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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.
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.
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
Agency pricing is pretty scummy period in my opinion, and is fairly rare. Here not only was it being done, but as a collusion.
Apple has so far sold 25 billion songs, all with agency pricing. Record companies set the price, and Apple sells it. The same things with books. Apple sells tens of thousands of different ebooks. They don't want to worry about what price to set for each book. So they let the publisher set the price; the publisher has more experience anyway.
Now apparently Apple told the publisher: If you sell the same book to other distributors for less, then we are not interested. Can't see anything wrong with that.