3 Publishers Settle e-Book Price Fixing Lawsuit, Terminate "Agency Model" With Apple

[jpeyton]

We told the publishers, ‘We’ll go to the agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that’s what you want anyway.’

-Steve Jobs

http://arstechnica.com/tech-policy/...-pay-back-millions-over-price-fixing-charges/

The settlement amount itself amounts to little, but forcing these three publishers to terminate their agency pricing model is going to lead to lower prices for consumers.

Meanwhile, the lawsuit against Macmillan, Penguin and Apple is going to trial.

 

[ViRGE]

http://arstechnica.com/tech-policy/...-pay-back-millions-over-price-fixing-charges/

The settlement amount itself amounts to little, but forcing these three publishers to terminate their agency pricing model is going to lead to lower prices for consumers.

And a monopoly for Amazon, who will return to selling books at a loss. Just great.

 

[Ancalagon44]

And a monopoly for Amazon, who will return to selling books at a loss. Just great.

Nothing is stopping Apple from doing the same. I dont think Amazon has as large a monopoly as some would think.

 

[ViRGE]

Nothing is stopping Apple from doing the same. I dont think Amazon has as large a monopoly as some would think.

Apple's not in the business of selling things at a loss to corner a market though.

I know it sounds paranoid, but look at what Amazon has already done to the printed book market. They were already trying the same thing with eBooks before the agency model came into play, and I can't imagine they won't try it again.

 

[WelshBloke]

I know it sounds paranoid, but look at what Amazon has already done to the printed book market. They were already trying the same thing with eBooks before the agency model came into play, and I can't imagine they won't try it again.

What's the problem? Aren't people buying more books than ever? Does it really matter if they are on paper or electronic?

 

[ViRGE]

What's the problem? Aren't people buying more books than ever? Does it really matter if they are on paper or electronic?

I think you misunderstand me. The format is not important; who's selling all of those books is.

 

[WelshBloke]

I think you misunderstand me. The format is not important; who's selling all of those books is.

What's wrong with Amazon? They pretty much rejuvenated the entire business and started the general public reading again.

 

[Dulanic]

Not to mention how does Amazon have a "monopoly"? Apple, Google, B&N just to name a few ebook competitors....

 

[Dari]

How is what the government doing not illegal for being bias? Apple should fight this. So what will happen now, publishers will sell books at a fixed price on iTunes?

 

[Dulanic]

How is what the government doing not illegal for being bias? Apple should fight this. So what will happen now, publishers will sell books at a fixed price on iTunes?

What? Seriously? I mean I know your a apple fan and all... but how is it not obvious what Apple & the publishers did is illegal. It is anti competitive and ILLEGAL for companies to do what Apple & the publishers did.

Amazon & Apple & Google & all the others are now free to set their own pricing... as would be normal in any competitive market. No one is forcing Apple to do anything now, they can make a fixed price, or any price they like. Just as Amazon now can.

 

[Dari]

What? Seriously? I mean I know your a apple fan and all... but how is it not obvious what Apple & the publishers did is illegal. It is anti competitive and ILLEGAL for companies to do what Apple & the publishers did.

Amazon & Apple & Google & all the others are now free to set their own pricing... as would be normal in any competitive market. No one is forcing Apple to do anything now, they can make a fixed price, or any price they like. Just as Amazon now can.

You must be confused. Before Apple, Amazon forced the publishers to sell ebooks at a fixed price. After Apple, Amazon was essentially forced to allow the publishers to set at whatever price they wanted. That is what lead to higher prices. Then the government sued and Amazon may force them to lower the price again.

 

[Kingbee13]

I think you misunderstand me. The format is not important; who's selling all of those books is.

You may be correct, but I still feel 30% markup for the etailer is a bit steep for simply hosting an ebook in thier digital marketplace. I say let the free market decide.

 

[ControlD]

You must be confused. Before Apple, Amazon forced the publishers to sell ebooks at a fixed price. After Apple, Amazon was essentially forced to allow the publishers to set at whatever price they wanted. That is what lead to higher prices. Then the government sued and Amazon may force them to lower the price again.

