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DoJ Investigates eBook Price Fixing 165

Posted by samzenpus
from the pillaging-publisher dept.
dave562 writes "The U.S. Justice Department's antitrust arm said it was looking into potentially unfair pricing practices by electronic booksellers, joining European regulators and state attorneys general in a widening probe of large U.S. and international e-book publishers. A Justice Department spokeswoman confirmed that the probe involved the possibility of 'anti-competitive practices involving e-book sales.' Attorneys general in Connecticut and, reportedly, Texas, have also begun inquiries into the way electronic booksellers price their wares, and whether companies such as Apple and Amazon have set up pricing practices that are ultimately harmful to consumers."
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DoJ Investigates eBook Price Fixing

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  • zzzz (Score:4, Insightful)

    by Hotweed Music (2017854) on Thursday December 08, 2011 @04:19AM (#38300514)
    Obviously providing the means to download relatively small files is cheaper than manufacturing and shipping books, so good thing something might be done about it.
    • Re:zzzz (Score:5, Insightful)

      by Chrontius (654879) on Thursday December 08, 2011 @04:54AM (#38300622)
      A lot of the fixed costs of production must be amortized the same regarding both ebooks and paperbacks.

      Marginal costs are far lower for distributers, but I need to buy an expensive electronic reader.

      You never have ebooks that are sitting around taking up valuable shelf space so they get put on sale or clearance to get them to move, however, as ebooks don't really compete for finite retail space. If they go on sale, it's as a loss leader, or to get at least a little money out of price-sensitive consumers who have more time than money.
      • Re:zzzz (Score:5, Insightful)

        by rtb61 (674572) on Thursday December 08, 2011 @05:10AM (#38300676) Homepage

        Competition is the killer of ebooks. Not only do you end up with all available content, you can also add all out of copyright content to that list. Now that you have paid for an expensive eReader there is also all that other content available, like video content and of course interactive content.

        They are setting electronic publishing cartel because that is the only way that they can survive, well, survive for as long as possible whilst the corporate executives suck as much money as possible out of foolhardy investors and less than honest pension funds.

        The likely reality is universities will simply end up sponsoring book production, whether it be fiction or non-fiction (years down the track) and then take in donations and use volunteers for proof reading, editing and critiquing work. Many universities will share this effort by forming associations for the various scholastic styles involved.

        The publisher was a middle man that assisted in providing the needed skills to link between, the author, the printer, the distributor, the retailer and the reader. When the need for a printer and rubber and bitumen distributor ended, so did the need for a publisher. The only need left is for funding, the 'one of' payment to authors to produce the work.

        • Re:zzzz (Score:5, Insightful)

          by Richard_at_work (517087) <richardprice@@@gmail...com> on Thursday December 08, 2011 @05:21AM (#38300730)

          >

          The publisher was a middle man that assisted in providing the needed skills to link between, the author, the printer, the distributor, the retailer and the reader. When the need for a printer and rubber and bitumen distributor ended, so did the need for a publisher. The only need left is for funding, the 'one of' payment to authors to produce the work.

          The publisher also provides the marketing, editing, proofreading, typesetting, illustrations and quite a few other services that the author cannot provide themselves.

          • Re:zzzz (Score:5, Insightful)

            by Liambp (1565081) on Thursday December 08, 2011 @05:55AM (#38300878)

            "The publisher also provides the marketing, editing, proofreading, typesetting, illustrations and quite a few other services that the author cannot provide themselves."

            This is an important point. Traditional publishers provided a lot of valuable services to authors not least of which were marketing and publicity. However in return for these services publishers asked a very high price - up to and sometimes even including all ownership of the creative work. They got away with this because of the monoploy power they held due to the huge barrier to entry caused by high printing and distribution costs. Ebooks have effectively eliminated printing and distribution costs and have undermined that entire business model. I don't think traditional publishers can continue as they are now that their main source of power is vanishing. The question as to who will take over from publishers as the dominant power in the market is as yet unresolved:

            In my favourite scenario it will be the authors themselves. A small number of successful self published authors are showing this is possible and when a superstar like J K Rowling opts to self publish you have to take it seriously. Unfortunately the much larger number of poor quality self published works makes me suspect that most authors lack the knowledge and skills to critically evaluate, edit and market their own works.

