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(Washington Post) NewsFlash US Justice Department sues Apple, publishers for antitrust violations on e-book pricing. Read all about it in an electronic report that costs more than the hardcover   (washingtonpost.com) divider line 432
    More: NewsFlash, Justice Department, hardcovers, Macmillan, Penguin Group, e-books, pricing, antitrust laws, United States Department of Justice  
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10732 clicks; posted to Main » on 11 Apr 2012 at 10:47 AM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»


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2012-04-11 10:48:07 AM
'Bout time.
 
2012-04-11 10:49:23 AM
LEAVE THE BEATLES ALONE!!!
 
2012-04-11 10:49:28 AM

Samwise Gamgee: 'Bout time.


Done in one.
 
2012-04-11 10:49:35 AM
This was inevitable. The publishers are more to blame than Apple, but there's already suits pending against them too.
 
2012-04-11 10:50:21 AM
this could get very interesting....
 
2012-04-11 10:50:25 AM
fark yeah!
 
2012-04-11 10:51:22 AM
This is actually an abuse of the newsflash tag I can get behind
 
2012-04-11 10:52:57 AM
So what exactly did they do? Serious question. I'm not very well read on e-book related anti-trust law.
 
2012-04-11 10:54:00 AM
Hmm? The ebook version of the book I just bought costs 12.99, and the hardcover of the same 39.99.
 
2012-04-11 10:54:05 AM

Silly Jesus: So what exactly did they do? Serious question. I'm not very well read on e-book related anti-trust law.

 
2012-04-11 10:54:06 AM
I'm with the DOJ, eBook pricing is a crime. Why in the world should an eBook cost more than a physical copy?

Apparently, the real answer is price fixing and collusion.
 
2012-04-11 10:54:06 AM
Did you know that when the DOJ fines a company millions of dollars, the department just adds that money to their operating budget?

I haven't decided it I think this is a good thing or a bad thing yet. On one hand, they are incentivized to go after companies because of the funding implications. On the other hand, they may go after spurious cases out of greed. On the other other hand, I could be wrong yet again.
 
2012-04-11 10:55:15 AM

Silly Jesus: So what exactly did they do? Serious question. I'm not very well read on e-book related anti-trust law.


they allowed the publishers to set their own prices for all ebook sales. in exchange, apple gets a cut of the profit.

Classic kickback
 
2012-04-11 10:55:45 AM
From 9to5MAc:
At the core of the settlement discussions is the agency model introduced with the iPad in 2010. The model allows publishers to set their own prices as long as Apple gets a 30 percent cut and a guarantee that the same content is not offered lower elsewhere, but the Department of Justice is trying to return to Amazon's wholesale model by giving retailers control over pricing. Bloomberg explained:

The government is seeking a settlement that would let Amazon and other retailers return to a wholesale model, where retailers decide what to charge customers, the people said. A settlement could also void so-called most-favored nation clauses in Apple's contracts that require book sellers to provide the maker of the iPad with the lowest prices they offer competitors, the people said.
 
2012-04-11 10:55:50 AM
Acting antitrust head Sharis Pozen confirmed the investigation

I read that as Share Ponzi, and laughed.

/need more coffee
 
2012-04-11 10:55:50 AM

GAT_00: This was inevitable. The publishers are more to blame than Apple, but there's already suits pending against them too.


I actually think Apple is (slightly) more to blame. Amazon had been selling e-books for $9.99 (or less), back when the Kindle was the only game in town. When Apple came out with the iPad, it bent over backwards to appease the publishers & agreed to a deal whereby the publishers set the prices for e-books. Once the publishers had an alternative to the Kindle, the had leverage over Amazon and were able to demand that Amazon either agree to let them set the prices, or lose access to e-books.

At any rate, a pox on both their houses.
 
2012-04-11 10:56:06 AM

Silly Jesus: So what exactly did they do?


Colluded to fix prices in an attempt to drive out competition.
 
