Got a tip for us?
Let us know
Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.
Google Executive's Testimony Weakens Justice Department's Case Against Apple in E-Book Price Fixing Trial
- Thread starter MacRumors
- Start date
- Sort by reaction score
They had 90% of the market and were selling products below cost
Before asking the same dumb question again actually go educate yourself on the history of monopoly and anti trust legislation in the US.
These days you should be able to find a lot of information online but if not there is probably a community college near you that might have classes that touch on the history. I don't want you to read articles about this case. I want you to actually educate yourself on the history of these laws and even how they came into being. This will provide you with examples and lousy rations that will help you realize that Amazon's position in the ebook market was illegal.
There is plenty of information out there but I will share a little bit with you
http://en.m.wikipedia.org/wiki/Predatory_pricing
Just so you know if you view the US section and notice the bar is set very high you will eventually realize Amazon still easily clears it. Like I said though do some research into the history of antitrust and monopoly laws in this country.
Before accusing others of ignorance it will be a good thing actually knowing what reality is.
You're the one writing the same dumb thing again and again. Do you have any single proof of that predatory pricing or are you just spitting nonsense?
Are you saying that DoJ is lying when they didn't find Amazon doing predatory pricing when they investigated them?
Okay. Explain this to me.
We'll assume Amazon is the demonic presence you're making them out to be. They're underselling products across the board in a transparent attempt to gain a monopoly so they can jack up prices later. They're a blight on the ebook industry, and anticonsumerist as a whole.
So how is the agency model as it exists with the publishers a better alternative? Your choices are between one monolithic monopoly controlling prices and gouging consumers every chance the get vs. a conglomerate monopoly consisting of multiple entities attempting to do the exact same thing.
In this situation, there is no good choice. It's like having to pick which leg you want cut off. Either way, you're going to be hobbled. Between Amazon and the publishing houses, how can you blast one as the devil, while portraying the other as a saint.
Agency pricing model is not illegal. Wholesalers setting prices is not illegal.
The scope of apples culpability here is very narrow. They have to have specifically been a conduit for the publishers to conspire to fix prices. Just getting the publishers to agree to an agency model is not illegal at all.
I know a great deal about negotiating contracts and deals as a retailer: I can ask a wholesaler for whatever I want. They can agree or disagree.
The publishers hated the amazon ebook monopoly because amazon was selling their products below cost and cheapening the perceived value of their products. They were eager and anxious for anything to change to break up Amazons monopoly:
As I noted before it is not illegal to set minimum prices as a wholesaler. The reason why the publishers did not do it before apple is because there was no other avenue to sell their products.
No. Agency pricing by itself is not illegal. Multiple competing entities coming together to force it upon the market in an attempt to control prices from top to bottom is.
This is what you're failing to grasp. None of this is about the agency model in and of itself. Any single company can work with retailers any way they see fit. It's multiple publishers coming together to control the market through collusion that's the issue. The agency model in this situation is nothing more than the model they used to achieve the desired results.
Wow, Steve Jobs admitted to price fixing in his biography? Did not know that.
LOL! I am still surprised by those who really do not know that...
Last edited:
Not always, no.
Many ebooks are re-edited and reformatted so they look the best on the ereader. This costs money. This is particularly true where there is hyperlinking done to indexing, adding in other interactive facilities such as maps, pictures, movies. So with eBook you can end up getting MORE than just printed material.
Now this is an additional cost on top of everything the printed book has, and then you have to spread the cost over the number of expected sales, so if you were to sell more printed books than ebooks its is easy to see that the ebook will be cheaper.
Printing and shipping of paper books in bulk is NOT a significant cost, and can be equalled by the cost of running a large ecommerce site
You crack me up, you really do. LOL!Get real...and you meant "who" and not "how", I presume.
Attachments
Wrong about what? Get over it! LOL!
...
He can say that he signed it to the best of his knowledge at the time, was feeling poorly, had writers cramp. There would be reasonable doubt and I will take a bet he won't get the 'chair'. Just because he cannot remember the names, does not mean it did not happen. Also they are not relying on his sole evidence as far as I can ascertain.
