Class-action Suit Filed Against Apple and 5 Book Publishers Over E-book Pricing

[marksman]

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Lol amazons pricing was not pro consumer. It was predatory. The sold below cost in an attempt to control the market. They would have raised prices significantly once cornered / met with kindle saturation.

All this stupid suit will do is make money for lawyers and all ebook readers will pay for it.

 

[CalBoy]

IANAL, but isn't the fact that Apple still has a minority share in the eBook market (IOW, they do not have a monopoly position) make this a difficult suit to sell?

For an anti-trust claim, you only have to show that a company used their market presence to control prices for the entire market, or that their market presence is controlling how the industry operates/functions.

 

[001]

Too much

You must be the only one here who understands the meaning of the word collude.

...insisted that the publishers agree to the agency model for all distributers.

 

[Glideslope]

PLEASE!!!! Just go away all you jealous, uninspired, non-inovating Blind Mole Rats!!

 

[dcorban]

Yes, because it will be much more beneficial to the consumer to suddenly have these publishers pull their ebooks from the Apple store.

Not that these shills care.

 

[drwatz0n]

To qualify for the iBookStore, Apple insisted that the publishers agree to the agency model for all distributers. It wasn't enough that the publisher agree to use the agency model with Apple, they had to also agree to use the agency model with Amazon, and at the same price.

Apple is dictating the price at which the publishers sell their ebooks in other stores, like Amazon. They can't do that.

If Amazon wants to sell their ebooks at no profit, it's not Apple's business to interfere unless Amazon's sole intention is to inhibit competition. That's clearly not the case, however, because it's well established that Amazon is willing to sacrifice their ebook profits to increase Kindle sales (a legitimate business strategy), and also utilized this pricing model long before Apple sold ebooks.

Similar to the line used regarding In-App purchases/subscriptions controversy; you can sell your subscription outside of the application, but it can't compete with the price you charge on the App Store.

 

[mrongey]

And of course, since Lion is just a burp of data, it should be a third of the price of Snow Leopard was, which was delivered physically. The cost of physically printing a book is quite low compared to producing the content, layout, and marketing of the book. You're getting the same content in a more convenient format. Why should you expect massive discounts for your convenience?

People paid more for CDs than cassettes, the former of which cost far less to produce. This is the same kind of thing. The same content on an arguably, but not necessarily, better and easier to use format.

 

[carlgo]

This is one of the most interesting of the many lawsuits that have been described here.

The point seems to be that Apple, etc. conspired to fix prices, not about the price itself. Those kind of issues attract the government.

 

[dcorban]

Remember that mess a few months ago with the new clauses that don't allow in-app purchases that don't go through the App Store? Yep, that's it. Several publishers effectively had to close down because they could not compete if they had to increase their prices by 30%.

That is not a logical complaint. If every publisher using that method has to increase their prices, how can "competition" be affected?

 

[EricNau]

And of course, since Lion is just a burp of data, it should be a third of the price of Snow Leopard was, which was delivered physically. The cost of physically printing a book is quite low compared to producing the content, layout, and marketing of the book. You're getting the same content in a more convenient format. Why should you expect massive discounts for your convenience?

People paid more for CDs than cassettes, the former of which cost far less to produce. This is the same kind of thing. The same content on an arguably, but not necessarily, better and easier to use format.

The suit doesn't assert that the current prices of ebooks are unreasonably high. Rather, that Apple used their market influence to control ebook pricing for all retailers, leading to a drastic price increase.

 

[coder12]

I can understand this for the interactive ebooks for learning that intertwine photos and videos and such, but never for plain books. Not gonna lie, sometimes it's a bit rediculous..

 

[TraceyS/FL]

The suit doesn't assert that the current prices of ebooks are unreasonably high. Rather, that Apple used their market influence to control ebook pricing for all retailers, leading to a drastic price increase.

But wasn't amazon doing the same with the subsidized $9.99 price point? they wanted kindle adaption, and that is how they got it. Which, in turn set a precedence for book prices that was low, and no one could be expect to compete against without taking the same losses.

I dunno, it will be interesting to see it play out.

 

[DisMyMac]

eBooks completely avoid taxes on inventory... stores often sell goods at a loss just to clear everything out in time. That's a huge savings consumers don't see.

This crap that eBooks are roughly the same cost as real books sounds just like the RIAA explaining the cost of a CD.... "$16.99 is a great value!"

 

[MacAddict1978]

GASP the publishers want to make profits from their publishing business. This is ABSURD!

At the expense of retailers and consumers via a practice that brings to mind the days of Ma Bell, Standard oil, or any other monopoly except in this case competitors unified to drive a cost up, which is probably the only reason this isn't illegal. (And maybe it could be...)

The mark up on paper books is usually in the range of 40%. So a $10 paperback nets the publisher $6.

A $10 ebook nets them... oh wait... $7 (since the retailer now gets a fixed 30% of the retail price and not a fixed or negotiated cost), and the retailer is forbidden to alter the price of the ebook. Who the f is anyone to tell a retailer what they can and cannot sell their merchandise for?