2012-04-11 10:56:17 AM

Silly Jesus: So what exactly did they do? Serious question. I'm not very well read on e-book related anti-trust law.


price fixing. in other words, the big boys went and had lunch and decided ahead of time what they were all going to charge for ebooks. that's illegal and very unethical.

not that it'll mean much in the long run. they'll be found guilty, pay a fine, then go right back to price fixing. RIAA and the MPAA get caught price fixing every 2-4 years and they figure the cost of fines into their business model.

And people wonder why file trading is so popular....
 
2012-04-11 10:56:22 AM
Hell yes. About the damn time alright.
 
2012-04-11 10:56:37 AM
To clarify, despite not really knowing the situation.

It's illegal to collude in our free market economy. If the governemnt can show that these companies all came together and said, "hey lets none of us drop our electronic book prices below $9.99 for new releases, despite the fact the cost of one more individual electronic copy to us is literally $0," then they have been shown to be competing unfairly.

See, if the above is true, then it's in the best interest of each publisher to lower the price to undercut the competition until the point where they are making minimal profit, which would be a much lower price than the $9.99, something closer to the $0. (obviously in the real world 0 isn't realisitic, but $2 might be)

How do they prove this happens? Whistle blowers and taped phone calls between the parties.
 
2012-04-11 10:56:42 AM
The sad thing in all of this is that authors still won't see much of the money for their work. If anything, this will drive their share down.
 
2012-04-11 10:57:02 AM

Tricky Chicken: Did you know that when the DOJ fines a company millions of dollars, the department just adds that money to their operating budget?

I haven't decided it I think this is a good thing or a bad thing yet. On one hand, they are incentivized to go after companies because of the funding implications. On the other hand, they may go after spurious cases out of greed. On the other other hand, I could be wrong yet again.


On one hand money for salaries not out of our pocket, on the other the money taken out of our pocket not going back into our pocket.
 
2012-04-11 10:57:06 AM

Private_Citizen: I'm with the DOJ, eBook pricing is a crime. Why in the world should an eBook cost more than a physical copy?

Apparently, the real answer is price fixing and collusion.


i240.photobucket.com
 
2012-04-11 10:57:10 AM

bulldg4life: Silly Jesus: So what exactly did they do? Serious question. I'm not very well read on e-book related anti-trust law.


They colluded with the publishers to artificially raise ebook prices so they could better compete with Amazon. Allegedly.
 
2012-04-11 10:58:26 AM

Silly Jesus: So what exactly did they do? Serious question. I'm not very well read on e-book related anti-trust law.


The entire e-book market is dominated by price fixing. There is no freedom of movement to set your own prices, and you aren't allowed to do that.
 
2012-04-11 10:58:34 AM
According to the report, Apple and Macmillan are denying that they have engaged in settlement talks with the Justice Department, and argue that the deals between Apple and publishers helped to increase competition in the e-book market.

Amazon was already increasing the competition, which is why you farkers colluded in the first place.
 
2012-04-11 10:58:47 AM

James!: They colluded with the publishers to artificially raise ebook prices so they could better compete with Amazon. Allegedly.


So, Apple said "keep the prices high and guarantee that we have the lowest price"?
 
2012-04-11 10:59:02 AM

Abe Vigoda's Ghost: GAT_00: This was inevitable. The publishers are more to blame than Apple, but there's already suits pending against them too.

No, not really. Apple was the brains behind this pricing scheme.


The pricing schemes were in place before Apple got involved. And the publishers dominate to all the other e-book publishers as well.
 
2012-04-11 10:59:26 AM
Farking finally.
 
2012-04-11 11:00:09 AM
Good. Go after all of these assholes. I bought a textbook in iBooks only because it was slightly cheaper than the print copy at school. It was selling for the same price at Amazon for the Kindle app.
 
2012-04-11 11:00:31 AM

Abe Vigoda's Ghost: GAT_00: This was inevitable. The publishers are more to blame than Apple, but there's already suits pending against them too.

