Apple found guilty of E-Book price fixing by the government

[Phokus]

http://www.theverge.com/2013/7/10/4510338/apple-found-guilty-of-ebook-price-fixing

Good, it was a scummy move on Apple's part. They could have easily pummeled Amazon by undercutting them, but they'd rather use an illegal and immoral tactic to try to 'compete'.

An anti-trust lawyer/redditor explains what they did wrong here:

http://www.reddit.com/r/technology/...pple_to_trial_over_ebooks_pricefixing/caatz4t

 

[ViRGE]

I fear all this has accomplished is the complete and utter domination of the e-book market by Amazon.

And unlike the music and movie businesses (with their agency models), the current e-book business doesn't leave any room for additional players.

 

[cheezy321]

Do we really need two threads about this?

Doesn't the resident Apple hater brigade have a meeting every week to discuss what their agenda should be?

 

[Ravynmagi]

I fear all this has accomplished is the complete and utter domination of the e-book market by Amazon.

And unlike the music and movie businesses (with their agency models), the current e-book business doesn't leave any room for additional players.

As a consumer if my choices are Amazon dominating with lower prices or more competition with higher prices, I'll go with Amazon.

It would be nice if there was more competition. But the publishers seem to be at fault with their rather high prices. No idea why they expect upwards to $15 or more for a new ebook. Amazon I hear will sometimes take a loss on ebooks, that is why their prices are so good. Others can't do that (or choose not to). But if these publishers would just bring the ebook prices down, then other stores like B&N, iTunes, and Google could probably compete better with Amazon on prices.

Well, at least that is how it seems to me. I admit I'm not completely versed in how this all works. So feel free to correct me if I'm way off base.

 

[Ravynmagi]

Do we really need two threads about this?

Doesn't the resident Apple hater brigade have a meeting every week to discuss what their agenda should be?

Not sure why that other thread decided to put two different topics into the same thread though.

 

[Phanuel]

As a consumer if my choices are Amazon dominating with lower prices or more competition with higher prices, I'll go with Amazon.

This is why I can't understand how additional "competition" was something I should have been rooting for during this whole fiasco.

Really soured me off of legitimately purchasing e-books when they became 3x the price of a paperback.

 

[ViRGE]

This is why I can't understand how additional "competition" was something I should have been rooting for during this whole fiasco.

Really soured me off of legitimately purchasing e-books when they became 3x the price of a paperback.

The concern is that with a near-monopoly Amazon will be free to set e-book prices as high as they wish, as that's where the scenario easily leads.

E-books are an expensive and difficult market to get into, so once Amazon runs out all the other competition they can charge much higher prices without needing to be concerned about viable competition undercutting them. As it stands Amazon is practically selling e-books at a loss, so there's little reason to believe that their current prices are sustainable or that the company intends to keep them low. Consequently you get low prices now, but much higher prices in the future.

 

[ChronoReverse]

http://www.the-digital-reader.com/2...amazon-isnt-the-defendant-today/#.Ud3c76xc9Lc

The tl;dr version is that Amazon has always made at least some money on ebooks, and that means there’s no proof that Amazon’s pricing policies meet the definition of predatory.

 

[BladeVenom]

Doesn't the resident Apple hater brigade have a meeting every week to discuss what their agenda should be?

Anyone with a brain should be upset that Apple engaged in illegal price fixing to raise prices on consumers.

 

[ControlD]

The concern is that with a near-monopoly Amazon will be free to set e-book prices as high as they wish, as that's where the scenario easily leads.

I'm not sure I completely agree with this. I do believe we will see the price of ebooks rise somewhat as Amazon consolidates their position, but raising prices "as high as they wish" may not be possible even for them.

If Amazon raises ebook prices too high then they will simply create a market opportunity for some other company. With the wholesale model Amazon is using there is nothing preventing other companies from entering the market, but with Amazon's prices so low there is little incentive to do so. If those prices start to creep up too much that will no longer be true and that incentive (an actual profit) will be there for competitors.

 

[Aikouka]

The concern is that with a near-monopoly Amazon will be free to set e-book prices as high as they wish, as that's where the scenario easily leads.

For me, the problem with an argument like this is that it sounds way too much like a Doomsday argument. In other words, you're predicting that it's only possible for the absolute worst to come from a situation, but I can't think of any instances that would serve as evidence that Amazon would do that. Although, I'm not exactly an Amazon expert, so I may just not know about them!

 

[crashtestdummy]

The concern is that with a near-monopoly Amazon will be free to set e-book prices as high as they wish, as that's where the scenario easily leads.

If that were the case, then publishers wouldn't be so upset about the $9.99 price point, as the court documents clearly show they were. Amazon was engaged in a price war with publishers, not other distributors.

There were two anti-competitive tactics taken here. The first was the publishers colluding together to try to break Amazon's price point (which they settled on out of court), and the second was Apple requiring that the publisher only be allowed to make agency deals with other retailers. This was done in particular with the express intent of raising prices across the board.

I think that if Amazon was keeping prices low with the intent on raising them after achieving market dominance, it would have happened already. They've been pursuing their current market model for years now, and have not run up prices in any of their various markets.

Amazon is a strange, anomalous company. They run almost as a non-profit, but one that people invest in anyway. I can't imagine the business model will last forever, but I also don't doubt that once it ends, there will be a dozen new competitors that will jump in at the first sign of higher prices. They don't operate in the space of a natural monopoly (i.e. an industry that requires massive capital investment to participate in, such as railroads or utilities), so the instant someone else can sell things for less than Amazon, they will.

 

[ViRGE]

I'm not sure I completely agree with this. I do believe we will see the price of ebooks rise somewhat as Amazon consolidates their position, but raising prices "as high as they wish" may not be possible even for them.

