Should this exception apply only to Apple or all companies that try to gauge the consumers?
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How Apple's Agency Model for Publishers Fails to Merit Collusion Charges
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Should this exception apply only to Apple or all companies that try to gauge the consumers?
Or they could lower prices on Apple. Raise, lower, or stop selling. Seems like all the options are covered there.
I fail to see how Angry Birds is different on one platform over another. It takes more work from the developer to port it? Yeah, sure. So what?
If I'm a consumer and I buy Angry Birds and I buy Harry Potter on 2 different platforms all I know is that the game and the book look the same on both of my phones. Whatever work had to go into that behind the scenes is irrelevant. That's not going to affect my purchasing decision.
I like their take-it-or-leave-it approach. It gives an option to the publisher - they don't have to go with Apple.
Not the Agency Model.
The obvious (non-legal) problem comes down to the Most Favored Nation behavior. When apple tells the publishers that they have to give apple the best price and that the publishers can no longer whole-sale their products. That is clearly abusive. Apple used their market position to change how the publishers do business with everyone in the industry and effectively removed the ability of other markets to use sales or loss-leaders or any other price adjustment discretion.
Without the Most Favored Nations thing, Apple could have just used the wholesale model and publicly stated "We will apply a 42% markup (making the wholesale 70% of the final price) to whatever figure the publisher wants". But then Apple would not have had the cheapest price due to amazon using loss leaders and 0-margin items as a way to drive other sales.
The obvious (non-legal) problem comes down to the Most Favored Nation behavior. When apple tells the publishers that they have to give apple the best price and that the publishers can no longer whole-sale their products. That is clearly abusive. Apple used their market position to change how the publishers do business with everyone in the industry and effectively removed the ability of other markets to use sales or loss-leaders or any other price adjustment discretion.
Without the Most Favored Nations thing, Apple could have just used the wholesale model and publicly stated "We will apply a 42% markup (making the wholesale 70% of the final price) to whatever figure the publisher wants". But then Apple would not have had the cheapest price due to amazon using loss leaders and 0-margin items as a way to drive other sales.
We're talking about an eBooks deal with a company that had never sold an eBook - ever. This is preposterous. What business would the publishers lose not playing ball with a company that's never sold their product ever. (I know, audiobooks, but not ebooks.) EDIT: <<I mean Apple never sold a single iBook before making these deals and the iPad was not released.>>
Publishers I think agreed because they've seen what Apple has done in other businesses and probably thought you know what, this is a good deal! Apple's hot and hasn't failed since the iPhone. This is our chance to get on that bandwagon and collect 70% from a lot more customers. Was it controlling pro leveraging? yes. But there was no loss of business to consider from the publishers. It was simply is Amazon enough or do we want to widen the market and take a chance on Apple.
Your Walmart example is not at all "Wal-Mart is selling so many iPods that Apple has to comply, or face such a loss of business that they couldn't effectively recover." The truth of this situation is actually more like what you said or even better, Walmart sells 0 iPods and then goes to Apple and says I want to sell your iPods but we want the retail price at $_____ and all other retailers must offer it at the same price. Apple would say no because they are already selling them like hotcakes through their own means and other retailers. Publishers have a different attitude because eBooks were only sold by Amazon (90%) That's dangerous. Don't believe me? Ask the music publishers how they real about Apple and iTunes. When Apple "notified" that they were changing samples to 90 seconds and all you have to agree is just leave your music on the store, that was controlling and using your control as a leverage. Why? Because in that instance, taking music out of iTunes would be detrimental to those Labels.
Why was I down ranked for this? Too logical?
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False accusation & hypocrisy
U know what this smells like to me?
This smells like a false accusation operation by the government to establish what Apple is alleged to have done in the guise of preventing it.
Government is full of this kind of smack.
U know what this smells like to me?
This smells like a false accusation operation by the government to establish what Apple is alleged to have done in the guise of preventing it.
Government is full of this kind of smack.
This statement implies that Apple does this.
What product does Apple sell that's cheap?
I don't think Apple has ever sold a product below cost, in fact they are known for high margins. So...?
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When all competition is zapped and Kindle is the only place to get ebooks, are you so naive to think that the price would still be $9.99
Yes. Government should stop protecting the consumers. We do not need it for that. We only need it to stop the abortions (that is unless Apple goes into abortion business).
But the way you got there are completely different. If you fail to understand this then I'm not sure how else to explain it.
The games are not the same. To the end user or consumer, some (not all) apps might look and feel the same but there are some apps where it will not be the same or remotely close. Some apps are free with ads on one platform and are paid with no ads on another platform. However, if you buy a book in iBooks or in Kindle App, every word, comma, apostrophe and dot on the i's are going to be exactly the same in both. Publishers can actually send the books via email to both Kindle App and Apple iBooks in one email. Not possible with apps. (I know they don't actually email them, I'm just saying they could because they're exactly the same.) Are Mac Games and Windows Games the same when they're released in both platforms? Hell, tell me the latest MS Office for Windows and the latest MS Office for Mac are the same!
