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Apple gets slammed by US federal judge for antitrust regarding ebook prices
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Jul 10, 2013, 06:14 PM
 
Just released today.

Apple colluded on e-book prices, judge finds | Reuters

Unsurprisingly, Apple worked with the biggest publishers in the US to allow the publishers to set the prices of their ebooks, with Apple getting a tidy 30% commission. That in turn forced Amazon to enter into a similar agreement with those publishers in order to avoid losing business.

The publishers settled out of court. Apple went to trial.
     
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Jul 10, 2013, 07:13 PM
 
There's some sensible discussion over in the News section comments:

http://forums.macnn.com/113/tech-new...-apple-e-book/

I'm kind of torn on this.
Yes, they're probably guilty as charged, but
Amazon had an effective monopoly at the time, and
Apple's move allowed other competitors (not just Apple) to get into the market, and
the results have been beneficial to consumers, publishers, and authors.

The ONLY party that lost is Amazon.

Or is this just rainbow-tinted fanboi glasses?
     
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Jul 10, 2013, 07:15 PM
 
Beneficial to consumers how? I'm not seeing a $5 price hike on Simon & Schuster ebooks as a benefit in the least.

Price fixing is bad news for consumers. It's bad news for the competition. It's illegal (in most cases, cable TV notwithstanding) for a reason.

P.S. I wouldn't call fourteen posts in a row of "poor Apple" and "that judge is an idiot" and "Amazon clearly paid off the DOJ for this ruling" as "sensible discussion".
     
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Jul 10, 2013, 07:29 PM
 
Amen, good ruling. The parties that really lost were the millions of consumers who were paying nearly twice as much for ebooks than they should have.
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Jul 10, 2013, 07:41 PM
 
Originally Posted by shifuimam View Post
Beneficial to consumers how? I'm not seeing a $5 price hike on Simon & Schuster ebooks as a benefit in the least.
It is my understanding that, on the whole, prices have come DOWN due to the Amazon monopoly having been cracked, and author income has gone UP.

The counter-argument is this:
Amazon was using their monopoly to drive prices down through the wholesale distribution model, which was devaluing the media, making competition impossible, and bleeding the publishers and authors in an unsustainable business model.

Who was price-fixing?

The publishers and authors had agreed to these deals at a time when there was no other option in town, and when the long-term effects of electronic publishing probably weren't yet clear.

Along comes a company who's completely new to the business, looks at the market, and says "this isn't going to work", and rather than leave it alone, they go at it anyway, and try to change the rules. Everybody wins, and books still get written.

Like I said, I'm kind of torn, because I see what you're saying, and you're right. But at the same time, I see what went on there from the perspective of a content producer and think, "Atta boy!"

My guess is that they went in fully prepared to eat the consequences, and once they're through with their appeal, whether they've won or lost, they'll lean back and enjoy the results of what they've done, even if damages and fines will mean they won't make any money off of it for years to come.

BTW, I'm pretty sure that the only reason that publishers settled was because they could not afford to lose in court. The way damages and lawyers' fees are concocted, you settle out of court even if you KNOW you're right, simply because losing could bankrupt you. You balance the risks/cost (see also: US tort law, and Cessna vs. the widow of a drunk pilot). Apple can see this through.
     
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Jul 10, 2013, 11:52 PM
 
Seriously, what does a publisher do in regards to an ebook that Amazon doesn't do. The relationship that's going to be dominant is between the content creator and the on-line distributors. Publisher and their money-grubbing can go the way of the dinosaur.
And that's true too.--Shakespeare, King Lear
     
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Jul 11, 2013, 12:26 AM
 
Originally Posted by yoyo52 View Post
Seriously, what does a publisher do in regards to an ebook that Amazon doesn't do. The relationship that's going to be dominant is between the content creator and the on-line distributors. Publisher and their money-grubbing can go the way of the dinosaur.
Yep.

Publishers are finally facing what the RIAA and MPAA have been dealing with since the late 90s - piracy.

As soon as Amazon released the Kindle, the eBook market exploded from niche into the mainstream, and it's just continued to grow ever since. Now that eBook readers are cheap and easy to get (my Kindle with ads, which I easily removed, was only $49), millions of people have them and use them. The result is that people are discovering that paying $25 list for a book they'll read once and leave on a shelf to gather dust is ridiculous, but so is paying $15 for a book they'll read once and delete off their device (or forget about).

The fact is, if publishers keep churning out utter crap that mysteriously makes it to the NYT Bestseller List (*cough*Twilight*cough*) it's inevitable that people are going to pirate the shit out of it, because it's not worth paying for.

The RIAA and MPAA's solution was to sue into financial oblivion any name and address they could actually nail down. The publishers' solution was to collude with Apple to artificially inflate prices in order to ensure continued, lucrative profits. We'll have to see what happens next now that they've been caught red-handed.
     
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Jul 11, 2013, 04:12 AM
 
Originally Posted by yoyo52 View Post
Seriously, what does a publisher do in regards to an ebook that Amazon doesn't do. The relationship that's going to be dominant is between the content creator and the on-line distributors. Publisher and their money-grubbing can go the way of the dinosaur.
This is like asking what a label does that iTunes doesn't.

Most authors/musicians/etc. are just that because it's what they're good at, and what they would spend their time on if given the choice.

