European Regulators Investigating Apple and e-Book Publishers over Antitrust Concerns

[MacRumors]

Bloomberg reports that the European Commission has launched an antitrust investigation targeting Apple and five e-book publishers. The publishers targeted in the investigation include five of the six major book publishers: Hachette, Harper Collins, Simon & Schuster, Penguin, and Macmillan.

PricewaterhouseCoopers said in a January report that European e-book sales have been sluggish, partly due to the small range of non-English titles and fixed price agreements between publishers and stores in 13 countries. EU Competition Commissioner Joaquin Almunia said last month that he wanted to fight "artificial restrictions imposed by some companies to cross-border trade" and was examining the way e-books are distributed.

Today's probe "will in particular investigate whether these publishing groups and Apple have engaged in illegal agreements or practices that would have the object or the effect of restricting competition," the Brussels-based authority said.

Apple has been targeted by a number of investigations and lawsuits related to its remaking of the book industry. With the launch of its iBookstore, Apple reached agreements with major publishers to adopt an "agency model" in which publishers retain control over sales prices and retailers receive a 30% share of that sales price. Previously, retailers had paid set wholesale prices for books and then priced them for sale at their discretion. With Apple driving the shift to an agency model, Amazon and other major retailers quickly followed suit.

Article Link: European Regulators Investigating Apple and e-Book Publishers over Antitrust Concerns

 

[Sasha-1]

The EU investigates when an ant crosses the road. Too much government.

 

[realitycheck69]

iJail

 

[charlituna]

The EU investigates when an ant crosses the road. Too much government.

While I generally agree with you on that, this time there is an aspect that I think is well overdue. And that's about this notion of treating digital the same as physical. My issue with books and ebooks is this notion of territories and releasing in select countries only. I understand it a little for physical books because of sales tax, costs to print and ship etc. But for ebooks a lot of that is gone. The issue is generally that every publisher wants those rights and that money. But some kind of agreement should be possible. If this EU investigation forces them to make that agreement so that ebooks go worldwide at the same time then I say that's not a bad thing. In fact I hope they then do the same thing with TV and movies. Availability is a major excuse used by those that want to justify torrenting etc so drop that one off the list and move on to quality and pricing.

 

[leroypants]

The EU investigates when an ant crosses the road. Too much government.

The sounds like a waste of time, can you please link and cite that case where they investigated an ant crossing the road.

 

[ChazUK]

Wirelessly posted (Mozilla/5.0 (Linux; U; Android 4.0.1; en-gb; Galaxy Nexus Build/ITL41F) AppleWebKit/534.30 (KHTML, like Gecko) Version/4.0 Mobile Safari/534.30)

The EU investigates when an ant crosses the road. Too much government.

While I generally agree with you on that, this time there is an aspect that I think is well overdue. And that's about this notion of treating digital the same as physical. My issue with books and ebooks is this notion of territories and releasing in select countries only. I understand it a little for physical books because of sales tax, costs to print and ship etc. But for ebooks a lot of that is gone. The issue is generally that every publisher wants those rights and that money. But some kind of agreement should be possible. If this EU investigation forces them to make that agreement so that ebooks go worldwide at the same time then I say that's not a bad thing. In fact I hope they then do the same thing with TV and movies. Availability is a major excuse used by those that want to justify torrenting etc so drop that one off the list and move on to quality and pricing.

Perfectly put, thank you!

It would be nice to see a positive come out of this for the consumer.

 

[Leaping Tortois]

Previously, retailers had paid set wholesale prices for books and then priced them for sale at their discretion. With Apple driving the shift to an agency model, Amazon and other major retailers quickly followed suit

This is not a good thing. Before ebooks were a maximum of $10 then apple comes along and agrees to the publishers demands (who know they're going out of business because they do nothing for ebooks except edit and screw over the author) which has risen the average cost of an ebook because these greedy publishers still want their slice of the pie for doing nothing at all. Apple should be fighting for the authors AND for the consumers. Take us back to the days when ebooks were $10. Apple could still keep their $3 per sale and send the $7 directly to the author (instead of a few cents), bypass the publishers entirely.