But Apple wasn't selling any books at the time. All these negotiations took place before the iBooks Store was released. The publishers took a chance on Apple by looking at the past success it had with music and apps (and to a lesser extent, movies and tv).
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Yes, that is part of the agreement. However, they still have the choice of not selling within the iBooks Store. Since Apple in no way has a Monopoly on eBooks, there was no force on Apples part.
The problem is that "screwing over the consumer" isn't always so cut and dry by checking who costs more. Especially when wholesale pricing allows Amazon to use newer titles and the kindle itself as loss leaders. It not only creates an unrealistic price expectation, but it tends to squeeze out players that can't afford to slash their own wrists in the game of price cut-throat. Amazon can fuel losses in Kindle sales from video games, furniture, TVs, peripherals, food, clothing, etc. B&N can't.
And what happens when Amazon does get themselves setup as the 'de-facto e-book source' under their model? Do those loss leaders go away? What keeps them going? Prices on older books that just never seem to get lower because Amazon needs the margins? Which is worse? Higher initial prices or higher final prices?
The PC OEM market has effectively commoditized themselves doing stuff like this. Look at how slowly the survivors (Dell and HP) are able to respond to the move to mobile devices and slates. Look at the fact that Intel had to do a big chunk of the R&D to bring ultrabooks to Apple's competitors. Perhaps the e-book market needs to be commoditized as well, but not around a single retailer with vertical integration lock-in.
It should be an exception to any company that doesn't have a monopoly in the industry in question. If it were in regards to MS and windows, then no, they should not have the exception. Apple and iBooks, an industry they weren't even competing in at the time the deal was struck, then yes, they get an exception.
(I intentionally didn't mention Amazon, I have not seen any definite numbers to show if they did/didn't have a Monopoly on eBooks at the time. They were the biggest by far, but they had some competition with the Nook and others. Until I see hard marketshare numbers from the time period in question I won't claim a monopoly on Amazons side)
This is some strange economics
Apple will lead us to believe that I am better off because there is competition. However, the competition comes with a higher price. Normally that is the effective of a monopoly.
The fact is Apple need to Agency model implemented because they would never be able to compete with Amazon over eBooks. This belief that they had the "consumers" in mind is the most ridiculous thing I have ever heard. As a customer, I ended up paying higher prices but I still cannot read my iBook on my Kindle.
" Why not give people the option to pay 10% more to access an e-book on all e-readers?"
What option did any of us eBook readers have? I would prefer to pay 10% percent less since I only read books on my Kindle. Plus how many of you can read your iBooks on a Kindle?
Apple will lead us to believe that I am better off because there is competition. However, the competition comes with a higher price. Normally that is the effective of a monopoly.
The fact is Apple need to Agency model implemented because they would never be able to compete with Amazon over eBooks. This belief that they had the "consumers" in mind is the most ridiculous thing I have ever heard. As a customer, I ended up paying higher prices but I still cannot read my iBook on my Kindle.
" Why not give people the option to pay 10% more to access an e-book on all e-readers?"
What option did any of us eBook readers have? I would prefer to pay 10% percent less since I only read books on my Kindle. Plus how many of you can read your iBooks on a Kindle?
But publishers were under no requirement to sell through Apple. If a particular book didn't fit Apples terms, they could keep it off the iBooks store with no repercussions.
Government did not accuse Apple of monopoly. They accused Apple and book publishers in price fixing. Price fixing can be done without monopoly.
I said "yeah, so what?"
You explained the "yeah" part very well but didn't address the "so what" part.
My point is that many apps work the same on iOS and on Android and yet consumers still choose both platforms. Thus, if books are the same everywhere, consumers will likely choose them on multiple platforms.
You sill haven't explained what's wrong with that assumption. You've just told me that making apps is harder than making books. Ok, so what?
Controlling the retail price is the problem!
I completely agree - the problem isn't the price - it is the attempt to limit what anyone else can charge. What is significant is that they aren't just saying that other businesses can't get a better wholesale price > they are forcing everyone to set the same retail price.
I also don't understand all the noise about Amazon's lower prices. My understanding is that Amazon is selling the products cheaper and cutting the savings out of their profits. There's nothing wrong with the Publishers saying this is the lowest price we will sell the ebook to Amazon. If the publisher says our lowest price for this new book is $12 and Amazon decides to sell it at $9.99 > that does no harm to the publisher, author, etc.? They still received their $12.
If you don't like that, then you shouldn't shop on Black Thursday - a lot of those great deals are loss-leaders that are sold at or below cost to get people into the store with the hopes they will buy other things as well!
Same thing that Amazon is doing!
I completely agree - the problem isn't the price - it is the attempt to limit what anyone else can charge. What is significant is that they aren't just saying that other businesses can't get a better wholesale price > they are forcing everyone to set the same retail price.
