Good idea! You're on to something!
However, I've noticed that some words are longer than others. Shouldn't a longer word be more valuable than a shorter one? I'm sure some publishers will try to cheat and just use short words to boost their numbers!
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.
Legal Experts Suggest Justice Department Unlikely to Win Antitrust Suit Against Apple
- Thread starter MacRumors
- Start date
- Sort by reaction score
Good idea! You're on to something!
However, I've noticed that some words are longer than others. Shouldn't a longer word be more valuable than a shorter one? I'm sure some publishers will try to cheat and just use short words to boost their numbers!
capitalism
Agreed. One of the cornerstones of capitalism is the ability for companies to set their own prices. It's a fine line between setting it too high and losing customers or setting it too low and not making enough profit.
If the publishers all got together and colluded to raise all their prices, then they should be punished for anticompetitive practices. But in this case, it appears on the surface that all the publishers wanted in on the new iPad release and the ability to sell books on the iPad/iBooks, so if they all independently agreed to Apple's stiff terms in their contracts. Well that's just business.
It could be argued that everything Apple does nowadays could be convoluted into anticompetitive practices if look and think about it hard enough. You buy an iDevice, you're somewhat locked into the Apple/iTunes/iBooks ecosystem. It's not easy to walk away from all of your movies, TV shows, books, and music re-downloadable in the cloud and attempt to convert everything to work on an Android or Windows phone. To work best with iCloud, people are starting to buy Macs instead of Windows computers. Everything Apple does is already getting DOJ scrutiny because they've gotten so big over the last decade. It would be a shame to force Apple to support other platforms with content (similar to the way AT&T was forced to open up their local and long distance service to other providers, including cable companies and internet service providers). IMHO, DOJ has no case here, but I'm not an attorney.
Agreed. One of the cornerstones of capitalism is the ability for companies to set their own prices. It's a fine line between setting it too high and losing customers or setting it too low and not making enough profit.
If the publishers all got together and colluded to raise all their prices, then they should be punished for anticompetitive practices. But in this case, it appears on the surface that all the publishers wanted in on the new iPad release and the ability to sell books on the iPad/iBooks, so if they all independently agreed to Apple's stiff terms in their contracts. Well that's just business.
It could be argued that everything Apple does nowadays could be convoluted into anticompetitive practices if look and think about it hard enough. You buy an iDevice, you're somewhat locked into the Apple/iTunes/iBooks ecosystem. It's not easy to walk away from all of your movies, TV shows, books, and music re-downloadable in the cloud and attempt to convert everything to work on an Android or Windows phone. To work best with iCloud, people are starting to buy Macs instead of Windows computers. Everything Apple does is already getting DOJ scrutiny because they've gotten so big over the last decade. It would be a shame to force Apple to support other platforms with content (similar to the way AT&T was forced to open up their local and long distance service to other providers, including cable companies and internet service providers). IMHO, DOJ has no case here, but I'm not an attorney.
The agreements were individually and separately constructed, negotiated and signed. Even if the same terms are used, this is not collusion. The collusion (if any) is by and between the publishers. Apple does not tell them what to charge, only that Apple gets their 30%. There is nothing here.
There is no legal standard for "in effect" activities. Either you are in violation of a statute as written, or you're not.
This is the kind of case where, even if Apple were to lose, the verdict will get tossed on appeal.
Except the DOJ has documented meetings where all the CEOs of the major publishers gathered to talk business throughout 2008 and 2009.
http://www.theverge.com/2012/4/11/2...k-price-fixing-case-against-apple-an-analysis
Silly idea
This idea is silly. If the business model is to pay by the word or by the letter, this will drive writers to write longer books with little decent content in an attempt to make more money. Editors would go thesaurus crazy to replace short words with similarly defined longer ones. Then society will start to speak in long, verbose gibberish because that's what they're reading.
It's the quality of the content that should be the overwhelming reason to purchase a particular book, not the price per word ratio. Shakespeare shouldn't be on the same level as a Harlequin romance novel.
