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Proposed E-Book Publisher Settlement Could See Customers Receiving Up to $3 Per Book Purchased
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What are you people talking about?
I'm sorry, but I had to create an account just to post about the apparently complete lack of understanding of this situation and Apple/Publishers actions.
Short story, you have to be smoking the cheapest kind of crack or be so far into the reality distortion field to believe this is any way acceptable. Honestly, if you don't understand the severity and implication of what is going on here, please don't post your opinion. Statements like "Well, I want a competitor to Amazon" or "Cheaper eBooks = yay" are just . . . geez, just bad.
First things first: I used to be a senior investigator for Australia's equivalent of the FTC, however we were generally more pro-active about this kind of things (See also: Murica, why we hate gubment doing anything wot I don't like). Our laws are different, obviously (esp when it comes to monopoly laws), however for the most part they are very similar on issues like his.
Resale Price Maintenance (Price fixing or collusion) is potentially the worst-breach of anti-trust laws. Why? Because it is a concerted effort to distort the market and artificially set prices. That is, not allowing the market forces of supply and demand set the prices. When businesses get together to decide prices they are effectively agreeing not to compete.
Now, you can argue that publishers aren't competitors with Apple, but the fact remains, you have several groups of "suppliers" (or levels of the supply chain) agreeing to set artificial prices.
The fact that Amazon has a *significant* market sure (not a monopoly just yet, but potentially close) is irrelevant. Almost everyone in business wants to be a monopoly. That is no excuse for what happened. How is it "good" for me that books are set by the forces of consumer demand, but what all the publishers and the distributor decide to charge.
I am sure Apple had legal council (sic) but it also seems pretty clear that ol' Stevey Jobs thought he was pretty much above the law when it suited him.
Apple has been looked at several times in Australia for dodgy practices and gotten away because a lot of the stuff was verbal and couldn't be corroborated but this time they were stupid (hubristic?) enough to put things in emails.
Written on a pimped out Macbook Pro
I'm sorry, but I had to create an account just to post about the apparently complete lack of understanding of this situation and Apple/Publishers actions.
Short story, you have to be smoking the cheapest kind of crack or be so far into the reality distortion field to believe this is any way acceptable. Honestly, if you don't understand the severity and implication of what is going on here, please don't post your opinion. Statements like "Well, I want a competitor to Amazon" or "Cheaper eBooks = yay" are just . . . geez, just bad.
First things first: I used to be a senior investigator for Australia's equivalent of the FTC, however we were generally more pro-active about this kind of things (See also: Murica, why we hate gubment doing anything wot I don't like). Our laws are different, obviously (esp when it comes to monopoly laws), however for the most part they are very similar on issues like his.
Resale Price Maintenance (Price fixing or collusion) is potentially the worst-breach of anti-trust laws. Why? Because it is a concerted effort to distort the market and artificially set prices. That is, not allowing the market forces of supply and demand set the prices. When businesses get together to decide prices they are effectively agreeing not to compete.
Now, you can argue that publishers aren't competitors with Apple, but the fact remains, you have several groups of "suppliers" (or levels of the supply chain) agreeing to set artificial prices.
The fact that Amazon has a *significant* market sure (not a monopoly just yet, but potentially close) is irrelevant. Almost everyone in business wants to be a monopoly. That is no excuse for what happened. How is it "good" for me that books are set by the forces of consumer demand, but what all the publishers and the distributor decide to charge.
I am sure Apple had legal council (sic) but it also seems pretty clear that ol' Stevey Jobs thought he was pretty much above the law when it suited him.
Apple has been looked at several times in Australia for dodgy practices and gotten away because a lot of the stuff was verbal and couldn't be corroborated but this time they were stupid (hubristic?) enough to put things in emails.
Written on a pimped out Macbook Pro
We're all speculating, but let's assume that your speculation is the correct one and the antritust law is unclear. In this case the lawyers should have advised about the risks of "maneuvering" in a grey area and the management should have considered the worst case scenario. If they gave the green light without warning the management that there were risks due to the uncertainty of the law they made a mistake. My speculation is that it's more likey that the lawyers did warn the management that there were legal risks in the operation and the management considered the risk acceptable.
Actually I think the publishers did not admit any wrongdoing in their settlements.
The deals themselves taken one by one are not illegal, it's the collusion which was judged to be illegal, but this point has already been debated to death, I'm not reopening that can of worms... if you want the whole argument there are endless threads available.
Amazon was selling some titles as loss leaders, but it is overall profitable in the ebooks market. Were this not the case I would agree with you, it would be predatory pricing and an antitrust case would be brought against Amazon. The problem is that Amazon being profitable means that there is no predatory pricing and that their business model is perfectly valid. If their business model works and you want to compete you need to find a similar or better business model and do your investments. Basically if Amazon is profitable, Apple can be profitable too. This being hard or expensive doesn't make Amazon's position illegal, Apple or other competitors are not entitled a "fair share of the market" simply because Amazon has a huge share of it, if they want it they have to win it fairly.
