Apple being sued over ebook pricing...

[KLin]

http://money.cnn.com/2012/04/11/technology/apple-doj-ebooks/index.htm?hpt=hp_t1

Interesting read.

 

[JeffreyLebowski]

I find Apple ironic more than iconic. lol For a decade, they were the poster child for people wanting to go against the grain. The "counter culture" that despised M$ for it's business practices and basically printing money. Apple has now turned into the M$ of the 90's.
I figure this suit by the DOJ is nothing more than the government trying to get a slice of the Apple pie.

 

[Bateluer]

Surprised it took this long. Those of us watching ebooks before and during the first iPad launch watched Jobs sign contracts with the major publishers. Prices on ebooks doubled as soon as the iPad launched.

 

[senseamp]

Long overdue. Hopefully they will force the conspirators to disgorge wrongful gains as well.
I don't have too much faith in the DOJ, but with European authorities also investigating, dragging this out is like playing Russian roulette with a loaded gun.

 

[dougp]

Apple isn't the only one being sued, you should probably update your title. Assuming they are found guilty, this is nothing but great news for consumers.

 

[dougp]

Looks like some settlements have already been proposed:

http://www.wired.com/epicenter/2012/04/doj-terms-settlement-ebook

 

[ChAoTiCpInOy]

I don't know how I feel about this. On one hand, for consumers it's good because it lowers the price for them. But on the other hand, Amazon's tactics were incredibly monopolistic considering they dropped the price lower than the price they paid which they could afford to do. So the publishers were forced to make this kind of decision. In the end though, I think the agency model is better and I don't think the government should be stepping in here.

 

[senseamp]

I don't know how I feel about this. On one hand, for consumers it's good because it lowers the price for them. But on the other hand, Amazon's tactics were incredibly monopolistic considering they dropped the price lower than the price they paid which they could afford to do. So the publishers were forced to make this kind of decision. In the end though, I think the agency model is better and I don't think the government should be stepping in here.

I feel that $9.99 is better than $20 for me as a consumer. If another retailer wants to resell at a loss, I don't think Apple should be stepping in here.

 

[Spoooon]

Looking forward to more reasonable prices on e-books.

 

[dougp]

I don't know how I feel about this. On one hand, for consumers it's good because it lowers the price for them. But on the other hand, Amazon's tactics were incredibly monopolistic considering they dropped the price lower than the price they paid which they could afford to do. So the publishers were forced to make this kind of decision. In the end though, I think the agency model is better and I don't think the government should be stepping in here.

Until someone can explain to me the cost of an eBook vs. a physical copy, and why they're both $9.99 (sometimes the paperback is $7.99 or vice versa) - I don't really care who gets screwed. eBooks should be cheaper than the physical copy - by whatever margins necessary.

 

[Mopetar]

From the wired article posted by dougp:

In particular, the proposed settlement states: “These provisions do not dictate a particular business model, such as agency or wholesale, but prohibit Settling Defendants from forbidding a retailer from competing on price and using some of its commission to offer consumers a better value, either through a promotion or a discount.” Discounts, promotions, and some control over retail pricing must all be at least partially under the retailers’ control, even if the agreement is technically an agency-commission model, rather than a wholesale one.

This doesn’t kill the agency model outright, but does modify it well beyond what’s widely recognized today. Suppose a publisher prices a book at $10 list price, and a retailer agrees to a 30 percent commission, or $3 on a full list sale. Under these conditions, those retailers would be permitted to sell the book below list price, presumably taking the discount out of their own $3 commission. The publisher would still net $7, but lose its ability to maintain prices.

Honestly, I'm not sure why things weren't that way to begin with. Apple could still keep their 'most favored nation' status in that other retailers would not get a lower price from the publisher. If Amazon or any other company wants sell at a lower price after that and cut into their own profits that shouldn't be anyone's business but their own.

 

[zerogear]

After royalty to the author, ebook is pretty much pure profit? I think 9.99 is a bit much for ebooks considering how much less it takes (for the publisher) to produce.

 

[runawayprisoner]

Since it's the Department of Justice suing, I wonder if saying "justice is served" would create a paradox...

Joking aside, it is indeed long overdue.

 

[pm]

I am personally very happy to see this happening. I was pretty annoyed when the "cartel" of publishers and Apple changed things over to an agency model and about my only response is "what took them so long?".

I'm sure I can dig up a couple of posts that I remember writing back when it happened saying that the idea that a bunch of competitors got together to figure out how to raise prices smacked of anti-competitive price-fixing.

Edit: I saw this linked off the OP's post:
http://tech.fortune.cnn.com/2012/04...conspiracy-three-days-in-january/?iid=T_Blogs

I don't usually recommend DOJ complaints as good bedtime reading. This one may be the exception.

