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Settlement over e-Book Pricing to Undo Apple's Agency Model for Pricing?
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no they can't. Because they don't set the prices. the publishers do.
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Not exactly. Apple merely said that publishers in ibooks can't set the price lower on other stores. So it can't be $12.99 on ibooks and $9.99 on Amazon.
but they are free to set the same price everywhere.
And this is the problem with the agency model. Every store sells at the same price, so there's no incentive to look elsewhere. The original method allowed for the retailer to set the selling price, but the publisher was still paid the wholesale price. i.e. Amazon would pay $9.99 for a book but could sell it for $6.99 if they didn't mind losing the money.
I think the best method is the Harry Potter method. J.K. Rowling has cut out the middleman completely and is selling directly to consumers. Neither Amazon nor Apple are getting a cent out of that deal.
As for the people saying they hope Apple squashes Amazon in terms of book sales, I think that would be very bad for everyone. At least with Kindle books you can read them on any platform. With iBooks, if you ever switch from an iPad or an iPhone to something else, you can't read any of your books. I think this is a problem.
If, as suggested by the article, the agency model dies, then Apple will set the retail prices.
The Potter method is direct to retail only. Why isn't the justice department attacking that? They are price fixing (her own product) and not only keeping zero pricing out, but keeping retail stores out.
The "Agency model" does not at all restrict the sellers to sell at whatever price they want, but sets the wholesale price for that transaction. If there was a contract provision preventing the dealer from buying at 70% of retail and selling at $0 on a promotional basis I would suggest voluntarily redacting that. But despite that, having the government use "suggestive force" to prevent it is itself unlawful.
But having a firm wholesale price does not prevent a discounted retail price.
The model the government openly encouraged and in no way enforced against was the most destructive model of all. The Wal-Mart model. They cut out the wholesale distributor who buys from the manufacturer at their stated price and sells to every dealer nationwide at a fixed markup. The dealer sells to consumers at a fixed markup. That's the way it was done for decades. The margins are 40/25 BTW.
Wal-Mart buys at distributor price and sells to consumers at wholesale, capturing only the middleman markup, till all local dealers went out of business then they increased their prices to a point between distributor and retail.
Then as if that was not enough they pressured manufacturers in USA to manufacture in China at lower cost or be canceled. They did. Loss of USA jobs. Then once Chinese manufacturers were trained by USA manufacturers and IP owners how to make the product, Wal-Mart exploited China's lack of IP respect to have knockoffs made of ALL THOSE PRODUCTS. That's what you now see on Wal-Mart shelves. That's why some people hate Wal-Mart.
The original manufacturers are largely out of business and their employees on the street.
Government, we're here to help you.
Wal-Mart, low prices, every day.
Not many people are old enough to remember the whole time line of events.
Rocketman
The "Agency model" does not at all restrict the sellers to sell at whatever price they want, but sets the wholesale price for that transaction. If there was a contract provision preventing the dealer from buying at 70% of retail and selling at $0 on a promotional basis I would suggest voluntarily redacting that. But despite that, having the government use "suggestive force" to prevent it is itself unlawful.
But having a firm wholesale price does not prevent a discounted retail price.
The model the government openly encouraged and in no way enforced against was the most destructive model of all. The Wal-Mart model. They cut out the wholesale distributor who buys from the manufacturer at their stated price and sells to every dealer nationwide at a fixed markup. The dealer sells to consumers at a fixed markup. That's the way it was done for decades. The margins are 40/25 BTW.
Wal-Mart buys at distributor price and sells to consumers at wholesale, capturing only the middleman markup, till all local dealers went out of business then they increased their prices to a point between distributor and retail.
Then as if that was not enough they pressured manufacturers in USA to manufacture in China at lower cost or be canceled. They did. Loss of USA jobs. Then once Chinese manufacturers were trained by USA manufacturers and IP owners how to make the product, Wal-Mart exploited China's lack of IP respect to have knockoffs made of ALL THOSE PRODUCTS. That's what you now see on Wal-Mart shelves. That's why some people hate Wal-Mart.