That isn't true either. Amazon, before the agency model was put in place, was using a wholesale model. Amazon would pay the publisher directly a set price per book. The number I generally see is that this price paid to the publisher is 50% of retail. Amazon itself then would set the price of the book being sold. The publisher had no say at all in the price of the book, Amazon did. The problem obviously is that nobody has the leverage that Amazon does and companies like Apple hoping to break into the ebook business had no real incentive to do so. Amazon could and did sell many books at a loss to increase their market share. Regardless the publisher still gets their 50% of retail for each book sold.

In contrast the problem with the agency model is that it easily can lead to collusion and artificially inflated prices. In the agency model the publisher directly sets the prices and they keep 70% of the price with 30% going to the seller. This means that for books to be sold at a discounted price the publisher has to be the one discounting it. Amazon, Apple, etc. have no control over the price of the book in this case. Amazon wants to be able to compete by having better prices. Apple wants to compete by product recognition / brand loyalty.

 

[Dari]

That isn't true either. Amazon, before the agency model was put in place, was using a wholesale model. Amazon would pay the publisher directly a set price per book. The number I generally see is that this price paid to the publisher is 50% of retail. Amazon itself then would set the price of the book being sold. The publisher had no say at all in the price of the book, Amazon did. The problem obviously is that nobody has the leverage that Amazon does and companies like Apple hoping to break into the ebook business had no real incentive to do so. Amazon could and did sell many books at a loss to increase their market share. Regardless the publisher still gets their 50% of retail for each book sold.

In contrast the problem with the agency model is that it easily can lead to collusion and artificially inflated prices. In the agency model the publisher directly sets the prices and they keep 70% of the price with 30% going to the seller. This means that for books to be sold at a discounted price the publisher has to be the one discounting it. Amazon, Apple, etc. have no control over the price of the book in this case. Amazon wants to be able to compete by having better prices. Apple wants to compete by product recognition / brand loyalty.

There is nothing wrong with Apple's way. Amazon's way undermines the capitalist system. Also, they (Amazon) still sold the books at a fixed price in order to undermine competitors and may have been forcing publishers and others down the line to take a loss on each book sold. That is wrong. The government is wrong in this case.

 

[waggy]

I love my E-reader. i do think its insane that the books cost as much as a paperback.

 

[ControlD]

There is nothing wrong with Apple's way. Amazon's way undermines the capitalist system. Also, they (Amazon) still sold the books at a fixed price in order to undermine competitors and may have been forcing publishers and others down the line to take a loss on each book sold. That is wrong. The government is wrong in this case.

I am not saying either side is right or wrong. Both Amazon and Apple are trying to maximize their present and future ebook profits by molding the market to their whims.

That being said, I sure don't see how Amazon is "undermining the capitalist system". The publisher gets 50% of the retail cost per book sold. If the publisher wants to make more money they can increase the retail cost. If they want to increase sales they can lower the price. Of course if they increase it too much nobody will be buying the book. That sounds like capitalism at its' finest. Also the publisher is free to ask for more than 50% if they so choose.

What you don't seem to understand is that when Amazon is selling the books at a loss, it is Amazon's loss, not that of the author or the publisher. The publisher still gets 50% of retail for each book sold no matter what Amazon is selling the book for. Amazon is willing to take that loss in order to increase market share. Sucks for everybody else out there for sure but that is what is being done. Amazon is not forcing publishers into a fixed price, Amazon is setting their own price after they have purchased each copy of the book from the publisher.

The government is only wrong in this case if there is no collusion amongst Apple and/or the major publishers in fixing the prices of ebooks. Price fixing in such a case violates US law and is under the perview of the government.

 

[Dulanic]

There is nothing wrong with Apple's way. Amazon's way undermines the capitalist system. Also, they (Amazon) still sold the books at a fixed price in order to undermine competitors and may have been forcing publishers and others down the line to take a loss on each book sold. That is wrong. The government is wrong in this case.

Wait so making your own prices and not being forced into specific pricing is the "capitalist system" way? So you think it's better if a distributor meets with the publishers to force a 2nd distributor to raise their prices? That is "wrong"? The government is completely right that this was against the law.

