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Connecticut AG To Grill Amazon, Apple Over E-Book Price Fixing
suraj.sun tips news that Connecticut's Attorney General has demanded a meeting with Apple and Amazon to discuss anti-competitive pricing methods in the e-book market. From Ars:
"Richard Blumenthal says that he wants representatives from both on-line giants in his office ASAP to discuss what Blumenthal calls their 'most favored nation' arrangements with big book companies like Macmillan and Simon & Schuster. The crux of the MFN concept is that a given product maker must offer a given distributor the lowest price it's offering anyone. If a competing distributor gets a price break, they get it too. 'The net effect is fairly obvious,' Blumenthal warned in his letter to Amazon (PDF), 'in that MFNs will reduce the publisher's incentive to offer a discount to Amazon if it would have to offer the same discount to Apple, leading to the establishment of a price floor for e-books offered by the publisher.'"
Of course ebook prices are fixed (amoungst other digital "goods") - how the hell do you price something that can be copied infinitely at next to zero cost? And therein lies the problem...
Didn't Amazon just hand over its right to price many new releases to the publishers? I seem to remember Amazon wanting to charge $10 for a new (only in hardcover) release, but the publishers forcing them to increase the price or not carry the books. Of course, that doesn't say anything about cheaper books that are out in paperback...
Fucking e-books. Why does it cost more to buy an e-book than it does to buy a dead-tree paperback? wtf?
I absolutely adore my nook, but it's filled with public works and books that have been gifted to me...I refuse to pay $10 for a digital copy of a book.
Living With a Nerd
Aren't e-books selling at levels competitive with physical books?
Aren't they luxury items in the first place?
If the previous two points are true as I believe, it seems kind of silly that the best use of the Connecticut AG's time is making sure people aren't overpaying a few bucks for items they're obviously already comfortable purchasing at that price.
I would rather see a legal investigation into Amazon's and Apple's patent tactics and such. Their portfolios and legal strategies likely cause many more customers of many other companies to overpay many more total dollars for zero value.
But who the fuck am I?
This is just grandstanding by a politician running for office. Neither Amazon nor Apple are headquartered in Connecticut, which makes the appropriate action for this state AG to make a filing to the FTC.
Except, of course, filing with the FTC just doesn't sound as exciting to voters.
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Best use of time as determined by election season.
It seems absurd to me to bring in Amazon and Apple over this, when they aren't the ones who set prices (Amazon used to).
I don't see, at all how Apple and Amazon demanding the lowest price offered sets any kind of "floor" beyond the natural floor of the lowest price the publisher is willing to charge. The only thing it affects is the ability to charge a lower price at one vendor than another, but if that were OK how would that help the consumer? That to me would seem to be used to squeeze out a competitor and generally shrink the book market to one clear leader, who could then more easily collude with publishers to keep a higher average price for books beyond loss leaders...
"There is more worth loving than we have strength to love." - Brian Jay Stanley
I'll stop reading slashdot... how credible can a newssite be, which has a headline like THAT?
This headline is one of the worst cases of so called "journalism" that I've ever seen in my entire life!
I think it's only beaten by "Super-Virus kills Superman", which was the headline of the BILD Zeitung when christopher reeve died (yes, they used the phrase "kill", which is very very colloquial in germany)...
The MAFIAA is a bunch of mindless jerks who will be the first up against the wall when the revolution comes
I need to adopt an even higher level of cynicism.
it seems kind of silly that the best use of the Connecticut AG's time is making sure people aren't overpaying a few bucks for items they're obviously already comfortable purchasing at that price.
By that logic, there's never been a damaging monopoly at all - after all, by definition, all the customers are comfortable paying the price charged or they wouldn't be customers, right?
"Richard Blumenthal (born February 13, 1946) is an American lawyer and politician. A member of the Democratic Party, he has been Attorney General of Connecticut since 1991. He is a candidate in the 2010 U.S. Senate election for the seat currently held by Christopher Dodd.[5]"
Nuff said.
http://en.wikipedia.org/wiki/Richard_Blumenthal
It's completely ironic that the government would prevent a corporation from requiring that if it a supplied gives a better price to another customer, it has to give the same price to that corporation. Especially since the GSA requires that any government vendor do the same thing or its a violation of the False Claims Act. So seriously, how is it that an act that hurts the consumer is good for the government?
Politicians continually want it both ways, but this is seriously a waste of tax payers money.
Here's a very informed look at the costs of digital publication and distribution.
Basically, there's a lot of costs that go into publishing a book that have nothing to do with paper or warehouses (both of which are a lot less expensive than we think they are).
Also, the value of an e-book simply must be placed higher than the value of a digital song, based solely on the compensation needs of the artist: how many books can an author be reasonably expected to produce in a year, versus how many songs can a singer/songwriter produce? The average singer will derive some additional compensation from performing; the average author, much less, if any. You want to charge more for a book from an established author, from whom much can be expected, versus from a N00b who's craft is unknown, fine. But you still need to place the benchmark higher than a dollar.
This sounds exactly like how GSA contracts work. More double standards at work here.
http://news.slashdot.org/story/10/07/30/2051249/Justice-Department-Joins-Fraud-Lawsuit-Against-Oracle
Those that accuse someone else of bad behavior are most often guilty of the same of offense (in my experience).
How does offering the same price to two of your distributors discourage you from lowering prices? The publisher will lower prices for a variety of reasons, such as to increase sales or generate publicity, but none of those reasons would seem to be contingent on lowering prices with one distributor and not others.