The original manufacturers are largely out of business and their employees on the street.
Government, we're here to help you.
Wal-Mart, low prices, every day.
Not many people are old enough to remember the whole time line of events.
Rocketman
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The Government is dead wrong on this one.
This wholesale model is not a requirement and should not be dictated by the government. This is what I call the Walmart model where huge companies are allowed to use someone else media to run other companies out of business by selling below cost. This makes it impossible for anyone other than another billion dollar company to participate in the free market. Once they have kill all of the smaller dealers they are all that is left and they can charge what ever they want. By decreasing the amount of competition the number of available outlets for these items becomes limited and someone who would never go to Amazon's website may not even be exposed to the media which increases advertising cost to the producer as well as limits the number of releases published.
This wholesale model is not a requirement and should not be dictated by the government. This is what I call the Walmart model where huge companies are allowed to use someone else media to run other companies out of business by selling below cost. This makes it impossible for anyone other than another billion dollar company to participate in the free market. Once they have kill all of the smaller dealers they are all that is left and they can charge what ever they want. By decreasing the amount of competition the number of available outlets for these items becomes limited and someone who would never go to Amazon's website may not even be exposed to the media which increases advertising cost to the producer as well as limits the number of releases published.
The problem is when they do this constantly like they do, they prevent any other options for outlets. Would you offer a product that you know your largest competitor is selling them for half of what you could. You would be out of business before you start. The you have the creative partners who sell their products on their websites being undercut constantly by a supposed partner. It does devalue their product everyone wants something for nothing. I wish all those that support this method would go to work one day to find out that since a competing company's employees are willing to work for half your pay they are going to lower your income.
Thats what happens when an artist can't sell his books at the price agreed to because Amazon decided to undercut him.
People here don't seem to get the different models.
The WHOLESALE model that Amazon prefers is essentially the same as any other good you purchase at a store. The store pays the wholesale price and then sells it at whatever price they want. MSRP's are still set by the manufacturer but the retailer can choose to offer any kind of discount they want, for whatever reason. For example, a book publisher (or in this case an ebook publisher) could set their MSRP at $15.99, and charge a wholesale price of $11.19 to the retailers. But the retailers are still free to charge a lower price if they want. That's the beauty of competition. In many cases, Amazon was willing to charge only $9.99 for the ebook, taking a loss on the sale in order to get customers to the store and potentially buying other items.
The AGENCY model that Apple uses for the iBookstore (as well as the App store) essentially takes the retailer out of the equation. The publisher (or app developer) sets their own pricing, determines when and if something goes on sale, and Apple gets a cut for acting as the seller's "agent" in the transaction (processing payments, allowing the item into their store, etc.) In the above example, the publisher could set it's price at $15.99, and Apple would pay them 70% ($11.19) for each one sold -- exactly the same as the wholesale model. The difference is that the only one who could choose to put an item on sale is the publisher -- Apple isn't acting as a traditional retailer, merely as the publisher's agent.
So, while the publisher makes the exact same amount in both scenarios, the agency model produces higher prices for consumers -- Apple's 30% can't be changed, while Amazon, under the wholesale model, can sell books at a loss if they want. The publishers can complain all they want about Amazon's pricing "devaluing" their product (despite the fact that they'd receive the same amount of money for each copy, and, logically, Amazon is going to sell a lot more copies at their lower price to consumers), but, really, publishers are just scared of Amazon becoming even more powerful -- eventually demanding lower wholesale prices. This is the way Walmart behaves. They become far and away a manufacturer's biggest retailer, then start demanding price cuts once the manufacturer can't survive without them.
I don't know if Amazon plans to do that or not, but I do think Amazon has a much better grasp of what electronic content (without any production and distribution costs that applied to physical items) can sell for, than do the book publishers. In other areas (particularly music), it was Apple who had to tell the "don't-get-this-whole-internet-thing" executives that their product wasn't worth what they thought it was, but, by selling at a lower price, they could sell far more product, and make more money in the end.
