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

[AppleMad98004]

Ok so Apple figures out a way to bypass the agency model and make it more efficient for the author and consumer and lower the price and put more money in the authors pocket.....

Europe is dying. They are about the old ways and inefficiency from top to bottom.

They are about to break up the Euro due to debt and lack of any new growth and they are worried about Apple and e-books (?)

Wow just Wow!

 

[Daveoc64]

Ok so Apple figures out a way to bypass the agency model and make it more efficient for the author and consumer and lower the price and put more money in the authors pocket.....

I don't think you understand - the Agency Model was Apple's creation.

The Agency Model raises prices because it prevents retailers from discounting the books.

Europe is dying. They are about the old ways and inefficiency from top to bottom.

They are about to break up the Euro due to debt and lack of any new growth and they are worried about Apple and e-books (?)

The EU is a large governmental organisation covering 27 different countries.

They have departments just like any other government.

Not everyone will be working on financial issues - this is no different to any other government.

 

[gkpm]

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.

Talk about distorting reality.

In the old model: Publisher sets RRP (£10), retailer takes 50% cut (£5) Publisher takes away 50% = £5

In the new model: Publisher sets RRP (£10), retailer takes 30% cut (£3), Publisher takes away 70% = £7 (aka wholesale price)

That's assuming Apple even gets as much as 30% from iBooks sales, they probably have better agreements with large publishing houses, just like Amazon.

So instead of coming up with fantasy RRP prices that only trick customers, publishers can reduce the sticker price to realistic levels and still get paid the same as in the old scheme.

Personally I hate how Amazon handles physical books prices, with constantly changing discounts from 0% to 40% - sometimes the same day!. Always feel ripped off because I got the book at a bad time.

With the agency scheme such fluctuations should be quite rare.

 

[qtx43]

The inner workings of the publishing industry may be annoying, but I overlook that when I buy a book. What I will not overlook is paying the same or more for a digital book which I cannot trade with friends and disappears when I die. Unless I go through the hassle to break the DRM (which btw is illegal). Until that gets fixed, I only read out of copyright ebooks.

 

[mytdave]

rights holders

It's always the "rights owners" that are the problem. Apple has shown time and again that they are interested in selling products/content in any/all markets if labels/publishers/studios would just play ball.

 

[Joe-Diver]

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...

You can hire an editor to review and edit your work.

My ex-wife had a masters degree in English and worked as a copy editor for technical proposals and product documentation. She also (kindly) would review much of my writing for work. (speeches, documentation, etc) She did work on the side for people....from executives to amateur writers. Depending on the amount of work and length of the material, she charged about $30 and hour.....sometimes a flat rate....like $500 for a 600 page work of fiction.

And she was very good....I've never met anyone else in my life with a knowledge of the English language like hers.

 

[mytdave]

it would be nice...

What am I missing here?
...
*There needs to be a uniform standard format
...
EU needs to investigate publishing companies for antitrust, but not over the mere e-book portion of the equation.

There is a standard format, it's the ePub format. The problem you run into, just like all other standards, is that you can't force anyone to use the standard.

The other problem is DRM. Just like music, publishers/distributors can wrap the ePub format in whatever DRM flavor they feel inclined to use.

Apple pushed the music industry to drop DRM, and it has been good for everyone. It would be good for books too, but don't hold your breath. I don't think you'll see publishers drop DRM anytime soon, if ever, and you're also unlikely to see Amazon drop their proprietary Kindle format either. Same goes for B&N and whatever controls the Nook uses.

 

[Piggie]

eBooks should always be dramatically cheaper that real books, as you have nothing that you physically own.

You can't sell the books, given them to charity, give them to your friends, and your friends give you you're to read.

 

[Middling]

Talk about distorting reality.

In the old model: Publisher sets RRP (£10), retailer takes 50% cut (£5) Publisher takes away 50% = £5

In the new model: Publisher sets RRP (£10), retailer takes 30% cut (£3), Publisher takes away 70% = £7 (aka wholesale price)

Your example is flawed.

In the old model there were Recommended Retail Prices (RRP) but no one ever paid those because the wholesale cost was a fraction of that and so the books were discounted by the retailer. There is no "Recommended" in today's Retail Prices because the publisher dictates the end price to consumers.

Because no consumer ever paid the RRP publishers today can't set a RP of the same value, no one would pay it!

So the situation would have been something like this:

Wholesale model:

RRP = $29.99
Wholesale price = $15
Price to Amazon customer = $9.99

Agency Model:

RP = $17.99
Amazon's cut = $5.40
Publisher's cut = $12.59
Price to Amazon customer = $17.99

As you can see, the publisher actually makes more under the older, wholesale, model than under the agency one. The only one that loses out is Amazon because they were selling at a loss.

 

[divinox]

You can hire an editor to review and edit your work.

My ex-wife had a masters degree in English and worked as a copy editor for technical proposals and product documentation. She also (kindly) would review much of my writing for work. (speeches, documentation, etc) She did work on the side for people....from executives to amateur writers. Depending on the amount of work and length of the material, she charged about $30 and hour.....sometimes a flat rate....like $500 for a 600 page work of fiction.

