The chain bookstores like Barnes and Noble put local bookstores out of business with discount plans and heavy marketing. What makes this one different? Even the concept of loss leaders didn't originate with online purchasing.
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Publishers in E-Book Antitrust Case File Objection to DOJ's Proposed Punishment for Apple
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The chain bookstores like Barnes and Noble put local bookstores out of business with discount plans and heavy marketing. What makes this one different? Even the concept of loss leaders didn't originate with online purchasing.
Wrong. The consumers put B&N Bookstores out of business. The consumers are the ones who actively decided not to purchase their goods well knowing that if they don't, B&N will no longer have a healthy business model. Plus, eBook sales eclipsed hardcover sales in 2012 and last time I checked, B&N brick-and-mortar stores don't sell eBooks.
I hate this stupid argument about the 30%... do you think retailers don't make margin on products? 20-50% is very common in B2B software for channel partners and distributors. Also, in publishing they we're giving up margins on the books sold in stores... plus people had to print them, store and distribute them... I'm sure that was way more than 30%.
If you don't understand sales models and cost of goods, then I guess you can just say Apple is greedy. Publishers in the long run wanted Apple's deal... they are a HUGE channel and have the ability to make the publishers a lot of money... including the small ones. They always had the choice of not selling with Apple.
And what the hell do the overcharged customers get? A pat on the head?
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Well, and B&N created the Nook. The first model was an underpowered bad joke...
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Well, and B&N created the Nook. The first model was an underpowered bad joke...
Boggles me
An industry tries to regulate itself to protect itself from a monopoly abuses and then apple gets f'd over. Waaaait... Obviously Steve did not bribe the right politicians. Because the banks seem to be able to regulate themselves to the tune of WORLD ECONOMY MELTDOWN! I really hope you Americans reform your tax code and financial system. Lock down the banks.
An industry tries to regulate itself to protect itself from a monopoly abuses and then apple gets f'd over. Waaaait... Obviously Steve did not bribe the right politicians. Because the banks seem to be able to regulate themselves to the tune of WORLD ECONOMY MELTDOWN! I really hope you Americans reform your tax code and financial system. Lock down the banks.
Agency model give publishers control over pricing. So even without that clause the publishers can still set all prices the same.
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Apple's terms allow publishers to raise prices above what Amazon was charging. And with Apple's clout they didn't need Amazon anymore so they were able to force Amazon to change to agency model with publishers controlling prices or lose the titles.
That is the part that was really the issue, not the MFN
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By the same token, if consumers en masse feel that $12.99 or whatever is too high for n book they have the power not to buy it and force publishers to lower prices. The latest John Grisham isn't a life essential item after all.
I'm still missing what Apple did wrong in the first place.
I think...
Apple didn't conspire with the publishers to raise prices, they convinced the publishers that the agency model worked best for them as THEY set the prices.
It was the publishers that conspired with each other to simultaneously adopt the agency model, however not specifically to raise the prices. The raising of the prices is the individual publishers action solely.
If someone can succinctly explain the law that Apple broke, then the remedy should follow the violation. The proposed remedy by the DOJ has nothing to do with any specific law broken, that I can tell.
I cannot wait for the appeals court to devour this verdict. This DOJ proposal is just a waste of time for all involved. Apple will never accept any compromise/admission of wrong-doing. If the DOJ was hoping Apple would accept this, let alone anything, they are a bunch of idiots.
I think...
Apple didn't conspire with the publishers to raise prices, they convinced the publishers that the agency model worked best for them as THEY set the prices.
It was the publishers that conspired with each other to simultaneously adopt the agency model, however not specifically to raise the prices. The raising of the prices is the individual publishers action solely.
If someone can succinctly explain the law that Apple broke, then the remedy should follow the violation. The proposed remedy by the DOJ has nothing to do with any specific law broken, that I can tell.
I cannot wait for the appeals court to devour this verdict. This DOJ proposal is just a waste of time for all involved. Apple will never accept any compromise/admission of wrong-doing. If the DOJ was hoping Apple would accept this, let alone anything, they are a bunch of idiots.
Well your understanding is incorrect. Hint: http://en.wikipedia.org/wiki/Cartel
That is not good for consumers.
Apple lives for this kind of fun. With money to burn they love expanding their legal team to play this chess game. It's become apparent they enjoy it so much there's no end in sight. Today there were news reports of a new legal attack they're launching to stop Samsung from selling certain models in the U.S.