This idea is silly. If the business model is to pay by the word or by the letter, this will drive writers to write longer books with little decent content in an attempt to make more money. Editors would go thesaurus crazy to replace short words with similarly defined longer ones. Then society will start to speak in long, verbose gibberish because that's what they're reading.
It's the quality of the content that should be the overwhelming reason to purchase a particular book, not the price per word ratio. Shakespeare shouldn't be on the same level as a Harlequin romance novel.
I understand the anticompetitive bit was not on the same pricing (ie %), that's the case for iTunes and AppStore too.
It is the covenant that the digital price could not be lower elsewhere (read Amazon), and after all prices went up of +30%. Whereas Amazon kept pressure on digital book prices ... which SHOULD be lower because no printing costs shipping, physical stores, librarians ...
If that's not price fixing I don't know what a better example of price fixing could be ...
Thank you for your insightful post. The reason for the change to the agency model was because they were already the walmart of books and now ebooks. They essentially killed book stores buy undercutting them so there are few left, and did the same to ebooks with 90% of the market because they were selling below cost.
Wow, it must be nice to know how all this complex legal stuff will turn out so far in advance.
From the start it was clear that Apple's terms required price fixing from the publishers. It certainly appears that Apple would not sell books from publishers who did not agree to fixing the price.
If the laws prohibiting cartels are to mean anything, then they must mean something in a case like this. Apple may not have fixed the price themselves, but they gave the publishers the mechanism to do so. This is a problem, no matter how you parse it.
That's not exactly right. Apple initially wanted to offer the same deal as it did with Music, but the Publishers refused that model vehemently. With Music Apple dictated the price and pretty much took over the distribution of music, destroying the traditional way that it was being disseminated, selling CDs. The publishers were scared and therefore didn't want to take the same route as the Music industry did, and which the Music industry regrets having done. As a result Apple introduced the new Agency Model, allowing the publishers to set the price, but Apple made two conditions for this compromise. One that they get 30%, and two that they are guaranteed the lowest price on the market so that they can be competitive.
If it were up to Apple, ebooks would have been very cheaply priced, as Music was when the iTunes store was introduced. Apple's worry was that if it didn't compromise with the Publishing industry, (1) they wouldn't be able to compete on the ebook market with Amazon and (2) they also couldn't get the content from the publishers.
The big worry about this lawsuit is what happens if the Publishers decide to stop supporting ebooks? After all, it is their product, so if they can't set the price as they want it, they might refuse to sell it, forcing people to buy the paper and hard backs.
Hmm. They could have told Apple no. Apple needed them, not the other way around. Apple doesn't even chart for book sales by retailer. Even i-Device owners have greatly shunned iBooks in favor of the Kindle and B&N apps. They also have no entry into the physical book market... they're a nothing of a reseller for the publishing industry, and I don't think the publishing companies ever thought they would be. iBooks gives them incremental sales sure, because there are people that buy an iPad and think, hey, ebooks... let's have a look at that... but in numbers, Apple is not threat to anyone in ebook sales.
The publishers saw an opportunity... We didn't see the music labels dining out together to toss around music pricing ideas. They all held their own. This was very unprecedented and it's kind of unheard of... thus the collusion bit.
And while it is legal for manufactures to set a fixed retail price, it's not common. MSRP's are the common standard, and a retailer has the choice to not sell an item at MSRP. We have an industry that has exclusively used an MSRP until this deal came about... and continues to use MSRP on print books. This is the publishers achilles heel. "You can sell this book for whatever you want, because you get wholesale pricing. But this non-physical version that we make twice the profit on you can't... because we're black balling you and don't care that you bought billions worth of inventory from us when Apple has never bought a dime from us before..." (insert moment where publishing executive stick out their tongues at every book seller in the world).
I never thought Apple would end up having any charges really stick. They are simply a retailer that negotiated a contract... at issue for them though is they didn't do this individually, which is where this is questionable. They had to invite an industry to partake in an illegal practice. Just the publishers having lunch and talking about the subject entered into very illegal territory.
Does Sony invite Vizio over for tea and crumpets and talk about rigging prices? No, because they'd be in deep s_ _t. Oh wait, the television industry did do this... and they got spanked hard for it... and consumers ended up getting affordable tv's after the display price fixing scheme 5 companies cooked up was found to be illegal.