Anyway, since I can read Kindle books on my Kindle, iPad, Android tab, MacBook Pro and Air, and desktop, I'm looking forward to prices going back down. Apple makes a ton of money in other areas -- they don't need their bookstore to be super-profitable in order to be the most successful company on earth.
The WHOLESALE model that Amazon prefers is essentially the same as any other good you purchase at a store. The store pays the wholesale price and then sells it at whatever price they want. MSRP's are still set by the manufacturer but the retailer can choose to offer any kind of discount they want, for whatever reason. For example, a book publisher (or in this case an ebook publisher) could set their MSRP at $15.99, and charge a wholesale price of $11.19 to the retailers. But the retailers are still free to charge a lower price if they want. That's the beauty of competition. In many cases, Amazon was willing to charge only $9.99 for the ebook, taking a loss on the sale in order to get customers to the store and potentially buying other items.
The AGENCY model that Apple uses for the iBookstore (as well as the App store) essentially takes the retailer out of the equation. The publisher (or app developer) sets their own pricing, determines when and if something goes on sale, and Apple gets a cut for acting as the seller's "agent" in the transaction (processing payments, allowing the item into their store, etc.) In the above example, the publisher could set it's price at $15.99, and Apple would pay them 70% ($11.19) for each one sold -- exactly the same as the wholesale model. The difference is that the only one who could choose to put an item on sale is the publisher -- Apple isn't acting as a traditional retailer, merely as the publisher's agent.
So, while the publisher makes the exact same amount in both scenarios, the agency model produces higher prices for consumers -- Apple's 30% can't be changed, while Amazon, under the wholesale model, can sell books at a loss if they want. The publishers can complain all they want about Amazon's pricing "devaluing" their product (despite the fact that they'd receive the same amount of money for each copy, and, logically, Amazon is going to sell a lot more copies at their lower price to consumers), but, really, publishers are just scared of Amazon becoming even more powerful -- eventually demanding lower wholesale prices. This is the way Walmart behaves. They become far and away a manufacturer's biggest retailer, then start demanding price cuts once the manufacturer can't survive without them.
I don't know if Amazon plans to do that or not, but I do think Amazon has a much better grasp of what electronic content (without any production and distribution costs that applied to physical items) can sell for, than do the book publishers. In other areas (particularly music), it was Apple who had to tell the "don't-get-this-whole-internet-thing" executives that their product wasn't worth what they thought it was, but, by selling at a lower price, they could sell far more product, and make more money in the end.
Anyway, since I can read Kindle books on my Kindle, iPad, Android tab, MacBook Pro and Air, and desktop, I'm looking forward to prices going back down. Apple makes a ton of money in other areas -- they don't need their bookstore to be super-profitable in order to be the most successful company on earth.
Don't look at it that way. Look at it as opening the market to give another retailer a chance to really compete with Amazon fairly.
Barnes & Noble could do these things just as well... or Target.. or Wal-Mart or any other merchant out there. If they don't fight back, then it's their own stupidity. B&N still wants to charge $25 a year for a discount card rather than extend good sales prices to every customer to drive traffic to their brick and mortar stores or online store. This is why I generally go to amazon. They don't charge me to get a discount... and when you have to buy a discount card, it takes awhile to make that $25 investment back.
Apple pushed this because they knew they had no competative advantage and ibooks would be a flop with their lack of book buying power in the whole sale arena. B&N and Amazon can always get better pricing because they buy a larger volume of books. So if you can't compete fairly, do something dirty and appeal to the greed of your competitors suppliers.
Sometimes you can get the pb brand new for less than the ebook... book stores are allowed to have sales on those.
Um, because it's less capitalism and more communism which is why these practices are illegal in the United States.
Why not charge everyone $10 for a gallon of milk... by your argument, wouldn't that benefit everyone because we're paying the same price? And your points argue against your own statement. *palm slap* Yes, so an ebook costs virtually nothing to produce as you just illustrated... and yet you can buy printed books cheaper most of the time. Stores can have sales to drive traffic with them.
Again price fixing is communism at heart... I'd tell you to move to Russia if that is how you feel, but even they realized what a bad idea it was to not have a free market.