If the retailer wants to sell a paper back on sale for $8, the publisher still gets... $6.

If the retailer wants to sell an ebook on sale for $8... the publisher still gets... oh... $7.

The only people who lose are the retailer and consumer. Now if you want to get to the real dirty truth of this issue, it probably cost the publisher about $3 to print and distribute the paperback in the example above including buy back fees. (that's very generous, it is probably much less, and most of the major publishers will accept returns on excess inventory after a first run, which is where bargain books come from later as they are redistributed at a discounted rate to clear the inventory. Buy backs do add to the cost factor.)

So a publisher makes about a 50-70% profit on a paper book depending on their specific agreement with a retailer for buy backs. On an ebook, it's more like 70%-95% profit because there is no inventory, printing, buy backs, returns, damages, shipping, etc. (Most authors get very small royalties or advances unless their big named people).

So sure, a publisher is entitled to make more money, but pushing upwards of 45% more profits for ebooks is absurd.

The consumer is also buying a device to read the books on, a cost they pay and not the publisher. It's just evil and stifles both innovation and reading. If the publishing industry wants to see a Napster for books bite them in the ass, this is a good way to encourage people to try.

 

[SandynJosh]

The suit doesn't assert that the current prices of ebooks are unreasonably high. Rather, that Apple used their market influence to control ebook pricing for all retailers, leading to a drastic price increase.

I totally agree with your above statement, however Apple found a ready audience in the publishers who were looking for a way to preserve the publishing industry.

If there is insufficient margins within an industry, it will suffer. There will become less publishers and therefore less places for writers to submit their manuscripts and finally less variety of stories to read. This is not good for the consumer. In addition, with less publishers, the competition is reduced and price and quality suffers. This also not good for the consumer.

Any change within an industry has its dangers, but I think that the change to an agency model will enable us all to enjoy more varied writing and points of view, even at the short-term higher cost of purchase.

E-books will lower the cost of reading in the long run, but not over the death of many publishing houses, which would likely ensue under the old model.

FYI: Russia, under the old model, had one publishing house. The choice of content stunk to high heaven and the books cost more then anywhere else in the West.

 

[EricNau]

But wasn't amazon doing the same with the subsidized $9.99 price point? they wanted kindle adaption, and that is how they got it. Which, in turn set a precedence for book prices that was low, and no one could be expect to compete against without taking the same losses.

I dunno, it will be interesting to see it play out.

Amazon is perfectly within their right to set extremely competitive prices that other companies have difficulty matching (insomuch that it wasn't a move to be strictly anti-competetive, which I established earlier that it wasn't). Costco and Sam's Club do exactly this.

You're right. Amazon forwent their ebook profits to encourage Kindle adoption and convince customers that ebooks are not to be feared. Likewise, Apple could compete by forgoing their iBook profits to encourage iPad adaption, couldn't they? But Apple didn't want to be competitive, so instead they used their market influence to artificially control prices.

Apple has no legal right to demand that pricing be identical across all retailers, but Apple colluded with book publishers to do exactly this.

 

[ThisIsNotMe]

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Lol amazons pricing was not pro consumer. It was predatory. The sold below cost in an attempt to control the market. They would have raised prices significantly once cornered / met with kindle saturation.

All this stupid suit will do is make money for lawyers and all ebook readers will pay for it.

Hit the nail on the head.

 

[MacAddict1978]

I'm a book publisher, having been in this business for 15 years (and for 25 years in mass communications).

The book publishing business is indeed struggling. But Apple's iBookstore has been a bright spot (at least for us). The Kindle Store, not as much.

Most consumers are probably unaware that Amazon charges publishers a per-megabyte fee for the delivery of ebooks. That fee is deducted from the 70 percent Amazon pays publishers for the sale of their ebooks. My company publishes image-heavy educational comics that often weigh in at 30 or more megabytes, and therefore the delivery fees Amazon charges us approach around $2 per book.

With Apple, there is none of this "delivery fee" nonsense. They pay 70 percent of the sale, no deductions whatsoever. That allows us to offer our books on the iBookstore for half off the cover price of the physical edition. The result: Our customers save money, we get a fair percentage of the sale, and our authors and artists get a larger royalty payment.

Apple iBookstore FTW

iBooks is more black and white, but the Kindle store is better for most publishers, especially independents.

You neglected to mention that "fee" is a delivery fee to cover data over AT&T's network and is only charged to people using Amazon's self publishing program (Kindle Direct Publishing Platform) or that the fee is waived if the retail is $9.99 or higher. (So if you're company wholesales or uses the agency model, you're probably exempt.)

Amazon also pays out 5% more than Apple in most cases, which covers some of the fee.

Graphic heavy books are a bit of a sore spot with the Kindle store. (Text books usually have a delivery fee of .02 cents.) My issue with the charge is that not everyone is downloading Kindle books on AT&T's cellular network, the reason for the charge in the first place. That "free 3G connection" shouldn't be paid for buy small publishers. That was dirty of Amazon. That I think is horse dung.