            In my least favourite (bud sadly more likely) scenario it will be a small number of (possibly only one) mega online retailers who will own the market.

            As for the publishers, well everything they used to do will probably become just a service for hire.

            • Re:zzzz (Score:5, Insightful)

              by Luckyo (1726890) on Thursday December 08, 2011 @07:19AM (#38301266)

              You forget the single most important part of publishing: it provides stable(ish) income to the author when his royalties do not. Income such as advance payments.

              • by 0123456 (636235)

                You forget the single most important part of publishing: it provides stable(ish) income to the author when his royalties do not. Income such as advance payments.

                From what I've read, a typical advance these days is down to around $5k. Unless you're selling a book a month, you're going to be working a day-job.

                • by Luckyo (1726890)

                  But you will not be forced to pick any job at all, and you will be able to work hours you choose, rather then ones your manager will choose for you. Which is the whole point of advance for the first authors, who are the ones pushing median size of allowance down.

                  If you're successful, advance starts to function more of an equalizer of your income, so that instead of spikes of royalties at release, followed by long dry periods you get steady income. Until then, it functions as a small allowance to help you ge

                  • by 0123456 (636235)

                    But you will not be forced to pick any job at all, and you will be able to work hours you choose, rather then ones your manager will choose for you. Which is the whole point of advance for the first authors, who are the ones pushing median size of allowance down.

                    Again, how does Joe Nobody get a publisher to give them even $5k for a book they haven't written yet? And how does he manage to live on that amount of money without a day job while writing the book?

                    • by Luckyo (1726890)

                      No, but he will give him a few hundred to a couple of thousands for good idea and a first chapter, after a face to face meeting. Another couple of grand after he gets book done well over halfway and sends it in. Another grand after the book is fully in and waits for marketing + press.

                    • by 0123456 (636235)

                      No, but he will give him a few hundred to a couple of thousands for good idea and a first chapter, after a face to face meeting.

                      No they won't.

                      Not in America, anyway.

                  • by hedwards (940851)

                    Unless you're writing nonfiction or are already a successful author nobody pays an advance on a book that hasn't been through at least one draft. The whole notion that I can take my idea for a novel to any publisher large and small and get an advance before I've done the work to complete at least the first draft is pure fantasy. There may be a small number of celebrities that get away with that by virtue of having enough name recognition to sell a book on that alone, but for people that have to worry about

            • by Quirkz (1206400)
              I agree, and this isn't a small point at all. I don't think anyone knows yet how all those other costly features will be covered - it's a huge investment for an author and will be very inconsistently applied if that becomes the norm, but it doesn't get us anywhere interesting if we fall back on the same old (or maybe some new but still traditional) publishing houses. And you rightly note a very key point that removing the cost of printing barrier is only being replaced with the obstacle of being found amids
            • most authors lack the knowledge and skills to critically evaluate, edit and market their own works.

              Is that because sometimes people with really interesting story ideas, creative talent, and the ability to tell a story might have their education and background in the technology fields, such as engineering, and are not English majors?

              This thread is very interesting, and everyone must admit that ebooks are the future, yet as you say all books need edited and proofread. How can Joe the Writer do that on his own when just starting out?

          • Re:zzzz (Score:4, Interesting)

            by 0123456 (636235) on Thursday December 08, 2011 @10:55AM (#38302818)

            The publisher also provides the marketing, editing, proofreading, typesetting, illustrations and quite a few other services that the author cannot provide themselves.

            No, they don't. Publishers pushed editing off onto agents and writers years ago, proofreading costs about $100 even if you hire someone to do it rather than spend a few evenings doing it yourself, typesetting is irrelevant for an e-book, illustrrations, if you need them, can be bought from an artist, and the only marketing that a publisher does for a typical book is to try to get it into book stores, not to get readers to buy it.

