U.S. Government Warns Apple and Publishers of Antitrust Lawsuit over e-Book Pricing

[dru`]

If there was collusion to force others to raise their prices, then that is a place where the government has a rightful claim for interference.

Except there wasn't, not on Apple's part. Apple just wanted to ensure it always got the "best price" from publishers. Publisher's set the prices. Any price they want. Apple was putting its customers first by demanding "best price" for access rather than see iOS consumers used and abused to subsidize lower prices for Amazon Kindle or another outlet.

This kind of usurious behavior happens in gas prices, in healthcare prices and elsewhere. Rather than the price being the price, the price is spiked in some so-called "get healthy" market areas to subsidize others or to run up profits because the companies know they can.

Unlike real world products, including books, there are no logistical justifications for publishers to charge one ebook retailer more than another. Development cost differences? Statistical noise at most. Volume discounting? It's just bits.

If anything, Apple's demand means there will be no unfair premium "tax" added to ebooks just because they're on iOS. All ebook platform users should win because the total marketplace is that much larger.

 

[MacAddict1978]

Sounds feasible to me, I know for a fact when I check e-book vs hardcopy prices I've found e-books to be much more expensive on numerous occasions. This doesn't make sense from a printing and delivery standpoint, and makes me believe these companies are trying to take advantage of the hype and popularity behind ebooks as a new technology. I hope they come down hard on Apple and Publishers if it's true, ripping off customers should not be a business model for any company. No sympathy for greed.

Oh, it's very true, and you just cited the evidence. Retailers can actually make more money selling physical books and offer better sales to their customers than they can with ebooks, that have very little cost associated with them.

People have been reading less. Book prices have risen, the number of published books has fallen... and here the publishing industry had a great chance to reinvent the market and bring back people to reading, and they blow it.

They could sell ebooks for half the price of paper books, make the same if not more money, and increase readership and sales all around. When you read comment threads about why people haven't moved to ebooks, the price not being worth it is always the first or second comment thrown out there.

This pricing scheme (scam as it really is) is only beneficial to the publishers. Barnes And Noble pays a set price for a physical book, and can do any kind of sale or promotion they choose, and offer a better value to a customer. Same of any retailer. yet the ebook, they cannot. And they often make more money selling a physical book on sale than they do the ebook with it's fixed pricing.... that there stinks.

 

[saturn88]

take a look at: http://www.fonerbooks.com/paper.htm

2. the cost of printing a run like that is estimated to be between $2 and $3 per book. It drops to $1 per book at 10,000 copies. That is printing...no money for anyone like the author, etc

The cost of printing vary significantly. Black and white book printed "offset" may cost $3 to print if you order many books. Color interior offset may cost twice more. Color book printed digitally "on-demand" (not offset) may cost $15-18 each. Offset printing is cheaper on average but you have order large quantity and pay upfront. On-demand digital printing is more expensive but requires no money upfront: you can print for each individual sale. Consumer would have no idea what method was used to print the book.

 

[sw1tcher]

Apple doesn't sell the book at $15. The publisher sets the price.

The $15 price was just an example.

Apple's requirement is that if the publisher sets the price at $10 elsewhere, they have to set it at $10 on the iBookstore as well.

Apples requirement is that the publisher will get to set the price and Apple will sell it at that price. Unfortunately, so must every other retailer. If someone wanted to sell it for less, they aren't allowed to. If someone wanted to sell it for more, they aren't allowed to. That's price fixing.

This is not price fixing, which is a term used to describe collusion to keep prices high. This is a requirement that a given price be the lowest, always. This results in lower prices.

No. This results in only one price.

Price fixing is an agreement between participants (in this case Apple and the publishers) to sell a product, service, or commodity only at a fixed price.

So, now you want prices to be higher on some stores?

No. I want the seller to determine what the price should be based on a free market.

No, that's called rights. Has nothing to do with monopoly. Monopoly is when you own the whole market.

How is it not a monopoly when publishers are the only ones supplying the commodity and are colluding to control pricing?

A monopoly exists when a specific person or enterprise (in this case the publisher) is the only supplier of a particular commodity.

How is this bad? As a result, prices are lower.

No. Prices are all the same. It's bad because prices aren't being determined by a free and open market.

In a wholesale model, we'll see lower prices. In an Agency model, we only see one price.

 

[CapnJackGig]

Good. There's no way in hell an e-book should cost more than the paperback. Glad to see Apple and the others get smacked around on this.