 

[Dari]

Wait so making your own prices and not being forced into specific pricing is the "capitalist system" way? So you think it's better if a distributor meets with the publishers to force a 2nd distributor to raise their prices? That is "wrong"? The government is completely right that this was against the law.

It is common sense. That is how the free market works. You set the price people are willing to pay. Are you even American? How can you not understand this?

 

[Dari]

I am not saying either side is right or wrong. Both Amazon and Apple are trying to maximize their present and future ebook profits by molding the market to their whims.

That being said, I sure don't see how Amazon is "undermining the capitalist system". The publisher gets 50% of the retail cost per book sold. If the publisher wants to make more money they can increase the retail cost. If they want to increase sales they can lower the price. Of course if they increase it too much nobody will be buying the book. That sounds like capitalism at its' finest. Also the publisher is free to ask for more than 50% if they so choose.

What you don't seem to understand is that when Amazon is selling the books at a loss, it is Amazon's loss, not that of the author or the publisher. The publisher still gets 50% of retail for each book sold no matter what Amazon is selling the book for. Amazon is willing to take that loss in order to increase market share. Sucks for everybody else out there for sure but that is what is being done. Amazon is not forcing publishers into a fixed price, Amazon is setting their own price after they have purchased each copy of the book from the publisher.

The government is only wrong in this case if there is no collusion amongst Apple and/or the major publishers in fixing the prices of ebooks. Price fixing in such a case violates US law and is under the perview of the government.

Do you really believe what you wrote? Do you believe the publishers can set the retail price to whatever they want? And once Amazon has a monopoly you don't think they can then decide what the retail price is?

 

[ControlD]

It is common sense. That is how the free market works. You set the price people are willing to pay. Are you even American? How can you not understand this?

That is NOT how the free market works. The free market works by letting the price of goods be determined by supply and demand. Fixing the price of a good and demanding that price be honored by every person selling it sure as hell is not free market economics. That is called price fixing and precisely because it violates the ideas of free market economics is why it is not legal and why the government is involved in this case. Believe it or not this isn't a conspiracy case against Apple.

 

[ControlD]

Do you really believe what you wrote? Do you believe the publishers can set the retail price to whatever they want? And once Amazon has a monopoly you don't think they can then decide what the retail price is?

Of course they can set the retail price to whatever they want. Go to an actual book store sometime and observe the retail price of the books. Some cost more than others. Sounds like the publishers are setting the retail price to what they think they can get out of the book. Common sense of course will prevail and setting the newest Stephen King book at $100 per copy will quickly lead to financial ruin but they could do that if they so wished.

 

[Kingbee13]

Do you really believe what you wrote? Do you believe the publishers can set the retail price to whatever they want? And once Amazon has a monopoly you don't think they can then decide what the retail price is?

The Agency model IS puplishers setting the retail price and giving retailers no leverage to compete. What makes you think Amazon will ever have a monopoly? Google, Apple, and Barnes and Noble are all compettitors.

 

[Phokus]

There is nothing wrong with Apple's way. Amazon's way undermines the capitalist system. Also, they (Amazon) still sold the books at a fixed price in order to undermine competitors and may have been forcing publishers and others down the line to take a loss on each book sold. That is wrong. The government is wrong in this case.

How the hell does Amazon's way 'undermine' the capitalist system? THAT IS THE CAPITALIST SYSTEM.

Now if you want to argue the same thing about Walmart...

I can't blame Amazon, but i sure as hell can blame Apple for raising prices on the rest of us.

 

[Dari]

Of course they can set the retail price to whatever they want. Go to an actual book store sometime and observe the retail price of the books. Some cost more than others. Sounds like the publishers are setting the retail price to what they think they can get out of the book. Common sense of course will prevail and setting the newest Stephen King book at $100 per copy will quickly lead to financial ruin but they could do that if they so wished.

He implied that the publishers can charge Amazon anything want and Amazon will pay half of that. I don't believe it. It's bullshit.

 

[Dari]

Lots of confusion in this thread. It's just how the DoJ likes it. I hope I'm a juror in this trial. It'll be NOT GUILTY all day everyday.