            While publishers are still essential if you want a print book in a lot of book stores, the kind of services the average publisher offers a new writer for e-books might cost the writer a couple of thousand dollars if they paid for it themselves. In return for that, they'll be handing 50% of the cover price of that e-book to the publisher forever, and from the 20% or so of the cover price the writer recieves, they'll have to give 15% to their agent.

            Publishers simply cannot justify their existence financially at this point in time with the royalty rates they're offering writers. They're raking in the cash from e-books while the person who wrote the book has to work in Walmart to pay their bills.

            • by Quirkz (1206400)

              Publishers pushed editing off onto agents and writers years ago, proofreading costs about $100 even if you hire someone to do it rather than spend a few evenings doing it yourself ...

              This isn't true in my experience. I used to freelance copy edit/proofread, and it paid $20/hour, which for most books was between $600 and $1000 by the time I was done. And that was after one, two, or sometimes three editors (if there was a subject matter expert) had worked it over, in addition to the author. This is for nonfiction -- maybe the fiction market is different.

          • by BLKMGK (34057)

            Apparently that's horseshit. The publishers make the authors do most of the promotion, price badly, and overcharge. Authors who are doing it themselves have found this all out and many of them won't work with big publishing any more as a result.

            Read this blog some -> http://jakonrath.blogspot.com/ [blogspot.com] Do especially read his much older postings where he was just realizing how full of crap the publishers are and how he has learned to outsource, at HUGE discount, the many functions big publishing charges so muc

            • by HiThere (15173)

              You might want to read what Piers Antony wrote about Lester Del Rey as a editor. You might revise your opinions. Granted, Lester Del Rey was an unusual editor. But he was an editor, and a good one. And he was hired by a publisher to run his section the way he thought it should be run.

              I will grant that this doesn't speak of how most editors act, and of the relations of most publishers with their authors. But don't do a blanket condemnation.

          • by makomk (752139)

            The problem is that a lot of the time no-one's actually been proofreading the official eBook editions properly and they're full of mistakes that no self-respecting book pirate would ever have allowed.

        • Re:zzzz (Score:5, Insightful)

          by ortholattice (175065) on Thursday December 08, 2011 @05:52AM (#38300866)

          The likely reality is universities will simply end up sponsoring book production, whether it be fiction or non-fiction (years down the track) and then take in donations and use volunteers for proof reading, editing and critiquing work. Many universities will share this effort by forming associations for the various scholastic styles involved.

          I think the likely reality is that university professors will continue to rearrange the chapters in next year's version of the Calculus 1 textbook, making it incompatible with this year's so there's no resale value, and sell it for $150.

          • Re: (Score:2, Informative)

            by Anonymous Coward
            The professors/teachers I had at college wouldn't do that, they absolutely despise that practice.

            One of them is even trying to get an open source math textbook project going.
            Reasons: The books are too expensive, they keep shuffling around the problems and other text, and they are loaded with mistakes that they never correct, even when hundreds of people write to them to explicitly point out the errors and the corrections. Please note that they tend to come out with a 'new edition' every year.
            • by mcgrew (92797) *

              The professors/teachers I had at college wouldn't do that

              I only had one whose own book was required. It was, however, a very good tome and I still have my copy 35 years later.

        • by phayes (202222)

          Thats a mighty wide brush you're using in describing all publishers as only being involved in the production side of book creation & thus useless in the ebook world.
          Some publishers are much more helpful to their authors and actively participate in the creative process. Jim Baen comes to mind, who has nurtured many authors to greater success. Baen was also a forerunner in making part of their book catalogue available free for download in a number of formats: http://www.baen.com/library/ [baen.com]

    • Re:zzzz (Score:5, Insightful)

      by Osty (16825) on Thursday December 08, 2011 @05:12AM (#38300684)

      Obviously providing the means to download relatively small files is cheaper than manufacturing and shipping books, so good thing something might be done about it.