Sorry, you're wrong again. He signed it under penalty of perjury. He can certainly change his testimony now to say the contrary, however, it will impact his credibility. I've been practicing law longer than you've been rolling your eyes...get over it.
Glad you find me entertaining. Although unfortunately it's only because of your own misperception.
Oletros...I think it's safe to say that English is not your first language. I only speak one language so my hat is off to you.
I'm curious, is there a saying in Spanish that would correspond with "spitting nonsense"? Just wondering since it is very colorful and descriptive, but not an english saying that I'm aware of. Amazon didn't have a monopoly. Fact.
Amazon was not guilty of doing anything illegally. Fact.
Amazon being hated by publishers was what you said but not just because of perceived value - but because Amazon sold some eBooks below what hard copy books were being sold for and reduced sales for printed books. The thing is - if you don't sell an eBook - you don't eat costs. When physical books don't sell - they get sent back to the publisher. Amazon was rapidly increasing the desire for eBooks OVER physical books. Which is why some publishers decided to hold back popular titles either "permanently" or until they believed they had gotten their physical sales "rush" and were comfortable releasing them electronically.
At the end of the day - Amazon was paying the publishers the very same regardless. The publishers weren't losing money on eBooks. They were losing money on printed books.
And the agency model didn't really help them diminish Amazon's sales of eBooks AND they were making less much of the time because of the 30% "commission."
I'm not saying you are factually incorrect. I just think you're posting with a bias that doesn't tell the entire story.
Last edited:
agency model
Simple question, take Apple out of the picture, actually take all the publishers out of the picture.
What would have happened if each and every publisher independent of one another went to Amazon and demanded the agency model?
What would have happened if one publisher when to Amazon and demanded the agency model and then the rest of the publishers followed suit?
People are complaining about the agency model here quite a bit. There is nothing in the agency model that indicates and sort of price fixing, yet people here seem to be upset at the agency model itself. Do you feel that the publishers should not be able to negotiate the use of the agency model with Amazon?
If there is nothing wrong with the agency model, and nothing wrong with the publishers negotiating the use of the agency model with Amazon then what is the issue if the impetus of using the agency model was iBooks?
Simple question, take Apple out of the picture, actually take all the publishers out of the picture.
What would have happened if each and every publisher independent of one another went to Amazon and demanded the agency model?
What would have happened if one publisher when to Amazon and demanded the agency model and then the rest of the publishers followed suit?
People are complaining about the agency model here quite a bit. There is nothing in the agency model that indicates and sort of price fixing, yet people here seem to be upset at the agency model itself. Do you feel that the publishers should not be able to negotiate the use of the agency model with Amazon?
If there is nothing wrong with the agency model, and nothing wrong with the publishers negotiating the use of the agency model with Amazon then what is the issue if the impetus of using the agency model was iBooks?
When I thought of eBooks in 2009 I only thought of Amazon.
A small shop could open up to "compete" but amazon would pay the publishers the same or more than any small shop could, take the loss on their books until every competitor had been squashed and then enjoy the long term exclusive agreements they would have in place but then apple showed up to the party.
I still buy books through amazon because the kindle app works on iOS and my mac desktop and apple isn't ready to offer that.
Amazon is doing a great job of distributing books but to say that apple's "wild success" in the same market is deserving of this kind of scrutiny and attention from the the government or macrumors readers is sensationalism to say the least.
A small shop could open up to "compete" but amazon would pay the publishers the same or more than any small shop could, take the loss on their books until every competitor had been squashed and then enjoy the long term exclusive agreements they would have in place but then apple showed up to the party.
I still buy books through amazon because the kindle app works on iOS and my mac desktop and apple isn't ready to offer that.
Amazon is doing a great job of distributing books but to say that apple's "wild success" in the same market is deserving of this kind of scrutiny and attention from the the government or macrumors readers is sensationalism to say the least.
Once again, the agency model is just an aside. It's the publishers coming together and striking a deal to fix prices across the entire industry and remove control from retailers that's the problem.
The agency model by itself is legal for the reasons you stated. It's just a model of business. Price fixing and collusion? Not so much.