They have business partners who take care of editing, layout, promotion, placement, sales, and international taxes and accounting. Amazon only takes care of the sales part, but they don't give a shit if anybody's ever heard of you, and if they have, they used to dock prices to the point where it didn't make you any money (until Apple killed that distribution model).

I know musicians who have switched to self-marketing, and I actually know one who is successful at that, but he spends a lot of time at it, has become an expert and built a lot of connections within his particular niche, and most of us just don't have time for that.

Regardless of all the ignorant hatred, content creators actually love labels and publishers.
     
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Jul 11, 2013, 04:37 AM
 
     
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Jul 11, 2013, 07:31 AM
 
I honestly don't understand exactly what was illegal here. The only possibility seems to be the MFN deals, but they have been shown to be legal before. Not sure that this verdict stands up on appeal.

My sympathies here are not so much with Apple (which plays as much hardball as anyone) as against Amazon - I had heard complaints from authors for years about how Amazon was destroying what they were making from books, and it's obvious that Amazon would have tripled prices as soon as they felt secure enough in their monopoly.

The problem with the reasoning here is the idea that without Apple, Amazon would have continued to sell new books at $9.99. That was never a possibility - even before the iBooks launch, publishers had begun delaying ebook releases to the paperback window. The reason was that bookstores complained of the cheaper ebooks available on Amazon, and since these bookstores were much more important to the publishers than the still struggling ebook market, that was already happening. The two options are $13 ebooks at release from any of many sellers, or $10 ebooks six months later from one...for now, until they hike the prices.

As for publishers and their continued existence...Not sure. I have always hoped that we would see that happen in the music industry - that artists retain full control of their work, and then hire producers etc to get it to market - but it doesn't appear to be happening. The record industry just screws the artists instead, which is no solution. I like to read, and for that to be a workable solution, authors have to get paid. If a book is too expensive, I wait for the paperback window (which is where I buy most of my books anyway, so I guess a better way to put it is that I buy hardcover only when it's a book I really can't wait for). At that point, there is no real saving in buying an ebook version, so I often get it on dead trees these days. Strange, in a way, given that I was part of the very bleeding edge of ebooks all those years ago.
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Jul 11, 2013, 07:40 AM
 
Originally Posted by yoyo52 View Post
Seriously, what does a publisher do in regards to an ebook that Amazon doesn't do. The relationship that's going to be dominant is between the content creator and the on-line distributors. Publisher and their money-grubbing can go the way of the dinosaur.
If you self-publish on Amazon for the Kindle, they offer a 65-35 split. Same as Apple, right? No - 65-35 the other way, with 65% going to Amazon. Also, if they feel like it, they will promote your book by giving it away for free, and you can't complain. After the iBooks launch, they added a second set of terms to match Apple's, except they don't, because you still pay for distribution. (Details) I'm torn about publishers, but Amazon can go DIAF as far as their ebook strategy is concerned. All they're doing is buying a monopoly and then exploiting it to screw everyone.
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Jul 11, 2013, 08:56 AM
 
Originally Posted by P View Post
As for publishers and their continued existence...Not sure. I have always hoped that we would see that happen in the music industry - that artists retain full control of their work, and then hire producers etc to get it to market - but it doesn't appear to be happening. The record industry just screws the artists instead, which is no solution.
You're wrong: that is exactly what IS happening in the music market, at least for electronic music. Tons of small labels are making a name for themselves and picking stuff up off soundcloud and releasing it commercially, getting the artists heard (and bought).

For "traditional" music, there isn't really a functional system yet, because that's so expensive to make well (a decent studio capable of recording drums and a full band can easily cost six figures to build, and if you want/need to record a string section, add another zero).

They're still trying to work out how to get enough money flowing to finance a production, while people really seem entitled not to pay real money for music, because they've been fed the line about how evil the music business used to be.
     
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Jul 11, 2013, 09:17 AM
 
Originally Posted by Spheric Harlot View Post
You're wrong: that is exactly what IS happening in the music market, at least for electronic music. Tons of small labels are making a name for themselves and picking stuff up off soundcloud and releasing it commercially, getting the artists heard (and bought).
Glad to hear it, but that's only part of the equation given what you're saying below:

Originally Posted by Spheric Harlot View Post
For "traditional" music, there isn't really a functional system yet, because that's so expensive to make well (a decent studio capable of recording drums and a full band can easily cost six figures to build, and if you want/need to record a string section, add another zero).
But that's investment, not cost. Ideally there'd be such studios available for rent without giving up control over your creation.
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Jul 11, 2013, 09:21 AM
 
The studio is investment, but $400 a day for a small studio is cost.

Those studios need to recoup their investment and running cost, and good engineers aren't cheap either.
     
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Jul 11, 2013, 09:40 AM
 
Whats the difference(in terms of price fixing) between the eBooks deals Apple hammered out, and the deals it hammered out with the music industry for 99c songs and 9.99 albums?
     
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Jul 11, 2013, 10:10 AM
 
Well, we don't know the details of the deals, but from 10 000 feet they look the same. This is part of why I don't understand how this is illegal.
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Jul 11, 2013, 10:18 AM
 
I think Apple "fixed" the price for music on their store, with eBooks it left the price up to the publishers. (Apple was to music what Amazon was to eBooks?)

It's strange cause when AmazonMP3 entered the market, the deals with Apple started falling apart and the publishers wanted to set the prices themselves, and the prices of music started going up..... and no one complained?