I also don't understand all the noise about Amazon's lower prices. My understanding is that Amazon is selling the products cheaper and cutting the savings out of their profits. There's nothing wrong with the Publishers saying this is the lowest price we will sell the ebook to Amazon. If the publisher says our lowest price for this new book is $12 and Amazon decides to sell it at $9.99 > that does no harm to the publisher, author, etc.? They still received their $12.
If you don't like that, then you shouldn't shop on Black Thursday - a lot of those great deals are loss-leaders that are sold at or below cost to get people into the store with the hopes they will buy other things as well!
Same thing that Amazon is doing!
True, but it seems the publishers like Apple's policy.
It's not like Microsoft installing IE but preventing Netscape from being installed where the latter suffered. Amazon is the only one that suffered, but they still have such a huge market it was a minimal effect.
Sounds more like the DOJ was just shifting its weight for show.
companies sell items Wholesale - stores buy them and sell it at whatever price they want. it is how things should works.
SONY does not tell Walmart what price to sell their TVs at - if BestBuy can not compete, that is their problem. If the publishers need more money they can raise the price at the BtoB level.
The DOJ does not need to beat Apple, they got what they wanted. Agency Model as the only game in town is dead.
SONY does not tell Walmart what price to sell their TVs at - if BestBuy can not compete, that is their problem. If the publishers need more money they can raise the price at the BtoB level.
The DOJ does not need to beat Apple, they got what they wanted. Agency Model as the only game in town is dead.
HobeSoundDarryl
macrumors G5
When all competition is zapped and Apple is the only place to get media, are you so naive to think that the price would still be...
Or does your comment only apply to companies other than Apple? You're finding fault with a guy's comment that generally yielded cheaper products for us consumers. If- as you imply- Amazon would eventually dominate the market and then jack up the prices to crazy levels, new competitors at lower prices would arise. If Apple eventually dominates it's markets such that it decides to thoroughly jack up it's prices to capitalize on it's monopoly(s), new competitors will also arise.
The "win" is in not paying a lot more solely because we believe it is what is best for Apple. We consumers don't actually win by enriching the biggest company in the world at our own expense. Apple is a very rich company right now... KING of the hill... King of ALL hills. They don't need us to pay 5 more dollars for an ebook so they get their extra $1.50 cut. Our $1.50 will not make or break Apple 2012. We're a long, long way from the desperate days of 1997 when every $1.50 in Apple revenue may have actually counted.
Personally, I do think Apple was in the wrong on this subject. While Apple's motives were mostly to just drive the sales of more iDevices, it was a play to help the publishers & Apple attempt to overthrow Amazon as king of that hill... at the consumers (that would be OUR) expense. The move basically encouraged Amazon to raise prices of ebooks, making a competitor who generally had the lowest prices INCREASE their pricing. That's not good competitive pressure where the consumers win. That's only good for the sellers.
At the time this first went down, a few of us pointed this out in a related rumor posted on this site. But, of course, the huge cheerleader crowd can never see fault with the Almighty, so we were shouted down (somehow it made sense for us to pay more for eBooks if that's what Apple wanted... especially if it could somehow hurt any competitor of the Almighty like Amazon). It also made no sense to the cheerleaders that it was a perfect analogy to Apple's locking down 1-price songs in the iTunes store in hot pursuit of their own monopoly-like control of digital music but, of course, "THAT was completely different" from Amazon trying to use a 1-price model for ebooks... even if it meant Amazon taking a loss on some of those titles to maintain that model.
End result, we consumers ended up paying more for Ebooks... which is at the root of the various financial claims surrounding this particular investigation. Eventually, those will become class action(s) leading to eventual settlements "with no admissions of wrongdoing" but leading to some modest "changes to the way we do Ebook business".
End result of that: Publishers made more money for a few years. Apple made a bunch of money for a few years. Amazon made a bunch of money for a few years. Lawyers make a bunch of money on the class action. Some of us Ebook buyers will be able to apply for a class action settlement check for something like 18 cents for each Ebook purchased between one date and another. And some of us might eventually get that check totaling about $1.44 in the mail in 2019.
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No you are talking about a company with a near complete market control due to the device they sell for one to use the books (which itself functions as a virtual store), the ipad, trying to force out competition and competitor's business models by colluding with the publishers to fix the prices at the level they want to so apple can guarantee itself a 30% cut.
There's also something even more sinister here and anticompetitive (and this hasn't been mentioned by anyone yet, as far as I know). If apple managed to wreck amazon's business model and dictate their price, amazon would then not be able to sell their kindle devices which are in direct competition with the ipad. In that sense apple kill two birds with one stone. As they would become the dominant ebooks seller by virtue of their device/store's market dominance and penetration, and also kill competition not only from another bookseller, but from another device to their device. I am quite sure that was apple's thinking as well. If amazon cannot compete with us on book prices, and we guarantee a lowest price for us, as well as the 30% cut, they won't afford to sell their reading devices competitively to people either, so we won't have to face competition at a device level either from them.
Now they'll be rushing an ipad mini to the market because the fire has already made a serious impact in the smaller form factor. Apparently the ipad mini is going to come with a nail clipper to chop the ends of fingers off to be usable according to the late Steve.