The issue is very well explained in The Innovator's Dilemma. Basically the point is that some innovations disrupt the old business models. Take ebooks: the rise of ebooks is disrupting the physical books market. In the long run many expect ebooks to become the standard and physical books to become like vynil disks. If you are a company which relies on physical books in its business model (like all traditional publishers) you have an interest in protecting it which goes directly against your interest to push innovation and lead the revolution. Sadly many companies rather cling to their obsolete and failing business model than abandon it to lead in the new world.
Even if they are not clear, a good lawyer should warn you about the risks. I agree that the law should be clear since in my opinion every citizen should be able to understand it without need for legal advice, but I cannot believe that Apple's lawyers didn't warn the management that what they were doing was at least in a grey area.
Even assuming that there is no free and fair competition, this doesn't entitle Apple & Publishers to break the law at the expense of consumers, which is what the DoJ claimed and the judge confirmed. I don't buy the "there is no way to compete against Amazon" mantra, Microsoft demonstrated that it's possible to enter a saturated market and eventually become profitable offering the right products and doing the right investments. My speculation is that Apple simple didn't want to commit a too large investment to enter the ebooks market and didn't like the idea to operate at low margins.
Running at an overall loss is NOT the test of whether a trader is using predatory pricing. In fact if you're engaged in predatory pricing its common sense to raise prices elsewhere to fund your extermination programme. That's why big companies can undertake it, and regularly get accused of it - because their size makes it quite easy to pull off without hitting their bottom line.
In the case of Amazon, I really don't know what they did or didn't do, but for example running the bestseller list at a loss while profiting on all other book sales could be considered predatory, since certain smaller physical booksellers may be forced by publishers to buy bestsellers in bulk so they either have to face an inevitable massive loss or commit commercial suicide by never stocking the books people actually want to buy.
I'm not saying the above happens, but its an example of predatory pricing where you need to look at the specifics of that trade to see how the tactic works, not just apply blanket rules of profit vs loss.
What has to do physical books with ebooks in this case? Price of bestseller ebooks were lower than physical books even if they were sold with agency model.
The practice you are talking about is a different thing, it's when a company is very successful in a market and uses the money from that market to become dominant in a different market. Were this the case I would agree that it would be an antitrust violation, but this is NOT what Amazon is doing. Amazon is not using money from a different market to cover the losses in the ebooks market, Amazon is profitable in the ebooks market, period. Actually the ebooks market is what covers the losses from the hardware devices sales, making the whole "Kindle business model" viable. Another poster was arguing that it was unfair to sell tablets so cheap thanks to the ebooks profits making up the losses...
Amazon is not "funding its extermination programme" from anywhere outside of the ebooks market itself. It means that the business model is viable and my interpretation is that no predatory pricing is possible if you are actually profitable without external funding covering the losses coming from a different market. Of course my interpretation could be wrong.
"Stocking the books" is going to be unprofitable anyway since physical books are going the way of the dodo. I don't know how many years will be needed, but ultimately they will become like the vynil disks. Basically the foundation of their business model is crumbling in the face of digital distribution. They need to either adapt or die since digital distribution is not going away, even if you remove Amazon or reduce their market share and influence.
It might be, as I said that was my interpretation of predatory pricing. The only way to know for sure is with a lawsuit. Still these principles have already been tested. Emphasis mine:
My interpretation is that Amazon is not engaged in predatory pricing because predatory pricing needs to meet the "I take a loss now, drive the competition away, and recover the investment later" criteria. The problem is that Amazon is not taking any losses with the ebooks sales, Amazon is making money right now, so there are no "losses to recoup" in the future at all.
Who cares? I stated twice I wasn't being specific to the Amazon facts, just giving a hypothetical example that counters the generic claim that business must run at a loss to be considered predatory.
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If course it's all interpretation, and the law is vague and differs around the world, but if a supermarket chain were to open a store in a small town close to an independent cheese shop, and shortly after start selling cheese at a loss, many people would call that clear and blatant predatory pricing. It wouldn't meet your criteria though because there's no way a loss on just cheese could drive the entire organisation into the red.
The law might be vague but the courts' interpretation is very clear and consistent and makes a predatory pricing claim very difficult to succeed, you just have to search a bit and read the various sentences. Again another example:
Price is largely irrelevant. Apple iBooks delivers a more immersive ebooks experience. That's what consumers want.
How it i more an immersive experience reading a novel on iBooks app than in other ebook app?
Yes its difficult to succeed, because obtaining the proof is difficult. But read the two-pronged test below. It is not required that the entire business be running at a loss, just that specific prices are below cost. This is the only point I'm trying to make: you cannot say that because Amazon makes a profit it must be innocent of predatory pricing. Because they allegedly do sell at a loss, and because they are becoming dominant in many markets, its right that commentators raise the issue of whether they are engaging in predatory behaviour to build a monopoly, regardless of whether the US court have made it difficult or impossible (via the 2nd prong) to secure a court victory.
United States Supreme Court Decisions On Predatory Pricing
I buy iBooks because I prefer them. Much easier on the eye for me. I know when I purchase an iBook that it may also be available from other sellers for a little less. Most Apple items are a few dollars more.