Is the MFN clause the difference?
     
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Jul 11, 2013, 10:41 AM
 
An MFN clause just means that you can't sell this to anyone else at a lower price than what you're offering me. Since Amazon's MP3 store sold songs for less, Apple must not have had an MFN clause in that case.

So we know that the agency model is legal, and MFN clauses are legal, but the combination of them isn't? Or the fact that publishers all played hardball with Amazon is not legal, and the negotiations with Apple was the way they communicated?
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Jul 11, 2013, 11:08 AM
 
Originally Posted by Spheric Harlot View Post
Regardless of all the ignorant hatred, content creators actually love labels and publishers.
Do you personally know any indie musicians who like the RIAA? Last time I checked, the RIAA's entire business model is based on completely screwing over the artist, indebting them to the recording label for several years, and holding totalitarian control over the artist's content.

One of my favorite bands of years ago (Nine Days) was unable to release music they had created for several years because Sony held the "rights" to the music. They dropped Nine Days from their label but wouldn't let the band have their own art.

No, I don't think that real musicians are much a fan of the recording industry at all. They're overly powerful bullies to both the artists and the consumers. They do shit like, you know, trying to justify lowering artist royalties so that they can make even more billions off the backs of musicians. There's also those artists were more than a little pissed that the RIAA didn't share their windfall profits from litigation against people who - gasp - shared music on the Internet. Apparently it wasn't really about hurting the musicians as much as it was about chipping away at the massive profit machine that the recording industry had become.

P.S. Be careful; you're starting to sound dangerously like a Republican.
     
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Jul 11, 2013, 11:10 AM
 
Originally Posted by P View Post
An MFN clause just means that you can't sell this to anyone else at a lower price than what you're offering me. Since Amazon's MP3 store sold songs for less, Apple must not have had an MFN clause in that case.

So we know that the agency model is legal, and MFN clauses are legal, but the combination of them isn't? Or the fact that publishers all played hardball with Amazon is not legal, and the negotiations with Apple was the way they communicated?
So, lets assume that the pubs sold the books to Amazon and Apple for the same price. Wasn't there something in the contracts with Apple that said other retailers could not sell the same book for less? (ie Amazon's subsidized model. so if Amazon was subsidizing the books to 9.99, that would have to be the price on iBooks?)
     
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Jul 11, 2013, 11:14 AM
 
Originally Posted by shifuimam View Post
Do you personally know any indie musicians who like the RIAA? Last time I checked, the RIAA's entire business model is based on completely screwing over the artist, indebting them to the recording label for several years, and holding totalitarian control over the artist's content.

One of my favorite bands of years ago (Nine Days) was unable to release music they had created for several years because Sony held the "rights" to the music. They dropped Nine Days from their label but wouldn't let the band have their own art.

P.S. Be careful; you're starting to sound dangerously like a Republican.
But, the band signed over ownership of their work to the publisher voluntarily. (IMHO they didn't have to do that, there are other avenues of self publishing, or negotiating better contracts, other publishers, etc). I don't think either party has any obligation to go beyond the mutually agreed terms of the contracts.
     
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Jul 11, 2013, 11:19 AM
 
That is true - my point is that the contracts typically pushed by the RIAA are fairly anti-musician. The recording industry in the US doesn't give two shits about good music, artistic expression, or the people on the backs of whom they have historically made ridiculous profits. All they care about is lining their pockets further.

That is quite evident.
     
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Jul 11, 2013, 11:33 AM
 
Originally Posted by shifuimam View Post
That is true - my point is that the contracts typically pushed by the RIAA are fairly anti-musician. The recording industry in the US doesn't give two shits about good music, artistic expression, or the people on the backs of whom they have historically made ridiculous profits. All they care about is lining their pockets further.

That is quite evident.
This thread is going off on a tangent . I do not disagree that publishers are looking to make as much as possible. BUT it would be hypocritical to claim that artists who voluntarily sign up with publishers don't want to make as much as they can as well. If they didn't publishers wouldn't exist. Everyone is looking for the best deal possible.
     
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Jul 11, 2013, 12:54 PM
 
Very true.

The whole reason the recording industry came into the conversation, at least from my side, is to point out that publishers are trying to figure out how to continue making huge profits while also catering to the consumer base, which demands everything in electronic format.

The thing is, the solution isn't all that hard - stop churning out total shit every week and start focusing on finding real talent that can actually, you know, write without the need for five editors to peruse every word of a manuscript before it can go to print (so to speak). Unfortunately, as people get stupider, the demand for quality literature continues to deteriorate, and publishers can get away with turning total shit into multimillion dollar bestsellers that the idiotic masses will eat up quite happily.

And as long as what's being produced is shit, there will be a segment of the population who isn't interested in wasting their money on it. So piracy will live on, even for those most moral and ethical.
     
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Jul 11, 2013, 01:28 PM
 
Originally Posted by Hawkeye_a View Post
So, lets assume that the pubs sold the books to Amazon and Apple for the same price. Wasn't there something in the contracts with Apple that said other retailers could not sell the same book for less? (ie Amazon's subsidized model. so if Amazon was subsidizing the books to 9.99, that would have to be the price on iBooks?)
That could be. Amazon's general terms state that if they find anything they sell for sale for less somewhere else, they will drop their price to match. That shouldn't be possible under an agency model, however.
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Jul 11, 2013, 02:27 PM
 
So is this why ebooks are the same price on the Google Play Store?
     