      The fallacy here is that the physical cost of a book (printing, storing, shipping) is the largest contributor to its price. It's not*. For mass market books, print runs are done in such large quantities that the economies of scale bring the physical price down to pretty much nothing per book. The real cost of a book comes from people -- the author, editors, proof readers, cover artists, marketers, agents, researchers, people doing layouts, etc. That and marketing, of course, because nothing will sell if it doesn't have a million dollar marketing campaign behind it. All of the rest of that is needed for ebooks just as much as it's needed for paper books, so the net result is that from a pure cost perspective a paper book and an ebook should cost about the same (assuming the mass market paperback print copy here, not the limited-run hardcover). Also, at least currently, the big publishers are still very much stuck in a print mindset and all of their processes are geared toward a print world. This has obvious repercussions for ebooks, but less obvious is that a lot of editing that happens for a print run is done on copies other than the original manuscript, in formats that are difficult or impossible to convert back to a proper ebook (mobi/epub, not PDF, as PDF is not a valid ebook format). This is why we end up with so many poorly-edited ebooks from major publishing houses, some of which are very obviously OCRed rush jobs without even broad proof reading for obvious mistakes.

      The investigation here is whether or not price fixing has taken place, and at least from my perspective it very obviously has. The agency model prevents retailers from setting their own prices or running sales. If you want to sell a book under the agency model, it can be no more and no less than the same price your competitors charge. That removes competition, and that's the problem. The funny thing is that agency pricing was just the first step in Apple's evil plot for (ebook) world domination -- first force everybody to sell at the same price as Apple, and then for step 2 charge ridiculous fees for in-app purchases of books such that Amazon et al can no longer viably work on your platform (if 30% has to go to Apple and 70% has to go to the author, and the price cannot be more than the price in the iBooks store, how can Amazon make money selling on iOS?), thus driving everybody to buy their books from the iBooks store (muahaha!). Of course step 2 failed, with 3rd parties finding loopholes or simply abandoning the platform for greener pastures, leaving Apple in a tough position. Nobody wants to buy anything from the iBooks store, and Apple can't run sales to entice new readers to buy because they're bound by the agency pricing agreements. Oops!

      * This applies to large-scale publishers, not smaller houses or vanity presses. In the paper world, if you're not guaranteed to sell several hundred thousand copies you're not going to get a contract with a big publisher because they can't afford to do a small print run. Smaller presses afford it by charging more per book. In this scenario, ebooks are a huge win for smaller/independent authors because the huge cost of a tiny print run is no longer a factor. And of course let's not forget the ability to cut out the middle-man entirely. Ebooks make it much easier for authors to self-publish, depending on how much effort they're willing to put into the process beyond simply writing a book.

      • Re:zzzz (Score:5, Insightful)

        by TiggsPanther (611974) <tiggs.m-void@co@uk> on Thursday December 08, 2011 @06:37AM (#38301046) Journal

        Obviously providing the means to download relatively small files is cheaper than manufacturing and shipping books, so good thing something might be done about it.

        The fallacy here is that the physical cost of a book (printing, storing, shipping) is the largest contributor to its price. It's not*.

        The problem with ths fallacy, though, is that it is reinformed by the retail side of it. Hardback are pricey, paperbacks are cheaper. Hardback prices still stay at the same price even after teh paperback comes out, therefore hardbacks cost more. Therefore printing is a key factor in cost.

        The conclusion may be false, but it is logical given the perception of the facts at hand.

        There is also the matter of value.

        Personally, I don't mind paying close to paperback prices for an ebook. Hardback prices, on the other hand, make me want something persistent. Maybe if the file was DRM-free. Maybe.
        But hardback pricing for less functionality than a paperback? It's just not worth it.

        • by taustin (171655)

          According to industry indisders, the cost of putting paper on ink and getting in to the store is about 10% of the cover price. Yeah, that little. (And that's consistent with most other forms of manufacturing, too, where the average is more like 15%.) Charlie Stross estimated that as many man-hours are put in by the publisher as by the author, to turn a manuscript in to a book.