What you really have to speak to is that Amazon and Border's both came out with a lot of these pricing tiers and policies as a way to give the agency model Apple got into bed with the publishers over the finger. It was much more simple until this happened.

For anyone interested, here's kind of a break down of how it actually works:

http://www.publishersweekly.com/pw/by-topic/digital/content-and-e-books/article/46244-kindle-we-have-a-problem-amazon-s-pricing-policies-affect-publishers-.html

 

[Judas1]

It doesn't make sense for you to buy an ereader, a hefty cost, and not get any benefit from buying a digital copy of books.
In the digital world, do authors even need publishing companies? They can get their book out there through the digital book store, something that they can get through various retailers. What do the publishing companies offer them nowadays? The publishing companies do less now and demand more profit. Doesn't make sense.

 

[DesignerOnMac]

Post of the Year

I worked in the book publishing business for a long time. As 2005 came, the publishers got stingy in paying designers to design their covers, spines, and back covers. In fact, they cut my pay in half to do the same work and the same amount of time!

In every case, I was told the book publishing business was hurting and they needed to reign in expenses. Now as can be seen, some of them have gone out of business....regardless of how much money they saved with production.

Books are going the way of music, movies, etc. Technology moves on and companies adapt. It also means they can change the pricing per book as they want to.

 

[japanime]

It doesn't make sense for you to buy an ereader, a hefty cost, and not get any benefit from buying a digital copy of books.
In the digital world, do authors even need publishing companies? They can get their book out there through the digital book store, something that they can get through various retailers. What do the publishing companies offer them nowadays? The publishing companies do less now and demand more profit. Doesn't make sense.

What do publishers offer authors?

Editing and marketing come to mind. But those two things don't cost anything, right?

 

[Judas1]

In the old day, publishing companies offered access, access to the printing press, access to retailers, and access to the distribution network. You had to go through them as the middle men if you wanted to be in the business. Now they only offer editing and promotion, and other small stuff. They are no longer needed as middlemen. The stuff they do now, you can do though smaller free agents and then deal directly with the retailers. They are obsolete.

Edit: I don't wish for their demise. Its just a different world, and they are no longer crucial to make books happen.

 

[GQB]

'pro-consumer discount pricing' or 'predatory pricing'?
Amazon is not being 'pro consumer'. Get real. They're trying to use their cash to buy the market.

 

[MrWillie]

This was truly one of the most evil things Apple did, not too long after Steve Jobs publicly proclaimed that "Nobody reads books anymore."

Until he realized that he can ride to higher profits on the burgeoning e-book sales, that is.

I hope the suit wins. It will be better for all consumers.

Just like the great computer monitor suit in the 90s, the only winner will be the attorneys and their 40% + cut of the award.

This is getting a bit offtopic, but the problem isn't Apple wanting a 30% cut. It's that Apple _forces_ people to use their iBook Store, not letting any way around it, thus making their 30% mandatory, even if the publisher does not wish to use the iBook Store.

Not true. The apps (Zino, Kobo, and Kindel are the ones that I have experience with) can still access your account, and anything purchased via the web can be uploaded. You just can't purchase in app.

I'm all for this lawsuit.

There is no way I was going to pay $12.99 - $14.99 for a new e-book when you can get the dead tree version cheaper.

As a result I passed on the following books...

Life - Keith Richards
2% Wall Street Tampa Bay Rays book
ESPN (latest book)

I didn't wait for a price reduction, I got them elsewhere.

I would have paid the normal $9.99 price in a hot second if offered.

Laugh it up Apple fanboys, but it would be like Google getting into music industry, signing agreements with the labels and Apple being forced to charge $4 for a single instead of 99 cents.

No, it wouldn't. The Publisher sets whatever price they want. Apple just insured that the books sold at their store cost the same as everyone else. Instead of Amazon setting the price, and then giving the publisher a percentage of Amazon's price.

 

[acorder]

...
If the retailer wants to sell a paper back on sale for $8, the publisher still gets... $6.

If the retailer wants to sell an ebook on sale for $8... the publisher still gets... oh... $7.

...

Except that's not quite right. If Amazon had to pay the distributor or publisher a set price (usually 55-60% of the cover price) no matter what price they sold the book at, that'd be a fair comparison. But if Amazon only has to pay a percentage of the for-sale price, then your comparison isn't valid.

So, if AMZ pays 70% of the selling price, that seems great until they decide they want to sacrifice making money on your book in order to generate Kindle says (by selling the book for 20% of the cover price) then you have problems.

But I agree with the basic idea that it's improper for a supplier to tell a sales outlet how to price things. There needs to be a middle ground. Publishers/distributors/wholesalers deserve to set the price that a retail outlet pays them; what the retail outlet does from there shouldn't much matter. If Kraft gets ten cents per box of Mac & Cheese that Kroger sells, it shouldn't matter how Kroger prices it. If they want to sell it for eight cents a box as a loss leader, it shouldn't matter as long as they're paying Kraft what they agreed on.

The current model doesn't work like this for ebooks.