And she was very good....I've never met anyone else in my life with a knowledge of the English language like hers.

Editing is about more than just language though. It could be just as much about rewriting paragraphs, making editorial decisions to strike certain content out and highlight other, etc. To do this successfully, you need experience. You need to know how and what to tweak to get the best end result. While your ex-wife probably is competent to make edits to technical proposals and product documentation, she might not be that suitable for doing the same when it came to children's books for instance.

That said, publishers are hardly angels - gate keepers rarely are - but people need to see things in color, rather than black white. Publishers do play a crucial role outside of mere gatekeeping.

 

[northy124]

They are about to break up the Euro due to debt and lack of any new growth and they are worried about Apple and e-books!

Someone does not watch the news, they are not breaking up Eurozone (yet), they are however going to tighter fiscal integration.

Also Eurozone and the European Union are two different entities.

 

[gkpm]

Your example is flawed.

In the old model there were Recommended Retail Prices (RRP) but no one ever paid those because the wholesale cost was a fraction of that and so the books were discounted by the retailer. There is no "Recommended" in today's Retail Prices because the publisher dictates the end price to consumers.

Because no consumer ever paid the RRP publishers today can't set a RP of the same value, no one would pay it!

So the situation would have been something like this:

Wholesale model:

RRP = $29.99
Wholesale price = $15
Price to Amazon customer = $9.99

Agency Model:

RP = $17.99
Amazon's cut = $5.40
Publisher's cut = $12.59
Price to Amazon customer = $17.99

As you can see, the publisher actually makes more under the older, wholesale, model than under the agency one. The only one that loses out is Amazon because they were selling at a loss.

Oh I do apologise, I didn't realise Amazon were running a charity. Of course they're around to sell books at a loss.

And you call my example flawed...

 

[alhedges]

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.

No, this is not the problem. There is still competition between e-book sellers. It's just that those sellers are the publishers. There is nothing in any country's price-fixing law that required competition to be among *retailers.* Both wholesale systems and agency systems are permissible because they both permit competition on prices.

What most of these investigations focus on (and there have been some in the US as well) is not agency pricing per se, but on the provision in the contracts that don't allow a publisher to sell a book through one retailer for less than it does through another. In other words, while the publisher sets the price and sells it through an agent (Amazon, Apple, B&N) for its price, the contracts with the agents don't permit the publisher to sell a product for less through Amazon than they do through Apple.

It's not clear that these kinds of agreements violate price fixing laws - of the couple of investigations announced by state attorneys general in the US 18 months ago, nothing has seemed to result, so there may be no problem. But as these contracts explicitly mention pricing, it makes sense that someone would investigate.

The other issue that may be being looked at is the fact that all major EU countries except the UK have price maintenance laws that do not permit a retailer to sell a book for less than the price set by the publisher. Even though these are not agency agreements. This means that Amazon in France or Germany, say, can't generally sell a book - even a paper book - for less than the price offered by a B&M bookstore. This is something that the EU might be looking into, although as this is legally required in most large EU members, it's not clear what they could do about it.

This has nothing to do with international rights, either. When an author writes a book, he owns the worldwide rights. He can choose to sell the rights to distribute the book in the US to one company, and the rights to distribute the book in another country to a different company. Thus, when Amazon won't sell you a book because you live in Brazil, it's because the US publisher does not have the right to do so. This is inconvenient in the e-book world. And authors might want to rethink whether this sort of arrangement makes sense for e-books (and it might) - but it's not illegal or wrong.

 

[acidfast7]

They are about the old ways and inefficiency from top to bottom.

I like the old ways.

35-hour work weeks and 6 weeks, minimum, vacation time. Throw in the federal holidays and everyone gets 8 weeks vacation/year.

Totally crappy. I hate it, I should move to the US, where there is no madatory minimal amount of holiday.

Oh yeah, but the ebooks are cheaper.

 

[gnasher729]

The other problem is DRM. Just like music, publishers/distributors can wrap the ePub format in whatever DRM flavor they feel inclined to use.

DRM is actually an optional feature of the ePub format. It is of course possible to wrap a DRM-free ePub into a DRM wrapper, but it isn't necessary.

 

[Middling]

Oh I do apologise, I didn't realise Amazon were running a charity. Of course they're around to sell books at a loss.

And you call my example flawed...

*sigh*

You're missing the point.

Amazon could have sold at a profit if they wanted to and it would have no effect on the amount of money the publishers received for their books. It was Amazon's choice to sell at a loss, and choice is exactly what the agency model removes.

Why should publishers be able to dictate the price a retailer can charge for a product? It's not their place to do so.

Anyway i'm tired of arguing and trying to educate you.

 

[StyxMaker]

Wirelessly posted (Mozilla/5.0 (iPhone; CPU iPhone OS 5_0_1 like Mac OS X) AppleWebKit/534.46 (KHTML, like Gecko) Mobile/9A405)

To talk about 'wholesale' and 'retail' prices is idiotic when the product is a downloaded copy of a digital product.