          Every vote for 99 cent ebooks is a vote for less editing, no proofreading, amateurish layout, and generally even lower quality. And q

      • Re:zzzz (Score:5, Insightful)

        by Pastis (145655) on Thursday December 08, 2011 @07:29AM (#38301314)
        So according to you
        * printing, storing, shipping costs are not a large part of the book price as Extra costs (marketing, etc) are to be applied
        * this is only valid for large scale sales as low scale aren't envisioned due to poor viability
        * because of large scale, they need to have large marketing costs, increasing the cost ratio of these Extra activities
        * because of large scale, publishing costs get lowered per item, thereby reducing its ratio

        The publishing costs are just low per item because the system is focusing on large scale printing to actually lower the distribution costs per item...

        Aren't you just describing an inefficient system that justifies itself ? I say cut the inefficient part.

        According to http://ireaderreview.com/2009/05/03/book-cost-analysis-cost-of-physical-book-publishing/

        And author's get 8/15% of a book. That's a bit small to me. And that's in part caused by this inefficiency.
      • by honkycat (249849)

        The fallacy here is that the physical cost of a book (printing, storing, shipping) is the largest contributor to its price.

        For new books, maybe. But this doesn't explain why the eBook for For Whom the Bell Tolls costs more than the paperback on Amazon. Pretty sure that book recouped its pre-production costs long, long ago.

        • Agreed. I've been recently introduced to DiscWorld, and am looking to pick up the rest of the series.

          I stopped by Amazon and B&N to check the prices of their eBooks offerings, and found them to be higher than the cost of print. I kind of did a double-take.

        • by iamwahoo2 (594922)

          I think can explain why an ebook might cost more, though I cannot say for this particular book, but it is feasible that the side of a business has different salary costs, marketing costs, etc. In time, electronic publishing will be cheaper. There is no argument, but in the short term the costs might be higher as the market adjusts to a new way of doing things and has not completely worked out all of the inefficiencies.

        • Re: (Score:3, Insightful)

          by will_die (586523)
          The market for ebooks has people who have disposable income, they purchased a machine to read books from, and are known to purchase the higher costing ebook version. Why should they not increase the amount of money they make when the market will allow it?
          • by CastrTroy (595695)
            Ah so very true. Free market at work here. Some of us may be screaming at the top of their lungs that they should be cheaper. But there's plenty of people out there with enough money that they will buy the eBooks anyway. For a lot of people eBooks are probably worth more than the physical book, because they are more convenient to tote around, and because if you have a kindle (free 3G) you can buy it from anywhere with cell phone reception; you don't even have to find a book store. There is a monopoly on ev
            • by mcgrew (92797) *

              Some of us may be screaming at the top of their lungs that they should be cheaper. But there's plenty of people out there with enough money that they will buy the eBooks anyway.

              I don't think that argument holds up. Those with the extra income are likely to buy hardcover books to display on bookshelves (rich people love flaunting their wealth, or nobody would buy a Lexus), and perhaps buying the ebook version as well. But there would be a LOT more money to be made from middle class people wo DO have to watch

            • Re:zzzz (Score:4, Interesting)

              by wygit (696674) on Thursday December 08, 2011 @12:32PM (#38304060)

              True.

              But there's "want to make a lot of money" and then there's "stupid".

              J/K/ Rowling refused (and so far as I know STILL refuses) to allow Harry Potter to go ebook, because she's afraid it will be pirated; hence it's one of the most pirated book series available on the torrent sites. It's the only way you can GET them.

              Yup... still only available electronically for free. Can't pay for it if you want to.

              http://news.yahoo.com/harry-potter-e-book-sales-postponed-until-2012-202829043.html [yahoo.com]

      • Re:"Real Cost" (Score:2, Interesting)

        by TaoPhoenix (980487)

        "The real cost of a book comes from people -- the author, editors, proof readers, cover artists, marketers, agents, researchers, people doing layouts, etc."

        Good effort, but I feel we have an "Emperor's New Clothes" effect going on here.