 

[gkpm]

If this EU investigation forces them to make that agreement so that ebooks go worldwide at the same time then I say that's not a bad thing. In fact I hope they then do the same thing with TV and movies. Availability is a major excuse used by those that want to justify torrenting etc so drop that one off the list and move on to quality and pricing.

The EU commission already investigated DVD price fixing and region locking back in 2001, just after dropping the price fixing investigation on CD sales.
Nothing came of it.

Don't think much will come of this either, and sure won't result in them opening up content to the worldwide market.

 

[divinox]

This is not a good thing. Before ebooks were a maximum of $10 then apple comes along and agrees to the publishers demands (who know they're going out of business because they do nothing for ebooks except edit and screw over the author) which has risen the average cost of an ebook because these greedy publishers still want their slice of the pie for doing nothing at all. Apple should be fighting for the authors AND for the consumers. Take us back to the days when ebooks were $10. Apple could still keep their $3 per sale and send the $7 directly to the author (instead of a few cents), bypass the publishers entirely.

Publishers are granting up-front payments to authors, which in turn allow them to write books to begin with. Publishers are generally bad, but not all bad. They serve a key role in the ecosystem of things. In short, no publisher no book. No book, no e-book. Publishing is more than just printing, and, in fact, i am sure that they do more for authors than Apple will ever do (and yet, somehow, Apple is supposed to deserve a 30% cut).

p.s.

Now, if i had a book written, and that was that, and i thought that i could get it out on my own, then yes, paying 30% to Apple wouldn't be all bad. However, most of the time, thats not how the story goes.

 

[gkpm]

This is not a good thing. Before ebooks were a maximum of $10 then apple comes along and agrees to the publishers demands

Amazon was selling books at $9.99 while taking a loss to get people into Kindles, it wasn't never a long term plan.

Apple actually brought the commission down to 30%, when previously Amazon was taking a 65% cut (and still are for most territories - see their e-publishing agreement for details)

Here's the link to the Kindle agreement: https://kdp.amazon.com/self-publishing/help?topicId=A29FL26OKE7R7B

 

[cjbryce]

While I generally agree with you on that, this time there is an aspect that I think is well overdue. And that's about this notion of treating digital the same as physical. My issue with books and ebooks is this notion of territories and releasing in select countries only. I understand it a little for physical books because of sales tax, costs to print and ship etc. But for ebooks a lot of that is gone. The issue is generally that every publisher wants those rights and that money. But some kind of agreement should be possible. If this EU investigation forces them to make that agreement so that ebooks go worldwide at the same time then I say that's not a bad thing. In fact I hope they then do the same thing with TV and movies. Availability is a major excuse used by those that want to justify torrenting etc so drop that one off the list and move on to quality and pricing.

That would revolutionise the industry. Authors often have several different publishers across different geographical locations and sell rights to different formats via different publisher/agency combinations. The film business is the same with studios contracting with different distributors in different countries.

How this arose, I know not, but the homogenisation you're calling for might be very difficult to achieve.

 

[Middling]

I'm not sure when e-books were ever $10. Apple actually brought the commission down to 30%, when previously Amazon et al were taking 70% (and still are for some territories - see their e-publishing agreement for details)

It was 70% for people using Amazon's self-publishing system. The big publishers were never on that.

Previously ebooks were treated the same as physical books. The publishers set a RRP, and the sellers paid a wholesale price to the publishers which was a percentage of the RRP price (often around 50%). The sellers were then able to sell the book for whatever they wanted (just like every other commodity in the world), and in Amazon's case that was often at a loss to promote their Kindle devices.

Whatever the retailers sold at made no difference to the publisher's or author's bottom line.

The agency model is far worse for everyone's bottom line except for, ironically, the retailers who were previously selling at a loss.