You realize that 80% of the items on sale at your local grocery store every week at being sold at a loss or a near break even to get you in the door to hopefully buy higher margin merchandise. Would you like super markets to stop have weekly sales??? Price fixing IS NOT SUBJECTIVE.
Loved and agreed with everything you said, but the publisher does not make the same with both models.
The publisher makes MORE MONEY under the agency model. The margin on a paper book is usually around 50% give or take depending on some factors, more if a store agrees to not be able to return inventory back to the publisher.
That margin is based on a fixed cost... ebooks technically have no fixed cost. They are virtual inventory.
If a book retails for $19.99 under Agency the publisher gets $13.99
Under the basic wholesale model they get $9.99... but out of that $9.99 there are printing and shipping costs that do not exist with the ebook. This in turn makes the ebook an even bigger money maker for the publisher. Now factor in that they don't have to pay labor costs for workers in warehouses, or printers labor (not just the raw cost of printing) and the ebook becomes even more attractive.
This is where the publishing industry needs smack. Readership has been declining every year for almost two decades. They finally have a chance to reignite interest in reading and generate sales, and they get greedy.
What the publishing industry should be doing is promoting ebooks as a better value, encouraging them to be sold cheaper than paper books (because they would make twice as much profit selling those cheaper) and sell a larger volume of books. It would incense people to want to adopt ereaders. The only group this is bad for are brick and mortar book stores.
Currently this system is bad for everyone but the publisher.
So many faulty assumptions...
So many posts on ebooks, pricing, and models for payment seem to be based on some significant lack of understanding of the publishing industry.
Many of the complaints about ebooks being overpriced either claim or imply that because there isn't a physical book to print and ship, but a single electronic file to copy and download, the prices should be substantially lower. The reality is that cost of the physical book is actually a rather small portion of the purchase price. The biggest expenses for any publisher are those related to acquisitions, editing, author royalties, and production (that is, getting the book ready for the press or into ebook format). Producing an ebook doesn't remove any of these. In fact, producing an ebook can often increase the production costs as a publisher needs to prepare both for print and for multiple ebook formats/devices/sales channels. The low prices set by Amazon when they introduced the Kindle were distortions of prices in many cases, as many titles were being sold as ebooks for at or less than publishes were being paid for the sales of their content.
Books are almost never sold at a true wholesale model. Books are not sold at a set wholesale price by the publishers, with retailers then establishing their own markup above that price. This is the system that allows so many products to always have street prices significantly below the MSRP. In the book publishing industry, the publisher has always set the price. Retailers and distributors purchase the books from the publisher at a discount from that price. Most books in brick and mortar stores are sold at the publisher's resell price. The discount allows the bookseller to cover their costs and provide some margin for profit. Virtually every printed book you buy now will have a barcode on the back that includes the retail price of the book. It's required by Amazon and Barnes & Noble. So, yeah, the publishers do, and long have, set the price on print books. The complaints about the agency model seem to insist on applying different standards to a new format.
Sure, sometimes booksellers pass along a portion of the discount or even sell an item at a loss. This is a key aspect of Amazon's business model, but in an effort to provide these discounts, and using their huge weight in the book market, Amazon had driven the discounts up and the revenue for publishers down. Maybe the big publishing giants can have some real pull for their terms with Amazon, but most publishers have no real choice but to accept terms dictated by Amazon or not have their books available there. Small and mid-sized publishers simply can't afford to not be on Amazon.
So many posts on ebooks, pricing, and models for payment seem to be based on some significant lack of understanding of the publishing industry.
Many of the complaints about ebooks being overpriced either claim or imply that because there isn't a physical book to print and ship, but a single electronic file to copy and download, the prices should be substantially lower. The reality is that cost of the physical book is actually a rather small portion of the purchase price. The biggest expenses for any publisher are those related to acquisitions, editing, author royalties, and production (that is, getting the book ready for the press or into ebook format). Producing an ebook doesn't remove any of these. In fact, producing an ebook can often increase the production costs as a publisher needs to prepare both for print and for multiple ebook formats/devices/sales channels. The low prices set by Amazon when they introduced the Kindle were distortions of prices in many cases, as many titles were being sold as ebooks for at or less than publishes were being paid for the sales of their content.
