Apple selling naughty e-books?

[easysurfer]

No, not that kind of naughty books.

Instead, DOJ sues Apple over price fixing:

"The suit stems from the 2010 release of the iPad, when Apple (AAPL, Fortune 500) reached an agreement with five publishers to release books on its then-new iBookstore. The DOJ said Apple colluded to raise the price of e-books with CBS's (CBS, Fortune 500) Simon & Schuster, News Corp.'s (NWS) HarperCollins, Hachette Book Group, Pearson's (PSO) Penguin unit and Macmillan."

DOJ sues Apple over price-fixing scheme - Apr. 11, 2012

[ERD50]

I'm not sure what to make of this. The story says Amazon would only sell books at the $9.99 price. Apparently, there were few other outlets for e-books, so the way I see it, it is Amazon that is possibly restraining trade here, they have a sort of monopoly. I'm guessing that Amazon took a fixed $ amount per book, so low prices meant more sales and more $ for Amazon (plus more people browsing their site).

So the publishers were looking to Apple to provide competition to Amazon. With two major outlets, the publishers had a freer market. And Apple set prices higher. OK, but the consumer still has a choice, right?

What about iTunes - don't all the labels have the same price? Is that price fixing? Seems to me if you own a store, and you tell your suppliers you are pricing all the following items at $1/pound with a 25% markup, , then it is up to them to decide to if they want to sell to you at 80 cents. I don't think that is price fixing.

But if you talk to the other store owners in the area, and say that no one should charge more than $1/pound for those items, then that is price fixing, right?

-ERD50

[M Paquette]

And Amazon is going to be vewwy, vewwy quiet.

Oh, and book prices will go up...

[clifp]

I think it is pretty clear cut case of price fixing which is why most publishers have settled. The DOJ has emails documenting an agreement among the publishers and Apple to all switch to an agency model and drive the price up to consumers. Now considering that in general physical book are sold at wholesale price with retailer being free to mark up the books (in the case of Amazon a small markup) this is mighty suspicious.

Most of the time in past anti trust lawsuits by the government against tech companies it is hard to figure out how the consumer is harmed, for example Google provides search and bunch of other services for free and while it is actions maybe unfair to competitors it isn't like they hurt me.

In contrast this collusion to raise ebook prices had direct impact on consumers. One of the reason I signed up for the Kindle was the promise of most ebooks would be $9.99. Amazon did their part since often the publisher would price their wholesale price of ebooks ( 40-50% of suggested retail) at the same price as the hardback so Amazon would buy the at $8 wholesale and sell them for $9.99. In some case Amazon was selling at cost and most cases they could make more money selling a hardback version compared to an ebook. But Amazon want to build the market for Kindle books so they accepted lower margins.

Then along comes Apple and works with publishers and they decide they will set the price of ebooks to be a a $1 or two below hardback prices. They switch to agency model which gives the e-tailer no control over pricing and instead gives them a fixed 30% profit of the price of an ebook.

By working collectively they publishers force Amazon to abandon the wholesale model and switch to an agency model. Suddenly I and other consumers instead of finding that we are paying $9.99 (which is typically a $1 or two higher than the paperback version) for a Kindle book now find that we are paying $12.99 (almost all of the NY Bestseller Kindler books are at this price) and many are at $14.99.
This leads to absurd situation such as the bestseller where the Kindle cost $14.99 and the hardback cost $13.99.

A year or so ago when I saw an ebook that I wanted to that cost more than $9.99 I wrote an email to the publisher and said I'd like to purchase this books but I won't pay more than $9.99 for an electronic book. So instead I'll get it at the library or wait until the paperbook. I generally got form letter response. However, I threw in the towel at Xmas when making my Xmas list wish for my family cause it is clear that find best selling ebooks for $9.99 is a lost cause. Although I still buy plenty of ebooks at $2 or $3.

Fundamentally the cost of publishing an ebook (including printing, distribution, shipping, and dealing with returns and overstocking) is probably $4-$5 less than a physical book. Obviously printers and shippers (UPS, USPS) are hurt by this but who should benefit? It seems to me in a true free market that everybody authors, etailers,and publisher should make a bit more money from the cost savings and the consumers should benefit from lower prices. Instead we see the publishers and the etailers get virtually all of the savings due to collusion.

[Texas Proud]

Quote:

Originally Posted by ERD50 I'm not sure what to make of this. The story says Amazon would only sell books at the $9.99 price. Apparently, there were few other outlets for e-books, so the way I see it, it is Amazon that is possibly restraining trade here, they have a sort of monopoly. I'm guessing that Amazon took a fixed $ amount per book, so low prices meant more sales and more $ for Amazon (plus more people browsing their site). So the publishers were looking to Apple to provide competition to Amazon. With two major outlets, the publishers had a freer market. And Apple set prices higher. OK, but the consumer still has a choice, right? What about iTunes - don't all the labels have the same price? Is that price fixing? Seems to me if you own a store, and you tell your suppliers you are pricing all the following items at $1/pound with a 25% markup, , then it is up to them to decide to if they want to sell to you at 80 cents. I don't think that is price fixing. But if you talk to the other store owners in the area, and say that no one should charge more than $1/pound for those items, then that is price fixing, right? -ERD50

From what I got off the news.... it was not that there was a second outlet, but that the publishers stopped selling through Amazon... now, I have no idea if this is true, but the national news guy had said they had noticed that the price of ebooks had increased 'overnight'...