The agency model has never been about the money, it's about control.

The agency model is illegal in the UK anyway (see Net Book Agreement) so if the publishers have actually been engaging in it and Apple has actively helped them i hope they have the book thrown at them.

 

[Leaping Tortois]

Publishers are granting up-front payments to authors, which in turn allow them to write books to begin with. Publishers are generally bad, but not all bad. They serve a key role in the ecosystem of things. In short, no publisher no book. No book, no e-book. Publishing is more than just printing, and, in fact, i am sure that they do more for authors than Apple will ever do (and yet, somehow, Apple is supposed to deserve a 30% cut).

p.s.

Now, if i had a book written, and that was that, and i thought that i could get it out on my own, then yes, paying 30% to Apple wouldn't be all bad. However, most of the time, thats not how the story goes.

The majority of the cost of having a book published is in the editing. In Australia this process costs approximately $5000. Now, if you were to go to a publisher they will charge you (yes, you still have to pay upfront), $1000 depending on which company and genre. In doing so you lose pretty much all rights to your work.

The other big cost of publishing a book is in advertising, which is where Apple could come in with a "If you read popular book x then you'll like book y" type thing.

I believe it's Stallman (I'll double check), who's starting up a business model which involves taking over the editing phase and publishing straight to ebook (with options to go to print later) while allowing the original author to keep their rights to the book.

I say this as an aspiring author (I write in my spare time. I'd dare say most authors do that for at least their first book).

I'm not sure when e-books were ever $10. Apple actually brought the commission down to 30%, when previously Amazon et al were taking 70% (and still are for most territories - see their e-publishing agreement for details)

There's a whole movement around boycotting ebooks over $9.99 which started as soon as iBookstore came out and every ebook distributor (ie amazon) had to up their prices or risk not being able to sell ebooks anymore.

 

[gkpm]

It was 70% for people using Amazon's self-publishing system. The big publishers were never on that.

Previously ebooks were treated the same as physical books. The publishers set a RRP, and the sellers paid a wholesale price to the publishers which was a percentage of the RRP price (often around 50%). The sellers were then able to sell the book for whatever they wanted (just like every other commodity in the world), and in Amazon's case that was often at a loss to promote their Kindle devices.

Whatever the retailers sold at made no difference to the publishers or authors bottom line.

The agency model is far worse for everyone's bottom line except for, ironically, the retailers who were previously selling at a loss.

OK, so you say it wasn't 70% cut for big publishers, it was 50%. It's still more than 30% isn't it?

How exactly is this then bad for publishers and authors, and good for sellers?

If it was no publisher would move to iBooks - they're not stupid. Publishers would stay with Amazon, and Amazon would not have needed to change their old rules.

As for the agency model being illegal I think you missed the part where Amazon is doing it now as well.

 

[Consultant]

Apple didn't set the price. The publishers did.

History: $0.99 songs on iTunes. $0.99 apps.

 

[icelord]

I am missing something

What am I missing here?
*Apple takes a cut of the sale
*Publishers get to name their price
*Consumers have choice if they use an iPad (B&N Store, Amazon, iBookstore)

The only things that come off as bad to me are:
*How much of a cut publishers take to "publish" an ebook for the author
*How other readers (kindle/nook) only support THEIR format
*There needs to be a uniform standard format
*Authors need to self publish more (& pay for independent editors)

EU needs to investigate publishing companies for antitrust, but not over the mere e-book portion of the equation.

 

[Bernard SG]

I believe it's Stallman (I'll double check), who's starting up a business model which involves taking over the editing phase and publishing straight to ebook (with options to go to print later) while allowing the original author to keep their rights to the book.

How is that different from authors' ability to directly put their work on the iBook marketplace without need for a publisher's intermediation?

 

[Leaping Tortois]

Apple didn't set the price. The publishers did.

History: $0.99 songs on iTunes. $0.99 apps.

but apple are the ones who agreed to let the publishers do that.