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Jul 11, 2013, 04:41 PM
 
Originally Posted by shifuimam View Post
The thing is, the solution isn't all that hard - stop churning out total shit every week and start focusing on finding real talent that can actually, you know, write without the need for five editors to peruse every word of a manuscript before it can go to print (so to speak). Unfortunately, as people get stupider, the demand for quality literature continues to deteriorate, and publishers can get away with turning total shit into multimillion dollar bestsellers that the idiotic masses will eat up quite happily.

And as long as what's being produced is shit, there will be a segment of the population who isn't interested in wasting their money on it. So piracy will live on, even for those most moral and ethical.
One thing I've learned is that if you think something sucks and people are buying it, you're wrong.
     
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Jul 11, 2013, 04:55 PM
 
Originally Posted by shifuimam View Post
The thing is, the solution isn't all that hard - stop churning out total shit every week and start focusing on finding real talent that can actually, you know, write without the need for five editors to peruse every word of a manuscript before it can go to print (so to speak).
This is what publishers try to do, and it's acutally harder to do than I think you give credit for, which is why the handful of Dan Browns of the world basically subsidize everybody else.

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Jul 11, 2013, 05:42 PM
 
Originally Posted by Spheric Harlot View Post
One thing I've learned is that if you think something sucks and people are buying it, you're wrong.
Wait, so by your logic, both the Twilight series and Fifty Shades of Grey are good literature and their sales numbers are not evidence of stupid masses, but of cultured, enlightened folk who are interested in consuming truly well-written novels?

Oh, and Justin Beiber and Nicki Minaj are talented musicians who are keystones of the next generation - that doesn't indicate talent, though. It indicates a severe drop in our standards for what is "good music" or "good literature".

Dear god. I don't want to live on this planet anymore.

Originally Posted by ctt1wbw View Post
So is this why ebooks are the same price on the Google Play Store?
I'd imagine so.

Originally Posted by SpaceMonkey View Post
This is what publishers try to do, and it's acutally harder to do than I think you give credit for, which is why the handful of Dan Browns of the world basically subsidize everybody else.
Well, yeah - the same can be said for really good music and fine art, IMO. It's a lot harder to write a really good book than one might think.

The biggest problem I have with the current state of things is that the horrible drivel that passes for books these days does little more than dumb down society even more.

Case in point: I tried to read the first Twilight book, just to see what the hype was about (that and people I knew who loved the Harry Potter books told me it was worth a read, WTF). The unbelievably poor writing and shoddy grammar was enough to put me off after less than two chapters.

I think the root problem lies in the fact that as it gets easier and easier for anyone and everyone to create content, the quality of that content goes down. Just cruise Amazon's Kindle-only books that are either free or dirt cheap (like 99 cents). It's all total shit.
     
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Jul 11, 2013, 06:01 PM
 
Originally Posted by shifuimam View Post
Well, yeah - the same can be said for really good music and fine art, IMO. It's a lot harder to write a really good book than one might think.

The biggest problem I have with the current state of things is that the horrible drivel that passes for books these days does little more than dumb down society even more.

Case in point: I tried to read the first Twilight book, just to see what the hype was about (that and people I knew who loved the Harry Potter books told me it was worth a read, WTF). The unbelievably poor writing and shoddy grammar was enough to put me off after less than two chapters.

I think the root problem lies in the fact that as it gets easier and easier for anyone and everyone to create content, the quality of that content goes down. Just cruise Amazon's Kindle-only books that are either free or dirt cheap (like 99 cents). It's all total shit.
I guess my point is that the first Twilight book was actually hard to produce, not "easy." I don't mean hard in an intellectual, literary sense. But hard in the sense that producing anything creative that a huge number of people will want to buy is difficult. The second Twilight book was easier. The third even more so. Publishing a young adult vampire novel by Stephenie Meyer using characters that everyone is already familiar with from earlier, wildly successful books is a no-brainer. But it wasn't a no-brainer in the early 2000s to think, "hey, maybe the kids will like this emo vampire stuff by this lady who hasn't written anything before."

Finally, most people aren't interested in buying "good literature." They never have. It's a bit simplistic to think that all "literature" is shorthand for "not commercial," but only a bit.

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Jul 12, 2013, 03:51 AM
 
^ that's pretty much spot-on.

If you're producing something that millions of people are gobbling up, you must be doing something right. Selling a million of ANYTHING is hard!
Whoever is producing Bieber and Minaj is *extremely* good and talented at what they do, and part of that is figuring out what people will buy. (FWIW, Nicki Minaj is quite awesome production as well. I don't like her stuff, but it's actually pretty amazing.)

If you want high-brow, you have to be willing to pay for it as well, and if you think it's ridiculous to pay 12 or 15$ for something you're only going to read once, then you're either accepting that the low-volume, high-brow stuff is simply not going to happen, or you accept that huge numbers of what you consider shit will be sold to cross-finance the production of whatever it is that you and six other people happen to like.

Artists eat, poop, and pay rent just like you do.
     
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Jul 12, 2013, 04:03 AM
 
Adam Engst wrote a nice summary of what is going on here:

TidBITS: Explaining the Apple Ebook Price Fixing Suit

How this is an antitrust violation?

