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U.S. Department of Justice Sues Apple and Publishers over E-Book Pricing

Boston007 said:
I can't believe how much ******** is in this post. Learn to use lose/loose proper PLEASE.

Collussion is better than struggling to stay in business? Collusion just like conspiracy is ILLEGAL. Price fixing is ILLEGAL.

Did you have this same argument when the music industry was bitching about digital music? Were you willing to pay $16 for a digital album, the same price of a physical CD?

The industry is CHANGING. The publishers need to ADAPT to the changing technology or they will die. It's the evolution of business!

You're precious Apple and iTunes removed MANY MANY music businesses from the market. But that was OK right?

The hypocrisy in your post is truly astounding.

Of course it's terrible when people lose jobs, but the industry needs to adapt.
Just like people were NOT willing to pay a high price for music, the same will be true for SOME ebooks. Maybe if publishers charged a good price on a phsyical book that INCLUDES the ebook people would buy into that. There are many other options they can pursue.

To jusitfy collussion and price fixing is ridiculous.
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Yep, agree 100%

To say to allow price fixing and collusion so a company can stay in business is just amazing to me and proves what P.T. Barnum said is so true.

The publishing industry is in trouble the same way the music industry was.
They move at a glacial pace to change to market demands.

They were so lucky to have their guardian angel, Steve Jobs to allow them to continue their outdated business model for a couple of years but now the chickens have come to roost.

And the cost of a physical book is pennies?

I can guarantee you that the cost difference of producing, designing, printing and shipping a hardcover book compared to a digital version is huge.
 
section31 said:
How quickly we forget the lessons learned in recent years.

Didn't we already go through this with physical/digital versions of music, movies and software?

The digital distribution model lends itself to lower prices from a manufacturing standpoint. This is not even a debatable point. Fixing the prices at levels equal or above the cost of physical media is reprehensible. Apple colluding with the publishers to do this in a move to hurt all who sell e-books (specifically Amazon) is one that hurts the consumer.
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Exactly
 
Something wrong with this

There is something majorly wrong with this. The government should not be involved in controlling the business world like this. The constitution provides no instructions to do so.
RP 2012!
 
OllyW said:
That article conveniently omits any reference to Apple insisting that publishers are not allowed to let rival retailers sell the same book at a lower price.
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Straight from the article: "Government antitrust lawyers interpret these comments as a smoking gun proving collusion among Jobs and the top publishers".

That's the question: does a smoking gun exist?

I also recommend Joe Wikert's article on oreilly.com on the state of e-book publishing. O'Reilly actively discusses the publishing industry and holds multiple conferences about publishing annually.
 
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psonice said:
How can they get this so *utterly* wrong?! They should most definitely not be suing apple. They should be suing apple, amazon, and all of the publishers, and their intended outcome should be this: DRM free ebooks that can be bought at any store and read on any device.

As it is, I simply refuse to buy any ebooks. If I buy from apple, and in 5 years I no longer have an apple device, what happens to the ebook? I can't read it. What happens if apple no longer supports ebooks (don't laugh - this happened with MP3s, some people lost entire collections because they bought DRM'd music and the company dropped support). Most of all: what happens when I want to lend (or give) a book to a friend? What happens when I've finished with it and give it to the charity shop?

I wouldn't mind the DRM if it was standardised across all companies + devices, so long as it gave me confidence the book will still work in 10 years and that it has the same features as a paper book (i.e. I can lend it, give it away, or sell it 2nd hand).

Prices would be much lower if that happened, because if I could buy the books at either amazon or apple or wherever else and read them on a tablet, a kindle or a desktop computer... I'd shop at the cheapest place, and they'd have to compete on price.
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One word, "Calibre.":)
 
They should be taking care of the lock ins on the ebook market as well.

If I want something from amazon I need a kindle.

If I want something from apple I need a iOS device.

If I want something from barnes & noble I need a nook.

I don't need special glasses from different companies to read the print versions why should the ebooks be any different?

Now Im not totally against special formats for certain devices to take advantage of some special feature a certain ebook device provides but I think there should be a generic universal format. . . Like txt files are to microsoft word files.
 
jonnysods said:
Thank you big brother.

I'm glad they don't waste time with time wasting issues such as collusion of gas prices at the pumps, and they deal with important things like book prices.
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It seems that whenever some government agency does anything effecting the electronics world, posts like the above appear criticizing the action and pointing out that there are more important issues that should be addressed instead.

While there are always other issues to be addressed, issues such as book publishing and pricing are, for many people, important subjects.

It appears that, for some, anything touching the computer industry, computer security, the internet, competition, and the like are not to be the purview of government investigation because there are other issues of greater importance.
 
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So much misunderstanding of how things work.

1. Apple makes practically nothing on eBook sales, any percentage they take gets ate by costs of running their store. They have always said iTunes Stores don't make any real profit, only enough to keep it from becoming a giant hole in their pockets. Their goal is to sell iPads, not books, so by making it as attractive to publishers as possible, they have more books, and it becomes more attractive to iPad buyers.

