted to force it to a wider set of attributes. Quality and variety of content, driving publishers to a new medium that wasn't always seen as profitable not to mention varying devices and methods of access.
Amazon's model allowed one kind of competition. Price. And no one could or would be willing to compete based on price when the market leader happily sold their products at a negative margin. What would be the point.
It can't be said that customers only cared about price. There were no other viable options at the time. Customers had not experienced a competing product and thus couldn't make a decision based on any competing factors--let alone price.
Sounds like the DOJ has a lovely smoking gun in a case against Apple. Not the best email to come out in court for Apple. It really hurts Apple defense.
Are we reading the same email--the one quoted in the article?!
Please describe how this email is a "smoking gun", "not the best email to come out", and "really hurts Apple".
That's a good thing since antitrust law doesn't have anything to do with protecting consumers.
It seems you have misunderstood the complaint DOJ is making as well. First of all, Apple's agreements puts a ceiling on bestseller prices, so the publishers are free to compete against each other.
Amazon has agreements with some publishers that gives it total exclusivity. Other retailers cannot compete with Amazon on anything, not just price, for those books.
There is one major publisher whose agreement with Apple is not being called into question, as apparently it did not "collude" or "coordinate" its moves with the other publishers.
There are many products where publishers set the price. If you read the 50 page document DOJ has put out, it does not call this arrangement illegal, either. It just calls it "unusual".
In the end, there is still price competition between retailers. A more efficient retailer or one that can live with smaller margins in the hope of selling customers other items can compete with Apple on price by offering a 20% cut rather than 30%. Such a retailer can even become the exclusive retailer for a publisher using this tactic.
I am listing these to show that DOJ is not arguing that the business model Apple has proposed is illegal. It is actually quite mild compared to Amazon's exclusive content arrangements.
No, actually, I don't think DOJ calls it "price fixing". As I've said above, the agreements set a price ceiling for books, not a floor. The publishers and Apple agree to a new pricing mechanism, which they openly hope would lead to higher average prices, but that is not necessarily illegal. Steel manufacturers get together to complain to the government about Chinese companies dumping their products onto the US market and ask for punitive steel tariffs for example. Their aim is obviously a rise in prices and they are allowed to coordinate their efforts through lobbying firms or associations.
DOJ needs to prove that the communications between Apple and publishers is part of a conspiracy to raise prices by switching to an "unusual" pricing mechanism, one that is not unheard of in general, but historically unusual for books. The pricing mechanism used is not illegal. Agreeing to contracts that call for price ceilings for sellers, rather than collective price floors is not illegal, either. Emails between CEOs are not necessarily illegal, either. DOJ has to prove that these elements, each of which does not seem illegal by itself, form an illegal act when combined.
There is one more road block for DOJ: the average ebook prices has reportedly come down since these agreements were announced more than a year ago. The bestsellers as a sub-sub-market (ebooks being a submarket of books in general, now we add one more layer to define an even more limited market) has seen price increases, but it is not clear to me whether DOJ has the complete freedom in defining a market.
There is certainly nothing illegal or untoward about Jobs' letter on its own.
Not really. Publicity whoring more than anything. Why is B&N just come up now? How does a company who sells no books join forces with a companies competitors to force them to do something. It does not even make any sense. If B&N chose to give random house poor placement it could be any number of reasons. Large retailers charge for prime real estate. Be it discounts, terms or whatever? If Barnes and Nobles chose to not give preferential treatment to random house because random house was hurting their ability to make money none of that is illegal.
All I have seen are a variety of totally legal and acceptable business practiced that nobody has connected or linked together in any reasonable way. My take on it right now is if there was never a connection between apple and Barnes and Noble there is no case. Both those entities were and are entitled to negotiate to sell books just like amazon does.
This is more about publicity and headline chasing than it is about protecting consumers or enforcing anti trust laws.
Nothing about any of that is illegal or breaks any laws. Apple as a new entrant to the market is free to negotiate with book publishers who wish to negotiate with them. Apple had absolutely no ability or leverage to force any publisher to do anything. Add to that a more dynamic range on book pricing after apple entered the market I don't know how anyone can claim price fixing.
It would be unprecedented to go after a company that had sold no products in a given industry to have taken over illegally and forced all the manufacturers to do what they want.
All this has shown us is how much the publishers hated Amazon and how that hate will likely continue to go forward. It is going to be hard to prove price fixing when you change to a system where each publisher sets an individual price for every book they sell. Again that is not illegal. Where are the illegal parts of this? It is not illegal to play manufacturers against each other as a retailer. It is what retailer buyers do.
I still don't understand the charges. Are the publishers being charged with wanting to legally set the prices of their products? Is Barnes and Noble being charged for legally limiting access to Random House because they would not meet their terms? Is Apple being charged for legally entering the ebook market and allowing publishers to set their prices?
Where does the illegal part come in?
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You are 100% wrong. Manufacturers are allowed to legally set the minimum retail price for their products. That is not price fixing and is not illegal .
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What is funny is the anti competive angle is absurd. What Apple negotiated with the publishers not only allowed apple to compete with amazon it allowed pretty much anyone who wanted to to compete. There was no way for anyone to compete legitimately before. That is why the whole thing is absurd. I have yet to see any evidence of any anti competive behavior or anything illegal except for what amazon was doing before apple.
