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Steve Jobs statement in the ipad unveiling video (smoking gun for DOJ?)

E

EbookReader

macrumors 65816
Original poster
Apr 3, 2012
1,190
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This is back on January 28, 2010. A few months before the switch to agency pricing (in April 2010). Video here, fast forward to around 1:45 mark
http://allthingsd.com/20100128/boom...arring-walt-mossberg-plus-a-steve-jobs-cameo/


Transcript:
http://www.businessinsider.com/embed?id=4b62e75f0000000000643282&width=600&height=430

Steve Jobs told Walt Mossberg that Amazon's e-book prices are likely going higher than $9.99.

After Steve presented the iPad, Walt Mossberg managed to talk with him briefly while people were testing the iPad. Kara Swisher filmed them.

Walt asks Steve, "Why should she buy a book for $14.99 on your device when she can buy one for $9.99 from Amazon or Barnes & Noble?"

Steve responds somewhat knowingly, "That won't be the case."

Walt says, "You won't be $14.99 or they won't be $9.99?"

Steve says knowingly, "The prices will be the same."

Then the video cuts, then Steve says, "Publishers are actually withholding their books from Amazon because they're not happy."
Click to expand...


1) What is the publisher motive? (high ebook prices to protect print books)
2) What is Apple motive? (don't want to compete with Amazon on prices because that would result in very low margin)

Agency pricing with MFN clause will

1) increase ebook prices (big plus for publishers)
2) eliminate price competition (big plus for Apple)

How to make Amazon complied:

"Publishers are actually withholding their books from Amazon because they're not happy."

Steve Jobs knew it a few months beforehand that the publishers would team up and go to Amazon and demand the switch to $14.99 or they will all withhold their books.
 
EbookReader said:
Who should the DOJ went after then?
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Usually, in price-fixing cases, it's the content owners who are responsible, not the stores that carry their products. Apple is not a publisher. See e.g. CD price fixing case and the major labels.

Insofar as who the DOJ should "go after" you might start with the parties that have already settled.
 
DOJ is going after whoever Amazon tells them to go after it seems. If Amazon starts making their own TV shows, they'll probably start investigating Apple TV.
 
EbookReader said:
So it's okay for companies to collude and fix prices?
Click to expand...

So you beleve it was okay for Amazon to undercut every publisher and attempt to create a monopoly? By the way, that 'opinion' piece you cited is just that, an opinion piece. I wouldn't put much stock in the possibility of the gov't winning against Apple. Odds are about 01100110 01110101 01100011 01101011 00100000 01101111 01100110 01100110 to 1
 
0m3ga said:
So you beleve it was okay for Amazon to undercut every publisher and attempt to create a monopoly? By the way, that 'opinion' piece you cited is just that, an opinion piece. I wouldn't put much stock in the possibility of the gov't winning against Apple. Odds are about 01100110 01110101 01100011 01101011 00100000 01101111 01100110 01100110 to 1
Click to expand...

there will be NO monopoly on selling ebook. Why not? It can't be a monopoly if it's contestable.

If Amazon buys book at $12 and sell for $20, it will be undercut by a new competitor (for example, a guy in his garage who buy ebook at $12 and sell for $16 on his website/delivery system).

Apple doesn't have a monopoly on selling digital music on Itunes even if it has 98% market share. Why not? Itunes is contestable. If Apple abuses its dominant position by raising price, it will be contested.

Apple buy song at $0.91 and sell it at $1.49.
Someone will jump in and undercut Apple. CONTESTABLE








p.s. what opinion piece I cited? I cited the video

Here's the transcript from the video:

Walt Mossberg: "Why should she buy a book for $14.99 on your device when she can buy one for $9.99 from Amazon or Barnes & Noble?"

Steve Jobs: "That won't be the case."

Walt Mossberg: "You won't be $14.99 or they won't be $9.99?"

Steve Jobs: "The prices will be the same."

Steve Jobs: "Publishers are actually withholding their books from Amazon because they're not happy."




Here's an opinion piece (my opinion on Steve Jobs thought process): Steve Jobs knew that prices of ebook will increase. Steve Jobs also knew that there will be no PRICE COMPETITION because the prices will be the same. Steve Jobs also knew that the publishers will force Amazon to accept the switch from wholesale to agency with no discounting because they will withholding their books.

Amazon loves discounting. In fact, it's their bread and butter. It was no mean feat to force Amazon to agree to give up discounting. But without ebooks to sell, the Kindle will be toast. That's why they caved. Imagine Itunes store without 3/4 of the popular songs.

If 1 out of 6 publishers force Amazon hand, it can survive (it will still have 5 out of 6). But all 5 teams up, it's game over.
 
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EbookReader said:
So it's okay for companies to collude and fix prices?
Click to expand...

Apparently so. Ever notice how gas goes up to the same price at the same time at all your local stations? Nobody does anything about that. If that's not price fixing and collusion, then I don't know what is.
 