 

[aristotle]

Strange. I find it interesting that the EU is investigating Apple for going with the agency model which allows the "publisher" to set the price rather than Apple and they seem perfectly ok with the old Amazon model where Amazon would "price fix" books sold on their store and even reduce the prices without consulting the publishers.

It is even stranger considering that Amazon still has the lions share of the market.

 

[Joe-Diver]

Editing is about more than just language though. It could be just as much about rewriting paragraphs, making editorial decisions to strike certain content out and highlight other, etc. To do this successfully, you need experience. You need to know how and what to tweak to get the best end result. While your ex-wife probably is competent to make edits to technical proposals and product documentation, she might not be that suitable for doing the same when it came to children's books for instance.

Nope, she was...very talented. Avid reader and amateur writer herself. She could have easily landed a job at ANY publishing house....but they could not come close to the money she was making. She worked for a very large defense contractor editing highly technical (and classified) technical works.

Editing books....any books....was child's play for her.

 

[danckwerts]

From a Publisher's View

One frustrating aspect of Apple's iBook program for small non-US publishers is that Apple requires them to obtain a US tax ID. I understand that it is quite possible to obtain one but, quite frankly, the last thing I need is a second tax authority breathing down my neck. As a result, many small publishers choose to work through an aggregator and receive a much smaller share of the list price. This is probably a major cause of the anaemic growth of European iBook publishing.

With regard to pricing, this is an absolute nightmare for ebook publishers. Apple, Amazon and others have strict rules on how the prices are set and each set of rules is different.

The ePub format is a pain, too. It is really not suitable for complex books, it is surprisingly difficult to create a clean ePub from existing typesetting files and, of course, different platforms render it differently.

 

[gkpm]

*sigh*
You're missing the point.

Amazon could have sold at a profit if they wanted to and it would have no effect on the amount of money the publishers received for their books. It was Amazon's choice to sell at a loss, and choice is exactly what the agency model removes.

Anyway i'm tired of arguing and trying to educate you.

I'm sorry you're finding it tiring to justify your unrealistic facts.

The problem goes both ways, you can argue the old model removed choice from publishers, who can't even set the price of their own books. Why shouldn't they, it's their books after all. An e-book distributor's job is accepting payment, copying and pushing bits down the pipe.

The end of the previous agency model (net books agreement) in 1997 was seen as a great thing for the book industry. However what did we really get?

Bookstores closing down all over (including Borders, the banner child of the net books agreement reform)

Publishers merging into large corporations to fight off the market power of large retailers, who they desperately need - because if a large retailer doesn't carry your book, at the price that suits them (not your theoretical wholesale price), you don't get sales.

E-Books changes all that, so it's fitting we boot the old world agreements together with it.

 

[Daveoc64]

Strange. I find it interesting that the EU is investigating Apple for going with the agency model which allows the "publisher" to set the price rather than Apple and they seem perfectly ok with the old Amazon model where Amazon would "price fix" books sold on their store and even reduce the prices without consulting the publishers.

That's how virtually any retailer operates.

They buy a product at a wholesale price from a manufacturer or supplier and they then sell it on at THEIR chosen price.

That price could involve a hefty profit margin, a thin profit margin or no profit at all. This is VERY basic economics that virtually anyone should realise - if you don't, you're probably getting ripped off every time you go shopping!

There is nothing illegal about this. It's very common for retailers to sell things at a loss (a loss leader) in order to get more customers "through the doors". A few countries have rules against selling certain categories of products at a loss (e.g. Alcohol), but that's more due to public health concerns than anything to do with competition.

Letting retailers set prices theoretically increases competition because each retailer will be competing to get the lowest price possible. If a book is the same price in Store A, B, C and D then there's no competition on price between them. That is "price fixing" if it is enforced by the manufacturer, supplier or distributor of that product.

If I want to buy a specific book, then I have no option but to pay the publisher's price for it - that doesn't happen with any other type of product. I can buy groceries in several supermarkets and smaller stores - exactly the same products, completely different prices.

The Agency model is (effectively) a conspiracy between retailers and the publishers to ensure that there is no competition over pricing of ebooks - that is what the EU (and several local governments) are investigating.

 

[ChrisA]

The entire book publishing industry is nothing BUT a bunch of price fixing agreements between all the competitors. Needs to be broken up.

 

[KPOM]

[Deleted - responded to wrong thread]

 

[ChrisA]

..
If I want to buy a specific book, then I have no option but to pay the publisher's price for it - that doesn't happen with any other type of product. .

Actually this kind of price fixing is common in many industries. One good example is SCUBA equipment. If you own a shop and try to offer a discount below MSRP some brands of gear the distributor will simply cut you off and you will never get any more product. The only time I've ever seen a discount on those brands is when a shop decides to no longer carry that brand so in that case the threat of being cut off was moot.

There are many other examples of this, it's really common