Think of it like this. If a retailer doesn't like a publisher using the agency model, they don't have to carry their books. It's their choice, and it's just one publisher. Doing so usually hurts both parties in the end, so it's usually not the preferred method of doing things. If multiple retailers refuse the agency model, then that publisher has no alternative but to go back to the wholesale method they were using before.
That's how the market works. You can do anything you want (within reason), but you can't force anything upon anyone. If your customers don't like it, you have to change your business model to fit their needs.
But if all the publishers come together as one and tell the retailers "use the agency model or go out of business", then the retailer has no choice in the matter. They have to use the agency model, have to agree to the publisher telling them how much to sell their wares for, have to capitulate to their demands, or basically forfeit their entire business.
Even Amazon felt the sting. This supposed bastard of a company with nearly unlimited power in the book industry had to put their preferred business model aside to do what all these various publishers wanted them to do or risk their position in the books market. Amazon's monopoly (if they ever had one to begin with) was cut out from underneath them practically overnight. By working together, these publishers had complete control over Amazon, Apple, Barnes and Nobles, and all. The industry was theirs, and theirs alone.
This is why the whole agency model BS became such a huge deal, and why the DOJ eventually got involved. It wasn't because of the agency model itself, rather the publishers using it as a means to a very illegal end.
I agree with this, except one part, if one publisher does the agency model and the rest choose to follow suit then so be it. That is their choice. Now the retailers have the choice of carrying ebooks or not. It is a free market. If the publishers decide that they want to use an agency model then that is fine.
Yes, exactly, if the publishers want to go with the Agency model then that is their choice. It is a market, they are the suppliers, and there is nothing in a market that says that eh supplier must offer terms that the purchasers (retailers in this case) are happy with.
Given that the publishers wanted Amazon to stop selling books at a loss this argument is weak on the face of it. However, that doesn't address my question. If the publishers all chose to do this independently of one another we would be in the exact same state as what the government is alleging happened.
Since we could be in the exact same situation without collision as with collusion (publishers all depending the use of the agency model) then where is the actual issue here? Nothing in the free market dictates that publishers cannot use the agency model.
So, you would have the same issue if all of the publishers arrived at forcing the retailers into using the agency model independent of one anther I take it?
I see your position as being inconsistent. If a single publisher uses the agency model a retailer can choose not to carry their books and that is fine. If all publishers use the agency model then the retailer either has to accept the agency model or close up shop and that is bad, and it is bad if the publishers get there independently or by collusion.
For that to work then agency model has to be bad, and the single publisher wanting to use the agency model is bad not fine... but you already said that the single publisher wanting to use the agency model is fine not bad. It is at this point that the whole argument is lost on me since you are trying to hold two contrary positions.
To summarize:
- agency model, no problem
- all the publishers using the agency model - problem.
- publishers should have the right to use the agency model or not.
- not all publishers should have the right to use the agency model at the same time.
Those 4 statements taken together do no work. So either I am missing something big, or your position isn't solid.
I understand that you are saying that the collusion is the issue, but that means that arriving there without collusion should be fine, but it seems that you would feel that arriving there without collusion is not fine.
You're still getting caught up on the agency model being the big issue. Like I said before, it's just a little academic aside of the real problem, which was the publishers working together to fix prices across the whole market.
The deal with Amazon selling books at a loss is a feint argument to draw attention away from what's really going on. They weren't, at least according to the DOJ investigation, doing anything but using a loss leader setup, where they sell some books below what they paid wholesale, only to recoup the cost elsewhere. In this case, they undercut the competition on best sellers, but jacked the prices up on other, less popular books. Bookstores have been doing this for years now, and Amazon still made a profit in the end.
Read Samcraig's post above. He knows far more about about this than I do, and does a better job of explaining the whole thing.
Nope. All publishers are free to use whatever business model they feel like using, so long as it's legal. Unfortunately for the publishers, corporate trusts and collusion are anything but. Hence why the DOJ got involved.
Actually, I'd be perfectly fine with it. Will of the market and all that. Thing is, the agency model setup as we're seeing it now probably wouldn't have happened naturally for the simple reason that it only benefits a select few.
Just to reiterate. The agency model isn't the problem. It's how it became the de facto model for the entire industry practically overnight that's the real issue here.
