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DoJ Files Suit Against Apple, Ebook Publishers
forkfail writes "The Department of Justice has filed suit against Apple and a number of book publishers, including Hachette SA, HarperCollins, Macmillan, Penguin and Simon & Schuster, claiming that they worked in collusion to artificially rig prices on eBooks."
I think the DoJ may be able to do more than one thing at a time.
Tic-Tac-Toe, Global Thermonuclear War, and relationships all have the same winning move.
And regardless, I hope the publishers get crushed on this one. While I won't go so far as to suggest that they don't serve any useful purpose anymore (as some people do), they _are_ dinosaurs and need to be dragged into 21st century competition. This should do it.
My userid is prime!
Well, price rigging is an important issue. If it were gas that they were doing this with and your gas started costing $4+ a gallon you'd care more. Oh... wait....
Well. Since ebooks seem to be priced at higher than print book prices....no. no they are not cheap at all.
I have a book in the iBookstore. I set the price on it. Apple sells it for that price and gives me 70%. I have the same book in the other bookstores. I have no control over the price. They give me what they want, which is half of what Apple gives me. I have no choice or say in the matter. And the Department of Justice sues Apple? That's just wrong.
The paperback was $38 shipped and the downloadable version was $97. Excuse me but that's insane.
Although some eBooks are cheap or free, most of the popular ones cost as much or more as their dead tree counterparts
Because after decades of $100+ physical textbooks from the major publishers, they go after far cheaper eBooks while they're still young.
Why they didn't go after publishers a LONG TIME AGO and only choose eBooks now is beyond me...
It has nothing to do with whoever is in office. The US has no control over an internationally traded commodity and never will. The US can only *temporarily* affect the market. The US can dump several million barrels on the market and OPEC will just cut production the same amount. No effect. So regardless of which party you hate they can do nothing and anyone claiming they can is a liar.
Until the US can import no oil at all they are subject to the international price and even then I am not certain though I would think you would have more power to control domestic prices if it is all internal. Now the subsidies are another matter, but I don't know enough about them to know whether they are having an effect, positive or negative, on domestic oil prices.
Well here's the spin I just heard on MSNBC (you can decide how accurate it is). "The standard price for ebooks was $9.99 but when Apple started selling them, they colluded with the publishers and raised that price to 14.99 or even 19.99. So claims the DOJ."
If that is true, it's called price-fixing and forming a cartel. It is illegal under U.S. Consumer Protection Laws (antitrust).
My AC stalker: " I personally agree with your posts most of the time, but that won't keep me from modding you troll"
Don't know if the "collusion" bit is true, but Shyster and Shyster books are all $19.95 on Amazon and Kobo, even while the paper version of the same book is going for $6. They used to be less than the paperback, which is why it made economic sense to buy an ereader, since you'd eventually make the money back in book savings. Now you're paying treble for a book you cannot lend, resell, or give away.
ASCII stupid question, get a stupid ANSI
Do you have an example of a major textbook that's "far cheaper" in ebook format?
Usually I see at most a 10-20% difference. For that you get a book you cannot write in, and which has no resale value. Many paper textbooks can be resold for 40-50% of their purchase price.
Dumping is the act of charging a lower price in a foreign market than one charges in the domestic market. They are not dumping, they are selling loss leaders, an action common in every brick and mortar supermarket or electronics store.
This is exactly what is at issue in the hub-and-spoke model of collusion (cf. section beginning "Information Sharing in the UK") the DOJ is alleging.
Quoting myself from elsewhere:
blog
P.S.
I was reading the Year's Best SF of 1992. The intro provides a summation of the state of the industry, and it said the publishing industry was "dying". A quick scan through the 1997, 2002, and 1987 editions had the same dire prediction of publishing going away: Magazines no longer existing and books ceasing to be published.
The only difference is today they blame amazon and "too cheap ebooks". Back in the 90s and 80s, they were blaming TV and movies for stealing-away audience. Whatever the cause it's always the same tired song-and-dance.
Ever heard the story of the boy who cried wolf? After awhile people stopped believing the boy's claims of seeing a wolf. Well I view the publishing industry the same way. They've been crying wolf for 25 years. Instead of fighting technology, they should embrace it.
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Technically “petroleum products by value” – and that’s important.
First, the US has a lot of refiners. Low cost Nigerian crude oil is shipped to the US, we ship higher cost gasoline, etc. back to Nigeria.
Second, thanks to fracking, we have a lot of natural gas. And we export a lot of that – either directly or indirectly (like Propane, Petrochemical Feedstocks)
More text from the complaint suggesting that DOJ has hard evidence:
"Beginning no later than September 2008, the Publisher Defendants' senior executives engaged in a series of meetings, telephone conversations and other communication in which they jointly acknowledged to each other the threat posed by Amazon's pricing strategy and the need to work collectively to end that strategy. By the end of the summer of 2009, the Publisher Defendants had agreed to act collectively to force up Amazon's retail prices and thereafter considered and implemented various means to accomplish that goal."
"The Publisher Defendants directly discussed, agreed to, and encouraged each other to collective action to force Amazon to raise its retail e-book prices."
"Publisher Defendants took steps to conceal their communications with one another, including instructions to 'double delete' e-mail and taking other measures to avoid leaving a paper trail."
