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Apple Loses Ebook Price Fixing Appeal, Must Pay $450 Million
An anonymous reader writes: A federal appeals court ruled 2-1 today that Apple indeed conspired with publishers to increase ebook prices. The ruling puts Apple on the hook for the $450 million settlement reached in 2014 with lawyers and attorneys general from 33 states. The Justice Dept. contended that the price-fixing conspiracy raised the price of some e-books from the $10 standard set by Amazon to $13-$15. The one dissenting judge argued that Apple's efforts weren't anti-competitive because Amazon held 90% of the market at the time. Apple is unhappy with the ruling, but they haven't announced plans to take the case further. They said, "While we want to put this behind us, the case is about principles and values. We know we did nothing wrong back in 2010 and are assessing next steps."
You mean Tim Cook might have to deal with a slightly less than full scrooge mcduck swimming pool? The inhumanity!
BeauHD. Worst editor since kdawson.
Every publisher believes that the e-books don't really compete against one another in price because each one is unique. They aren't interchangeable...someone won't say "wow, I bet I can get this same book cheaper somewhere else..."
But they are wrong. Lately, people have been able to get the same book cheaper by buying a used physical copy (still cheaper even after shipping costs). But, apart from that, when the price of a book exceeds the potential customer's sense of the book's value, they absolutely will buy a completely different book instead.
No product is immune to market forces, which is a good thing, and price-fixing harms the majority.
I'm still irked by the pricing. Now, I don't expect to be able to buy an ebook for the price of a used book, but by golly, I refuse to pay more for the book than I do for a dead-tree version, and given that I'm a halfway 'smart' shopper, 30% under 'list' is the average for me, I can often reach 50% or more, for a book that's not quite a new release. As such, I'm pretty much stuck buying from Baen for now.
They need to hold more sales like Steam. But no, the publishers don't want that. Apple & Amazon don't want that.
I don't read AC A human right
Enh... ok.... the pedantic in me is speaking up. Apologies in advance.
Although it may not apply in this case, I feel compelled to point out that "doing nothing wrong" and "not being criminally liable" are two entirely different things. The first is a moral judgement, and the second is decided by law, which may or may not be related to anything moral.
Conversely "doing something that any reasonable person would know is wrong" and "being criminally liable for such action" are two entirely different things as well. You could probably think of several recent examples in the news.
Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
"Ok, and with annual sales revenue of 180 Billion (with a B) or thereabouts, $450 Million amounts to the change you'd find under the couch cushions."
That is 1/4% If you routinely find 1/4% of your annual household revenue in your couch not doing very well.
Even for a household making a modest 30,000$/year; that would be like finding $75 in the couch. Hell, I make several times that per year, and I'd still consider finding $75 in the couch a pretty good day.
Now... http://www.macrumors.com/2014/...
According that Apple only had net revenue of $42.1 billion. So that's like our 30k household finding $320 in the couch. A rather nice day I'm sure.
And of that Apple only profited 8.5 billion...so more like the equivalent of finding $1588 in the couch. Come now, that's not couch money anymore... that's getting into hidden mattress money!!
Enh, to a certain extent true, but there is a cost associated with fighting for that extra $1. At some point it stops being cost-effective. There has to be some reason to fight for the dollar, not just that you smell like sulfur and your part is played by Ray Wise.
Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
It would seem appropriate, when a company wastes the courts time, by appealing until they get the verdict they want, they should also be billed for all the courts costs, for the current and all prior guilty verdicts.
"While we want to put this behind us, the case is about principles and values. And we're hoping to find someone who can explain to us what those words mean."
The government will not do that. Raping the poor and the students is the american way.
Do not look at laser with remaining good eye.
According that Apple only had net revenue of $42.1 billion. So that's like our 30k household finding $320 in the couch. A rather nice day I'm sure.
Not really. $320 is a lot of food money for the family living on $30,000.
It may be the same percentage, but after a certain amount, it doesn't affect your lifestyle(or business) in any real sense.
You think that if Bill Gates lost 1/2 billion overnight, his life would change at all?
I guarantee that the family will feel the loss of $320 far more than Gates or Apple losing $500,000,000.
The fine is a joke. The US needs to start adding in punitive damages to corporate bad behaviour. Off the cuff numbers: If the price fixing gave Apple $1 billion in profit, the fine should be $4 billion.
Even with the fines, it is more profitable to behave badly than it is to be honest. Apple would do it all over again, except try a little harder to get away with it.
Everyone This thursday, no free bagels at all apple offices. We have to pay the fine.
Yes their thursday bagel expense is about the same as their fine.
US$ 450,000,000.00 divided by 80,000 employees = US$ 5,625.00 per employee. So let's be super generous here and assume that they spend $5 per bagel + Schmear.