For my needs Apple did not interferer in any way with my choice. I had a kindle book that I deleted. Not easy to read due to quality. I also deleted one from B&N for the same reason.
I prefer Apple products and I buy them. I am aware that there are other products available to purchase a a lower price from other sellers.
Personal choice. I'm all about that. Back in the day of restocking fees being standard operating procedures I returned a Toshiba notebook and paid the 15%. My reason. the notebook was too unattractive for me to sit and look at for hours over a period of years.
I like choice and I am willing to pay. If everything was strictly a matter of price my local library provides books at no charge as long as I return them on time.
We have good public transportation here. I'm keeping my cars.
For my needs Apple did not interferer in any way with my choice. I had a kindle book that I deleted. Not easy to read due to quality. I also deleted one from B&N for the same reason.
I prefer Apple products and I buy them. I am aware that there are other products available to purchase a a lower price from other sellers.
Personal choice. I'm all about that. Back in the day of restocking fees being standard operating procedures I returned a Toshiba notebook and paid the 15%. My reason. the notebook was too unattractive for me to sit and look at for hours over a period of years.
I like choice and I am willing to pay. If everything was strictly a matter of price my local library provides books at no charge as long as I return them on time.
We have good public transportation here. I'm keeping my cars.
Exactly. That's what he said. But just because its difficult to successfully prove, doesn't mean it's not happening.
I'm sending mine back
In protest of an unjust verdict and the capture of US policy by a monopolist's lobby.
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If you're an author and Amazon just decided to sell your book at a discount, you'd be pissed, just like the app developers who find they've given away your app for nothing for a week. Amazon has made very limited profits for 15 years. They specialize in monopoly pricing and dumping, and they got away with paying no taxes for years.
Plus, can nobody remember when Steve Jobs wanted to keep .99 a track for music AND dropping DRM? The labels wanted variable pricing, with higher prices for new releases. They gave the non-DRMed files to Amazon, and Amazon wasn't the friend of low pricing then.
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Can not? Maybe not. As a part of a gathering monopoly, no. Why no protests about Amazon's DRMed books?
In protest of an unjust verdict and the capture of US policy by a monopolist's lobby.
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If you're an author and Amazon just decided to sell your book at a discount, you'd be pissed, just like the app developers who find they've given away your app for nothing for a week. Amazon has made very limited profits for 15 years. They specialize in monopoly pricing and dumping, and they got away with paying no taxes for years.
Plus, can nobody remember when Steve Jobs wanted to keep .99 a track for music AND dropping DRM? The labels wanted variable pricing, with higher prices for new releases. They gave the non-DRMed files to Amazon, and Amazon wasn't the friend of low pricing then.
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Can not? Maybe not. As a part of a gathering monopoly, no. Why no protests about Amazon's DRMed books?
In other words
Low, low discount items, loss leaders, are the sign of a Herb Tarlick shifty salesman to me. Late night TV barkers.
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How come no Mike Daisey writing about conditions in Amazon warehouses? That's in the US. Discount model works? For who? For the monopolist. Amazon is Walmart.
Low, low discount items, loss leaders, are the sign of a Herb Tarlick shifty salesman to me. Late night TV barkers.
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How come no Mike Daisey writing about conditions in Amazon warehouses? That's in the US. Discount model works? For who? For the monopolist. Amazon is Walmart.
Why would I be? I've already been paid for it by the publishers, and made a few cents beyond that off the revenue percentages the moment Amazon paid a publisher the wholesale cost. Doesn't matter much to me if some random retailer is taking a loss by selling it below what they bought it for.
In a perfect world, Amazon selling some books below cost would mean all of jack and squat to everyone else. The problem was that Amazon had a monopsony, and, being practically the only seller in a market, could dictate wholesale prices. This means if Amazon didn't like how much you were selling your ebooks for, they could refuse to carry it. And since they're practically the only seller, they wouldn't have any other outlets to use as leverage against them. It was either them, or no one at all.
Selling bestsellers below costs was only a means to get people into the store, wanting to buy Kindles over hardcovers. But that's not illegal in and of itself.
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You ever bought a PS3 or an Xbox? Ever been to Walgreens, Food Lion, Publix? They all use loss leader tactics.
Of course it might be happening, but it also might not...
Anyway my point is that he said that "obtaining the proof is difficult", but the problem does not lie in that. Said like that it even sounds like it's easy to engage in predatory pricing without getting caught. Predatory pricing is instead considered a very rare and difficult practice:
Actually the problem is not "obtaining proof" at all. The problem is that the definition of predatory pricing (and I mean the only definition which actually matters, the courts' one) is very specific and requires to fullfill all of the above mentioned conditions. Many practices that at first sight may look like predatory pricing actually are not predatory and perfectly legit.
As they dam well should have. Apple will win on Appeal despite all this Cow Scat, and the DOJ knows Denise Cote is the reason.
"Trust the Government. It worked well for Native Americans."
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Apple will never pay a dime.