 

[MacAddict1978]

Except there wasn't, not on Apple's part. Apple just wanted to ensure it always got the "best price" from publishers. Publisher's set the prices. Any price they want. Apple was putting its customers first by demanding "best price" for access rather than see iOS consumers used and abused to subsidize lower prices for Amazon Kindle or another outlet.

This kind of usurious behavior happens in gas prices, in healthcare prices and elsewhere. Rather than the price being the price, the price is spiked in some so-called "get healthy" market areas to subsidize others or to run up profits because the companies know they can.

Unlike real world products, including books, there are no logistical justifications for publishers to charge one ebook retailer more than another. Development cost differences? Statistical noise at most. Volume discounting? It's just bits.

If anything, Apple's demand means there will be no unfair premium "tax" added to ebooks just because they're on iOS. All ebook platform users should win because the total marketplace is that much larger.

I'm sorry, but you don't understand how the publishing industry works, and loving a companies products doesn't mean their practices are always fair.

1. Apple knew exactly what they were doing and knew the publishers were looking for a way to fatten their own wallets. What this deal did was kill competition. Without it, iBooks would have been a total failure. (It's honestly not a smashing success now.) Why buy from Apple when you can shop around other retailers, have their reader apps on your device, and get the best price elsewhere? This is called PRICE FIXING. This deal and model has made it so that no matter which ebook seller you go to, there is likely not going to be any incentive to price shop as the prices are going to be the same. It's also inflated prices. There is no excuse for a hardcover book to be cheaper than it's ebook version.... and 9 out of 10 times, you can find a hardcover on sale cheaper than the ebook because physical book prices can't be price fixed in this way because they use a wholesale model.

2. You rationale is flawed. If Amazon and B&N are buying physical books from a publisher, why shouldn't they be able to negotiate better ebook wholesale prices? That's called a free market. And why should they be able to buy physical books cheaper then ebooks which have almost no cost to a publisher? A $10 ebook nets 30%, or $3. They can make $5 off the paperback book. How does that make sense?

Apple did not ensure IOS users the best price with this deal, they screwed them. Ebooks were just starting to get to a point where there was a value associated with them. Prices were starting to get cheaper than paper books.
I can take a paper book to a used book store and trade it for credit, lend it to my cousin, and I can't do that with an ebook. There's less value to the buyer of an ebook, but the prices don't reflect that. Don't compare commodities like oil to books. No one needs a fiction book... but they do need gasoline to get to work even if they're just taking a public bus.

The telling difference is when you look at brick and mortar stores with physical inventory vs. virtual inventory. The evidence of price fixing is totally transparent.

 

[Rodimus Prime]

Except there wasn't, not on Apple's part. Apple just wanted to ensure it always got the "best price" from publishers. Publisher's set the prices. Any price they want. Apple was putting its customers first by demanding "best price" for access rather than see iOS consumers used and abused to subsidize lower prices for Amazon Kindle or another outlet.

This kind of usurious behavior happens in gas prices, in healthcare prices and elsewhere. Rather than the price being the price, the price is spiked in some so-called "get healthy" market areas to subsidize others or to run up profits because the companies know they can.

Unlike real world products, including books, there are no logistical justifications for publishers to charge one ebook retailer more than another. Development cost differences? Statistical noise at most. Volume discounting? It's just bits.

If anything, Apple's demand means there will be no unfair premium "tax" added to ebooks just because they're on iOS. All ebook platform users should win because the total marketplace is that much larger.

I think you make a good example post of how people are confusing the issue.

Apple (and Amazon) is not going to get a fine from the government but they will get some restrictions put on them. Apple will be demanded to turn over huge amounts of information to the government but that will mostly be used against the publishers but to be able to get that info from Apple Apple needs to be named in the lawsuit.

Do I believe there was some Antitrust done in e-book pricing. God yes. Do I believe Apple is at fault for it. No not directly. Apple demands were for itself but it gave the publishers the power to really abuse the system and demand things like it from everyone else making it impossible for places like Amazon to use different prices on the Ebooks because the publishers screw with the prices.

The end result I see from this would be if a publisher sell under X amount per year they are allowed to use the agency model with Apple and others. If they sell over a certain amount they are are no longer allowed to do that and the publisher is required to be whole sell.

 

[Lennholm]

I don't get it, why aren't people complaining that the government should have better things to do and shouldn't waste tax money on this kind of stuff this time?