Again, there is nothing inherently illegal with the agency model, price caps, or an MFN clause. And there isn’t even anything wrong with combining them in negotiation with a single company. The problem comes when they’re combined in negotiation with six publishers that between them control nearly 50 percent of the book market, and over 90 percent of the New York Times bestsellers.
So the publishers are guilty of colluding, fine. Brings up the question why all music costs the same and has for decades, but I guess that could be an amazing coincidence. The judge apparently thinks that Apple is somehow guilty of conspiracy in the matter, which feels like a stretch given that it had zero marketshare in the book market at the time. That's the big hole in the argument, from where I'm looking.
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Jul 12, 2013, 04:38 AM
 
For everyone who thinks Apple and the publishers are guilty, consider the following scenario:

What if Amazon, who controlled about 90% of the ebook market, decided one day that their loss-leader strategy for ebooks was simply unsustainable, and started to sell at cost. This would have caused a massive and immediate $3-5 price increase overnight of their entire product line.

Would this be illegal?

If no, why is a massive increase in prices by a virtual monopoly not subject to the law?

If yes, why would the abandonment of suicidal loss-leading be illegal?

The reality is, both of these conclusions are absurd. That's because we are looking at the Amazon situation completely upside-down. Instead of the raising of prices being regarded as illegal, we should have been looking at Amazon's monopolistic price-cutting as illegal.

It is Amazon who should have been in court, not Apple. And Apple actually made this statement in court, which the judge wrote-off as irrelevant.

The fact is, ebooks have become more popular, which should of course cause prices to rise. It's called supply and demand. It was only Amazon's monopoly that was preventing this. (Anyone telling me they are "entitled" to $10 ebooks can go piss up a tree.)

I mean, seriously, the book publishers were being sued for selling their books to the public at the exact same price they were selling them to Amazon. In the real world, selling at wholesale to customers is considered an amazing deal, not a criminal act. Sheesh.

Ironically, it was Apple's attempt to keep prices lower that made them look like they were price-fixing. Like app makers, Apple was giving book publishers the right to set their own prices. Unlike app makers, it was a tiered system ($13, $15, and so on), tied to the cost of the physical books. Apple wanted this to keep publishers from setting prices at more than double what Amazon was charging, which would have made the iBookStore a laughing stock. If Apple had just said "charge whatever you want, just like the app makers," it would have been impossible to make any sort of case. But by insisting on specific prices, they made themselves look guilty, despite doing so was intended to keep prices lower.

Even more ironically, Amazon made more money per ebook with the agency model, and book publishers were making less money. But they were willing to do this because Amazon was hurting them in the long term by preventing the success of other ebook stores (monopolistic entrenchment) and binding the publishers' hands on necessary price adjustments (raising prices on popular books and cutting prices to encourage sales of less popular books).

This case is the worst application of antitrust laws I've ever heard. It should never have been prosecuted, it should never have succeeded, and it should be thrown out on appeal.
     
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Jul 12, 2013, 11:02 AM
 
Originally Posted by SpaceMonkey View Post
I guess my point is that the first Twilight book was actually hard to produce, not "easy." I don't mean hard in an intellectual, literary sense. But hard in the sense that producing anything creative that a huge number of people will want to buy is difficult. The second Twilight book was easier. The third even more so. Publishing a young adult vampire novel by Stephenie Meyer using characters that everyone is already familiar with from earlier, wildly successful books is a no-brainer. But it wasn't a no-brainer in the early 2000s to think, "hey, maybe the kids will like this emo vampire stuff by this lady who hasn't written anything before."

Finally, most people aren't interested in buying "good literature." They never have. It's a bit simplistic to think that all "literature" is shorthand for "not commercial," but only a bit.
I'm not going to disagree with most of this. I'm not saying that it only took Stephenie Meyer a day to write the first Twilight book. I am saying that as the quality of the majority of content goes down, the willingness of people to pay traditional prices for it also goes down.

It's much like CDs - why pay $15 for an album with two good songs when you can either pirate it or buy just those two songs for 99 cents apiece?

And, for the record, just because something sells doesn't mean it doesn't suck (or, to rephrase, it doesn't mean it's good). I don't care how long it took to create or how hard people worked. If you shit on a plate and spend four days trying to turn it into brownies, it's still shit.
     
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Jul 12, 2013, 11:21 AM
 
Originally Posted by P View Post
Adam Engst wrote a nice summary of what is going on here:

TidBITS: Explaining the Apple Ebook Price Fixing Suit

So the publishers are guilty of colluding, fine. Brings up the question why all music costs the same and has for decades, but I guess that could be an amazing coincidence. The judge apparently thinks that Apple is somehow guilty of conspiracy in the matter, which feels like a stretch given that it had zero marketshare in the book market at the time. That's the big hole in the argument, from where I'm looking.
From what i've read so far in the testimony, I'm not sure if the publishers were communicating directly with each other. Apple was the 'go between' making pertinent information about other negotiations and deals available. It could be assumed that without that information being shared (about the other pubs getting the same deal) they would not have signed up (although it could very easily be argued that they would have individually preferred Apple's proposal of the agency model regardless of whether or not the others were being courted IMHO).

So then I wonder, if Cue sharing information of the offers/contracts/deals/negotiations with each of the publishers is the problem? But then we're back to the iTunes music deals where they were all reportedly in the same room when the deals were hammered out?