Books are almost never sold at a true wholesale model. Books are not sold at a set wholesale price by the publishers, with retailers then establishing their own markup above that price. This is the system that allows so many products to always have street prices significantly below the MSRP. In the book publishing industry, the publisher has always set the price. Retailers and distributors purchase the books from the publisher at a discount from that price. Most books in brick and mortar stores are sold at the publisher's resell price. The discount allows the bookseller to cover their costs and provide some margin for profit. Virtually every printed book you buy now will have a barcode on the back that includes the retail price of the book. It's required by Amazon and Barnes & Noble. So, yeah, the publishers do, and long have, set the price on print books. The complaints about the agency model seem to insist on applying different standards to a new format.
Sure, sometimes booksellers pass along a portion of the discount or even sell an item at a loss. This is a key aspect of Amazon's business model, but in an effort to provide these discounts, and using their huge weight in the book market, Amazon had driven the discounts up and the revenue for publishers down. Maybe the big publishing giants can have some real pull for their terms with Amazon, but most publishers have no real choice but to accept terms dictated by Amazon or not have their books available there. Small and mid-sized publishers simply can't afford to not be on Amazon.
It is pretty freaking ridiculous to pay full retail price for a book that I downloaded essentially for free and that potentially hundreds of people were downloading at the same time I am downloading my copy.
The 'publisher' doesn't pay for the physical printing of the book, the physical shipping and warehousing of the book, or the many varied layers of middlemen and other flunkies in the process. Instead, the 'publisher' pays for a site to house the 'data' and possibly a charge for the transfer of the 'data', and one mustn't forget Apple's standard 30% ransom...
An electronically distributed book ('data') shouldn't cost as much as the retail price of any book IMO...
EDIT: OK, Drift in paper form is currently $14.55 and $12.99 in download form at Amazon.com. It's $12.99 in the iBookstore too, which is what the suit is about... Still, $12.99 for a 'book' which is just 'data' is kinda steep...
The 'publisher' doesn't pay for the physical printing of the book, the physical shipping and warehousing of the book, or the many varied layers of middlemen and other flunkies in the process. Instead, the 'publisher' pays for a site to house the 'data' and possibly a charge for the transfer of the 'data', and one mustn't forget Apple's standard 30% ransom...
An electronically distributed book ('data') shouldn't cost as much as the retail price of any book IMO...
EDIT: OK, Drift in paper form is currently $14.55 and $12.99 in download form at Amazon.com. It's $12.99 in the iBookstore too, which is what the suit is about... Still, $12.99 for a 'book' which is just 'data' is kinda steep...
While I agree with you that a single massively powerful retailer (like Walmart) can cause a whole host of problems with the wholesale model, you are completely misrepresenting the agency model. (In fact, what you call the agency model, actually is the wholesale model.)
In the agency model, there is NO wholesale price (because there is no typical manufacturer -> retailer -> consumer relationship. There is a manufacturer -> agent -> consumer relationship. The difference is important. The agent model essentially makes the manufacturer the retailer. The prices they set are the prices that consumers have to pay. Consumers buy their products from an agent, but that agent only gets a commission (a percentage cut) of whatever the manufacturer chose to charge. Think about travel agents (back when they existed), or ticket agents (today). I can go to my local grocery store and buy tickets to various events because they are a Ticketmaster agent. But Ticketmaster is actually the one selling the ticket. They set the price and the agent (the store I'm at) doesn't have any ability to change that. In return for being the "agent" for Ticketmaster, the store gets some kind of commission for the sale, but Ticketmaster is the seller.
The HUGE problem with that model is that it's MASSIVE vertical integration -- and vertical integration for the sole purpose of charging consumers more money. Hollywood used to operate that way. They made the movies and owned most cinemas. Therefore, the big movie studios could control the price of tickets. The big book publishers were wanting to create a similar system, where they could control the actual price consumers paid. The courts broke up Hollywood's price fixing for the same reason they are now breaking up the book publishers'.