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4. Sell your books DRM-free on your own website a la Pottermore. Pirates will pirate, don't punish legitimate customers.
You're selling nicely-formatted text files guys, it's not rocket science and you don't need to give 30%-70% away to Apple and Amazon.
You're selling nicely-formatted text files guys, it's not rocket science and you don't need to give 30%-70% away to Apple and Amazon.
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Keep going with Amazon at $9.99. At that price more people will be likely to buy your books. Since you are not selling physical copies and have no additional cost to sell from 2nd copy onwards, you can be happy with the 70% you get to keep and as a bonus you won't be called greedy. Fair enough?
Amazon wasn't the first eBook market. Not by a longshot. And Amazon, when they entered the market, didn't do anything other than offer an alternative with good pricing.
You don't really think the eBook and the market STARTED with Amazon, do you?
Apple is a lot more sympathetic than a book publisher which is why they're pushing for a jury trial.
All they need is some Apple fans or Amazon haters on the jury and they'll be totally vindicated.
Publishers just don't engender the same level of blind emotion that Apple does.
Trial lawyers will tell you that they ask for jury trials when they are certain that they'd lose if the verdict was handed down by a judge. This is the other red flag in Apple's approach.
In my opinion, views on this case depend on one's ability to see the long-term rather than the immediate effects of Amazon's pricing policy. And I think that Steve Jobs, for all his faults, was a guy who could (probably better than anyone else in technology management) see where things were going.
If you think Apple is the "bad guy" here, ask yourself this question: Does it seem likely that Amazon was going to keep selling its e-books at a loss forever? Especially when it is selling its Kindle devices at, or below, cost?
Now, as Jobs points out, Amazon wasn't going to make its e-book business profitable by raising consumer prices - it was going to do it by screwing the publishers.
The one thing in Jobs e-mail that I think he got wrong was the piracy thing. From a very practical perspective, it is immeasurably more difficult to pirate an e-book than it is a pop song. Example: I can rip and burn an whole 300 disc CD library in a single weekend, using nothing more complicated or exotic than a standard-issue PC.And end up with copies of the originals that are all but identical. But how long would it take me to scan 300 books, each running to several hundred pages? Then run them through an OCR program, then carefully proofread each page to catch the inevitable mistakes?
Piracy happens in the music business because pretty much everyone can do it. Piracy in the book business would be a vastly different proposition.
Good luck to DOJ on this one!
Here's why you are wrong and Apple will probably get away with this. Apple did not set pricing because essentially Apple is the one selling books to you and not publishers. On an open market, you purchase products directly through a manufacturer or through a retailer. On the App Store there is no such thing as competition because you Always by products from Apple making Apple a distributor. I would argue that the law does not deal with deals between a supplier and a retailer and they are free to set prices more or less the way they choose to. Apple however, introduced a new dynamic pricing model for retailers in which the supplier has the controlling power and responsibility for setting the price. Apple, unlike brick and mortar retailers are however ensured a stable 30% margin. No offence to DOJ but whoever approved this lawsuit is an idiot. You will have to first prove the existence of a competitive market before you can even claim a cartel case and competitive market on which book sellers and end users participate DOES NOT exist.
Here's why you are wrong and Apple will probably get away with this. Apple did not set pricing because essentially Apple is the one selling books to you and not publishers. On an open market, you purchase products directly through a manufacturer or through a retailer. On the App Store there is no such thing as competition because you Always by products from Apple making Apple a distributor. I would argue that the law does not deal with deals between a supplier and a retailer and they are free to set prices more or less the way they choose to. Apple however, introduced a new dynamic pricing model for retailers in which the supplier has the controlling power and responsibility for setting the price. Apple, unlike brick and mortar retailers are however ensured a stable 30% margin. No offence to DOJ but whoever approved this lawsuit is an idiot. You will have to first prove the existence of a competitive market before you can even claim a cartel case and competitive market on which book sellers and end users participate DOES NOT exist.
It is not like DOJ is offering a "judge" trial. It is only offering a settlement on its own terms and without even asking for an admission of any wrong doing. The red flag is in your imagination where Apple is already convicted before it got a chance to put up an official defense.
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By its own account, Amazon does not let any other retailer sell 16% of the bestseller titles at any price. It is the exclusive retailer. If not letting another retailer sell at a lower price were illegal, being an exclusive retailer would get you to Guantanamo.
Besides, publishers are free to sell at other retailers at lower prices, Apple just won't carry those particular titles. Considering the small market share of iBooks and the availability of other eReaders on iOS, that does not sound all that threatening. Compare that to the approach of Amazon, when it stopped selling paper books and ebooks when one publisher wanted to change its contract. Which one sounds more scary to a publisher?
Apple declined to settle, and has been sued. By default, the suit goes to bench trial. Either side in a lawsuit can request a jury trial, which Apple has done in this case (or at least intends to do). The red flag is that you are talking through your hat.
No, that's not price fixing, that's a most favored nations clause. And it's not illegal. Price fixing IS illegal, but it's a different part of the situation. Also, it's OK for different companies to agree to set pricing vertically (publisher, distributor), what is illegal is for competitors to be in communication and agree to set fixed pricing.
What price ceiling? Have you any source? Apple distributed this as a sample to the publishers.
That doesn't look like a ceiling to me.... You can calculate for higher priced books by simply extracting a function from this table.
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