2. Amazon has a huge bargaining chip by being the biggest source of books on the internet. Their only way to make money off book sales is to make a profit on them. So they actively put their fist down on publishers and buy bulk amounts and price them as cheaply as possible while still making their percentage. Their goal is to sell as many as possible to make up for the deals they made with publishers. They have more leverage than Apple because of their giant market dominance in selling books. They also sell physical copies of the books, so they have a unique bargaining position with publishers.

3. Both Apple and Amazon put DRM on their eBooks, which means they BOTH are trying to create a monopoly. If anyone tries to claim that what the DOJ is doing somehow breaks up a monopoly in the eBook market, they are totally missing the point consumers are being locked into a platform. Sure in the case of Amazon they offer Kindle on tons of devices, but they still control which devices get it, and could at any time remove devices (like the iPad) if selling their own devices (like the Kindle Fire) was more important than selling books. As I said in #2, that isn't likely to happen based on their current model, but it's still a scary thought.

4. Publishers are still the biggest issue here, they will always be screwing over the future of books, and have been for so many years now. I think Apple really is a minor part of the DOJ filing, but of course will get the majority of the media attention because they are Apple.

Also, stop throwing around the word monopoly like you are Hasbro trying to sell board games.
 
Small White Car said:
And in that future Amazon will tell your mother what she has to charge. The government is apparently suspicious of a method whereby your mother can go online and set her own prices.

Shouldn't your mother be able to sell her book at whatever price she wants to? I'm concerned that the DOJ seems to think that's a bad idea.
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And why she won't sell the price at the price she wants?
 
YAY!

Part of the reason I bought my wife an iPad was for a reader (not knowing anything about pricing). I was SHOCKED to see that some Ebooks were MORE than their paper copies. What? You'd think the absolute opposite. They don't have to physically PRINT an e-book, they don't have to ship it... Not to mention with a paper copy you can read it and then SHARE with your friends (like my wife and her friends do) or if it's a textbook you can sell it back to the bookstore for some money. I was VERY disappointed to see the pricing on E-books. I'm glad this is happening. They need to quit being so greedy.
 
Amazon had the singular position in e-book retail industry until Apples' entry into the market. It could be argued that Amazon engaged in predatory pricing practice to create a barrier of entry for competition. Apple built a wall around Amazons low-ball strategy temporarily to get established in a self-sustaining way. The Dept of Justice will successfully dismantle any agreements between vendors and retailers that set prices or act to restrict any retailer from reasonable independent marketing practice.

The Lawyers at Apple aren't stupid. They haven't settled for a reason.

Manufacturers of products across all industries engage in distribution strategy that limits free market pricing every day; exclusive products to exclusive retailers, retail sales contracts with manufacturers that threaten to nullify the agreement if products are sold below "list" price, geographic territory for sales that restrict retailers for selling outside their area, retail agreements that restrict the sale of products over the internet.... and many other methods of contractually limiting choices for the consumer in the procurement of products at low prices.

Honestly, is all of this bad? Retailers make significant investments to offer products to consumers and the only ROI is through the profitable sale of the goods. There is some reasonableness to creating healthy competitive environments for retailers and potentially some obligation on the part of manufacturers or publishers to aid in the process.

This could be a much broader legal matter than realized and could have far reaching impact on other industries.
 
Apple is being sued for price fixing because? Under the agency model, Apple has no control over price. Under the wholesale price, they can fix the price below what the competition can afford to sell at which is called dumping. That is what Amazon and Wal-mart were doing before.
 
I urge anyone interested in this topic to read the article by Scott Turow published by Bloomberg last month.

The iPad -- unveiled in January 2010, shortly after Barnes & Noble’s Nook became available -- made Apple’s proven iTunes- and-apps agency model for digital content relevant to book sales. Five of the largest publishers jumped on with Apple’s model, even though those publishers knew they would make less money on every e-book they sold through Apple than what Amazon was paying them. (Which shows that the alleged price-fixing conspiracy is one of the oddest in history, since it was, by the government’s logic, collusion to lose money.)

Amazon responded with a typical show of power. When John Sargent, the chief executive officer of Macmillan Publishing, went to Seattle in that month to tell Amazon executives about his company’s adoption of the agency model, Amazon pulled the buy buttons for every Macmillan title on its site -- not just e- books -- for a week. Yet now, it seems, the government is taking Amazon’s side.
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This is an article by Scott Turow, who as a best-selling author (The Burden of Proof, Presumed Innocent) does better out of the Amazon-style approach. But he (correctly in my view) recognizes that a publishing world dominated by Amazon would be an infinitely poorer one - one without physical bookstores, or indeed any semblance of independent market for the written word.

Yeah - we all like getting things cheap. But part of being a decent adult human being is understanding that "cheapest" doesn't always mean best. And I hope the people whinging about how "great for the consumer" this move is are fully cognizant that it could very well end up in a world where lesser known writers cannot get published.
 