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You make a lot of good points. I just want to point out that I wasn't comparing the wholesale price of physical books (which is around 50% or MSRP) to the agency price of ebooks (with the agent taking 30%). For various reasons the wholesale price of ebooks, though variable, is approximately 70% of ARP -- average retail price -- anyway. Also, I was just trying to explain by using the same numbers for simplicity. In my scenario, the ebook wholesale price was 70% of ARP under the wholesale model to make it easier to see that, all things being equal, the agency model is just a way of price fixing with no benefit to consumers.
Thanks.
One other thing to point out. I mentioned before that the App Store also uses the agency model -- and I should point out, that in that case, it may be beneficial to customers. The reason is this. There are thousands of different producers of apps, and many of them create apps designed to do the same things. This gives you thousands of stores all competing against each other, driving down prices incredibly fast. With media such as ebooks, you have 6 BIG publishers, and only one of them can publish any particular book. There's no real competition. And when they decide to start price-fixing (as they have done), they start to operate as a cartel, with absolutely no mechanism to drive prices down.
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Actually, you are the one confusing capitalism with communism and socialism. Antitrust laws are inherently anti-capitalistic, because they undermine contract law. If publishers want to coordinate their pricing, why shouldn't they? You don't have to buy their books.
As for Apple, they were a market upstart, and they did what was necessary to enter the market. They couldn't compete on price, so they used another competitive advantage, which was their existing iTunes pricing model.
There is nothing inherently wrong with the agency model. Newspapers use it in the US. You don't see 7-11 charging $0.50 for the local paper to undercut the $0.75 charged at the newsstand. It's just that the wholesale model had become entrenched in the book market. Apple sought to change that, and publishers liked it and struck deals with Apple.
There was nothing stopping Amazon from refusing to play ball. They could have told the publishers that their choice was between Apple or Amazon. Instead, they decided to let the DOJ do their bargaining for them.
Wait, so you are saying some one should be forced to go to some one else to sell their own product?
Are you kidding me?!!!
And yes I support the Potter method too. Especially since for us consumers it means we aren't stuck with using whatever software one company deems is fit if we want to read a book. We can choose whichever software we would like.
I'd rather pay for the e-book reader and choose the vendor based on best deal rather than have to consider if I like their ebook reader.
The rest of your post I don't have much issue with honestly. It has some good points. But I think you're being ridiculous on the first part.
So you don't buy ebooks from Amazon then? Because Amazon's ebooks are DRM protected and can be read on Amazon software only, if I'm not mistaken.
For those who are for the publisher's right to set their own price, what do you feel about the limitation set by Apple that publishers can't have a lower price outside the Apple store? I mean its their books, why can't they set a lower price somewhere else. How come Apple gets to make that rule? Lets say a publisher has a popular book that they want to sell in as many markets as possible. They can sell a lot more through Amazon, so why can't they sell on Amazon for slightly less? Also, let say they have their own website for selling ebooks. With no Apple or Amazon cut, how come they can't have a lower price on their own site? Amazon and Apple offer access to a consumer market, so they get a cut, I get that. But if publishers can get consumer access elsewhere also, why does Apple have a say on what minimal price they have to sell at?
Self-Publishing the Future
No matter what's happens with this settlement publishing companies are in trouble. More authors are simply self-publishing using e-books and Amazon and Barnes and Noble. Why should authors give the publishing companies such a large percentage when they can make more money selling their books online for $3-5. With self-publishing and e-books the authors win, the retailers win, and the readers win. The only losers are the publishing companies.
No matter what's happens with this settlement publishing companies are in trouble. More authors are simply self-publishing using e-books and Amazon and Barnes and Noble. Why should authors give the publishing companies such a large percentage when they can make more money selling their books online for $3-5. With self-publishing and e-books the authors win, the retailers win, and the readers win. The only losers are the publishing companies.
