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Apple Holds Firm As Publishers Settle With DoJ Over e-Book Pricing
Nerval's Lobster writes "The U.S. Department of Justice has just settled with book publisher Macmillan in an ongoing case over the price of e-books, bringing its number of settlements with big-name publishers up to five. Justice claims that those five publishers, along with Apple, agreed to 'raise retail e-book prices and eliminate price competition, substantially increasing prices paid by consumers.' Apple competes fiercely in the digital-media space against Amazon, which often discounts the prices of Kindle e-books as a competitive gambit; although all five publishers earn significant revenues from sales of Kindle e-books, Amazon's massive popularity among book-buyers — coupled with the slow decline of bricks-and-mortar bookstores — gives it significant leverage when it comes to lowering those e-book prices as it sees fit. But Justice and Apple seem determined to keep their court date later this year."
...along with a DRM scheme that causes problems (see the 1984 controversy) are why I keep reading dead-tree editions.
DVD and Blu-Ray have DRM that's somewhat nonsensical, but the media are cheap. I can excuse some of the stupidity because I'm not paying a lot for it.
E-books are too expensive for not having a physical copy.
Do not look into laser with remaining eye.
Which is to say I think that I don't think that the price is the critical factor here. Over time we are going to see more open sales and less lockin. This will happen as publishers depend less on printing paper and more on quality books.
"She's a scientist and a lesbian. She's not going to let it slide." Orphan Black
Publishers should be able to price their product at whatever levels they want. They got into trouble when they got together to agree on set prices.
Ebooks are an interesting thing. The Apple and Kindle Ebooks seem to be licenses to view the content, unless you illegally break the DRM of the content and load it into callibre or a similar software. You can't buy an ebook and then sell it when you are done. You can't buy a used ebook :)
Physical textbooks are getting that way too, coming with 1 time licenses to study problems that your teacher may require, which eliminates the used text book market. Ultimately, they are adapting their profit model to extract the most they can out of the existing market, similar to how Dice hosts advertisements on slashdot and calls them news articles.
I would hope that these trends push people to abandon these platforms, but history tells me that most people will stick with it because its good enough (some people gradually edging out of the market, but they don't matter). Will the people sick of these moves make their own platform? Hopefully.
apple entered into an agreement with the publishers to fix prices of ebooks and kill their competition's business model. That's the issue at hand.
What a fucking mess. I'm glad I still read actual books.
I don't respond to AC's.
There's a much better way to avoid being gouged for books. Pirate.
Ebooks are tiny and there is apparently a quite active ebook piracy scene. You can find torrents that are VAST archives of thousands of books (of just one genre!) and they're smaller than your average HD movie rip.
The ebook prices publishers put forward are an absurd, laughable fantasy designed to protect their old business models as long as possible. (And to foster the idea that their high prices are somehow normal)
I can get 10-12 dollars for a hot new release from a well known author, but 10 for the 3rd book in a serries of 12 in a not particularly critically acclaimed written in the 70s? Yeah fucking right. And that's even if it's for sale. The biggest complaint by far I have about ebook sellers is lack of selection and worse, inconsistent selection. The pirates have everyone beat here. Ancient copyright rules make this industry a farce.
But that isn't the issue:
http://www.pcpro.co.uk/news/378679/apple-settles-with-eu-on-ebook-probe
European Union regulators ended an antitrust probe into ebook prices, accepting an offer by Apple and four publishers to ease pricing restrictions on Amazon and other retailers. The decision hands online retailer Amazon a victory in its attempt to sell ebooks cheaper than rivals in a fast-growing market publishers hope will boost revenue and customer numbers. The European Commission said the concessions from Apple and the publishers soothed concerns that their pricing deals curbed competition. "The commitments proposed by Apple and the four publishers will restore normal competitive conditions in this new and fast-moving market, to the benefit of the buyers and readers of ebooks," EU Competition Commissioner Joaquin Almunia said.
Apple and the publishers offered to let retailers set prices or discounts for a period of two years, and also to suspend "most-favored nation" contracts for five years.