Oletros said:
And why she won't sell the price at the price she wants?
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vrDrew's post above mine explains it best. I believe that if Apple is blocked here we will soon see a world where Amazon sets the prices on all successful books.

Sure, you're free to sell yourself on your own blog at whatever price you want, but success stories there will be few and far in between. The vast majority of authors will have to submit Amazon's 'we tell you what to charge' world.

That's honestly where I see his mother ending up.
 
vrDrew said:
I urge anyone interested in this topic to read the article by Scott Turow published by Bloomberg last month.



This is an article by Scott Turow, who as a best-selling author (The Burden of Proof, Presumed Innocent) does better out of the Amazon-style approach. But he (correctly in my view) recognizes that a publishing world dominated by Amazon would be an infinitely poorer one - one without physical bookstores, or indeed any semblance of independent market for the written word.

Yeah - we all like getting things cheap. But part of being a decent adult human being is understanding that "cheapest" doesn't always mean best. And I hope the people whinging about how "great for the consumer" this move is are fully cognizant that it could very well end up in a world where lesser known writers cannot get published.
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Just like the music industry right??????
 
NMF said:
Because stores can sell physical books at whatever price they want. Barnes & Noble can have a sale where a certain book is 25% off, etc. With eBooks the publishers are setting the price, essentially cutting out the middle man. This is great for the publisher but terrible for the consumer. This is the reason why most Kindle books are more expensive than their physical counterparts.
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In the iOS App Store, the publishers of software are setting the prices. They have cut out the middle man. OTOH, this seems to be great for consumers: there is tremendous competition in virtually all software categories, and prices are low.

Why does the App Store -- with its agency model -- work so well? What exactly is different about e-books?
 
section31 said:
The digital distribution model lends itself to lower prices from a manufacturing standpoint. This is not even a debatable point. Fixing the prices at levels equal or above the cost of physical media is reprehensible. Apple colluding with the publishers to do this in a move to hurt all who sell e-books (specifically Amazon) is one that hurts the consumer.
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Most-favored nation pricing is not the same as price fixing. It's a fine line, but I think the DOJ is being overly aggressive here. Amazon selling physical book and eBooks at a loss to drive up market share is anti-competitive, as well.

What the publishers were attempting to do was establish a second viable market in addition to Amazon. Google and Apple are probably the only two companies in the current market with the infrastructure to enter the market, given that both have content markets and software platforms for e-readers. Apple was looking for content, and the publishers were looking for another platform. It's no surprise they struck a deal.
 
I'm glad that the DOJ didn't back down! It's absurd that eBooks are often more expensive than the DTB version! Before Apple entered into price fixing agreements with the publishers, prices were much more reasonable. I think it's wrong that no one is permitted to sell an eBook for less than Apple does!
 
TMay said:
What part of Amazon's action doesn't look like "dumping", i.e., subsidizing to undercut fair competition, e.g., Apple, Wal Mart, et al.
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The part where dumping is an entire country's industry export, unjustly subsidized by a government.

Amazon was using the very old and legal "loss leader" tactic, using cheap ebooks to sell Kindles...that is not illegal.
 
Apple should close down in the US, move to China. That'll show the government who needs who more.
 
miles01110 said:
I honestly never really understood the government's argument on this one. Publishers already have a monopoly on book pricing anyways since one book is (usually) only available from one publisher. How can they collude with one another to keep the price of a book only one party has a monopoly on artificially high?
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I can see where you're coming from but that's kinda like saying that coke has a monopoly because only they can sell coke. But you can see coke for different prices from different retailers.

Under a normal western market you'd see Store A and Store B buying a 600mL coke bottle for $3. Store A decides to sell in at $4, but store B decides to try and move more bottles by pricing them at $3.50. The Agency model would be like Coke saying to these stores "You can only sell coke if you sell it for $4 a bottle" Is it not store B's right to sell the bottle for a lesser profit to try and gain the upper hand against Store A?

In the case of Amazon and selling at a loss and subsidizing through other parts of its business, I'm not sure on the legality of that, but if they did it for too long (not just a sale here or there) then I suppose the DoJ should step in there, too.

Small White Car said:
This whole issue is like the laptop debate: What's better...a bigger or a smaller screen? - A smaller screen is easier to carry, a bigger screen gives you more pixels. There's no 'right' answer there.

Likewise, Amazon's method gives lower prices but is worse for writers and Apple's method is better for content creators but leads to higher prices. *

What's the 'right' answer there? Much like with the laptop they both have equal pros and cons.
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Apples model is NOT better for content creators. It's better for the publishers, and what's good for them is generally not good for the authours. With the old model I could have published my ebook on amazon, they'd sell it for $10, take $2, and I'd keep $8. With this model, I'd be pressured into putting my book through a publisher, surrendering my rights to the content and then from the $10, Apple get's $3, Publisher get's $6.50, authour gets $0.50. Which sounds better for content creators?

In this day and age we'll see a dying out of "Publishers" in favour of "Editors" with more authours publishing solo.
 
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