It depends on how you want to define capitalism. Typically, a capitalist economy is defined in two parts: 1) Greed - everybody trying to make as much money for themselves as possible, and 2) open and fair markets that encourage competition, benefiting consumers. You've ignored the second part. In the agency model, in a market with only a few big players, the big players can collude to price-fix, and that is DEFINITELY NOT supposed to be a defining feature of capitalism.
In fact, left unchecked, it shows a huge flaw in the capitalist model. In a market with many players, it rarely develops. In a market with few players, it can develop, but should be solved in the marketplace by a new market entrant who undercuts the existing players. The only time the government typically gets involved is when there is a HUGE market with only a few HUGE players, and a cost of entry that is far too high for a new market entrant to be able to enter the market. At that point, the government taking action against collusion may very well be the only way to reestablish correct market forces.
That's what they did here.
Newspapers use it in the US? Not around here at least. Newspapers most definitely use a modified wholesale model. The modification is that retailers only get charged based on the number of papers they sold each day, not on the number delivered at the beginning of the day. Obviously, that is because a newspaper has essentially no resale value after the day it is printed. So, it's in the newspapers interest to give retailers more papers than they are likely to sell in order to not lose sales by not having enough papers.
Having said all that, in my state vending machines (including those that dispense papers) do not have to collect or submit any sales tax. They sell the daily paper for 50 cents. At many retail stores though, the price becomes 53 cents with tax. The 7/11 by my house, however, charges 47 cents for the daily paper and collects 3 cents tax in order to compete with the machines. Also, on Sunday they give you an extra 50 cents off the paper if you purchase a certain amount of other goods in their store. That's competition, and its good for everyone.
If a manufacturer wants to set a MAP (minimum advertised price) and enforce it through contract with retailers (as Apple does with their hardware), they are free to do so. The effects of that can somewhat mimic an agency model without limiting the rights of retailers. An Apple authorized retailer can sell you a new MacBook Pro for a dollar if they really want to (though most salespeople don't actually know the law on minimum advertised pricing, and will tell you Apple won't let them), but they won't. Aside from losing a fortune, they have entered into an agreement with Apple not to "advertise" the machine at a price below Apple sets. And if you can't advertise below a set price, there's little reason to sell at a lower price -- unless it is to save a sale that you otherwise would lose. My guess is that the book publishers will try to do this with Amazon and their ebooks... but on the internet, a retailer can simply not show you the price until checkout (or in your cart) -- so their still tends to remain more incentive to offer a better deal than at physical retailers.
it is not clear to me what the anticompetitive part is:
- is Apple insisting that the retail price be the same in other stores? or
- is apple insisting that the wholesale price that they charge stores like Amazon to be the same as the effective wholesale price at the iBookstore?
You're wildly misrepresenting the agreement between Apple and the publishers. Apple doesn't "have a say on what minimal price they have to sell at". They just ask that whatever that lower price is, Apple gets it. And if publishers had a satisfactory alternative access to market, they wouldn't have cut a deal with Apple in the first place. The problem here is not about models, it's that the players are engaging in abusive practices in the implementation of those models. Amazon was abusing the wholesale model when it was the only game in town and then publishers, when they got into the agency model, priced their ebooks abusively. Had the publishers priced books reasonably after cutting the iBooks deal, there wouldn't have been DOJ/EU investigations to begin with.
I wish it was that simple. The fact is that nothing never prevented any author to forego publishers, be it in print or in ebooks. Yet, only a tiny fraction of authors decide to go for self-publishing and among those, few do so successfully. Despite all their shortcomings, publishers offer something crucial to authors: advertisement and promotion budgets.
Just sounds like someone Amazon is backing this because it doesn't benefit anyone except Amazon. Seems like whoever publishes the books should be the ones that set the prices. Writers should get pissed. Before long your e-book will be selling less then a dollar....
You were not overcharged. You purchased the book at the advertised price. That is no one's fault but your own. I don't care if you accept that or understand this simple basic principle of economics that 5 year olds understand, but you don't deserve anything from someone else for an agreement that you made freely and without deception.
jW