Judge Approves $450M Settlement For Apple's Ebook Price Fixing

An anonymous reader writes: On Friday a U.S. federal judge approved a settlement in the Apple ebook price-fixing case that could see the technology giant paying $450 million. $400 million of that would go to the roughly 23 million consumers thought to be affected by the price fixing, and the rest would go to lawyers. Though the case is now settled, the dollar amount is not necessarily final — an appeals court still has to rule on a previous verdict. If the appeals court finds in Apple's favor, then the total settlement drops to only $70 million. If they find against Apple, then it's the full amount. "The settlement appeared to reflect fatigue by Apple, the Justice Department, state attorneys general and class-action lawyers eager to conclude a case that has dragged on, largely because of delays by Apple."

Comments

So good that the proxy battle is over

[phayes]

All hail Amazon, the winner by proxy of this fight

Re:So good that the proxy battle is over

[I'm New Around Here]

Sounds like it. Apple and 5 publishers tried to raise the price of new "e-books from the $9.99 price that Amazon had made standard".

So why does Amazon get to set the price, and not Apple or the publishers?

Re:So good that the proxy battle is over

[whoever57]

So why does Amazon get to set the price, and not Apple or the publishers?

There would not have been a problem if Apple had tried to lower the price of ebooks.

Re:So good that the proxy battle is over

[__aaltlg1547]

Because setting your own price is legal and colluding with other companies to raise the price isn't.

Re:So good that the proxy battle is over

[Pembers]

So why does Amazon get to set the price, and not Apple or the publishers?

Because that's how the sale of every other product to the consumer works - the manufacturer or publisher tells the retailer "we'll sell you a crate of widgets for X dollars apiece" and the retailer is free to sell them to the consumer for whatever they think the consumer is willing to pay. Usually it's some function of X, but it doesn't have to be.

Agency pricing (so-called because the publisher sets the retail price and the retailer acts as an agent of the publisher, taking a fixed percentage of that as his profit) removes the ability of retailers to compete on price. Apple liked it because they don't want to compete on price anyway. It doesn't matter so much when you're talking about their hardware - plenty of people are willing to pay a premium for an Apple computer or phone or tablet because they perceive them as better or cooler than cheaper products with similar specs from other manufacturers. But if you're talking about ebooks, it's hard to see why you should pay $12.99 or $14.99 for the latest Stephen King or James Patterson from Apple when you could get exactly the same thing for $9.99 or less from Amazon. But if it's the same price at Amazon, you might as well get it from Apple.

The publishers liked agency pricing because it meant Amazon couldn't price ebooks at a point where it would cut into the publishers' print business. The publishers know that print is going away anyway - they're just trying to prolong it as much as they can because they know that when Barnes & Noble goes bust, there won't be anyone else they can play off against Amazon. They also know that print distribution is the last advantage they have over self-publishing. Self-published ebooks now compete on a level playing field with ebooks from the big publishers, but it's still very difficult for a self-published book to sell a lot of copies in print. (The ones that have managed it were usually picked up by a publisher after doing well as ebooks.) Everything else a publisher can offer an author can be bought from freelancers for a one-off fee, instead of most of the revenue for the life of the copyright.

Having said all that, the lawsuit was never about agency pricing as such. US competition law cares very little about protecting retailers. What was illegal was that Apple and the publishers colluded to raise prices, thus harming consumers. The fact that they used an unusual method of pricing to do it is neither here nor there, really.

Re:So good that the proxy battle is over

[Plumpaquatsch]

So why does Amazon get to set the price, and not Apple or the publishers?

There would not have been a problem if Apple had tried to lower the price of ebooks.

Actually they did. Ebook prices dropped everywhere but Amazon.

Re:So good that the proxy battle is over

[gnupun]

Agency pricing (so-called because the publisher sets the retail price and the retailer acts as an agent of the publisher, taking a fixed percentage of that as his profit) removes the ability of retailers to compete on price.

Does it? The retailer can still compete by lowering his profit percentage (30% is ridiculously high anyway and 50% for books over $10 is daylight robbery) of the final sales price. He can also negotiate a lower publisher price based on volume sold (just like traditional retailers). Amazon's $10 and lower price only for digital books is stupid, fascist and evil.

it's hard to see why you should pay $12.99 or $14.99 for the latest Stephen King or James Patterson from Apple when you could get exactly the same thing for $9.99 or less from Amazon.

That $9.99 is due to amazon's de facto monopoly, bullying publishers and authors. Amazon takes a whopping 65% cut for ebooks priced over $10 and only around 30% for books below $10. Distributors and retailers are mere channels between producer/manufacturer and users. They should have no right to set the base selling price of any item they sell, instead they should just add a markup percentage to whatever is their purchase price. We don't want another Apple appstore type pricing where everything is priced $1 to $2, because the quality of end product will really suffer.

Pittance

[PopeRatzo]

$450 million is nothing to Apple. They find that much under the cushions on the sofas in the Apple lounge. They spend more than that every week on KY and poppers.

Re: Socialism / fascism at its finest

[Chris453]

"without having all the facts" So basically you are talking out of your ass and have no clue what your talking about. Apple committed a serious crime to hurt consumers. In a just world all the Apple executives that signed off on this would be in jail.

Re: Socialism / fascism at its finest

[rtb61]

A government is there as a social function of the people that form that government. The governments function is and should be what ever the people want it to be. People uniformly hate being lied to, cheated and having their possessions stole. So a function people pretty much uniformly ascribe to government is to prevent lying, cheating and stealing and of course catch and punish those that lie, cheat and steal. Governments implement regulations in order to attempt to achieve this, liars, cheaters and stealers then attempt to work around those regulations which means government ends up creating more regulations etc.

Don't get rid of government, get rid of the psychopaths and narcissists the necessitate huge mechanisms of state to control their out of control behaviour. Let's just guess who hates regulations more the liars, cheats and thieves or their victims.