Such clauses bar publishers Simon & Schuster, HarperCollins, Hachette Livre and Verlagsgruppe Georg von Holtzbrinck, the owner of German company Macmillan, from making deals with rival retailers to sell ebooks more cheaply than Apple. ...
That is a cartel. If Apple did nothing wrong why did they settle in the EU?
Read more: Apple settles with EU on ebook probe | News | PC Pro http://www.pcpro.co.uk/news/378679/apple-settles-with-eu-on-ebook-probe#ixzz2KKxWeAFP
Really this case has a lot more depth to it than just the old Apple/Aamazon angle. Everyone shoudl read more details as to what this is all about.
It was about the publishers (and Apple) trying to keep the market more open to competition - an excerpt:
"While the deal caused prices to go up for some new releases and bestsellers, according to Schumer, the average ebook price actually went down from $9 to $7....It was actually Amazon - not Apple or the publishers - that held too much market power and was using a predatory pricing to drive the publishers out of business. In a comment on the settlement filed by Barnes & Noble, the company argues that without the shift in pricing strategy from the publishers, it would have been unable to develop its own competing e-reader. "
"There is more worth loving than we have strength to love." - Brian Jay Stanley
On the other hand, given the egregious awards for downloading just a few movies or songs - imagine the financial penalty for a collection of a thousand books.
Everyone is just lucky the book industry is not going after pirates the same way the music industry has.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
Not all ebooks are overpriced or have DRM.
I bought a Google e-book recently and used their instructions to convert it and download it to my old Nook reader. I think Google's will work on nearly any device.
Actually, some Amazon eBooks don't have DRM. I still don't think you're allowed to sell them when you're done, though.
If you can't convince them, convict them.
No they didn't. I repeat, the ebook business model is exactly the same as the app store model. It's not something new and devious devised by a conspiracy.
They were agreeing on a set agency pricing.
See normal pricing is wholesale, meaning that I decide what I need to charge for a product, and I sell it to stores for that much (usually with quantity discounts). Then the retailer is free to price it as they wish. They can mark it up a ton and try to make big unit profits, they can sell it at a loss as a loss leader. I am happy either way because I am getting what I want per copy.
Agency pricing is different. Here the manufacturer tells the retailer what price they must sell the final unit for. They not only set the price the retailer must pay them, but the price the retailer must charge customers.
Agency pricing is pretty scummy period in my opinion, and is fairly rare. Here not only was it being done, but as a collusion.
Then, to make matters worse, it was done due to the request of a retailer. Apple wanted agency pricing so they didn't have to compete with Amazon on price. They were having their high margins enforced on all retailers, at the expense of the consumers.
You are right – but you are also missing the point.
There are 3 major players: the publishers, the distributors (Apple or Amazon), and the customers.
Amazon’s Kindle used a distributor’s model. Amazon would buy the book at a fixed price from the publisher but would set the retail price. They could, and did, sell books at a loss, to promote the Kindle.
Apple uses an agency model. The publishers set price and then negotiates the percentage the retailer (Apple) keeps. It is alleged that Apple and the publishers colluded to break Amazon’s near monopoly.
The agency model shifts power away from the distributors to the publishers. As you say this model has been around for a long time – so why care?
What makes it a Federal case is that (allegedly) this raised prices for consumers. Why? Because now all bookstores sell the same book for the same price, so bookstores are no longer competing on price. It shifts power away from customers to the publishers, resulting in higher prices.
The problem was not Apple's app store model. The problem was that Apple allegedly colluded with the publishers to raise the prices of ebooks in other stores. With iPhone and iPad apps, it didn't matter so much, because the Apple store is the only officially-sanctioned source of those. I guess Apple didn't like the thought of having to compete on price with other ebook retailers...
Just another wannabe fantasy novelist...
The problem was that Apple allegedly colluded with the publishers to raise the prices of ebooks in other stores.
And it's nonsense. Apple has no ability to set prices for other stores. That is between the publisher and those other stores. Apple doesn't even set prices for their own store.
All Apple did was use exactly the same model they used for it's App Store. It'd be surprising if they didn't. It's not some fiendish plot.