Last edited:
So, if there was zero collusion, you would have no issue with it whatsoever? What if, without collusion, the same situation was arrived at practically overnight?
From what I have read it really only would have taken one publisher to stand up to Amazon for the others to follow suit. iBooks was the catalyst, but it could have just as easily been one of the publishers deciding that they had enough of the agency model, say MacMillan which did get Amazon to capitulate, for the industry to change - and that would have been an overnight change too.
So you have no issue with the end result of the agency model, just that it was arrived at quickly. You can still take collusion out of it, unless you think that collusion is the only way that the situation could have changed overnight.
I still find the argument rather weak.
The chances of that happening would be about slim to none. It'd be about like Apple dictating to Wal-Mart that they're only allowed to sell iPads in a certain way to certain people, and hope they don't ditch them entirely to sell Android devices exclusively.
Thing is, how was Amazon harming the publishers? They were paying quoted prices for their books. If Amazon wants to take a loss, then so be it. They've already made their money. Truthfully, Amazon was more a threat to Apple and Barnes and Nobles than they ever were to the publishing industry.
They were a threat to Apple because they were only just entering into the books market in 2010. They had an uphill battle against an established juggernaut. Barnes and Nobles didn't like them because they were making a much larger profit by selling books at lower prices because they don't have nearly as much overhead. B&N has to maintain a huge chain of stores along with their employees. Amazon is a glorified mail order catalog company, and only has to pay upkeep on warehouses and websites.
Nothing Amazon did was illegal. Being a success and taking a large chunk of the market isn't illegal in and of itself, so long as they don't abuse their position. Which they weren't. The smaller players loved the agency model deal because it put everyone on even footing. Amazon could no longer undercut B&N on prices, and Apple got their foot in the door.
Overall, it'd be all peachy keen if it weren't for the fact that the move was rather anticonsumerist in and of itself. It's like I said a few posts back, what reason do I have to choose Kindle over iBooks on my iPad? There weren't any sales. No special store promotions. No competition whatsoever. You just picked your favorite and ran with it.
And it's not like the deal would've saved B&N in the long run. Even with them selling books as much as Amazon, they still have to compete against the convenience the online only stores offer their consumers, and pay the same amount of overhead costs. It sure helped Apple out a bit, though. A bit, because Amazon is still about as strong as they were before. If it were truly an altruistic move to bring down an overly entrenched abusive giant, it failed spectacularly, and benefited no one.
The whole thing was completely pointless, and done mainly so the publishers could eek out a little extra profits by balancing the popularity of ebooks against physical ones, and to screw over Amazon. It did none of us any good whatsoever.
No. I have issues with them colluding as a means to a rather iffy end. To get the best deal possible for themselves by replacing one alleged monopoly with an actual one.
Not that it did them any good, either. They're making less money now than they were when Amazon was the big bad giant supposedly screwing everyone over.
One, the agency model, is driven by publishers and book buyers, book dead tree and electronic. It is a market in itself and pricing ultimately matched to a value proposition between writers, publisher and consumer. Pricing across retailers is consistent and pricing can be changed by the publisher to attract additional buyers after a best seller has satisfied the the first wave of "fan" or genre buyers willing to pay a higher price for earliest access.
The other, the wholesale model, is driven by many and exceptional market externalities that don't necessarily value books and writers at all. Amazon, in this case, may decide that inexpensive ebooks sell more DeWalt power tools, high end coffees or comforters, not to mention Kindles.
Amazon had the ability to disconnect the value of ebooks from the value attached by readers. They did so, and the publishers weren't happy about it, and even before Apple became involved, the publishers were attempting to switch Amazon to an agency model.
Amazon did use its market power in ebooks to negotiate in an extremely tough way with publishers, and publishers did withhold ebooks considerably past the prime months of best seller sales. To say that the ebook market for bestsellers was healthy with Amazon or the publishers would have been a stretch.
Last edited:
Glad you find me entertaining. Although unfortunately it's only because of your own misperception.
On the contrary, there is no misperception, or misinterpretation (on my part at least) and it is for that reason you are entertaining.