"They received assurances from both each other and Apple that they all would move together to raise retail e-book prices."
"All five Publisher Defendants agreed in 2009 at the latest to act collectively to raise retail prices for the most popular e-books above $9.99. [Then quotes internal email]."
"Apple concluded that competition from other retailers, especially Amazon, would prevent Apple from earning its desired 30 percent margins on e-book sales. Ultimately, Apple, together with the Publisher Defendants, set in motion a plan that would compel all non-Apple e-book retailers also to sign onto agency or else, as Apple's CEO put it, the Publisher Defendants all would say, 'we're not going to give you the books'."
"As it negotiated with the Publisher Defendants in December 2009 and January 2010, Apple kept each Publisher Defendant informed of the status of its negotiations with the other Publisher Defendants. Apple also assured the Publisher Defendants that its proposals were the same to each and that no deal Apple agreed to with one publisher would be materially different from any deal it agreed to with another publisher."
"Each publisher defendant rquired assurances that it would not be the only publisher to sign an agreement with Apple that would compel it either to take pricing authority from Amazon or to pull its e-books from Amazon. The Publisher Defendants continued to fear that Amazon would act to protect its ability to price e-books at $9.99 or less if any one of them acted alone. Apple supplied the needed assurances."
"Near the time Apple first presented the agency model, one Publisher Defendant's CEO used a telephone call, ostensibly made to discuss a marketing joint venture, to tell Penguin USA CEO David Shanks that 'everyone is in the same place with Apple'."
"On the evening of Saturday, January 23, 2010, Apple's Mr. Cue e-mailed his boss, Steve Jobs, and noted that Penguin USA CEO David Shanks 'wanted an assurance that he is 1 of 4 before signing'."
There's about 20 pages worth of evidence, with email and telephone conversations quoted. This will be a big case. It looks like Steve Jobs and the publishing companies' CEOs were personally involved in the conspiracy.
Here's what's going on. Steve Jobs wanted 100% of the saving of switching from print to ebooks to go to Apple, not users or publishers and authors. However, he didn't want to drive customers away with higher prices. So, how do you suck 30% of the revenue out of an industry as pure profit without adding value or inviting unwanted competition? This is pure Steve Jobs evil marketing genius, and one reason to be glad he's dead.
The answer is the "agency model" combined with "most favored nation status". The agency model eliminates the likes of Ebooks.com and Ebook Depot, where you could often go and find an ebook for $1 or $2 less than Amazon. By forcing the industry to go to the Agency model, an ebook costs the same no matter where you buy it, eliminating any priced based competition, and reducing the consumer's choice to a matter of convenience, where Steve could dominate with the iPad and iTunes. Just for good measure, he removed any apps that also sell e-books from the App Store, like Sony's e-book app.
However, the big publishers wanted all of the profits for publishing as ebooks and then some. They pretty much wanted to screw authors, users, and the ebook stores, and were hopping mad at Amazon for forcing them to sell at $10 while Amazon took a bigger share of the profits than was even close to reasonable (over 50% for small publishers). In dealing with Apple, they loved the agency model and immediately raised prices, and of course they wanted all of the revenue. Statements like "4% would be a reasonable fee for the digital distributor" were common. Rather than bicker with each publisher like Amazon did, Apple simply demanded the lowest price the publisher offered anyone, meaning Amazon's price. Thus, Steve gets just as good a deal as Amazon had for so long. And in this case, he gets tons of cash with no work, and no added value in the chain. On the positive side, he did lower Apple's cut for doing nothing to 30%, or roughly 100% of the savings for going digital. Amazon responded by requiring their publishers also give them the lowest price, and then even Google jumped on board. Thus over 90% of the distribution channel for ebooks agreed on one thing: Apple, Amazon, and Google get 30% for doing almost nothing. Screw users, authors, and publishers. Between them, they have become the new gate keepers, sucking money out of you and me and crushing independent stores and sales channels. It's about time the DoJ looked into this!
This anti-competitive price fixing pisses me off. In the age of digital media, authors should be closer than ever to their readers. Publishers are still needed for editing and marketing, as books rarely become best sellers by themselves. However, the lower cost of digital distribution should mostly go to us, the consumers. If a print book is $10, I want the ebook for $7.
I got so upset at how all these companies are screwing the consumers over, that I came up with a potential solution. I've got a stalling effort to create Ebooks.coop. Members of this coop would pay for ebooks through the coop at the same price as they would using iBooks or a Kindle, because of the agency model. The coop would hopefully get close to the price from publishers as Amazon and Apple. Thus, for doing pretty much nothing, Ebooks.coop would make an unreasonable amount of money on each sale. At the end of the year, members would be mailed a check for their share of the profits, which would be proportional to how much they spent at the coop. This should enable us readers to "earn" most of that 30% savings.
The main reason I've stalled on this effort is DRM. I have difficulty reading print or a computer screen, and use text-to-speech software to read ebooks. Fortunately, I can get many popular ebooks almost for free from Bookshare.org, because of a loop-hole in copyright law specifically designed to help the blind. However, most ebooks are not available there, so I am forced to break the DRM manually, which is a huge pain, and always a moving challenge as publisher
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