Apple will probably settle, just because it's cheaper for them to do so then fight it out in court... but if they fight it out, (which I doubt), they'll probably get a nasty letter in a United Nations kind of a way and go about their business... being in last place as a book seller.
Amazon didn't kill the small book stores. Barnes & Noble and Borders did. Amazon then killed Barnes & Noble and Borders.
I don't think there is anything wrong with letting the publishers/authors determine the selling price of their product. The agency model lets the market set the price. It assumes that if consumers think an ebook is too high, they won't buy it, thus forcing the price down. So then the competitive advantage goes to the software/user experience of the e-reader. I think it will be interesting to see the outcome. If Apple and the publishers win, then Amazon will have to do some truly unique innovation to overcome the iPad. Although I truly enjoy my kindle's e-ink screen, I don't really want to carry it around with my iPad.
Why is the justice department concerned about this anyway? I cannot think of one situation where any consumer is going to loose their livelihood because they cannot afford to buy an ebook (someone else undoubtedly will). Perhaps there is something that the justice department should focus on that might affect the livelihood of a few people. Something like, say, gas prices???? Now there's an agency model that is a problem.
Why is the justice department concerned about this anyway? I cannot think of one situation where any consumer is going to loose their livelihood because they cannot afford to buy an ebook (someone else undoubtedly will). Perhaps there is something that the justice department should focus on that might affect the livelihood of a few people. Something like, say, gas prices???? Now there's an agency model that is a problem.
They are allowed to get together and talk business. They are just not allowed to agree on anything that means they are not competing against each other. If businesses, including competing businesses, were not allowed to talk to each other we would all be in deep ****. For example, it wouldn't be possible to buy a hard drive from any manufacturer and know that it works in my MacBook unless the drive manufacturers had talked to each other. Right now phone companies are talking to each other how to create a database of stolen phones so that a phone stolen from an AT&T user cannot be used on Verizon either.
What you call "price fixing" is not what competition law calls "price fixing". "Price fixing" in the sense of competition law happens when two _competitors_ agree their pricing. When a publisher and a retailer agree on the price, that's not price fixing. If two publishers agree on the price, that is price fixing.
Your argument that "Apple gave the publishers the mechanism to fix the price" doesn't hold any water. Let's say Apple had signed contracts that says "Apple pays publisher X $5 for every book that Apple sells, and Apple can charge customers whatever price they like, above or below $5. ", Then clearly publishers X, Y and Z can fix prices by charging Apple the same amount for their books. Or they can compete against each other by charging different amounts. I think that on the contrary, Apple's contract gives publishers the means to compete, because if one publisher charges Apple 10% less or more for a book, then this will be reflected directly in the price that the end user pays, and sales should go up or down accordingly. With a contract where Apple can charge any amount, the publishers can't compete against each other because Apple would be able to sell any book more or less expensive at their whim.
Last edited:
I do not think Apple the biggest target in this mess. The real target is the publishers. Apple got brought in because they was the company that started the entire move but the publishers are the real target. This law suit is LONG LONG over due.
They should also start going after college text book publishers as well.
They should also start going after college text book publishers as well.
These clauses are not illegal in and of themselves. The issue is whether or not collusion was involved between the major publishers.
The physical cost of delivering the book has little to do with what the price SHOULD be.
What Apple did is not price fixing. What the publishers may have done could be price fixing.
http://en.wikipedia.org/wiki/Price_fixing
Right - I agree that it could be price fixing of the PUBLISHERS, but not Apple.
I could open a store that competes with Best Buy, let's call it Beagle Buy, where I only sold things at LIST PRICE, and never had any sales. The manufacturers of my TVs, computers, DVDs etc. are setting the LIST PRICE, not me. There is nothing illegal about this at all.
This is what Apple did.
If for example, Disney, decided to only sell their DVDs at Beagle Buy, not at Best Buy nor KMart, nor Target, nor Walmart, there is nothing illegal about this either.