If Amazon raises ebook prices too high then they will simply create a market opportunity for some other company. With the wholesale model Amazon is using there is nothing preventing other companies from entering the market, but with Amazon's prices so low there is little incentive to do so. If those prices start to creep up too much that will no longer be true and that incentive (an actual profit) will be there for competitors.

The issue is that the market for selling e-books (specifically, e-books from major publishers as opposed to DIY kooks) has a very high barrier to entry. The equipment is cheap - all you need is servers - but you need to sign content deals and then must be concerned with marketing and getting enough market share to make the whole thing viable, all of which takes time and money. I would consider it to be very similar to the music market of about 6 years ago; iTunes was by far and away the leader, and the only reason they lost any ground is that the labels specifically gave Amazon better deals to undercut them.

Once someone becomes the dominant player in a digital distribution service, they can survive almost entirely on inertia.

 

[Bateluer]

Its more shocking that it took 3 years for Apple to take the fall for this. Ebook prices tripled the day the iPad 1 launched.

It was infuriating to see ebook prices more than the printed book, which has to be shipped to the warehouse, shipped to the store/me, my driving to the store etc.

What this ruling does is weaken the control of the old guard publishers. Its time to join the 21st century, and they're going to be dragged into it kicking and screaming or they can go bankrupt. I assure you, they won't be missed.

 

[Joe1986]

The evidence was pretty damming, from the meetings, emails, and the biography, it was just ugly.

 

[NWilliam]

I wonder if this revelation will do them any harm since they're just about to bring iBooks to Mac which is a pretty big update since I for instance have been preferring Amazon's Kindle store because of its multi-platform capabilities

 

[ibex333]

Umm... There are people who "BUY" ebooks? Whoa...

 

[Phanuel]

I've bought a couple, but they were all independent and they were still more than the price of the paperback. It's all too frustrating still to want to embrace a digital distribution that is WORSE than the physical it intends to replace.

 

[Bateluer]

Umm... There are people who "BUY" ebooks? Whoa...

Yes, there are people who will pay for legit and legal content instead of pirating.

 

[lothar]

Given the fact that most eBooks I looked at during my university years cost just as much as the physical textbook itself(if not even more in some cases) with stupid DRM limitations, I'll take the physical textbook thank you very much. The physical textbook usually comes with a CD anyhow.

 

[gorcorps]

Umm... There are people who "BUY" ebooks? Whoa...

All of the ebooks I've purchased have been daily deals or something else to make them cheap (just a couple bucks). At those prices you should feel ashamed not paying for them.

 

[kalrith]

Umm... There are people who "BUY" ebooks? Whoa...

Yes. And there are people who "buy" movies, music, games, software, etc. I expect my company to pay me for creating digital content (I'm a programmer), and I obtain all digital content through legal means.

Many kindle books go on sale or even for free from time to time. As an example, I picked up all 7 Chronicles of Narnia books for $14 ($2 each). I can also check out ebooks from my local library.

 

[Crono]

Umm... There are people who "BUY" ebooks? Whoa...

Aside from wanting to do things the legitimate and legal way, you also get complimentary synchronization and cloud storage of those books in a digital library linked to your account. I very much like having the Nook and Amazon Kindle books I've purchased synced across my computers and smartphone, especially since I tend to go switch or get new devices every couple of months. The Nook and Kindle apps work fairly well as readers, too.

 

[Super56K]

Aside from wanting to do things the legitimate and legal way, you also get complimentary synchronization and cloud storage of those books in a digital library linked to your account. I very much like having the Nook and Amazon Kindle books I've purchased synced across my computers and smartphone, especially since I tend to go switch or get new devices every couple of months. The Nook and Kindle apps work fairly well as readers, too.

Not that I'm condoning any shady stuff, but you can have that same cloud storage and synchronization with personal documents on Amazon too. There's even a piece of software you can install that will add that functionality into a right-click menu in Windows. It's impressive really.

 

[jpeyton]

The DOJ is trying to hammer Apple with their proposed injunction: http://www.reuters.com/article/2013/08/02/net-us-apple-ebooks-idUSBRE9710OC20130802

The government's plan, which still needs court approval, would require that Apple end its contracts with the five publishers and be banned for five years from entering contracts that would effectively the raise prices of e-books sold by rivals.

The publishers included Lagardere SCA's Hachette Book Group Inc, News Corp's HarperCollins Publishers LLC, Pearson Plc's Penguin Group (USA) Inc, CBS Corp's Simon & Schuster Inc and Verlagsgruppe Georg von Holtzbrinck GmbH's Macmillan. All settled with U.S. regulators.

Apple would also be blocked from cutting deals with providers of movies, music and TV programs for its iPad tablets and iPhones that would likely increase the prices at which rivals might sell such content. It would also require providers to lower prices for Apple if they lower them for rivals.

Officials also want to make it easier for consumers to compare e-book prices by requiring Apple for two years to let Amazon, Barnes & Noble Inc and other rivals provide links to their own stores within their iPad and iPhone apps.

Their stock has recovered a bit since their latest quarterly sales report, but an injunction like this could damage Apple's image enough to make the stock take another dive.

Apple is already appealing the ruling, and making threats against the court should they impose the injunction: http://www.computerworld.com/s/arti...hollow_threat_to_bar_Kindle_other_e_book_apps

Apple on Friday responded to e-book price-fixing remedies proposed by the U.S. Department of Justice and 33 state attorneys general with, among other things, an implied threat that it could yank Amazon's Kindle app from its iPad and iPhone App Store.

"Apple is under no duty to allow other retailers to offer apps on the iPad," Apple said in its filing with a federal court.

The threat, however, was largely symbolic: If the court approves the government's proposal, Apple would not be allowed to drop any apps from its store.