Apple will let it go all the way to court because they have done nothing wrong.
Apple and the publishers did this to make money
Of course they did.
Because Amazon destroying all other publishers means they make very little money. But do you think that's better, or worse for readers?
Amazon charging less so they can lock the whole market into the Kindle platform for eBooks is not exactly an altruistic move either you know.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
The library has always been my first choice for books, but something like Spotify for books would move the library to 2nd...
He who laughs lasts.
But Amazon is selling books at prices across the board that are unprofitable and accusing anyone charging higher prices of gouging. They are actively trying to destroy other distributors and bring publishers under their thumb. This is going to hurt consumers in the long run because destroying publishers and distributors ability to make a profit will result in fewer books getting published. Consumers will have fewer books to choose from and fewer venues in which to shop for them.
I'm absolutely amazed that folks here on Slashdot who claim to value freedom, etc, are actually cheering Amazon's attempt to build a monopoly. Has everyone's hatred for Apple really blinded them that much to what's going on here?
Do 2 wrongs make a right?
There are Slashdotters who value fairness, reject sloppy logic, guilt by association, and broad generalizations.
Was Amazon selling best sellers at a loss as a loss leader? They wanted to generate overall excitement and get people to visit the store and buy Kindles. Or was this to crush book stores – which were already in decline.
If true, and I think there is more than a smidge of truth in those accusations, then Amazon should be brought on a lawsuit for it’s failings. Giving Apple a free pass is not the right option.
Almost. It shifts power away from distributors to the publishers.
In neither the Amazon nor the Apple model is the customer the one with power. Amazon is using its weight to crush competing bookstores. Apple tried to use its weight to stop Amazon, which actually would have eliminated the Amazon price advantage and made it possible for multiple bookstores to run digital versions, because they'd have to compete on things other than trying to match Amazon's negative margin.
Amazon's unfairly low prices hurt competing bookstores and also concern publishers, who see eroding prices as a threat to their long-term profitability when coupled with falling sales. Customers with a long view should also see a threat from Amazon essentially dictating prices.
It's not the agency model itself that is problematic. It's not even the MFN provisions. It's the combination of those two with a pricing structure that ensures the same end pricing for all. Had the publishers simply required that distributors recoup all costs and not sell at a loss, the DOJ investigation would be a lot less interesting, because that is a nondiscriminatory corrective action to predatory pricing. But requiring everyone to have the same markup is a step too far and becomes price fixing.
Publishers should be able to price their product at whatever levels they want.
Distributors should be able to price their product at whatever levels they want.
It's one thing for a publisher to set the price when they sell to a distributor. It's quite another thing for publishers to dictate the price when a distributor sells to a consumer.
Unix is user friendly, it's just selective about who its friends are.
You don't seem to understand. You're right, Apple shouldn't have the ability to set prices for other stores, but what they did was get the publishers to agree that they wouldn't allow other stores (aka: Amazon) to sell for prices less than Apple.
That's why there is such a "to do" about this. It's not the way things normally work and that's why the DOJ has brought the lawsuit about.
I don't have time to make a sig
My libary lends e-books.
Also, doesn’t Amazon Prime kind of do this – letting you lend 1 book a month?
I'm not saying you never see it, the audio world likes it to an extent, Denon does it, but it is not very common. Most manufacturers decide what they want to make per unit and price accordingly. What the retailer does is of no concern to them.
Agency pricing is legal, but not to collude on it.
Apple's business model was to raise everyone's price and contract so that no one could sell cheaper than them. It was good for apple and good for the publishers, and you want to tell me its "A Good Thing" for consumers? It is outright price fixing. Amazon's behavior has legal tests you can apply to see if its monopolistic behaviour that's illegal, but you'll find that it involves other distributors (like apple) not being able to get content, which certainly wasn't the case. It isn't illegal to just sell something for less than your competition. It doesn't take a set of binoculars to see that you're missing the point entirely, and defending Apple's actions that were truly bad for the consumer. It was anticompetitive (to put Amazon and their thin margins out of business) and also illegal by fixing prices.