        Author: By definition the indispensible one.

        Proof Readers: I'll skip that one, nothing that a spell check can't fix, and if the Author missed a "plot hole" ... issue a "patch!"
        Editors: Cut this down by half. Take care of the Big Picture stuff and then do a major revision by t

        • by aslagle (441969)
          Nothing that a spell check can't fix? Eye don't think ewe know what a proofreader does.
        • Re:"Real Cost" (Score:5, Interesting)

          by mcgrew (92797) * on Thursday December 08, 2011 @11:51AM (#38303552) Homepage Journal

          Proof Readers: I'll skip that one, nothing that a spell check can't fix

          Watt in the whirl ore ewe talking a boot? Dew knot truss yore spill chucker! That's what's wrong with most slashdot comments. A spell checker can't tell that your using the wrong word (yes, that was intentional). A spell checker doesn't know if you want to loose the dog or if you want to lose the dog. A spell checker won't tell you that your use of apostrophe's is retarded.

          Take care of the Big Picture stuff and then do a major revision by the author for the Second Printing

          I fucking HATE patches and the lazy bastards who issue them. Get it right the first time, damn it! If I'm paying full price for a book or an operating system the damned thing should WORK. You don't have to patch a new pair of jeans, do you?

      • by neyla (2455118)

        printing 100000 books, doesn't add up to a lot for each book.

        But packaging, storing and distributing that million books physically to 2000 bookstores, does cost quite a bit.

        They're then laden onto the shelves, in a high-price central location in town, and sold over the counter in units of 1. This costs *substantially*, especially in high-cost locations.

        Even if a bookstore sells 20 books/hour for each employee, that's still 1/20th hourly wage for each book sold, or where I'm at, about $3 to add to the price,

    • by mcgrew (92797) *

      Well, duh, of course delivery of electronic media is cheaper. That doesn't mean there's no collusion, or that someone isn't using unfair or unlawful business practices to sell them at a higher price than a free market would allow them to.

  • by mykos (1627575) on Thursday December 08, 2011 @04:25AM (#38300536)
    There isn't a lot of consumer outcry about ebook price fixing, but there's quite a bit of complaints about telecom price fixing. Any chance we could get that looked into?
    • Well, a quick google search of the numbers may be helpful:

      The list of biggest companies [wikipedia.org] shows that Verizon and ATT&T combined for a total revenue of about 230 billion. Meanwhile the the biggest publisher in the US [publishersweekly.com] only had revenue of about 2.5 billion, and the industry as a whole is much smaller than the telecom market. So who do you think can buy more influence in Washington?
    • Is there any actual evidence of price fixing in the telecoms sector? In this case we have Apple publicly stating rather onerous pricing terms that affect the prices on third party outlets for products you wish to buy - that's price fixing, ensuring that no one can undercut your store.

      • by jrumney (197329)
        Ever tried to use data when roaming? If telco A can offer unlimited bandwidth to any country in the world for less than US$50 / month and telco B offers the same deal as telco A for CA$50 / month, why is it that when roaming on telco B's network, telco A customers are charged US$10 / MB?
  • by Mitreya (579078) <mitreya@LISPgmail.com minus language> on Thursday December 08, 2011 @04:29AM (#38300542)
    How can the electronic copy of the book cost more than paper version of the same? (Just like audio tapes used to cost much less than CDs)

    I guess that's unfair book pricing in action
    Although I am unsure what they can do about it. Amazon can increases prices if they want to, can't they?

