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Apple Fires Back At DoJ Over eBook Price Fixing
An anonymous reader writes "CNN takes a look at Apple's response to the Department of Justice's investigation into eBook price fixing. The filing 'cuts the government's case to shreds' while at the same time not bothering to defend the five publishers also under investigation. Apple said, 'The Government starts from the false premise (PDF) that an eBooks "market" was characterized by "robust price competition" prior to Apple's entry. This ignores a simple and incontrovertible fact: before 2010, there was no real competition, there was only Amazon. At the time Apple entered the market, Amazon sold nearly nine out of every ten eBooks, and its power over price and product selection was nearly absolute.'"
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That's a lot of words that don't change the fact that virtually every eBook you could ever want to buy costs more now than it did before Apple entered the market, which is the actual problem that the DOJ case intended to address.
Apple also ignores the fact that in a price fixing case, you do not have to show any level of market power, competition, or monopoly existence, thus making Apple's response irrelevant.
Namely that Ananymous Reader is an astroturfer.
The publishers could have entered the market at any time and competed with Amazon directly, the fact that they want to go through gateways is their own problem and doesn't excuse price fixing.
We need some independent publishing houses, and we need them fast. The content distribution should not be that difficult, as long as these indie publishers are able to publish DRM-free books in multiple formats. Make your books available in all the major formats (kindle/epub), and you will kill Amazon, Apple, Google, and anyone else. The question is, what will those companies do to stop you?
Big words - can you back that up with data? Apple has, or will, in court.
From Page 6, Bullet #7 (emphasis mine) "This lawsuit wrongly seeks to condemn Apple based on the Government’s apparent dissatisfaction with the impact of competitive entry, demand stimula- tion and innovation (ignoring significant indicia of consumer and market benefit), not based on any anticompetitive conduct by Apple. This is contrary to law and sound economic policy." "This is contrary to law and sound economic policy" means ( "This is contrary to law" ) AND ( "This is sound economic policy" ) When written correctly, with the Oxford Comma in place, it would have the intended meaning: This is contrary to law, and sound economic policy Yeah, parts of Oxford University don't use the serial comma any more, and some even actively recommend against it's use. Doesn't mean they are right though.
-- obligatory (but true) caveat: my comments my own, and don't reflect my employer or colleagues' positions.
Even if the claims about Apple were true, how can that be translated to collusion to keep prices high??
How is having a contract that says that if you sell cheaper to other, you must sell cheaper to me in any way keeping the price high? Apple is not the one setting the price at any time.
In an ordinary, competitive market, a producer wholesales a good to multiple retailers and the retailers resell the good at an above-wholesale price. The wholesalers used to be barred from setting the price the retailers could price the good at though that's changed somewhat over the past 30 years.
In the eBook market, Amazon controls a majority chunk of the market since they were the first to provide a reader at a price most people were willing to pay. Prior to Amazon, Sony and a few other manufacturers were selling readers at substantially higher prices and few people were buying.
Amazon did something else. To promote the Kindle, they sold eBooks at below wholesale prices. Amazon is no stranger to this strategy as it views the loss on each sale as the cost of building their brand. Moreover, Amazon is in a position to underwrite losses in the eBook market with profits made from sales of other goods on their website.
The publishers view Amazon as a direct threat to their business. No business wants to have a single customer and if Amazon destroyed the brick and mortar business and destroyed any online competition, eventually the only place you could buy a book would be Amazon.
When Apple came along the publishers thought they might be able to build a defense against Amazon.
The irony of course is Apple is doing the exact same thing to software publishers that Amazon is doing to book publishers - squeezing them out.
Cory Doctorow's essay A whip to beat us with describes how DRM is screwing publishers and consumers alike.
The Department of Justice better be careful. Apple can buy or sell them anytime it wants.
What's that? "Too late", you say?
You are welcome on my lawn.
I can see by this submission the Apple's law firm reads Slashdot. The submissions text is so far out in left field It's not even funny! Reading the actual court filings you don't come up with the fact that Apple tore anything to shreds, much less the government's case. Apple does try to defend itself and its actions but that is to try to defend the indefensible. The government has damning words by Apple's own Steve Jobs and in spite attempts by Apple to minimize the effect of those words. The real world results prove the governments case. In my opinion.
