This is an important part of this whole inquiry into e-book pricing. Maybe the most important part:
Apple's policy with regard to publishers would force music labels to demand Amazon mp3 prices match the iTMS price, track for track.
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U.S. Department of Justice Sues Apple and Publishers over E-Book Pricing
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This is an important part of this whole inquiry into e-book pricing. Maybe the most important part:
Apple's policy with regard to publishers would force music labels to demand Amazon mp3 prices match the iTMS price, track for track.
Time to invest in alternative energy then. Agreed?
Speculation is speculation, much as tech analyst predictions, except big oil has friends in congress.
first anyone who feels the need to point out typos needs to show a little more maturity. Really lets be adults here.
Like I said you would be surprised how little it actually costs to print a book. I don't have numbers to quote from, but was surprised myself when friends in publishing explained it to me. Think of it this way the cost to make a single print copy of a film is a very small amount compared to the total cost to make the film itself.
Most of the time I am all for going after big business when they really are screwing the consumer over. However this is not what is happening here.
Brick & Mortar book stores are closing at an alarming rate because they can't stay competitive with Amazon who controls such a large percentage of the market. At the same time because publishers have fewer and fewer outlets to sell their products the major player (Amazon) says you know what we will only pay you x dollars now instead of the Y it should really be because well we are the only legitimate game in town if you want to sell any meaningful number of books.
The point was made that it is very difficult for new authors to get published now because they tend to fail more than succeed so the cost / benefit to publishers are skewed against them. Self publishing is like the indie music scene right now there are a few success stories, but overall isn't profitable because you don't have the marketing machine a publisher provides to get the book in front of people.
You could also look at it like works unionizing for fair wages. the publishers got sick and tired of not making a profit so they said screw you amazon we are going to work for someone else unless you pay us what we deserve.
Now that there are two viable agents in the market (apple & Amazon) it is likely that prices have gone up because one of them realized that if things continued the way they were publishers would go out of business and they wouldn't have any content to sell. Unlike Amazon which is now publishing its own books so it is in their best interest to put publishers out of business so they can have all the best authors for themselves.
The difference between this and digital music is that the music publishers have not seen their profits plummet. At the end of the day they were grousing about nothing. Publishers are loosing their shirts. it doesn't help that people are reading less so the size of the market has shrunk as well.
As for why the don't bundle the books I don't know I think it would be a good idea. I had it explained to me why the can't, but don't remember the reason. I'm thinking it is because Amazon doesn't want to and they are the only ones with an effective distribution channel to do so.
Which would raise Amazon MP3 price from $0.99 to $1.29
Amazon would makes a bigger profit (margin) on each sale.
But customers would lose out, paying $0.30 more for each MP3.
Exactly. I think most of the Apple defenders in this thread aren't seeing this side of the argument.
If there is agency pricing for digital movie rental, then Apple, Amazon, Google will just offer the same price (and take their 30% cut).
Instead, it is wholesale. As a result, customers sometimes get a good deal.
GooglePlay recently priced these movies at $0.25 (and Amazon price matched)
Puncture
Inglourious Basterds
Vicky Cristina Barcelona
American Psycho
Crash
Sunshine Cleaning
Reservoir Dogs
So, digital movies = wholesale, digital music = wholesale, digital book = used to be wholesale...now agency...will be back to wholesale if DOJ has its way.
Instead, it is wholesale. As a result, customers sometimes get a good deal.
GooglePlay recently priced these movies at $0.25 (and Amazon price matched)
Puncture
Inglourious Basterds
Vicky Cristina Barcelona
American Psycho
Crash
Sunshine Cleaning
Reservoir Dogs
So, digital movies = wholesale, digital music = wholesale, digital book = used to be wholesale...now agency...will be back to wholesale if DOJ has its way.
Was it an enhanced Ebook? Some Ebooks come with lots of extra content now think of it like the evolution of the DVD how they started to add special features over time.
With wholesale, RETAILERS can offer a discount to customers. With agency, RETAILERS can't. Each store has to sell that product at exactly the same price.