Hmm... what do you know? There's at least one free good ebook that came from this deal.

 

[Dulanic]

Amazon tried to fight all this when it happened. I thought Amazon filed a lawsuit against the publishers & Apple at the time too didn't they? I wonder if anything came of that... doubt it. It was nice when Amazon would sell books at 9.99 for a loss just to get customers... until Apple came around and said eh well do whatever you want which left Amazon in a bad position of either lose the publishers or give in.

 

[Mopetar]

After royalty to the author, ebook is pretty much pure profit? I think 9.99 is a bit much for ebooks considering how much less it takes (for the publisher) to produce.

Actually the physical production costs for books are rather low, usually only about 10% of the final product cost, so the move to e-books really isn't saving them tons of money, especially when the overall price of an e-book is much lower.

That may not be much of a problem as the lower prices will lead to increased consumption, offsetting the reduction in profit for each individual sale. There's also a strong historical trend of increased consumption following a reduction in production costs.

Really though, if the publishers wanted to destroy Amazon's dominant position, they should have just sold to Apple at a lower rate and asked Apple to sell below Amazon's rate in return. They could do the same for Barnes and Noble and other resellers as well. Amazon's sales would decline and the publishers could keep more control.

 

[BladeVenom]

You say that the printing cost is only 10%, yet paperback books are less than half the cost of hardcover books.

 

[Dulanic]

You say that the printing cost is only 10%, yet paperback books are less than half the cost of hardcover books.

Hardcover are even higher profit. They just charge that much more because they can. I wonder why sometimes books are available hardcover only when they first release...hmmmmmm.

 

[Mopetar]

You say that the printing cost is only 10%, yet paperback books are less than half the cost of hardcover books.

I don't say, but I did provide a few sources who claim the printing cost for a hardcover book is roughly 10% of the cost. Paperbacks are most likely cheaper, but if you're lumping in the $6 paperbacks that have been in print for over 100 years with the $15 ones that have just come out you're being a bit dishonest with your argument. Funny how something free of author royalties and any requirement for an editor would be cheaper than something new.

Also, hard cover prices are going to be inflated in much the same way that anything new tends to cost more. For example if you want to see a film in theaters it's probably at least $10. Eventually you can rent it for $5 or less, and given enough time it will show up on some TV channel that probably costs less than $1 a month. The increased cost of a hardcover isn't because of similar increase in production costs. Publishers charge more because people will pay more.

 

[gorcorps]

You say that the printing cost is only 10%, yet paperback books are less than half the cost of hardcover books.

This may be hard to grasp, but prices do not rise linearly with production costs. They charge what they think people will pay. Do you think Apple's production cost goes up by $100 when they add 16gigs of capacity? Hell no... but YOUR cost sure does.

 

[alent1234]

You say that the printing cost is only 10%, yet paperback books are less than half the cost of hardcover books.

it's not like they take the author's work and just print it. they have people to read and edit it and other people to read through submissions of new authors. then more people to work out business details with barnes and noble.

the reason paperbacks are cheaper is that they come out after the hardback book and those costs have already been recovered. they are there as a source of cash to partly fund new books and as filler for book stores

 

[Phokus]

There are more details about the case here:

http://www.theverge.com/2012/4/11/2...k-price-fixing-case-against-apple-an-analysis

I have to say, what Apple and the publishers did was heinous and they had gigantic balls to basically openly discuss this illegal price fixing scheme.

 

[MrX8503]

Anything that's digital should be cheaper than its physical form. This includes music cds, books, magazines, and comic books. Hopefully this will get ebook prices to come down.

 

[FoBoT]

Amazon tried to fight all this when it happened.

and now they are going to take this opportunity to lower prices
http://www.nytimes.com/2012/04/12/b...cut-e-book-prices-shaking-rivals.html?_r=2&hp

As soon as the Department of Justice announced Wednesday that it was suing five major publishers and Apple on price-fixing charges, and simultaneously settling with three of them, Amazon announced plans to push down prices on e-books. The price of some major titles could fall to $9.99 or less from $14.99, saving voracious readers a bundle.

 

[swanysto]

Until someone can explain to me the cost of an eBook vs. a physical copy, and why they're both $9.99 (sometimes the paperback is $7.99 or vice versa) - I don't really care who gets screwed. eBooks should be cheaper than the physical copy - by whatever margins necessary.

I can't explain to you why, but are video games cheaper to download than to buy the physical copy?

Also, don't the ebook sellers need to pay for bandwidth? I realize ebooks are not massive, but when millions of people are downloading books, there has to be costs there.