EU Targets Apple In Ebook Investigation

nk497 writes "The European Commission is investigating Apple and five publishers regarding ebook pricing, after raiding ebook firms earlier this year. 'The Commission will in particular investigate whether these publishing groups and Apple have engaged in illegal agreements or practices that would have the object or the effect of restricting competition,' the watchdog said."

Comments

duh

[apcullen]

of course they have. What else do you call it when everybody has to sell things at the same price?

Re:duh

[Tharsman]

Not sure if there is a name for: "we all buy the book from the same publisher and they charge all of us the same price, so we happen to sell it at the same price to the consumer. Why? Because we happen to have the same percentage commission rate." ... Maybe there is a german word for that.

Re:duh

[CastrTroy]

I agree with this. The publishers can charge whatever price they want for the book. They hold the copyright for the book. It's not like you can just go to some other publisher and get the same book at a lower price. The retailers all have to make money on it. You can only lower your selling price so close to the cost price. Everyone sells XBox 360 (or any other console) at the same price too (at least within a single country), but you don't see anybody crying foul over that.Everybody sells everything at the exact same price for the most part. Rarely do I see a price on a product that is significantly different then what a competitor is selling the exact same product for. Food seems to be the most variable. Whereas electronics/technology, and media (books, cds, dvds) seem to have almost no differentiation at all.

Re:duh

[dkleinsc]

Business as usual.

For companies in an oligopoly basically offering identical products, there are 3 basic ways they can make more money than they do now:
1. The big box retailer strategy: Lower their price, and hope that the extra volume more than makes up for the reduced margin.
2. The airline strategy: Raise their price, and hope that their competitors follow suit.
3. The cell phone strategy: Lower prices on a loss leader to gain customers, lock them in without them noticing, then raise prices and fees and the like.

Re:duh

[apcullen]

Certainly publishers should be able to charge what they want for a book. The rest of what you say is good only... not true. You can find video games on sale for different prices from different stores. If you don't see different products at different prices, you're just not looking hard enough. Modern warfare 3 sells for $59 most places, but I managed to find it for $52. Lots of things go on sale. I could buy the hunger games trilogy in Hardcover from Barnes and Noble for $30 or from Amazon for $22. But the ebooks were the same price everywhere (and inexplicable more expensive than the hardcovers). Nobody cries foul because for other items because, while everyone buys things at the same price, they don't all take the same amount of profit and resell it at the same price. At least they don't have to. Ebooks are a problem because publishers have contracts explicitly saying how much profit a company can, and has to make (the "agent" model).

Re:duh

[Anonymous Coward]

Maybe there is a german word for that.

Actually, in Germany book sellers are required by law to sell books at the same price (at least those from German publishers). And for that, there is indeed a word: "Buchpreisbindung".

However the sellers are quite creative at it: You may sell damaged books at lower prices, and therefore you quite often find "damaged" books where the only "damage" is the text "Mängelexemplar" ("flawed exemplar") on them.

Re:duh

[Zebedeu]

Most people don't realize that they're paying a very high monthly fee for that cool new smartphone.

Some of my friends cringe when I say my smartphone cost 500€. It's only natural, since they paid 100-200€ for an equivalent device.
What they fail to understand is that while they're locked into expensive contracts, I'm paying around 10€ per month (8€ internet + admittedly few calls and SMS) on my prepaid card without any sort of obligations.

It's the same way that printer manufacturers realized that they can lose money on the printer hardware and the make up for it on the cartridges.

Re:duh

[StikyPad]

Like I said, the problem isn't that people aren't aware what they're getting in to, it's that they don't care (enough to look into alternatives). Through their actions, people are saying that they care more about convenience (the convenience of the readily available option) than cost. It's not like we live in the dark ages where this information isn't readily available to anyone who cares enough to look.

Re:duh

[Darinbob]

That's one thing that's annoyed me about digital purchases, the prices seem to stay higher for a longer period of time. With a book you want to sell it. Every week that you don't sell it you've wasted shelf space. Publishers are wasting storage space holding these books and will eventually remainder them. But online... well there's no inventory pressure on you to drop prices. Same with games; in a month you'll see the price of a game drop already if it's in stores, probably a big drop after holidays, but online it may take several months. You will almost never see an initial digital price be lower than the physical product, the cost savings of cutting out printing/distribution is kept as profit.

Re:duh

[mjwx]

Not sure if there is a name for: "we all buy the book from the same publisher and they charge all of us the same price, so we happen to sell it at the same price to the consumer. Why? Because we happen to have the same percentage commission rate." ... Maybe there is a german word for that.