Buckeyestar said:
Apparently so. Ever notice how gas goes up to the same price at the same time at all your local stations? Nobody does anything about that. If that's not price fixing and collusion, then I don't know what is.
Click to expand...

Gas does not do that here. Within a 30 mile radius of where I live I can find prices up to 30 cents difference. Most of the time I will see 2 to 5 cents difference on stations across from each other. I just paid $3.63 a gallon as apposed to $3.89 a gallon.
 
Not only do I not see a smoking gun, I don't even see a squirt gun. It's easy to construe Jobs words as marketing bluster, something he was famous for mastering. And when you look to the actual eBook marketplace as it is today it's still very fragmented and Amazon, not Apple, still holds the pricing power. Also Apple has never made any attempt to ban Kindle or any other specialized reader on the App Store. So Jobs words here change zero. DOJ had a weak case, still has a weak case.



Redjericho said:
Definition of a free market economy.
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Maybe in the the Guilded Age or some fantasy Anarchy World, but in 2012 even libertarians don't support collusion and price fixing as a legitimate practice. A free market has to be FREE for all to have a chance to succeed on their own merits, not just a select corporate oligarchy who can slyly build an invisible barrier.
 
EbookReader said:
there will be NO monopoly on selling ebook. Why not? It can't be a monopoly if it's contestable.
Click to expand...
please look into the history of how things were before, when the publshers were being raped by Amazon. I am guessing English is your scond language, so I will explain that my other comment was past tense. Not now,but in the past.

Here is what Amazon was doing, before the iBookstore. Sound similiar to a certain Kindle Fire device?
In November 2007, at a news conference to introduce Amazon’s Kindle e-reading device, CEO Jeff Bezos revealed that Amazon would sell newly released e-books for $9.99, below the wholesale price.

“When you sell books at a loss, by the millions, to corner the market, you’re not interested in competing,” said Richard Russo, a Pulitzer Prize-winning novelist. “You’re interested in burying your competitors and then burying the shovel.”
Click to expand...

EbookReader said:
p.s. what opinion piece I cited? I cited the video.
Click to expand...

Incorrect. You cited the business insider piece, you only linked to the vid. And the business insider article was laced with anti-Apple barbs.

In the end, everything is better than when Amazon had a near monopoly. Hell, Borders went out of business thanks in no small part to Amazon.
 
0m3ga said:
please look into the history of how things were before, when the publshers were being raped by Amazon. I am guessing English is your scond language, so I will explain that my other comment was past tense. Not now,but in the past.

Here is what Amazon was doing, before the iBookstore. Sound similiar to a certain Kindle Fire device?




Incorrect. You cited the business insider piece, you only linked to the vid. And the business insider article was laced with anti-Apple barbs.

In the end, everything is better than when Amazon had a near monopoly. Hell, Borders went out of business thanks in no small part to Amazon.
Click to expand...

there is nothing wrong with selling 3-4 books below cost while making a profit on the other 97 ebooks you sell.

It's a loss-leader strategy and has been used for decades by stores. Put a few DVDs on sales (at a loss) in order to get people into the store. While there, they also browse and buy other profitable DVDs.

Amazon also do this for many years now with physical books. Sell a few print books at a loss but make money from other print books. Did people complain 10 years ago when Amazon did this?





Amazon has consistently been profitable selling ebooks. (per DOJ complaint).

Apple could compete with Amazon on price. In fact Apple is best suited for it (high cash reserves, high profit margin on hardware etc..). Sure, selling ebooks will result in low margin when you go head to head with Amazon. But that's price competition and good for the consumers.

As ebook consumers we want booksellers to COMPETE. When stores compete, consumers win.
We don't want publishers (whose motive is to slow down ebook adoption) to COMPETE. Why? It is in their best interest not to, by keeping ebook prices high in order to protect their $25 hardcover business.
 
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Before: price competition between booksellers (Kindle, Nook, Kobo, Sony etc..)
After: no price competition between booksellers (because "the prices will be the same")


Without price competition, prices tend to go up....
 
I don't see this as price fixing any more than almost every Xbox and PS3 game coming out priced at $59.99.

The only difference here is a) one company, one target and b) $70 billion in cash sitting untaxed in offshore havens.


Follow the money.
 
ReallyBigFeet said:
I don't see this as price fixing any more than almost every Xbox and PS3 game coming out priced at $59.99.

The only difference here is a) one company, one target and b) $70 billion in cash sitting untaxed in offshore havens.


Follow the money.
Click to expand...

What you miss is that the B&M and online retailers will and can sell that game for $39 one week and $49 the next, etc.
If Apple was in that business, the game wouldn't be a penny less then $59 for the life cycle of the game.
Please don't give them anymore ideas!
 
racer1441 said:
No one. How about the government butts out.
Click to expand...

+1 on this. I've seen the $12.99 books and up and passed on them. I hold out until the price drops to $7.99 and under, or just buy the physical book on ebay. My point is that the market should take care of the Amazon's and the Apples, if people wish to pay the stated price its up to them, if not the company will be force to lower prices.
 
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