Each Apple employee would have to consume 1,125 bagels each time. Assuming each bagel is 87.4 grams and that each employee eats 1,125 bagels, that would make 210 lbs (or 95 kgs) of bagels consumed per employee each Thursday (not including the Schmear).
Of course, I've made other assumptions. I've assumed that only the full time employees got free bagels, which is probably not the case. And I've assumed that all full time employees, even the ones at retail locations and warehouse locations, all got free bagels (which is probably not the case either).
I work the print communications production business. With todays prices for materials, labor and other intangibles the price to produce a modern paper back book is on the order of about 2 to 4 dollars depending on page count. The price to produce an e-book is mere pennies per sale of an individual downloaded book. E-books have turned out to be one of the biggest rip offs of the second decade of this century. These over priced e-books are a just a cash grab by publishers. It makes you wonder what portion of the price goes to the author and how much to the publishing house.
You can set your own prices however you want. What you can not do, and Apple did, is make it so all your competitors must raise their prices to match yours.
No one is harmed. If I drive down an empty freeway at 110 MPH, I'm not harming anyone, either. But that's not what this is about, much like your example.
This is about Apple basically contacting all the publishers and having all of them and Apple collude together to set up prices in such a way that screws a competitor. Sorry--can't do that.
Since you seem to like conspiracies, though, it's kind of like how the oil companies get together to set the price of gasoline...
https://tidbits.com/article/13912 has a good explanation of why this is illegal and how people were harmed.
In essence there's nothing wrong with putting something for sale at a certain price. However in this case harm was done. the rise in prices hurt consumers, and publishers made less money because quantity of sales were lost and more money was being taken by the distributors.
This becomes illegal because Apple colluded with publishers. The whole point of antitrust law is to prevent prices from rising due to anti-competitive measures exactly like this.
NicBenjamin posting anonymously to avoid undoing mod-points. According to Statista, US eBook revenue in 2010 was only $1.52 Bil or so the year this started. If you asdd in the other years Apple's was doing this you get a total of $7.2 Billion. Since Amazon always had much greater marketshare then Apple, unless their profit margin was above 10% $450 Million represents all the profit they made on eBooks during those years and then some extra.
That is 1/4% If you routinely find 1/4% of your annual household revenue in your couch not doing very well.
Damn it, I moved all the cushions, took the covers off, lifted the whole thing up, and then out of frustration took an axe to my sofa. All I found was 28p in change, a marble and some cat vomit. I really suck at mining my sofa.
const int one = 65536; (Silvermoon, Texture.cs)
SJW, n: "Someone I don't like, and by the way I'm a fuckwit" - AC
Still don't see the harm if Apple and the publishers try to set prices. You. An either deal with Apple or not. It's up to the publishers if they want to make that deal.
It would help if you read up on this case...
Apple and the publishers did not only fix the prices you pay at Apples shop, but they also forced all other ebook retailers to follow the agency model that Apple wanted and pay at least what Apple payed to the publishers.
So this collusion harmed all retailers, and thus all consumers because it removed a lot of choice.
100% Correct, this isn't a punishment that will prevent Apple from doing exactly the same thing further down the road.
Damages should be punitive, like what's happening in Sweden, where fines are directly linked to income.
http://www.nydailynews.com/new...
Just to be a bit pedantic.
While the driver were indeed a Swedish national, the infraction, and the fine, happened in Finland.
Finland recently changed their laws to make their speeding ticket fines (and possible other fines) proportional to the perpetrators wealth.
Assuming each bagel is 87.4 grams and that each employee eats 1,125 bagels, that would make 210 lbs (or 95 kgs) of bagels consumed per employee each Thursday
And people wonder why there's an obesity crisis in the US.
To have a right to do a thing is not at all the same as to be right in doing it
Completely wrong. Amazon and everyone else were NOT free to offer the books for a lower price, that is the whole point.
In the normal wholesale model, the retailer and wholesaler negotiate a price for the retailer to by the goods. The retailer can then retail those goods for whatever price they want. If some retailer wants a 30% profit on the item, another retailer can take 20% and beat them on price. That is competition.
In a normal, non-fixed, agency model the producer and retailer negotiate the markup. The producer sets the retail price and gives the retailer a cut of it. If the retailer takes a smaller cut, then the retail price they sell for can be lower. That is competition.
What Apple and the publishers did was make it so that no matter how little cut another retailer would take, the retail price was never below Apples price, and they ALWAYS got 30%. There is no opportunity at all for another retailer to beat Apple on price, and Apple has absolutely no risk because they always get their 30%. That is about as uncompetitive as you can get.