Having already launched a similar attack to prevent the sale of the S4, this is a new completely separate action. On the positive side Apple is getting lots of practice. That should result in more wins in the court of law. In fact once they become more successful in getting products banned, they'll have one more claim to fame.
Having already launched a similar attack to prevent the sale of the S4, this is a new completely separate action. On the positive side Apple is getting lots of practice. That should result in more wins in the court of law. In fact once they become more successful in getting products banned, they'll have one more claim to fame.
More like: The publishers would love to keep their 'Agency model'.
At least the corporations that make sizeable political contributions.
Not sure about that.
Can we find anymore ways to use the word "draconian" ?
Because it needs to be used at every opportunity, usually incorrectly ,especially when 90% of the public agrees with people using words they don't understand.
Has there ever been a more effective Bull****** buzzword ? Ever ?
This word is thrown around more than football. And by people less intelligent...if you can believe that !
Because it needs to be used at every opportunity, usually incorrectly ,especially when 90% of the public agrees with people using words they don't understand.
Has there ever been a more effective Bull****** buzzword ? Ever ?
This word is thrown around more than football. And by people less intelligent...if you can believe that !
From your quoted article:
"A cartel is a formal (explicit) "agreement" among competing firms. It is a formal organization of producers and manufacturers that agree to fix prices, marketing, and production.[1] Cartels usually occur in an oligopolistic industry, where the number of sellers is small (usually because barriers to entry, most notably startup costs, are high) and the products being traded are usually homogeneous."
1) Apple had no agreement with competing firms (Amazon, B&N, etc). It's agreement that is being challenged is with the publishers. They are not competition. They are a supplier to Apple. The consumer is not hurt in any way if one individual supplier comes to agreements with its supplier on how to set prices. This happens every day. It is harmed when competing firms conspire with Apple to set a specific price. That is not happening here. Apple has no agreement with any competitor.
2) "Cartels usually occur in oligopolistic industries, where the number of sellers are small and the products being traded are homogeneous." They exact opposite occurs here. There are many sellers. And they are selling a unique product (only one publisher owns rights to a particular book).
So I don't understand a comparison of this case/lawsuit/situation to a cartel.
On an semi-unrelated note... Why do people get so worked up about this kind of thing in regards to very small, inexpensive purchases, but completely ignore and not care when the same behavior occurs in regards to large expensive stuff. Think auto industry. The car manufacturers (akin to book publishers) supply cars to dealers who have obtained a license to sell them (akin to iBooks or Amazon). They conspire to come up with the highest possible price that the consumer will possibly pay. And to stifle competition, all of the various dealerships (who really are competition) generally avoid publishing set prices or going rates. They like to maintain a cloud of vagueness about what the retail price should be. We are talking about much higher dollar amounts here... and the DOJ or noone else cares. Why?
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Actually, it's the agency model of setting the same price for everyone which forced smaller ebook sellers out of business.
Apple wanted to sell iPads, so Steve Jobs changed his tune on ebooks and reading (remember his "Nobody reads anymore" statement of a few years earlier?)
But Apple didn't want to disrupt its walled garden model and compete in price, so they enticed the publishers with the iPad's dominance in the tablet market and got what amounts to fixed pricing.
So, the incentive for consumers to shop around for ebooks was taken away, and they went to whatever store their hardware offered. The Kindle's had the biggest ereader marketshare, so Amazon sold the most ebooks.
The result was that the smaller sellers went out of business. Now all books are the same price everywhere and many have doubled in price compared to the pre-Apple time. It will take years before the market recovers and we see some real competition between sellers again.
Apple was knowingly evil, it enabled the publishers and won a few battles, but it was really Amazon that won the war at the end.
NowI have to pay more, every time I buy an ebook. And that's why I am happy that Apple has to pay, too.
Underpowered?! It's an e-reader. How powerful of a CPU were you expecting in order to run something akin to Adobe Acrobat Reader... and not even in color?
Your understanding is correct, the problems are in the consequences which sadly are not lower prices for everyone.
Before Apple the game was played with the wholesale model. In wholesale the publisher doesn't decide the final price (the price the consumer pays), it instead sells to the retailer at a given price, and the retailer sells to the consumer at whatever price it sees fit. This means that in the wholesale model the publishers get the same money per-sale no matter what the consumer pays. With the agency model it's not so. With the agency model the publishers sets the price the consumer pays, and gets 70% of that, the retailer gets the remaining 30% (assuming Apple's fees).