Agency: 30% margin
Wholesale: margin varies (for example, if Amazon/Google only want a 10% margin, this "SAVING" is passed onto the customers).
Apple can survive with wholesale. It just need to compete and this will mean lower margin. Does Apple has the money to compete (for example, getting only 10% profit margin on ebook instead of 30%)?
Agency: 30% margin
Wholesale: margin varies (for example, if Amazon/Google only want a 10% margin, this "SAVING" is passed onto the customers).
Apple can survive with wholesale. It just need to compete and this will mean lower margin. Does Apple has the money to compete (for example, getting only 10% profit margin on ebook instead of 30%)?
Does not make sense.
This whole line of thought from the DoJ does not make sense. Quite simply, publishers are *allowed* to set a price for their products that are then sold through retail to end users.
Apple in this case is the "retail channel" that provides that sell-through.
Prior to Apple's involvement in the channel for eBook Sales from publishers to end users, Amazon sold every product for $9.99, regardless of the wishes of publishers and their authors. Some books became cheaper for the consumer through Apple's model, however many popular titles became more expensive as publishers elected to charge more.
It would seem as though Apple enabled the conventional retail book purchasing models (Brick & Mortar Retailers) to also exist with regards to electronic works.
This whole line of thought from the DoJ does not make sense. Quite simply, publishers are *allowed* to set a price for their products that are then sold through retail to end users.
Apple in this case is the "retail channel" that provides that sell-through.
Prior to Apple's involvement in the channel for eBook Sales from publishers to end users, Amazon sold every product for $9.99, regardless of the wishes of publishers and their authors. Some books became cheaper for the consumer through Apple's model, however many popular titles became more expensive as publishers elected to charge more.
It would seem as though Apple enabled the conventional retail book purchasing models (Brick & Mortar Retailers) to also exist with regards to electronic works.
It's easy, and not very expensive, to self-publish. If the publishers don't add value, then why do writers go to them?
Correct... Amazon was selling eBooks at a loss. They were using eBooks simultaneously as a loss leader and as a dumping tactic to prevent folks like B&N from competing in the eBook market. Amazon can subsidize that loss with other retail sales + they wanted folks to be locked-in to Kindle ecosystem (i.e.: Kindle books can only be read on Kindle readers). They were suffering the loss for the sake of monopolizing the market -- very anti-competitive. BTW: for folks who think that eBooks were a loss leader for Kindle Readers, its not true. Amazon also loses money on Kindle readers (especially the Fire now and especially the iOS and Android apps which are free to download), but they want the user lock-in and the monopoly.
Once the agency model was introduced, then folks like B&N stood a chance because they could actually sell eBooks and make money. B&N does not have other businesses to subsidize eBooks.
Where Apple screwed up was by adding the "best-price-with-Apple" clause to the contract. They practically invited the DOJ to sue them by doing that. It seems the DOJ is going after the agency model as a whole rather than simply attacking the price-fixing clause. Without the price-fixing clause in the contract the DOJ would not have a case.
I think every physical book should come with an epub version. CD's should come with mp3 format as well. Give the people what they want at a reasonable price and they'll buy it up. As it is I generally buy kindle version of books because I can strip the DRM and convert to epub to view on iBooks if I want.
Amazon was selling a very tiny % of ebooks at a loss. Probably less than 1 out of 100 books were sold at a loss. Keep in mind that the publishers get the full wholesale price for it. At a lower price, customers buy more, so the publishers make more money.
Example: Amazon pays $11 for the wholesale of Book X
Amazon price it at $9.99 (a loss of $1.01).
Like it is selling some MP3 at a loss right now in order to compete with Itunes.
Why can't Apple compete with Amazon the same way?
Not if it hurts the publishers. It's already a declining business. If publishers lose sales, they'll be less likely to publish newer authors. Everything you see will be written by Stephen King or Stephenie Meyer
That's exactly the opposite of what the future will bring.