No, not really. Apple was the brains behind this pricing scheme.


stands to reason. Apple is the only game in town that can even get close to Amazon.com. when you play at that level, ethical considerations and the law tend to get thrown aside in the pursuit of money and market share.
 
2012-04-11 11:00:34 AM
Good. It is batshiat insane for publishers to price books the way they do.
 
2012-04-11 11:00:45 AM
Apple was just the facilitator, the middle man. They certainly are part of the wrongdoing, but they don't have final say in pricing decisions for content. (although it seems as though their contracts do include a stipulation that they get the lowest price offerred)
 
2012-04-11 11:01:03 AM
negative news for Apple? How will CNN handle this?

/Swears that CNN owns Apple stock.
 
2012-04-11 11:01:17 AM

bulldg4life: James!: They colluded with the publishers to artificially raise ebook prices so they could better compete with Amazon. Allegedly.

So, Apple said "keep the prices high and guarantee that we have the lowest price"?


essentially.
 
2012-04-11 11:01:24 AM

Kar98: Hmm? The ebook version of the book I just bought costs 12.99, and the hardcover of the same 39.99.


That's true, but the soft cover edition would run you about $10.
 
2012-04-11 11:02:04 AM

bulldg4life: Silly Jesus: So what exactly did they do? Serious question. I'm not very well read on e-book related anti-trust law.


Agency pricing.

They used to do basic "wholesale" pricing, in which the retailer (e.g., Amazon) bought the ebook at a wholesale price, and then could sell it at whatever price they wanted to. So for a long time, Amazon sold most of their ebooks at $9.99. Some were loss-leaders to encourage kindle sales.

In theory the publisher shouldn't care less what their product is sold for at retail. Once they've sold it at wholesale, they're out of the picture.

When Apple came on board, the publishers colluded and forced the entire industry into "Agency Pricing." Basically, the publishers set the price and the retailers take a percentage. There's often a floor, i.e., Apple/Amazon/etc. gets 30% of the price above $12, but 0% if it's sold for less than $12.

Amazon hates this, and for their ebooks published by the "big five", their pricing notes that "This price was set by the publisher." Most of the time, this price is more than the comparable paperback.
 
2012-04-11 11:02:08 AM

BrynnMacFlynn: Good. It is batshiat insane for publishers to price books the way they do.


we could, well, buy less of them until the price falls to market levels. Hypothetically.
 
2012-04-11 11:02:23 AM

Abe Vigoda's Ghost:

No, not really. Apple was the brains behind this pricing scheme.


Zombie jobs strikes again.

Braaaains.
 
2012-04-11 11:02:24 AM
After Ticketmaster I'm not hopeful.
 
2012-04-11 11:02:31 AM

Abe Vigoda's Ghost: Viljo Tawast: The sad thing in all of this is that authors still won't see much of the money for their work. If anything, this will drive their share down.

lol, you think the authors were profiting from this arraignment?


not to the extent that the big boys are...but online publishing HAS made it easier and cheaper for authors to get a book out to the masses than ever before.
 
2012-04-11 11:02:51 AM

bulldg4life: So, Apple said "keep the prices high and guarantee that we have the lowest price"?


Kind of... More like "set whatever prices you want as long as you give us this percentage, and guarantee that we have the lowest price."
So a publisher could set a price of $2.99, as long as they (a) paid Apple $1 and (b) didn't sell on Amazon for less than $2.99. But they don't, because they're greedy.

So, because they had access to Apple's book store, the publishers went to Amazon and said "we're not going to use your service unless you charge $9.99. Don't accept and we walk," and Amazon said yes. They had no real option.
 
2012-04-11 11:02:54 AM

Silly Jesus: So what exactly did they do? Serious question. I'm not very well read on e-book related anti-trust law.


When all is good in the World, Amazon bought ebook basically in bulk at a price and sell them at a) low margin or b)at loss in some promotion. Publishers compete with low price to get into Amazon, the biggest of ebook sellers' good grace.