If Apple and the publisher got together and stated 'do not sell any for less than X'.... that is collusion.... if the publisher said, we will sell you each book for Y dollars and you sell it for whatever you want... and the price was X... not collusion...

Since a number of publishers have already agreed to settle, there might be something to this case....

[TromboneAl]

Can't wait to see if/how this will affect prices. I think at some point someone is going to say "If I can sell this new Ludlum book for $1, I will sell millions overnight."

This is exactly what price fixing prevents. One business says to the other "I won't do that if you won't, and we'll both win."

I'm still amazed at the iPod software I can get for free or $2.

The Informant is an interesting movie on price fixing.

[easysurfer]

Wasn't there a similar situation several years back regarding compact discs. They were at some point pretty much price fixed at around $16.99 or so. Eventually, the end result was CDs at a lower cost.

When I hear of the word collusion, I think about when baseball owners were found to have done that in regard to free-agents. Scratching each others backs, in a sense.

[seraphim]

A couple fo random and undeveloped thoughts (as I've not been keeping up on the issue):

If the publishers agree to it reasily, then it's in their best interest.

How can a group of people celebrating deregulation of brokerage fees celebrate fixed book prices?

And why does no one consider the effect of prices on the author? We want cheap books, but who's the first that policy will damage? The artist.

I'll sit back now and continue reading responses.

[clifp]

Quote:

Originally Posted by seraphim A couple fo random and undeveloped thoughts (as I've not been keeping up on the issue): If the publishers agree to it reasily, then it's in their best interest. How can a group of people celebrating deregulation of brokerage fees celebrate fixed book prices? And why does no one consider the effect of prices on the author? We want cheap books, but who's the first that policy will damage? The artist. I'll sit back now and continue reading responses.

It is not at all clear that authors are hurt by ebooks. Here is a very good story about Ms. Hockings who has now making a very good living as author after a more than decade of being rejected by publishers. Her royalities from Amazon are more than twice as much as she'd get from a traditional publisher and since she is selling her books at $2.99 vs $10 for a regular book she is selling at lot more of them.

Now it is probably true that some authors might get less money under the traditional wholesale model than under the agency model, but I somewhat doubt it. The real winners in this scheme were publishers and Apple and the losers were consumers and Amazon.

I am personally willing to give a lot of authors who sell $2.99 a shot on impulse buy, if the book looks interesting, as opposed to for $10-$15 for a regular book.

IIRC, Baseball has a Congressional exemption against anti trust action.

[ERD50]

Looks like Apple is defending in the way that I was wondering about:

Apple Fires Back at the Feds, Amazon - Peter Kafka - Media - AllThingsD

Quote:

The DOJ’s accusation of collusion against Apple is simply not true. The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon’s monopolistic grip on the publishing industry. Since then customers have benefited from eBooks that are more interactive and engaging. Just as we’ve allowed developers to set prices on the App Store, publishers set prices on the iBookstore.

-ERD50

Quote:

Originally Posted by TromboneAl Can't wait to see if/how this will affect prices. I think at some point someone is going to say "If I can sell this new Ludlum book for $1, I will sell millions overnight."

I also thought that music performers would go direct and sell an entire CD for $1 (or maybe < $5). I think they were making far less than that on a $16.99 retail CD, and by going digital costs are very low, you don't need to have a distribution network, etc. But there hasn't been much of that.

I see Magnatune changed their system, used to be you could download CDs (lossless was available) for a lower than retail price, and the artist made more than they would through the big labels. But now you have to sign up for $15/month to get access.

-ERD50

[Koogie]

I think all it will take is one major author (or several) with money/clout who start selling their e-books exclusively themselves through their own website. Editing/typesetting/design can all be outsourced quite cheaply and an e-commerce site is next to nothing to set up anymore. That will break the back of the parasitic publishing/distribution industry.

Direct from website $1.99 Stephen King e-books ? or $2.99 J.K. Rowling e-books ? I think that alone would reduce worldwide printed book sales by about 50% : o )

[Lsbcal]

You can publish with Amazon right now and get up to 70% royalties: Amazon.com : Self-Publish with Us

I am going to publish a new title soon:
Low Savings? Retire and Spend Like you are Rich

My angle -- Rich (Richard) is the name of a guy who is actually poor and out of work. You will be instructed in how to attack garbage bins with gusto. Should be very entertaining.

Well it's Friday the 13th, what else did you expect from me?