I am surprised that no one linked this to the deal the federal government had with Oracle. If the Connecticut AG thinks that the deals Amazon and Apple have created an artifical price floor, what does he think of the government doing the same?
Or am I missing some difference between the two?
Traditional books cost about $25+ for new hardback and about $8+ for paperbacks. This price includes the cost of materials which were claimed for many years to be a large chunk of the cost. But companies don't use "cost plus" to price things, where "plus" is some arbitrary profit to make over the cost. Companies, now, figure out the MAX people are willing to pay over cost. If it cost $1.00 to produce an ebook, but you're willing to pay $14, you are WILLINGLY paying 1400% markup; that's 1300% profit.
Companies aren't as interested in making a valuable product as they're interested in taking the MAX amount of money from you. This also means, power is in the hands of consumers. If you want the price to come down on "over priced," inexpensive to produce goods with relatively high profit margins, don't buy them unless they are at a price you feel they're worth. Yes, some instant gratification will have to put aside.
More on point, if consumers send the message to Apple, Amazon, Random House et. al. that they won't pay "high" prices for ebooks, then prices will drop across the board regardless of what distributors are charged.
Since when has they ability to more more product and therefore demand a lower price from a supplier been illegal?
Apple buyers will pay more than Amazon buyers. Good marketing takes advantage of that.
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
In that case it's good to see Connecticut protecting the rights of corporations to maximally screw their customers.
Okay, you stupid corporate pigs.
ya, you.
I'm not fucking paying over $5 for a ebook. ever. If you can't grasp that simple concept, don't bitch when your books get pirated.
I'll pay $15 for a hardback book. I'll pay $8 for a softback book. But an ebook? $5, max.
You see, I can pirate what I want for free. Do you grasp this simple concept? I can get what I want for free. But I'm not an asshole (well, I am, but that's another post), I'm letting you know that I would be willing to pay $5 per ebook, instead of downloading them for free.
If you, the book publishers, want to go hold on to your old ways (get off my lawn) like some stupid old person who can't get with reality, that's fine. Free works in my budget better. But see, like I said, i'm not an asshole (lies), i'm trying to work with ya here.
So, when you realize that making $5 from someone is better then making nothing from that person, for some text, then i'm sure you'll change your prices to reflect that.
Be seeing you...
MacMillan, etc, have *no* incentive to lower prices, in fact, MacMillan and Amazon just went head to head and Amazon lost. MacMillan *RAISED* prices, significantly. And they want to do it across the board, and raise them even MORE. They don't want competition from eBooks with brick and mortar distributors, nor do brick and mortar distributors. They want to be protected from thenew scary digital world. They argue "its for our authors" when what they mean is "its for *our* bottom lines because we're scared" because the authors, in my understanding, don't get any more for eBook royalties (in fact may get less) than dead tree media. Publishers would raise them *MORE* across the board if Amazon hadn't fought so hard to keep them lower. The publishers want to protect their dying dead tree paper industry. PERIOD. They want eBooks to be priced on level, or MORE than regular dead trees. Amazon and Apple are on the consumer's side in this case. They do have a stake, they want to get rid of traditional publishers, lock people into their platform, and move more content to more hands, and become the publisher of choice. Why? Because THEY GET IT. Amazon likely pays very little for each Kindle's network connectivity. So they're more than happy taking "just" 30% in the US market (65% elsewhere, higher telecom costs for amazon, thats not saying the costs are higher, just for amazon). Why the lower price, SELL MORE MORE MORE! It's 100% profit. 80% on 1 copy is 0.80. 35% on 4 is 1.40. So you've made more. Yes there's the argument for "lost potential" - but if you sell 4x the copies, of a product that costs NOTHING to make copies of? Even if you only sell 3x as many of the same product after you cut your prices in half. The actual equations are a bit more complicated mind you, but Amazon at least wants to bet that prices for eBooks will be significantly lower and sell significantly more in the long run, making up for the lower dollars profit per unit sold in volume. In the meantime it's a new line of business. I think they lose money on each Kindle sold but they hope to make that up through the 35-70% royalties, which, I'm betting in many cases they do.
I don't know what kind of deals others are offering authors, but according to Amazon's own pricing http://forums.digitaltextplatform.com/dtpforums/entry.jspa?externalID=393 you can as an author/self publisher (or other publisher) choose from 35% or 70% -- the 70% is after $0.15/megabyte (1024 based megabyte, which they define specifically) for distribution. This is only for US customers, all other customers you'll get the 35% rate. I'm willing to bet 35% is better than any traditional publisher especially if you're an unknown, and 70% is probably better than anyone ever gets at any traditional publisher.
So as an author, protect your rights to distribute electronic copies. If you already sold all your distribution rights to a traditional publisher for penny royalties...well...be smarter on your next deal. It's a very valuable market becoming more valuable by the day, and given half a chance the traditional publishers will strangle every author wanting to publish their material in these new markets. Amazon does require you give them the lesser list price yes. Why not though? eBooks have very nearly 0 cost per copy! IT'S GRAVY. The Connecticut AG is likely acting on behalf of or for the publishing companies in some way shape or form, and should probably educate himself or herself on the reality.
What about self published authors who have to raise the price since their sales are so low?
They're new, no one has heard of them, but they still need to eat and have a roof over their heads.
Democrats or Republicans. They are both taking us to the same place and they are not afraid of us anymore.