Apple deliberately misleads the court in its filings claiming that Amazon Kindle owners can only buy books from Amazon. This is the same as suggesting that iPad owners can only buy books from Apple. Apple ignores and myriad of smaller e-book competitors, I guess they just beneath Apple's notice. I have purchased e-books from many sources as sometimes the book I'm looking for is not simply not available from Amazon, so I have to use the excellent Calibre program to convert and manage my non-Amazon e-book purchases, as well as to load the books onto my device. It serves this function quite well.
Even when Amazon was the primary large e-book vendor on the Internet, there was nothing preventing publishers from maintaining their own storefronts for people to buy their e-books directly from them at close to the wholesale price that they charge Amazon, indeed, this would've made a lot of sense.
I've written on Slashdot in the past that the price of electronic goods are much less than those of physical goods. With electronic goods. You don't have the rights of printing, binding, shipping, and handling returns. While yes, the publishers who have cost in editing a manuscript, creating artwork, these costs, they would've paid anyway for the print version of the book. Once a single e-book is created by the publisher. You can distribute it an unlimited number of times. So the publishers make nearly a 100% profit on electronic sales. Consumers instinctively know this, and expect to pay much less. this desire for higher prices rivaling those of print or electronic version has significantly impeded the vibrant and competitive e-book marketplace consumers should have been able to expect.
The real crime that the publishers feel that Amazon has committed and needed punishment for was by providing a mechanism for small independent authors to get their works to market. I have read many of these $1-$2 e-books, and despite a few disappointments have been relatively happy with the experience.
What Apple has done with their anti-competitive in spite of their claims to the contrary, most-favored-nation status is to ensure that publishers must control the prices that they charge other vendors for the books, in order to account for Apple's most-favored-nation status and agency fee. This has the intended effect of raising the costs for e-books for consumers by preventing publishers from being able to choose to discount the retail price on new release books and in doing so causing harm to consumers. Which is the heart of the government's case. Walmart was found guilty a price-fixing, along with music publishers; and Apple will be too. I can't wait!
"GET / HTTP/1.0" 200 51230 "-" "Mozilla/4.0 (compatible; Setec Astronomy)"
They are not trying the case in the public. When it come time for the trial Amazon will hand over its records and they will clearly show what occurred. They can also go and get B&N and Sony's sales records. Apple is the least likely company to have data on ebook sales prior to the switch to the Agency model. They didn't enter the market till 2010 and they were never a big player in the market afterwords.
You know, All of this is kind of silly. We all know what's going to happen here. The printers raise their rates to handle the reduced amount of printing they are doing. In order to cope, they publishers have to raise their rates. If they raise the price on the paperbacks, no one will buy them, so they raise the price of the ebooks, driving folks to buy more paperback books cause they are cheaper. As people make the switch back to paperbacks, the cost of the ebook will go down for the same reason.
We are talking about a market that in the grand scheme, is really just starting. Think about how long books have been around, how long people have been selling books. Books won't be going anywhere for a long time. I think that a few things need to happen yet with ebooks before we can really see a change. A universal reader needs to be created and a universal drm free format needs to be created. I need to be able to walk into any store, and purchase an ebook, and that book needs to be able to open on any and all devices that I have. And a real method needs to be created for sharing ebooks. Finally, I think all these technology companies apple and sony, and google, need to get their hands out of the book/ebook market and get back to making devices and let the booksellers publishers figure this one out.
At the end of the day, people as a species will always love stories, and people will continue to consume stories in which ever way they are most comfortable with. If it were up to me, I'd say, just price them all the same. Hardback, paperback, ebook, audio book, whatever. And lets see where the market takes us.
while apple is filling many of the publisher's roles taking on some of it's costs and slightly more of its profits. If everything stayed the same then this would mean less money left over for author development via advances and promotion. Apple uses none of it's income for that.
But it may be the case the market for reading increases. That's not clear. The public can only read so much. But maybe they might consume (without reading) more if it is made easy. In which case they offset the profits they remove by expanding the pie.
The people getting hurt are definitely the brick and mortar stores. Which is sad if you are a bibliophile. browsing is wonderful and so is talking to a shrewd librarian or bookstore person about what you might like to read next. I suspect that recommendation systems on online can't match that.