 

[jdawgnoonan]

So they'd rather publishers not be compensated fairly for their work? Um....

Do you remember back when E-Books typically were cheaper than a hard back? After this agency model agreement is when the E Books became almost or just expensive as brand New Hardcover editions (and more expensive than places like Walmart). Come on.... a glorified pdf costs as much as a hard bound book that came from trees and was shipped across the country???? They began ripping off the consumer with this agreement, not being fairly compensated.

 

[Daveoc64]

I don't get it, why aren't people complaining that the government should have better things to do and shouldn't waste tax money on this kind of stuff this time?

Governments don't consist of a single person at a desk with a limited amount of time.

What do you think the Department of Justice should be doing, if not investigating potentially illegal activity?

 

[Lochias]

Is it worth it?

Publishers would stop publishing if they thought it wasn't worth it.

Many have, publishers as well as distributors.

----------

Governments don't consist of a single person at a desk with a limited amount of time.

What do you think the Department of Justice should be doing, if not investigating potentially illegal activity?

Investigating actually illegal activity, not theories that letting a publisher set the price of his book is anticompetitive.

 

[Lennholm]

Governments don't consist of a single person at a desk with a limited amount of time.

What do you think the Department of Justice should be doing, if not investigating potentially illegal activity?

Hey, you're preaching to the choir. My post was a jab at the people who always complain that the government shouldn't meddle in the affairs of companies.

I can't count the number of times I've seen public servants been ridiculed and called idiots and whatnot on these forums when they want to start an investigation because concerns have been raised about the practices of a particular company

 

[Daveoc64]

Investigating actually illegal activity, not theories that letting a publisher set the price of his book is anticompetitive.

The activity that the publishers are involved in IS allegedly illegal, so I don't see what your problem is.

 

[IJ Reilly]

So according to this author, if he sells 6,000 copies (3 times the average lifetime units for a non-self published book), he will make just over $3,000. Wow.

The lesson here is to self-publish. I made more than that on a self-published printed book with far fewer sales. I did have to front all the printing costs -- which I realize many people can't afford do -- but for me, taking the gamble paid off better than if I'd have worked with a publisher.

 

[3282868]

A little off-topic...

...but I'm glad there is an open dialog regarding this issue and that [most] are civilly discussing good points on both sides and are open to having their minds changed. It's [sadly] rare that this happens in online forums, and very refreshing.

ok, carry on

 

[IJ Reilly]

The cost of printing vary significantly. Black and white book printed "offset" may cost $3 to print if you order many books. Color interior offset may cost twice more. Color book printed digitally "on-demand" (not offset) may cost $15-18 each. Offset printing is cheaper on average but you have order large quantity and pay upfront. On-demand digital printing is more expensive but requires no money upfront: you can print for each individual sale. Consumer would have no idea what method was used to print the book.

Anyone who notices the quality of printing would certainly know whether a book was printed offset or on-demand. The latter is xerographic printing, a much lower quality result compared to offset, especially if the book includes photos. On-demand books also have to adhere to a limited number of sizes and templates, and (to my knowledge) can be softcover only. Then the big flag of an on-demand book is the publisher's name on the back of the cover. If I was serious about publishing a book, I'd never use on-demand. It just screams "amateur" to everyone with an eye to see, not to mention, as the author you get essentially zip.

Photo offset becomes economically feasible at a run of about 500 copies. My sense is, if you don't think your book can sell at least 500 copies then maybe you shouldn't be spending your time writing a book. Or go e-publication only.

 

[H. Flower]

There is no excuse for a hardcover book to be cheaper than it's ebook version....

Is there no value in being able to purchase/read a book instantaneously and anywhere, as opposed to having to drive to a bookstore, find the book, purchase at the counter. etc?

And if so, how would you measure it?

 

[Mattie Num Nums]

Is there no value in being able to purchase/read a book instantaneously and anywhere, as opposed to having to drive to a bookstore, find the book, purchase at the counter. etc?

And if so, how would you measure it?

Is it not cheaper to take one digital file, upload it one place, and then send it to millions of people instantaneously? Or is it cheaper to print millions of copies, ship them, advertise them, and then create shelf space for them?

E delivery of anything should never cost more than the physical media.

 

[iEvolution]

Yeah I think it is ridiculous that some books are more expensive to the paperback equivalent.