It was about the publishers (and Apple) trying to keep the market more open to competition - an excerpt:
Bless you sweetness, you do know that this is nothing to do with *competition*...its the opposite of competition its a cartel. As for Apple...because you don't really care about the publishers is in it for "most favored nation", that means *nobody* can compete on price with Apple.
In fact this is anticompetitive....its why the DoJ is breathing down Apples Neck
Apple and the publishers did this to make money
Of course they did.
Because Amazon destroying all other publishers means they make very little money. But do you think that's better, or worse for readers?
Amazon charging less so they can lock the whole market into the Kindle platform for eBooks is not exactly an altruistic move either you know.
You mean instead of *middle men* bleeding artists dry, and electronic store fronts taking massive mark-ups on Authors Books. That sounds wonderful.
As for the whole kindle thing. I'm pro a move to open devices and formats, and look forward to Apple relinquishing its patents on its closed formats [and it embracing open ones flac and webm being good starts] , and opening its devices to Alternative store-fronts *including* kindles who currently use a web-app :)
I Agree with you I think boycott Apple until they open their [not your] platform.
Look at the Apple vs. Samsung trial. Apple *owns* the US 'justice' system.
Nope. Publishers were still setting wholesalse prices in the distributor model. When Amazon set price at $9.99 for a book with a $20 suggested retail price the publisher was making $9.99 on the book. Under agency model they set the prices at $15 and got to keep 2/3s. So they made $9.99 per book. Publishers made more money per book in the distributtor model because with lower prices there were more sales. But driving sales to digital would kill the whole point of having a publisher. Publishers only provide benifit to authors in the print world. They are dinosours and they know it. So they intentionally raised prices to slow digital down. And they used an agreement that made sure other publishers did the same.
But Amazon is selling books at prices across the board that are unprofitable and accusing anyone charging higher prices of gouging. They are actively trying to destroy other distributors and bring publishers under their thumb. This is going to hurt consumers in the long run because destroying publishers and distributors ability to make a profit will result in fewer books getting published. Consumers will have fewer books to choose from and fewer venues in which to shop for them.
I'm absolutely amazed that folks here on Slashdot who claim to value freedom, etc, are actually cheering Amazon's attempt to build a monopoly. Has everyone's hatred for Apple really blinded them that much to what's going on here?
Consumers were hurt when Apple colluded with publishers to raised prices for ebooks. The wrong solution is to form a cartel between Apple and publishers.
Yes, they own the US justice system, and yet it is the EU courts that produced a pretty scathing opinion of Samsung's abuse of FRAND patents.
But let's not let facts get in the way of a good conspiracy.
Look at the Apple vs. Samsung trial. Apple *owns* the US 'justice' system.
Whatever your opinion of that trial, it's tough to argue that Apple "owns the U.S. justice system". It was just last year that Apple got smacked down pretty hard in their case against Motorola.
It doesn't matter how little it has helped the music industry. What matters is that the music industry has destroyed quite a few lives. And the publishing industry COULD do the same if it chose, I would be wary of putting myself into the middle of a very likely action.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
You don't seem to understand. You're right, Apple shouldn't have the ability to set prices for other stores, but what they did was get the publishers to agree that they wouldn't allow other stores (aka: Amazon) to sell for prices less than Apple.
There's absolutely no evidence of Apple being involved in a cartel.
Publishers only provide benifit to authors in the print world.
No, that would be printers. Publishers commission, give advances, provide editors, provide promotion, provide a brandname, get books reviewed by the important reviewers etc.
They are every bit as important as signing to a label is for a band. You can record your own CD of music and put it up for sale on the web without a record label. But it almost certainly won't see beyond your friends and family. Same goes for ebooks.
So they intentionally raised prices to slow digital down. And they used an agreement that made sure other publishers did the same.
No, if they wanted to slow digital down they'd just not do digital. They like digital, it's very profitable.
Publishers should be able to price their product at whatever levels they want.
You are right. But publishers shouldn't be able to specify the price the middle sales to the public.
There's no evidence that Apple colluded with publishers in this way.
Unfortunately prices remain high and I remain to read in a old way. Libraries can count on me!