I'm starting to wonder if this case is more about Amazon loosing the ability to control(fix) retail prices than it is about fixing prices. On the superficial level, Amazon was fixing prices of eBooks without opposition, while Apple promoted the variable pricing model for eBooks(the opposite of what they had done with music) by relinquishing their ability to set(fix) the price IMHO.
     
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Jul 12, 2013, 11:29 AM
 
Originally Posted by shifuimam View Post
And, for the record, just because something sells doesn't mean it doesn't suck (or, to rephrase, it doesn't mean it's good). I don't care how long it took to create or how hard people worked. If you shit on a plate and spend four days trying to turn it into brownies, it's still shit.
I think you need to realize the two different contexts here. One is specific to oneself(in this case, you), the other is for everyone. One person's opinion does not necessarily reflect that of the majority(nothing wrong with that). As long as we can individually choose how to spend our income that's all that matters.

While I generally agree that most pop-art (music, movies, books) is not to my specific taste (some is), I concede that they appeal to a large majority of people out there (mine is not the 'right' or 'better' choice'. it's the right choice for me, but obviously not for everyone else). It's like reality shows.... i never watched or cared for them, but they were all the rave, when most people lost interest, their popularity waned and they started to disappear. It gets produced because people want it.
     
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Jul 13, 2013, 12:25 PM
 
Speaking as someone who tried to get published (and got some very lovely personalized rejection letters which believe it or not is actually an achievement) a lot of the people in this thread have no idea what they're talking about.

The book that I wrote (and didn't get published) took a little over a year and a half to do four drafts. I'm sorry but nobody in their right mind has the right to tell anyone that something they dedicated that much of their life to is only worth $3. Now if I wanted to put my book on a store and sell it for free, that's my choice, if I want to sell it for 10 that should be my choice. It's your choice to buy it, not to tell me I'm wrong for setting the price at a pittance, when compared to the hours I spent writing it.

What people also don't realize is that publishers and agents aren't the same thing as the RIAA. Authors still want publishers because there's a lot of pluses for authors with being tied to one. In this situation, Amazon, not the publishers are the RIAA. Amazon is manipulating the market, forcing people into contracts that aren't good for them, and in general being controlling dicks.

For however much a lot of authors like the idea of trying to self publish, especially if they can't find a publisher who wants to take a risk on their work.

As somebody who worked hard on a book, I am genuinely disappointed with this ruling. (Even if I'm not selling that book.)
     
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Jul 13, 2013, 02:50 PM
 
Originally Posted by Salty View Post
Speaking as someone who tried to get published (and got some very lovely personalized rejection letters which believe it or not is actually an achievement) a lot of the people in this thread have no idea what they're talking about.

The book that I wrote (and didn't get published) took a little over a year and a half to do four drafts. I'm sorry but nobody in their right mind has the right to tell anyone that something they dedicated that much of their life to is only worth $3. Now if I wanted to put my book on a store and sell it for free, that's my choice, if I want to sell it for 10 that should be my choice. It's your choice to buy it, not to tell me I'm wrong for setting the price at a pittance, when compared to the hours I spent writing it.

What people also don't realize is that publishers and agents aren't the same thing as the RIAA. Authors still want publishers because there's a lot of pluses for authors with being tied to one. In this situation, Amazon, not the publishers are the RIAA. Amazon is manipulating the market, forcing people into contracts that aren't good for them, and in general being controlling dicks.

For however much a lot of authors like the idea of trying to self publish, especially if they can't find a publisher who wants to take a risk on their work.

As somebody who worked hard on a book, I am genuinely disappointed with this ruling. (Even if I'm not selling that book.)
When it comes to the major publishers - e.g. those implicated in this price-fixing case - how much of the list price do you, as the author, get paid directly?

My understanding from the articles published about this case is that Apple was getting a 30% cut from the prices they agreed to allow publishers to fix.

I don't think anyone is talking about ebooks that are cheap ($3, for example...). I doubt that a price hike from $9.99 to $14.99 amounted to much, if any, increase in royalties paid to the author.
     
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Jul 13, 2013, 08:30 PM
 
Originally Posted by shifuimam View Post
I don't think anyone is talking about ebooks that are cheap ($3, for example...). I doubt that a price hike from $9.99 to $14.99 amounted to much, if any, increase in royalties paid to the author.
a) Yes, it probably did result in higher royalties.

b) Pricing was at Amazon's discretion. They could throw books out for free as a promotion, amounting to exactly zilch for authors, even if the promo was wildly successful (for Amazon), or they could discount them as they saw fit.
     
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Jul 13, 2013, 09:59 PM
 
Originally Posted by shifuimam View Post
Beneficial to consumers how? I'm not seeing a $5 price hike on Simon & Schuster ebooks as a benefit in the least.
Continuing to allow amazon to sell ebooks below costs kills all competition. In the end that means the industry as a whole suffers, because there is no real competition. That's what the move was about: breaking amazon's ebook monopoly.
I don't suffer from insanity, I enjoy every minute of it.
     
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Jul 13, 2013, 11:03 PM
 
So.... When are they going to go after Amazon for artificially depressing prices (selling at below cost to publishers) in order to damage the traditional publishing business?

I still don't see any collusion. I see Apple making deals with publishers who didn't put up with Amazon's "we set all the prices" policy, and acting like a decent middle-man in offering ebooks at prices essentially set by the publishers.