Another issue I have is this locked in crap, I should be able to buy an e-reader and get books from where ever I choose... with the current model I have to buy a kindle, nook and an iOS device if I want to have absolute freedom.

 

[RiverCitySlim]

So basically this agency system prevents the retailer from deciding how much or how little profit they can make?

 

[saturn88]

Anyone who notices the quality of printing would certainly know whether a book was printed offset or on-demand. The latter is xerographic printing, a much lower quality result compared to offset, especially if the book includes photos. On-demand books also have to adhere to a limited number of sizes and templates, and (to my knowledge) can be softcover only. Then the big flag of an on-demand book is the publisher's name on the back of the cover. If I was serious about publishing a book, I'd never use on-demand. It just screams "amateur" to everyone with an eye to see, not to mention, as the author you get essentially zip.

Photo offset becomes economically feasible at a run of about 500 copies. My sense is, if you don't think your book can sell at least 500 copies then maybe you shouldn't be spending your time writing a book. Or go e-publication only.

In terms of sizes, on-demand printing offer wide range, eg CreateSpace offers 15 sizes including 12 industry standard sizes. Plenty. In terms of quality, I agree, offset is better but most consumers would not know the difference.

The disadvantage of offset printing is no options to make quick updates. Another one is that you'd have to deal with finding printer, negotiating price, checking quality, invoicing, warehouse storage and shipping. In on-demand scenario you just upload your PDF and you are done.

 

[Edsel]

I'm betting Steve Ballmer is chortling right about now. Apple is now the target in their famous "1984" commercial.

 

[jayhalleaux]

1. Apple knew exactly what they were doing and knew the publishers were looking for a way to fatten their own wallets. What this deal did was kill competition. Without it, iBooks would have been a total failure. (It's honestly not a smashing success now.) Why buy from Apple when you can shop around other retailers, have their reader apps on your device, and get the best price elsewhere? This is called PRICE FIXING. This deal and model has made it so that no matter which ebook seller you go to, there is likely not going to be any incentive to price shop as the prices are going to be the same. It's also inflated prices. There is no excuse for a hardcover book to be cheaper than it's ebook version.... and 9 out of 10 times, you can find a hardcover on sale cheaper than the ebook because physical book prices can't be price fixed in this way because they use a wholesale model.

Actually I believe it's called a most favored nation clause, which last time I checked was quite legal, and used in many industries.

2. You rationale is flawed. If Amazon and B&N are buying physical books from a publisher, why shouldn't they be able to negotiate better ebook wholesale prices? That's called a free market. And why should they be able to buy physical books cheaper then ebooks which have almost no cost to a publisher? A $10 ebook nets 30%, or $3. They can make $5 off the paperback book. How does that make sense?

I think you are frustrated with the difference between the agency and wholesale model. The reason physical books are cheaper is because they are bought and sold at a loss in order for you to buy other books that are not.

Apple did not ensure IOS users the best price with this deal, they screwed them. Ebooks were just starting to get to a point where there was a value associated with them. Prices were starting to get cheaper than paper books.

I think you are mistaking an artificially low price with the actually price of the book. I would say independent self-publishing would not count in this debate since the author would get what they believe they deserved. Now if you publish through a traditional publisher and they sell your book to Amazon, for instance, Amazon could sell your book less than what you thought the book was worth in order for them to attract customers. What Apple did was let the publisher/author set their own price, and agreed to establish a minimum sell price.


Do I think that prices of e-books for mainstream books went up? Yes.
Was it done illegally through supposed "price-fixing"? No
Do I agree that e-books fundamentally should be cheaper than print? Yes
Should I shout antitrust and anti-competitive when that is not the case? No


I think people need to vote with their wallets, if ebooks are too expensive don't buy them. Just like I do.

 

[snowmoon]

Do I think that prices of e-books for mainstream books went up? Yes.
Was it done illegally through supposed "price-fixing"? No
Do I agree that e-books fundamentally should be cheaper that print? Yes
Should I shout antitrust and anti-competitive when that is not the case? No

Yep,

To top it off, "Agency Model" will be the best the publishers get and will hasten their demise. Their inflated pricing will reduce sales and create a negative feedback loop. Agency model has been a boon for indy publishers and direct selling since they are smart enough and lean enough to price their wares appropriately.

 

[ThunderSkunk]

Governments don't consist of a single person at a desk with a limited amount of time.

They would if some people got their way.