I suspect we will see two divergent phenomena. A narrowing of general tastes while at the same time an enlargement of specialized tastes. That is, fewer books will be read a lot by mainstream readers while rare titles will become more available to those seeking them.
In such a case there is less incentive for the advance or the book tour for marginal authors.
Some drink at the fountain of knowledge. Others just gargle.
2006 Amazon was the king of books sold online. If you purchased a book and had it delivered to you house via Fedex chance are you purchased your book from Amazon or its chief competitor Barnes and Noble. Amazon was the Walmart or the Tower records of books.
Sept 2006 Sony releases the PRS-500 e-ink ereader.
Nov 2007 Amazon releases the Kindle and begins marketing it on Amazon.com to its large book buying customer base.
Nov 2009 Barnes and Noble, Amazons primary competitor, releases the Nook two years after the Kindle. It receives good reviews. B&N starts marketing the device in B&N stores to its millions of customers.
Mar 2009 Amazon releases the Kindle app for IPhone (app would later work on IPad)
April 2010 Apple releases the IPad with IBooks three years after the release of the Kindle and 1 year after the release of the Kindle app. The Agency model replaces the wholesale model.
July 2010 Borders starts selling the Kobo ereader three years after the release of the Kindle
Oct 2011 Borders goes into bankruptcy. Kobo survives and still sells books under the Agency model.
So saying there was no competition is strictly true. With the exception of Sony, Amazon did not have any competition for 2 to 3 years. So of course it gained 90% market share. And of course that market share went down after B&N started selling the Nook. If you look at current market share it is similar to Amazons share in 2006. Amazon in #1 and B&N is #2.
You don't have to suspect that, it is already happening. The self publishing industry is thriving on books whose intent is under 500 copies sold. Books created exclusively as ebooks meant to sell thousands of copies are letting authors write for tiny niches. Higher academic and professional prices are feeding niches. While general interest books designed to sell tens of thousands but not millions of copies are dropping off fast.
Yes, because you know that those books available on Project Gutenberg were never sold, no one tried to buy one and it was only when they were available online for free that people tried to read them.
Non sequitur. Why? Because:
1. What you said doesn't prove that paying for books is bad, and most importantly
2. What you said is not fucking true.
I can prove to you that what you said is not true by contradiction. If what you said was true (that no one tried to read the books in Project Gutenberg), then it has to the Epic of Gilgamesh, Sun Tzu's "The Art of War", Cervantes's Qixote, Shakespeare's Macbeth, Adam Smith's "Wealth of Nations", Nietzsche's "Thus Spake Zarathustra" to name a few.
This is obviously not true since these writings have been the object of substantial reading through the centuries and ages, which predates free e-books. Ergo, your statement is false (in addition to being tangential), and you are an idiot for making it.
If so, then my bad. My online sarcasm-o-meter is broken.
Read all the other articles written by Philip Elmer-Dewitt. Every one for years is basically "look how wonderful Apple is, and look how much good they do".
It's like he's channeling Steve Jobs from beyond the grave.
So whilst I don't doubt your anecdotal price evidence, do you think amazon pulling a bait and switch could be a possibility?
Did that actually happen or are you making stuff up. From what I remember Amazon quarterly statements show it making a ton of profit off the Kindle. I also don't remember any competition going out of business under the wholesale model. Instead we had a bunch of new ebook retailers crop up under the wholesale model. The only ebook retailer that started selling books under the Agency model was Google. Google hasn't made a dent in the market share. If Google could of lowered prices maybe they could have gained some share.
Editors, Proof Readers, and Marketing are different professions from publishers. Those people add value so of course they should get paid. A publisher does none of those things. So what are they getting paid for? In the physical book world they were businessmen who made deals between stores and authors. They are not needed for this anymore. That simply leaves advances. An advance is nothing but a loan. If banks or retailers step in and start guaranteeing loans against ebooks then publishers have nothing left.
Barnes and noble nook was prior to 2010. Apple is lying vermin.
We won't lose the industry, we'll lose the dinosaurs. Companies like Baen Publishing, Smashwords, Lulu, and dozens of others are making money hand over fist while the Big Six continue to follow outmoded models. Frankly, I think it's great that we're moving away from the highly consolidated market that we have today back towards a more traditional, dispersed one with many smaller players.