A traditional publisher's initial costs are very high: consider the cost of the editing, the cover art, consider that a typical initial print is of 5k copies... you easily reach thousands of dollars of costs. Basically traditional publishers need to bet these thousands of dollars every time they publish some new title in the hope to find a bestseller. Most of the times they lose hard, sometimes they make up the loss, a few times they win big time. It's those very few big wins which keep them alive.
This creates a nasty barrier of entry because publishers cannot afford to publish everyone's work, they need to be careful, otherwise the costs become so high the big wins are not enough to cover them.
Compare this with Amazon: the barrier of entry for authors is basically non-existent, you just need to follow their wizard and you'll have your ebook available to thousands and thousands of readers in minutes completely for free. The Author has free publishing and can decide how much to invest on his work, since hiring an editor for your first title might be overkill, but might make sense for your next one works if you actually find out out people like your stuff.
Apple is in the same position with their iBookstore, as are all the ebooks publisher. Traditional publishers are doomed to either adapt, become irrelevant or just go bankrupt.
I'm looking into doing this...l love my car but the price at the pump annoys me now.
I've been telecommuting/traveling for 6 years but will be commuting to my new job.
And is that what you are defining as collusion?
I disagree. iTunes showed that customers were willing to buy music from a source because it was legal.
The WSJ has a decent blog entry:
http://blogs.wsj.com/law/2012/04/11...awsuit-against-apple-publishers/?mod=yahoo_hs
http://blogs.wsj.com/law/2012/04/11...awsuit-against-apple-publishers/?mod=yahoo_hs
Not true at all.
Amazon opened a store, and sold books at whatever price it wanted to, even if Amazon priced it below list and lost money on some books.
Apple opened a store, and said they would charge the list price for every book with no sales or markdowns.
What Amazon and Apple did are both legal. There is nothing saying that you have to have sales or markdowns at any store.
The only issue is that Apple said that if you sell books with them, they cannot be cheaper somewhere else. All the publishers have their option to sign with Apple or not. This is the free market. It's the PUBLISHERS who have chosen to keep prices high by going with Apple.
A similar analogy would be: Samsung does not like K-Mart selling their TVs for less than list price, so they go to Best Buy and ask them to sell their TVs only at list price, and Best Buy agrees to be the exclusive retailer of Samsung. There is nothing illegal about this.
Before Apple got into the ebook business, retailers could each individually negotiate pricing with each publisher on particular buys of particular titles (typically with larger buys resulting in lower pricing). The retailer could then set or adjust retail pricing on each title as they saw fit. It worked this way for both print and ebooks.
In Apples model, publishers set the RETAIL price at which retailers must sell the title, and the retailer is given 30% of the retail price. The Publisher agrees that they can't sell any title to anyone else for less than they sold it to Apple for.
Apple appealed to publishers greed to get content that they otherwise couldn't negotiate and content prices went up for all retailers and Consumers for publishers that chose this model. There were a number of legal issues associated with how Apple and the Publishers did this and they deserve to be taken to task for it. I hope once the justice department finishes with them all the other retailer and consumers that were injured as a result take them to task as well.
I like the iBook app, but have never purchased a book from Apple that was available anywhere else and never will as a result of their interference in the market.
In Apples model, publishers set the RETAIL price at which retailers must sell the title, and the retailer is given 30% of the retail price. The Publisher agrees that they can't sell any title to anyone else for less than they sold it to Apple for.
Apple appealed to publishers greed to get content that they otherwise couldn't negotiate and content prices went up for all retailers and Consumers for publishers that chose this model. There were a number of legal issues associated with how Apple and the Publishers did this and they deserve to be taken to task for it. I hope once the justice department finishes with them all the other retailer and consumers that were injured as a result take them to task as well.
I like the iBook app, but have never purchased a book from Apple that was available anywhere else and never will as a result of their interference in the market.
Having read unedited transcripts believe me EVERY book needs an editor.
Self publishing is a long tough and more often than not unsuccessful journey. Your explanation of win / loose big is a good description. At the end of the day, To really get noticed it is very helpful for an author to have that type of muscle behind it.