I think most of the publishers settled to avoid exposing business plans, not to avoid publication of their "collusion" with anyone. No matter how honest you are, it's never a good thing to have to go to court and defend against a civil suit, when the litigants can get access to information that "might" be useful to them, depending on how well they pitch their case to the judge.

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Jul 13, 2013, 11:54 PM
 
I think it's perfectly understandable how one could see Apple as the ringleader in a conspiracy to change the pricing model and raise prices paid to publishers and authors. They were.

The thing here is, yes, "guilty as charged", but their intent was (IMO) clearly to benefit the entire market, as has been the result. As I said above, I'm pretty sure they went into this knowing full well that they might lose, but that it would be for the best of the market, even if the penalties meant that their own ebook business wouldn't be profitable for years to come.

Of course, intent doesn't necessarily affect guilt as per the letter of the law. It may, however, affect the penalty determined after the appeal.
     
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Jul 14, 2013, 12:34 PM
 
Originally Posted by Spheric Harlot View Post
The thing here is, yes, "guilty as charged", but their intent was (IMO) clearly to benefit the entire market, as has been the result. As I said above, I'm pretty sure they went into this knowing full well that they might lose, but that it would be for the best of the market, even if the penalties meant that their own ebook business wouldn't be profitable for years to come.
I think the courts equate "benefit" with lower prices (even if the market is run by a monopoly), and long term competition at the cost of higher short term prices as "bad". Short sighted IMHO.

This ruling and general attitude, confirms my belief that monopolies are sustained and supported by government policies no matter how unintentional.

PS>> On the judicial process, I remember reading comments/statements prior to the trial where it seemed like the judge was of one persuasion(guilt in this case). So Apple would have had to essentially try to prove innocence .
     
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Jul 14, 2013, 07:19 PM
 
Originally Posted by OreoCookie View Post
Continuing to allow amazon to sell ebooks below costs kills all competition. In the end that means the industry as a whole suffers, because there is no real competition. That's what the move was about: breaking amazon's ebook monopoly.
I'm going to use you as an example, but this post applies to everyone on here. I'm with an eBook start up. We've been developing technology to be disruptive in this industry. I live and breath the eBook business. I deal with this as a reality everyday. And I deal with Apple's iBookstore team, Amazon, the publishers, etc.

Let me first say this:

The guilty decision against Apple is some of the best news we've had since they decided to join the market.

The quote above is typical: from a person far removed from the actual industry and people involved, who repeats and perpetuates what the media said. Let's dispel this myth right now.

Amazon doesn't lose money on the sale of eBooks. Let's say it again. Amazon doesn't lose money on the sale of eBooks. This came out in the trial and the publishers revealed and stated that Amazon does not, in fact, lose money on the sale of eBooks. As consumers, if you think Amazon is losing money on a sale, all the better because you just think you're getting a better deal. All Amazon does by selling cheaper is cut into their own margins. Amazon does NOT pay $13.99 for eBook bestsellers and sell them at $9.99. The price Amazon gets these books for is confidential and under the wholesale model.

There may have been up to 36 instances where Amazon undercut a price on eBooks. The courts, rightfully, stated that this was such a fraction a percent of the total eBooks for sale to be irrelevant. But Amazon selling for low prices or even having loss leaders is also not something that's illegal.

Now, when it comes to selling and losing money on PAPER BOOKS, I have no idea what happens there.

But this Amazon thing is a digression. The courts were clear in their decision. This case is not about the particulars of an agency model vs. a wholesale model, or an MFN clause itself. This case is not about Amazon. It's about Apple and the world's largest publishers. It is about a simple matter: Did Apple collude with industry to inflate eBook prices and eliminate competition. The evidence in the case is quite overwhelming that Apple did in fact do this. Just because the publishers didn't like companies like Amazon making razor thin margins on their eBooks... and that Amazon had a sizeable chunk of the market in the US... this is not an excuse for them all to collude together, with another company as the ring leader, to stamp out any of this competition and completely inflate and flatline eBook prices.

As the court stated in its decision report:

Another company’s alleged violation of antitrust laws is not an excuse for engaging in your own violations of law. Nor is suspicion that that may be occurring a defense to the claims litigated at this trial.
First, it is no defense to participation in an illegal price fixing conspiracy to suggest that others did it too. Second, focusing on the precise terms of agency agreements and the extent to which they may have been similar is far too narrow a focus. The issue is not whether an entity executed an agency agreement or used an MFN, but whether it conspired to raise prices. Apple has pointed to NO EVIDENCE that either Amazon or Google desired either to eliminate retail price competition or to raise retail prices. Quite the contrary. Amazon was ADAMANT in its support of retail price COMPETITION and lower prices. It did not relinquish its control over retail pricing easily.
The totality of the evidence leads inextricably to the finding that Apple chose to join forces with the Publisher Defendants to raise e-book prices and equipped them with the means to do so.
Apple even went so far as to block Apps from Random House, the one publisher who never signed with them, to pressure them into signing on.

This came out in the trial: Cue told Cook, in writing, it’s “over for everyone” once Random House signs. Meaning Apple would become a monopoly that they hoped in the eBook industry like they were with MP3 players and music. And that they’d be eliminating competition.

Cue actually blocked Random Houses iPad Apps to squeeze them into signing on. After they signed on, he attributed this success, in part, to blocking their Apps.