The key issue is that with wholesale the price the consumer pays is irrelevant to the retailer's per-sale revenue (which is fixed) but in the agency model the price the consumer pays does affect to the retailer's per-sale revenue. Mix that with the MFN clause (which allows to match the lowest price) and you get the following scenario:
Let's assume Amazon sells through wholesale and Apple sells through agency with MFN clause. The publishers sell the book through Apple at a consumer price of 15$, so for every sale they get 10.50$ (the 70%). Through Amazon they set a wholesale price of 10.50$, so that's what they get and Amazon is free to sell the ebook to the consumers at the price it wants. So from the publisher's revenue point of view selling though Amazon or Apple is the same, they always get 10.50$ every sale.
Amazon decides to set the book on sale to the consumers at 12$ because they are happy with a lower margin than 30%. Every sale the publishers gets 10.50$ (wich is fixed) and Amazon 1.50$. Since the publishers always get their 10.50$ they are happy (at least about the revenue per-sale). Apple matches the price according to the MFN clause, so now they too sell the book at 12$, but in this case the publishers get only 8.40$ per-sale from Apple instead of 10.50$. And this makes them definately not happy.
Let's assume now that Amazon wants to use the book as loss-leader. It sets the price at 5$, so for every sale the publishers get 10.50$ and Amazon loses 5.50$. Apple matches the price and through Apple the publishers now get 3.50$ per-sale. If the publishers were not happy before, now they are contemplating suicide...
So the publishers cannot afford the agency model with MFN clause without fixing consumer prices overall, or their revenues would be at the mercy of the lowest bidder. This is to explain the consequences of the MFN clause, the collusion issues and the involvement of Apple in it are another story.
TL;DR: With the agency model the final price affects the publisher's revenues directly. With MFN the wholesale model had to go and prices had to be fixed by publishers, or the whole system would not work (at least from the publishers' point of view).
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Meanwhile, Amazon prohibits independent publishing companies from selling through the iBookstore for a lower price.
In fact, Amazon price-matches ebooks, and then pays the publishers on those reduced prices even though those are not the prices the publishers agreed to.
In other words, Amazon is doing the exact same thing that Apple has been found guilty of doing.
But the DOJ doesn't seem to give a whit about that.
I think that you misunderstand the Agency Model. What it sets is the retail price. The MFN clause was so that Apple would always get the lowest retail pricing from the publisher as any other seller. The publishers required that Amazon also sign new contracts based on the agency model, under threat of losing the publisher's catalog, otherwise as you state, Amazon would just continue low balling pricing.
What the publisher gets is the ability to set retail pricing to maximize profit at any time during the sales cycle; highest at release, and lowering over time. What Apple gets is the lowest pricing of any other retailer, and the same 30% commission. Amazon makes more money, but can't buy marketshare with low pricing. If a small retailer can't create a better purchasing experience for the customer than the larger stores, then it won't be successful, but it certainly wouldn't be successful against Amazon with the wholesale model either.
The agency model levels the playing field for all sellers, and assures that the Amazon's of the world can't use predatory pricing, i.e., selling below cost, to gain market share. This same agency model is how video and music sales have worked out so successfully.
What does the consumer get? Pricing will be driven by demand. Don't like the pricing of a bestseller at release? Then hold off your purchase.
It's a simple case of the right hand not knowing what the left hand is doing. This is quite common with big government.
Yeah. Rereading my post I definitely should have used /s. I did not mean that to be serious.
Apple should not be punished for you not thinking ahead. If you don't like the iBooks store price go elsewhere. Every tablet book store has it's door fee to get in. (That fee being the cost of the tablet itself). It was your choice use iBooks, you made that choice when you bought the iPad. If you didn't like it, should have bought a kindle or something.
The free market is working just fine. No one forced you to buy an iPad. Kindles and others exist.
OK, obviously you never tried one of them. It took a long time to flip pages! It would slow down slower than that at times and appear to hang flipping pages! That kind of activity should be 'natural' for that type of device! YOU BUY IT TO READ BOOKS. READING BOOKS REQUIRES FLIPPING PAGES. It flipped pages like a rock. a BIG rock. Trying to roll uphill... It was a bad joke.
I believe this whole thing came about because it is not seen as a "free market" ... hardware choice is not what is being discussed.
Can we find anymore ways to use the word "draconian" ?
Because it needs to be used at every opportunity, usually incorrectly ,especially when 90% of the public agrees with people using words they don't understand.
Has there ever been a more effective ************** buzzword ? Ever ?
This word is thrown around more than football. And by people less intelligent...if you can believe that !
Don't you think you're being excessively harsh and severe in your criticism of how people use the word "Draconian"?