Kollusion?

Re:Lets not just include Apple

[Anonymous Coward]

The point is that these publishers are dictating the price to Amazon and any other ebook distributors. In order to sell these ebooks, those distributors must sell at the price set by the publisher and are not allowed to give any sort of discount.

The Agency Model is a racket!

[thesuperbigfrog]

The Agency Model is a racket that takes away a seller's ability to price ebooks how they see fit.

This is bad for the consumer since it means that market forces have less sway and there is little to distinguish one store from another. You will not find ebooks on sale and there is no point in "shopping around" since the price is the same everywhere.

If similar agreements were in place for other products, it would cause lawsuits. Imagine if all of the oil products sold by Shell or BP were given fixed prices. Media companies would love to have their own profit-guaranteed cartel and will push for illegal agreements to defend their aging business model.

Re:Lets not just include Apple

[bkaul01]

Paul Thurrott's column on this speaks to that question, and describes the logic of the antitrust investigation pretty succinctly:

Before Apple's entry, publishers set the wholesale price of books, but retailers could determine the final selling price. But Apple changed that, allowing publishers for the first time to determine the final price at which eBooks were sold to consumers. As a result, the average selling price of new eBooks jumped from $9.99 to $14.99.

The EC will try to determine if the firms colluded to fix prices and restrict competition. Both charges should be easily proven.

As I reported in February 2010, while Apple was negotiating with the major publishers, at least one of them, Macmillan, demanded that Amazon raise prices on its Kindle books to match Apple's prices. Amazon, now as then, owns the dominant eBook platform, called Kindle. And Macmillan threatened to pull its books from the Kindle unless Amazon went along with the price hike. After temporarily pulling Macmillan's titles from its store, Amazon capitulated and raised prices as demanded.

"We have to capitulate and accept Macmillan's terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books," Amazon wrote to customers at the time.

Re:DRM Free to maybe?

[BlackCreek]

Amazon was the one setting their own price to the books. The publishers (supported by Apple) demanded (at the time that the iPad came to the game) Amazon to only sell their books at a fixed retail price.

Ebooks are Great

[thomasw_lrd]

Ebooks are slowly changing the way authors sell their books. No longer do you need a publisher to sell you book. Self-publishing is not only a possibility now, but it is also a reality. The only thing you can get from a publisher now is up front fees and marketing. But with the web, you can do much of that yourself.

Step 1. Create a company to help authors promote books
Step 2: ????
Step 3: Profit

Re:Ebooks are Great

[Telvin_3d]

Yes, all you get from a publisher is up-front fees and marketing. And professional editing. And layout and typesetting.

And the way you say 'marketing' makes it sound like an easy thing. There are a quarter of a million books published every year in North America alone. Writing the first rough draft isn't the hard part. Writing the much better eighth draft is harder. Then getting anyone to read the damn thing, much less pay for it, is hardest.

No one is getting rich in the book industry. No one. Not the publishers, not the editors, not the authors. As an industry it is notorious for how much money it doesn't make.

If there were an easy way to successfully chop out any of the various book production positions it would have already happened long ago. And not years ago but decades ago.

Re:Ebooks are Great

[Telvin_3d]

'Changing the font and size' is about the least part of what a typesetter/layout person does. And it's a job that is particularly important for digital media where consciously choosing how things are displayed makes a massive difference to the readability. What font gets used? How large are the indents and how will the book treat text-wrapping for long lines? How are chapters and other headings handled? Are there quotations or other types of inset text?

God help you if you are doing something actually complicated with illustrations or funky layout tricks.

These things are what separates a professional book from a wall of text. And you have never noticed them in your life because they are always done long before it sees your hands. Go read some of the 'self-published' stuff on Amazon and try and figure out why the reading experience feels so clunky.

Re:the word is "Marketplace"

[BLKMGK]

Amazon ALLOWED?! Wow, way to rewrite history there. Amazon actually went so far as to pull Macmillan books from their store in protest but knuckled under the pressure. Their middle finger at the publishers has been to make sure anyone purchasing from them sees that the price is set by the publisher and NOT by Amazon.

Read this -> http://blog.macmillanspeaks.com/a-message-from-macmillan-ceo-john-sargent/

Amazon did NOT go quietly on this and went so far as to pull quite a few books from their digital shelves trying to NOT be forced into this but the leverage the publishers held was simply too great. This lawsuit is what should have happened all over the place right then and there, that it's only happening now years later and in the EU is a shame. Why is it that lately the EU seems to be the only place where common sense appears to be spoken?