If Disney told Best Buy, Walmart, Target, etc. to only sell their DVDs at LIST PRICE or they would not be able to sell Disney DVDs, this is ALSO LEGAL. For example, Bose does this.
Who says digital should be cheaper. The purpose of business is to make money not give it away. If there is a more convenient item why should it be cheaper. It cost the same money to press a DVD as a it does a Blue Ray disc. Do you complain about the price of it? No. It cost the same to make a designer T-shirt as a cheap one. But do you complain about the cost? no. The danger in digital is horrible people who don't want to pay for anything and think that everything should be cheap or free, breaking the protections and making copies for their friends or posting online for free. This means fewer sales so less profit.
-
Yes, they can talk to each other. But they can't sit down and agree to fix prices. If they do it is going to look like a cartel, and they are illegal. Big difference.
This is assuming that the costs for printing, shipping, etc is a big piece of the overall cost.
You're forgetting all of the overhead and talent costs. You have to pay the author. You have to pay the employees of the publishing house (editors, fact checkers, etc). You have to pay for promotion and advertising.
I don't know what the breakdown is, but I'm sure any accountant worth their salt can get the data to say whatever they want it to say.
I agree with the legal analysis that suggests that the DoJ isn't going to have a "slam dunk" winning this case, especially when it comes proving that Apple magically was pulling the strings.
But the sad fact is that, by getting three of the publishers to settle, the DoJ has already done Amazon's dirty work for them. MacMillan and Penguin are going to have a hard time pushing their $14.99 e-books when Amazon is selling first-run titles for $9.99. (Although, for obvious reasons they aren't going to be the same titles.)
Apple I think did the right thing by standing firm. They've really got little to lose by fighting this (another couple of million in legal fees isn't going to make much difference) and whatever penalties they might incur aren't going to amount to much.
One thing I still don't understand though: If Amazon is selling best-sellers below their cost; to be read on Kindles which are already sold for very little (if any) margin, how does Amazon ever expect to make a profit? Its not like they can make conditions any worse for the poor folks who work in their warehouses...
But the sad fact is that, by getting three of the publishers to settle, the DoJ has already done Amazon's dirty work for them. MacMillan and Penguin are going to have a hard time pushing their $14.99 e-books when Amazon is selling first-run titles for $9.99. (Although, for obvious reasons they aren't going to be the same titles.)
Apple I think did the right thing by standing firm. They've really got little to lose by fighting this (another couple of million in legal fees isn't going to make much difference) and whatever penalties they might incur aren't going to amount to much.
One thing I still don't understand though: If Amazon is selling best-sellers below their cost; to be read on Kindles which are already sold for very little (if any) margin, how does Amazon ever expect to make a profit? Its not like they can make conditions any worse for the poor folks who work in their warehouses...
Right, the way books were sold is the Publisher would sell the books for a given price to the distributor, with a suggested market price. So, let's say a new paperback comes out that is 20$. They sell it to the local book store for 10$. Now, what happened is they would sell the ebook version of the book to Amazon for 10$ but then Amazon would instead of marking up the price, sell it for less than they paid for it, or at the price they paid for it, so as to push their hardware sales. Well, the problem with that is over the long term Amazon would effectively kill off bookstores and make the publishers depending upon Amazon, so they could use their influence to renegotiate prices. The publishers were extremely scared of this, just like they were scared of Apple's initial proposals to sell books at a preset price, for the same reasons.
So the publishers agreed to the Agency Model with Apple since they could determine the price of books into perpetuity, and kill Amazon's stronghold on them. It'll be interesting to see what happens now.
Exactly, which is why this is not a clear cut case. The DOJ does allege that the CEOs did discuss specifically how to deal with Amazon in these meetings. If the DOJ has evidence that outcome of these discussions were an agreement to all move to the agency model (and associated pricing), that's pretty clear collusion.
No that simply isn't true. Read my post #47 and post #35 to see why both the publishers and Apple needed each other.
But the Book and Movie industries think of the Music industry as an utter failure as regard digital distribution. They want to avoid repeating that mistake so they have to come up with something.
Last edited:
Harlequin romances are far mor popular than Shakespeare. Publishers should carge a premium for them.