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Apple E-book Price-Fixing Trial Begins
An anonymous reader writes "Technology giant Apple is to begin its defence against charges by the US government that it tried to fix the prices of e-books. The iPad-maker is accused of working with publishers in 2009 to set prices in an effort to compete in the e-book market dominated by Amazon. Quotes from Steve Jobs' official biography have been cited as evidence in the case."
Apple's iBook publishing deals included a clause that no other eBook outlet could get a better price than Apple. So, yes, they were engaged in price-fixing that directly favoured them as a seller. In a wholesale bookselling model that's not quite so terrible - you can compete by eating into your margins - but in an agency model where the selling price is set by the publisher isn't allowed to be any lower than on iBooks, you're fucked.
No kidding!!! What do you say at this point?
I think the word you're looking for is "condone". Condoming an island country could prove to be extraordinarily difficult.
For non-agency titles (in other words, titles that Amazon purchases to sell under the wholesale model,) Amazon reserves the right to set and change the price as it sees fit, although it will still remit the same wholesale amount back to the publisher or author. If Amazon drops its price for a title below that of Apple or Barnes & Noble, even without the knowledge of the publisher or author, Apple and Barnes & Noble have the right to match Amazon's price.
Read that through again. The blogger you are sourcing is misrepresenting what a "Most Favored Nation" agreement is. When a retailer, such as Amazon, buys a product at wholesale, either a book or a pipe fitting, they have the right to set whatever price they wish for that item. If they're cutting into their own profit that doesn't matter and is not illegal, the manufacturer/distributor/publisher was paid their asking price. This is not a MFN clause, it's standard retail practice. Apple's deal changed that. Retailers could no longer set their own prices. If they didn't charge the price the publishers demanded then they would not be sold any books, and several publishers did withhold books from Amazon until they agreed to their scheme. They could no longer use pricing as a competitive tool against Apple, which is why Apple is in court and not Amazon.
Apple has an agreement with the publishers that says "No one is permitted to sell for less than this."
In other words, they tell potential ebook sellers "Sure you can try to compete, but don't think you can sell more / establish yourself / give consumers a better deal by selling at a lower price."
Now, here's the purpose of the Sherman Antitrust Act:
"To protect the consumers by preventing arrangements designed, or which tend, to advance the cost of goods to the consumer."
Sounds pretty obvious that what Apple is doing is an example of what the Sherman Antitrust Act is about, doesn't it?
And here's how the law starts:
http://books.google.com/books?id=biU3AAAAIAAJ&pg=PA209
Prior to Apple's arrangement with publishers, retailers like Amazon could buy e-books wholesale and offer whatever prices they chose. Apple colluded with the publishers to change from a wholesale to an agency model FORCING all other retailers to abide by agency terms and removing the wholesale option. Amazon tried to fight this and several publishers stopped selling books through Amazon until they caved, solely because of Apple's backing. If Apple hadn't supported the agency model and they hadn't colluded with the other publishers, none of them would have risked cutting off their largest customer, Amazon to strong-arm them into the new terms.
If Apple truly charges 'too much', then it is nothing but an opportunity for an enterprising individual to start a competing business and provide better prices.
And that's exactly the problem here, Apple's exclusive contract forbids the publishers to get into a deal with anyone else.
At least not at a competitive price.
"The likes of Facebook and WhatsApp are free to those whose privacy is of zero value."
Printing Geek here: Paperback book would be roughly $0.01 or LESS per text page (depending on the run length of total copies) and $0.04 per cover. All of this includes binding and shipping. So, let's look at a 300 page paperback: about $3.10 per printed copy. Now, think of a large run book with text page cost at $0.005 or $0.0025 per page: ~$1.54 or ~$0.79 per copy. I think the lower range of prices is even more likely considering the junk paper stock and black ink only for paperbacks.
Keep in mind these cost are assuming domestic US production of books! I don't think I can pick up one of my kids books and not see "PRINTED IN CHINA" on the back.