I other words they are guilty of price-fixing what other stores may sell the ebooks for
Apple hasn't been shown to be guilty of anything. They've been accused of price fixing, they've vigorously denied it, and their guilt or innocence have yet to be adjudicated. Obviously you've made up your mind as to the facts of the case, never mind the actual facts.
PLUS anticompetitive behaviors such as blocking amazon from target. Guilty guilty guilty.
Except that Apple had nothing to do with it. The decision to yank the Kindle was Target's, and they said so explicitly in a statement. Target was pissed at Amazon for encouraging shoppers to compare prices in physical stores, and said in their statement that they refuse to become showrooms for Amazon.
But nice to hear you venting your hatred by snapping at any anti-Apple sentiment, however untrue. And "Mcirosucks"? Really? It's way beyond stale to refer to Microsoft as "Microsucks", not to mention childish, but you couldn't even spell it right. Pathetic.
People like to repeat it without much actual proof.
HOWEVER even if true it doesn't matter. Why? Because after Apple entered the market price fixing was clearly in place. Ebooks cost MORE than their physical counterparts. There is no way anyone can say that is reasonable or necessary. It costs less to distribute an electronic copy than it does to distribute a physical copy. As such there's no way the final price should be more.
If prices had risen a little, I'd say "Ok, maybe Amazon was forcing the publishers in to prices that were too low." However I'm sorry, but this shit does not need to cost more than physical books.
Also, surprise, surprise, now that the DOJ is involved that has been changing. Ebook prices aren't as low as they were initially but they are lower than the physical book prices (from most publishers at least).
I don't mind companies needing to make a reasonable amount of money for their product. I mind being screwed. When I go to Amazon to buy Dune and the paperback version is $12 but the Kindle version is $15 along with a "This price was set by the publisher" message you telling me there isn't some bullshit collusion going on? How the hell can a digital edition cost more than the paperback (brand new paperback mind you).
Same shit but worse at B&N. They'll sell me Dune for $10 in paperback, they are undercutting Amazon on it but the Nook Book? $15. Hmmmm...
So sorry, but Apple and the publishers colluded to raise prices, and it has hurt consumers, and the DOJ is on to them about it. They can't white knight their way out of this.
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Amazon having a large share of the market does not in itself prove a monopoly, as Apple asserts. Amazon had other competitors just waiting for them to stumble. It seems to me that Apple's ability to enter the market, and to do so on terms as different from Amazon as they claim, tells me that Amazon did not have "nearly absolute" power.
is irelevant. They chose to illegally fix ebook prices to avoid haveing to compete in a legal manner. The result was higher ebook prices to the consumer so that (CR)Apple and the 5 publishers could increase profits, injure Amazon's business, and rip off consumers. Don't get me wrong, Amazon is not "pure as the driven snow" either. But you can't fault them for getting into the ebook market first, and building a profitable business.
No, it doesn't. That would be written, "This is contrary to law and is sound economic policy." (More likely, it would be written, "This is contrary to law but is sound economic policy.")
There is no place for the serial (also known as "Oxford" or "Harvard") comma in that sentence, since where it is used at all, it is used in separating the final item in a series of 3 or more.
Nor would commas separating the elements do anything to tell you whether the common portion of the list ended with "is" or "to" and whether the first element started with "contrary" or was just "law".
If one was especially concerned about avoiding potential confusion of the meaning, one could rewrite the sentence as "This is contrary to both law and sound economic policy", but while that would be more explicit, it is unnecessary, but in any case throwing superfluous commas into the sentence doesn't help anything.
It is one thing to pedantic. It is something worse to be pedantic and wrong.
Unfortunately it turns out that the "excerpt" is satire. Very funny satire.
You want recommendations, join a club with like minded people from diverse backgrounds. Some sort of social network, possibly online. Relying on your local merchant to provide that by chance is a happy coincidence.
It's not a valid reason to prop up a failing business model.
A fool throws a stone into a well and a thousand sages can not remove it.
So their argument is since Amazon is so successful they should be allowed to break the law. That this is the only way they can compete.