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Apple Fires Back At DoJ Over eBook Price Fixing

Posted by Soulskill on from the best-defense-is-a-good-offense dept.

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.'"

19 of 311 comments (clear)

  1. A lot of words by Anonymous Coward · · Score: 5, Informative

    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.

    1. Re:A lot of words by sribe · · Score: 4, Interesting

      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.

      Except that if you actually read the words, they claim the exact opposite. I have no data to offer about their claims, but you haven't offered any either. In fact, you seem to be offering what the DOJ offered, anecdotes involving the prices of a tiny number of books, with no analysis at all of the overall market.

      And remember, Apple exerts almost zero (the exception being the so-called "most favored nation" clause) control over book prices.

    2. Re:A lot of words by DesertJazz · · Score: 5, Interesting

      Unfortunately I think the argument that Apple itself isn't responsible will probably be considered true in the end. The book publishers on the other hand can, and should, still get nailed to the wall. Charging as much for an ebook as a physical book is completely off-base. You still have to make the money back on editors, artwork, advertisement, etc., but the physical print, transportation, and storage costs should cause those books to be discounted a good amount. As it is, much of the time you can buy a print edition cheaper than an eBook version on new releases...

      Apple certainly deserves some of the blame, but I just can't see the DOJ managing to make it stick against them in this case.

    3. Re:A lot of words by cpu6502 · · Score: 4, Interesting

      The DOJ will demolish Apple's filing by saying, "That means 1 in 10 ebooks were not sold in Amazon, but on other magazine and book websites. So there was a healthy market of multiple e-stores competing with one another to lower the prices of this product, until Apple arrived on the scene and colluded with the publishers to engage in price-fixing" --- When the record companies tried this with CD sales, the case found Walmart was part of the collusion, and just as guilty of the crime. Same applies to Apple mart.

      --
      My AC stalker: " I personally agree with your posts most of the time, but that won't keep me from modding you troll"
    4. Re:A lot of words by jbolden · · Score: 4, Insightful

      Book publishers can't afford to get nailed to the wall. A few more pushes and we lose the industry. They are shrinking rapidly and having a tough time staying afloat. They need either:

      a) Very high margins on books selling 2k-50k copies
      b) Lots of inexpensive books selling 100k copies

      instead the market is moving towards a few books selling millions and many books selling hundreds of copies.

    5. Re:A lot of words by k4hg · · Score: 5, Insightful

      The books were cheap because Amazon was selling them at a loss to prevent the entry of competition. Amazon has a long-term strategy to work on razor-thin margins driving out all competition. In the last quarter they made about 1% of gross- they made a penny out of every dollar people spent. No small or medium business in their right mind would enter a market like that. So overall Amazon does not turn a lot of profit, but their stock is valuable (much more than their profit would justify) because investors expect that once they have completed driving all their competitors out of business they will raise their margin (meaning the prices you pay go up). So you are going to pay more, a little bit now because of the agency model and most favored nation status thanks to Apple, or a lot more later when no one but Amazon has physical or electronic books to sell you.

    6. Re:A lot of words by PhrostyMcByte · · Score: 4, Insightful

      And remember, Apple exerts almost zero (the exception being the so-called "most favored nation" clause) control over book prices.

      Though the result is that consumers got screwed because of it, this is my understanding of it as well.

      What I remember is that Amazon basically had the publishers by the balls, dictating somewhat more reasonable prices for ebooks. When Apple came to the market, they specifically worked with the publishers saying "hey, we'll let YOU set the price, so long as you always offer us the best one". The end result is that prices skyrocketed overnight, and today are still far higher than they once were.

    7. Re:A lot of words by ColdWetDog · · Score: 5, Insightful

      There has grown up in the minds of certain groups in this country the notion that because a man or corporation has made a profit out of the public for a number of years, the government and the courts are charged with the duty of guaranteeing such profit in the future, even in the face of changing circumstances and contrary to public interest. This strange doctrine is not supported by statute or common law. Neither individuals nor corporations have any right to come into court and ask that the clock of history be stopped, or turned back.

      R.A. Heinlein

      --
      Faster! Faster! Faster would be better!
    8. Re:A lot of words by Richard_at_work · · Score: 5, Interesting

      Before iBooks, I bought a lot of stuff from Ereader.com, and here are some of my comparisons (in GBP)

      Revelation [Mass Effect Series Book 1] £2.99 - iTunes price £4.99
      Ascension [Mass Effect Series Book 2] £2.99 - iTunes price £4.99
      Pandoras Star £4.99 - iTunes price £8.99
      Judas Unchained £4.99 - iTunes price £8.99

      Those examples were purchased in 2008, the iTunes prices are right now. I could go rough the other 50 or so books I purchased if you wish?

      None of the purchases I made on Ereader are currently available for new purchase - I can still download my purchased copies under my account, but you couldn't buy them now.

      I think the DOJ have a fairly decent case here.

    9. Re:A lot of words by teg · · Score: 4, Interesting

      Amazon wasn't as much dictating more reasonable prices (for your definition of "reasonable") as "selling at below cost" to build a dominant market position.