Without Apple, publishers are much more free to sign contracts with other retailers. With Apple around, there's no way we'd be able to do what we're doing. That is, offer an innovative business model that's great for the consumer but bad for companies like Apple. And that's because the consumer will find nice price variability and different business models in the market.

With Apple around, innovative technologies and business models in this industry would struggle to see the light of day. Because Apple's contract made it virtually impossible for any publisher to do anything but sell under an agency model everywhere else and locked them into a host of other draconian clauses.

No company should have that much power and that much control in an industry. This is a win for folks like us, and a win for consumers such as yourselves.
     
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Jul 14, 2013, 08:50 PM
 
Originally Posted by OreoCookie View Post
Continuing to allow amazon to sell ebooks below costs kills all competition. In the end that means the industry as a whole suffers, because there is no real competition. That's what the move was about: breaking amazon's ebook monopoly.
Was Amazon actually selling ebooks "below cost" though?

A copy of an ebook costs nearly nothing. It's not remotely the same thing as physically manufacturing a printed volume, distributing it, making little cardboard display units to put in retail outlets, etc.

I find it hard to believe that it actually COSTS publishers $10 a pop to make a digital copy of an ebook.
     
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Jul 14, 2013, 09:08 PM
 
No, AMAZON doesn't lose money, but the publishers do. That's why I phrased it the way I did. Amazon is manipulating publishers, which is hurting their ability to do business. Does this mean that the publishers' paradigm may need changing? Maybe. But being forced into it is neither a good business practice for the publishers, nor acceptable influence on the market by Amazon.

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Jul 14, 2013, 09:14 PM
 
Originally Posted by shifuimam View Post
Was Amazon actually selling ebooks "below cost" though?

A copy of an ebook costs nearly nothing. It's not remotely the same thing as physically manufacturing a printed volume, distributing it, making little cardboard display units to put in retail outlets, etc.

I find it hard to believe that it actually COSTS publishers $10 a pop to make a digital copy of an ebook.
This argument about eBooks costing so much less to make and because of that they should be dirt cheap is wrong. It's never been about the cost of the medium. Rather, it's about the intellectual property you're buying. Is a movie less valuable because it's digital?

No. It costs ~$1 million to make a textbook: a good textbook. Some novel writers spend a year writing a book.

This is about what is a fair price for an intellectual thing we call a book.

But aside from this, if you want to know, the cost to print a book and deliver that book via the postal service is marginally higher than storing and serving an eBook.

You may not know this but Amazon charges the publisher 15 cents for every 1 mb of data in their eBooks. In other words, there are real, direct costs to selling eBooks just like print. eBooks have been and are cheaper than print. But don't expect people to spend zillions of hours and in some cases several years to sell their IP for substantially cheaper just because it's digital.

At any rate, the myth that Amazon sells eBooks at a loss is just that: a myth. Their publisher contracts are complex with different pricing at different stages in a book's lifecycle.

And as the courts pointed out, a "noble" cause (e.g., breaking a monopoly) is not excuse to break the law yourself in doing it.
     
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Jul 14, 2013, 09:29 PM
 
Originally Posted by ghporter View Post
No, AMAZON doesn't lose money, but the publishers do. That's why I phrased it the way I did. Amazon is manipulating publishers, which is hurting their ability to do business. Does this mean that the publishers' paradigm may need changing? Maybe. But being forced into it is neither a good business practice for the publishers, nor acceptable influence on the market by Amazon.
Amazon simply innovated before Apple and the rest of the guys. Apple came late and tried to break Amazon's dominance through illegal business practices. Amazon never, ever tried to control publishers on other retail channels. Apple did. And they very far to do it.

Do I think lower prices for eBooks is good? No, not really. But you need to analyze Amazon's Kindle store and see the price variability. There's lots of stuff over $9.99. Also lots of stuff at $9.99.

Then people compare Apple's entrance into eBooks to their entrance into music. Problem is, the music software and MP3 players sucked before iTunes/iPod. The eBook business didn't suck before Apple. The Kindle with whispernet is slick, and that put eBooks on the map. Then Amazon launched KDP and self-publishing exploded. All well before Apple.

Did you know that self-publishers are under agency with Amazon and have been well before the iPad? Did you also know that if your book is priced at $9.99 or less, Amazon still reserves the right to put it on sale. BUT, you still get 30% of $9.99 and Amazon loses. That's incredibly fair.

I'm sorry but the media just likes an X vs Y battle, but Amazon has actually done a ton of good for the publishing industry. I think they're not perfect and they certainly have their problems, but a world where Apple inflates prices and eliminates competition is... no thanks.

The market is sorting itself out through innovation. We don't need grandpa Apple meddling their greedy hands in it.
     
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Jul 15, 2013, 06:31 AM
 
So Apple "manipulating" the market by signing publishers who didn't want to undercut themselves by signing with Amazon is "bad," but Amazon manipulating the market by forcing those publishers they sign to accept Amazon's arbitrarily low prices even if it is economically damaging to the publishers is "good?"

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Jul 15, 2013, 06:48 AM
 
Originally Posted by theothersteve View Post
Did you also know that if your book is priced at $9.99 or less, Amazon still reserves the right to put it on sale. BUT, you still get 30% of $9.99 and Amazon loses. That's incredibly fair.
From what I've read, this was NOT the case before Apple broke open the market and forced Amazon to renegotiate.
     
 
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