Here in Aus songs are a minimum of $1.69, and our dollar is around parity with yours. We still get ripped off on music.

 

[Consultant]

That would revolutionise the industry. Authors often have several different publishers across different geographical locations and sell rights to different formats via different publisher/agency combinations. The film business is the same with studios contracting with different distributors in different countries.

How this arose, I know not, but the homogenisation you're calling for might be very difficult to achieve.

Because different markets (countries) will bear different prices.

but apple are the ones who agreed to let the publishers do that.

Here in Aus songs are a minimum of $1.69, and our dollar is around parity with yours. We still get ripped off on music.

Apple does adjust prices for its own products, but seems to have kept content at the same price despite of changing exchange rates.

 

[gkpm]

Apple does adjust prices for its own products, but seems to have kept content at the same price despite of changing exchange rates.

Content exchange rates were adjusted last July.

Caused a stir in the UK (where the £ had dropped so prices increased) but I guess it was better for Australia where prices dropped on the stronger AUD.

 

[mw360]

That would revolutionise the industry. Authors often have several different publishers across different geographical locations and sell rights to different formats via different publisher/agency combinations. The film business is the same with studios contracting with different distributors in different countries.

How this arose, I know not, but the homogenisation you're calling for might be very difficult to achieve.

Distributors exist for a reason. I agree it would be difficult to homogenise, and I also think it will be a shame. Local distributors exist to maximise sales for oversees clients. They use local expertise and advantage to do that, if necessary tailoring the product for local tastes and even local laws, and providing the best local marketing. It a shame that it bores or enrages some people that their precious goods don't fall into their hands as soon and as cheaply possible. Distributors etc also keep plenty of ordinary people in respectable employment, but a lot of people don't care for those 'greedy' antics.

 

[Middling]

OK, so you say it wasn't 70% cut for big publishers, it was 50%. It's still more than 30% isn't it?

It was 100% cut for the publishers. The publishers got the full amount of the wholesale rate.

Remember the publishers set the RRP of a book. This is what they intend for the consumer to pay (even though no one ever does). The wholesale price is what retailers have always paid, whether the book be p or e.

So the publishers always got every penny they expected, whether the retailer then sold the book at a profit or loss.

How exactly is this then bad for publishers and authors, and good for sellers?

If it was no publisher would move to iBooks - they're not stupid. Publishers would stay with Amazon, and Amazon would not have needed to change their old rules.

As i said, it's not about the money it's about having control. The publishers now have the control to force the same price on every retailer. There is no longer any competition.

 

[Daveoc64]

What am I missing here?
*Apple takes a cut of the sale
*Publishers get to name their price
*Consumers have choice if they use an iPad (B&N Store, Amazon, iBookstore)

The only things that come off as bad to me are:
*How much of a cut publishers take to "publish" an ebook for the author
*How other readers (kindle/nook) only support THEIR format
*There needs to be a uniform standard format
*Authors need to self publish more (& pay for independent editors)

EU needs to investigate publishing companies for antitrust, but not over the mere e-book portion of the equation.

The problem is that there can be no competition between ebook sellers - the publishers are "price fixing" which is illegal in many jurisdictions.

Under the old system, the ebook sellers (like Amazon, Kobo etc.) had some room within which they could discount books (just like a real store could) - the agency model doesn't allow that.

Notably absent is the publisher "Random House" - they decided against the Agency Model in the UK because they thought it was illegal and didn't want to take the risk.

 

[mw360]

How is that different from authors' ability to directly put their work on the iBook marketplace without need for a publisher's intermediation?

You missed the part about editing. Authors are not flawless geniuses, there's a lot of work that goes on at the publisher's to get the product fit for release. Or alternatively to shield the public from it entirely. Eradicating publishers will not be a victory for the artist and the common man I'm afraid...

 

[Gasu E.]

The sounds like a waste of time, can you please link and cite that case where they investigated an ant crossing the road.

I thought ants crossing EU roads was covered in the Schengen Agreement.