      Besides, one vendor being able to dictate prices in the market is hardly seen as a healthy market.

    10. Re:A lot of words by poemofatic · · Score: 4, Interesting

      Copyright is not a free market and filing antitrust suits over pricing or price collusion is specious

      This misunderstanding is at the heart of the matter. Copyrights grant a monopoly (and therefore the right to engage in monopoly pricing) to the copyright holder for that specific work. The fact that a work is copyrighted does not grant monopoly rights to everyone else in the production chain, nor does it allow monopoly pricing for all books. I.e. you can say "this work which I own, I only make available to bookstores and re-sellers for $20". But the publishers cannot collude together and say "All books that *we* collectively own are only available for $20", nor can the bookstores and re-sellers collude to charge a fixed premium over what they pay publishers. The bookstore does not hold any copyrights, and no individual publisher holds all copyrights. So a general increase in the price of *all* books without any corresponding increase in marginal costs, prices paid to authors, or input prices is pretty good evidence of illegal collusion, irrespective of whether any individual book is copyrighted.

      So what you have here are two illegal practices:

      * publishers colluding with each other to charge high prices. They should be competing with each other, setting only the prices for the works that they (individually) hold copyrights over. Then if they charge too much for sci-fi author A, you can go to publisher B who holds sci-fi author B's copyrights. If B is substitutable for A, and B will be, to some extent, then a low enough price will force the publisher of A to also lower their price. When they all get together, they can set prices for all books, and this is illegal.

      * Collusion on the part of the re-sellers (e.g. apple, Amazon), who hold no copyrights. Whenever anyone says, "I will charge a fixed markup", they run the risk of being undercut by someone else who is willing to take a smaller margin. Unless the first person colludes with the (monopoly) supplier, so that whenever the competing re-seller tries to lower their markup, the supplier jacks up the price to the re-seller or refuses to supply the re-seller until the re-seller gets the message that he must charge the same fixed markup. Incidentally, this is why there were multiple lawsuits over "MSRP" -- suppliers aren't supposed to have the power to set retail prices, and retail stores need to have the right to try to undercut each other by lowering prices to the end user. But when the original good has a sole supplier, there is always the possibility of producer forcing retailers to sell for a certain price by withholding supply or charging more to those retailers that offer discounts.

      Whether or not the DoJ can *prove* collusion is one thing, but looking at the behavior or prices its pretty clear that illegal collusion is occurring, this despite the fact that that books are copyrighted.

      --

      When in doubt, have a man come through a door with a gun in his hand.

    11. Re:A lot of words by Dixie_Flatline · · Score: 4, Insightful

      Why is that bad?

      I mean, other than the fact that you personally are paying more, higher prices are not actually in and of themselves a bad thing.

      The prices were artificially depressed before. YOU were paying less, but that also means someone on the other end was necessarily earning less. That might seem great to you, but I'm sure the writer wasn't super hyped about it. Neither was the publisher.

      You don't have a RIGHT to low prices, though you have a right to only pay what you think is fair. If the prices are too high, stop buying. If everyone thinks the prices are too high, they'll stop buying too. If these 'new' higher prices are what the market will bear, then THAT'S the price that we should have been paying all along.

      Don't be fooled into thinking your personal desire to pay as little as possible is actually the fair or correct price to pay. It's just one of a nearly infinite number of options.

    12. Re:A lot of words by sgtrock · · Score: 4, Insightful

      And yet, Baen Publishing has proven for more than a decade that they can sell MORE ebooks and MORE dead tree books if they keep ebook prices cheap and don't use DRM. Smashwords is letting authors set their own prices and seeing the average price for an e-book drop to around $3.00 the last time I checked. O'Reilly has been selling a librar subscription model for e-books online through their Safari Books Online outlet for at least as long as Baen has been working their model. Lulu has moved into editorial services for e-books as well as print on demand.

      The fact is that the Big Six still haven't figured out how to sell ebooks successfully while the smaller, more nimble players are eating their lunch. Here's a couple of clues, fellas. Drop DRM and drop your prices. You'll make MORE money. :-)

  2. Re:I only download free books by MrHanky · · Score: 4, Interesting

    It's harmful to pay for books?

  3. Re:I only download free books by ticker47 · · Score: 5, Insightful

    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.

  4. Re:Oxford Comma matters by david.emery · · Score: 4, Funny

    I was with you until you misused "it's" in your link.

  5. Re:I only download free books by artor3 · · Score: 4, Interesting

    I want you to lose. I think that authors deserve to earn a decent living. So I'll keep buying books and supporting authors I enjoy.

  6. Re:I only download free books by Man+On+Pink+Corner · · Score: 4, Insightful

    If only there were some sort of mechanism, some sort of economic framework for commercial activity between willing parties, that could be used to sort out the question of who deserves how much money.

  7. Re:I only download free books by amiga3D · · Score: 4, Insightful

    The problem isn't with artists and authors, it's with the middle men who take the majority of the profits.