Apple comes in and said "Say, why don't we do agency model, you pick the price, we get the cut. Don't worry, every major publisher will be on board, we talked."

And thus, new ebook release matched hardcover pricing when Apple entered the market.
 
2012-04-11 11:03:34 AM
Yay. About time.

The top of the mountain, she is a cold, lonely place. Enjoy!
 
2012-04-11 11:04:03 AM

Tricky Chicken: Did you know that when the DOJ fines a company millions of dollars, the department just adds that money to their operating budget?

I haven't decided it I think this is a good thing or a bad thing yet. On one hand, they are incentivized to go after companies because of the funding implications. On the other hand, they may go after spurious cases out of greed. On the other other hand, I could be wrong yet again.


Good lord man, how many hands do you have?!
 
2012-04-11 11:04:44 AM
Funny. I've always been told Apple was irrelevant. I guess I should stop believing Fark.
 
2012-04-11 11:04:47 AM

Vertdang: Silly Jesus: So what exactly did they do? Serious question. I'm not very well read on e-book related anti-trust law.

they allowed the publishers to set their own prices for all ebook sales. in exchange, apple gets a cut of the profit.

Classic kickback


This is how I understand it. What I'm missing is why this is illegal. What's so wrong with allowing publishers to set their own prices? What's wrong with Apple getting a cut of the profit?

Coca-cola works with grocery stores and makes deals to set prices on soda. In exchange, grocery stores get a cut of the profit. How is that any different?
 
2012-04-11 11:05:01 AM

bulldg4life: James!: They colluded with the publishers to artificially raise ebook prices so they could better compete with Amazon. Allegedly.

So, Apple said "keep the prices high and guarantee that we have the lowest price"?


Yeah, basically Amazon was selling ebooks at a loss to push the kindle as the prominent ereader. (Sony did the same thing with VCR's in the 80's) Apple chose to sit around staring at it's dick for a while so when they tried to get into the ebook business it was basically cornered by Amazon. So instead of competing with the kindle on a level field Apple went to the publishers who don't like the profit loss ebooks represent and cut a deal to fix the prices and delay the ebook version release for like a month after the physical book.

Or at least that is my understanding.
 
2012-04-11 11:05:23 AM

Abe Vigoda's Ghost: Viljo Tawast: The sad thing in all of this is that authors still won't see much of the money for their work. If anything, this will drive their share down.

lol, you think the authors were profiting from this arraignment?


It depends. Some eBook arrangements are very profitable. Others are not. I've heard stories from both ends of the spectrum. Authors going through publishers are either not allowed to get eBook rights or get terrible rights. Establish authors going independent are making buckets with eBooks. Some, lesser known publishers are actually giving authors decent deals, especially in the romance / erotica genre.
 
2012-04-11 11:05:32 AM

Silly Jesus: So what exactly did they do? Serious question. I'm not very well read on e-book related anti-trust law.


Violated Section 1 of the Sherman Act, which prohibits (among other things) price fixing.

There were two pricing models for e-books: the wholesale model and the consignment model. Prior to the introduction of the iPad, Amazon used the wholesale model. That is, Amazon bought the e-books outright from the publishers, and resold them to the public at whatever price Amazon wanted ($9.99 in most cases). Publishers hated this, because it resulted in lower prices for e-books (in order to compete, other sellers had to match, or at least be competitive with, Amazon).

Apple was late the e-book game. Eager to break in to the e-book reader market, it agreed to sell e-books on the consignment model. Basically, the publishers retained ownership of the e-books, but contracted with Apple to act as a broker. The publishers set the prices of the e-books. For each book Apple sold, it received a commission. Apple may also have put in a Most Favored Nation clause (i.e., the publishers agreed that they would sell books to Apple at the lowest price they sold them to anyone else). Because they could now sell to Apple, the publishers were able to go to Amazon & threaten to cut off its supply of e-books if it didn't agree to drop the wholesale model & adopt the consignment model.
 
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