    • Re: (Score:3, Informative)

      by Anonymous Coward
      It's not about pricing things unreasonably, it's about colluding with other publishers or merchants to keep the price up artificially when normal competition would bring it down.
    • by will_die (586523)
      Because the people who own ereaders have more disposible money and are willing to pay more to have it on the ereader.
      That is all good and the correct thing to do.
      Where they would be in trouble is if the various publishers started talking together and decided on prices in collaboration. Since Amazon is now acting as a publisher they could be in trouble if they were in those talks or used thier market strength to directly dictate costs for other resellers.
    • Amazon is allowed to discount the prices of physical books. Amazon isn't allowed to mess with the prices of ebooks because of the agency model. So Amazon discounts the physical book below the cost of the ebook. Then people get pissed off at the publisher or author. Amazons market share was built on being the lowest price. They lose money on some books to keep reputation as the lowest price.
  • About time (Score:2, Insightful)

    by Anonymous Coward

    Nobody is dumb enough to believe that a single 400KB PDF that can be sold an infinite number of times over, costs more per unit than a paper book that takes materials, manufacturing, distribution and storage for every copy sold. So why do the publishers and online retailers think so? They need their greed checked. Go D.O.J.!

    • Re:About time (Score:5, Insightful)

      by Richard_at_work (517087) <richardprice@@@gmail...com> on Thursday December 08, 2011 @05:04AM (#38300652)

      That has nothing to do with what the DOJ are investigating - they can't stop a publisher or retailer from setting their own price at a rate you deem "greedy", but they can stop what Apple is attempting to do in saying "you cannot price your book cheaper anywhere else than the set iTunes price - if you do that you will cease to be able to sell on iTunes" while still adding an extra 30% cost over other outlets.

      Similarly, the publisher can set it's wholesale price but cannot set the price every retailer must sell for, retailers can pick their own prices and even sell at a loss.

      So it's not about high prices or greed, it's about control of the market.

      • Re:About time (Score:5, Interesting)

        by Osty (16825) on Thursday December 08, 2011 @05:33AM (#38300792)

        That has nothing to do with what the DOJ are investigating - they can't stop a publisher or retailer from setting their own price at a rate you deem "greedy", but they can stop what Apple is attempting to do in saying "you cannot price your book cheaper anywhere else than the set iTunes price - if you do that you will cease to be able to sell on iTunes" while still adding an extra 30% cost over other outlets.

        Even that's not really the issue here. Apple can charge whatever they want for you to sell on their OS, though there could certainly be monopoly concerns (leveraging their mobile OS "monopoly" to gain an advantage in the ebook market?). The problem with agency pricing is that it's not an MSRP value. It's a price set by the publisher that cannot be changed. For example, a publisher can price a paper book at $15 but Amazon, Barnes & Noble, etc will often sell that book for $7 or less because they can. The MSRP is just what it says it is, a suggested price. But Amazon, Kobo, Sony, BN, etc cannot run a sale on an agency-priced ebook. This is why it is commonplace to see ebooks selling for a higher price (and often much, much higher!) than the exact same paper book. That's what the DOJ is investigating, and Apple's part of it because they were the ones who started the whole "agency pricing" crap in the first place.

    • Three things:
      1) it's not what something costs but what it is worth to someone else
      2) Speaking as someone who has tried publishing my novel on an ebook, why shouldn't I be able to charge what I see as a fit price for my years of work? No-one else has to buy it if they don't think it is worth it.If I sell 0 because it is too expensive then that is my choice.
      3) this investigation is about price fixing not about the actual cost

  • by Boscrossos (997520) on Thursday December 08, 2011 @04:53AM (#38300616)
    Although I don't disagree with the posters before me that the price is too high, that's not what's at stake here, I think. Price fixing does not mean a company setting a price too high. It means multiple companies, together representing a large majority of the market, conspiring to all keep the prices high, thus eliminating the normally healthy effect of competition, with the prupose of making more money for all. If Amazon wants to sell its ebooks for more than the manufacturing costs plus some profit, that's perfectly fine and nothing wrong with it. However, if they make a secret arrangement with all other major ebook players, that is not, because then competition is bypassed, and customers are cheated by cartels.
    • Yeah but its more complicated than that. It is not price fixing if the Publisher sets the price. The publisher is the seller, they are allowed to set the price. Its only price fixing if publishers conspired together to set the same prices.
  • by inflex (123318) on Thursday December 08, 2011 @04:57AM (#38300632) Homepage Journal

    This is something that has had a lot of discussion in the past on various e-book forums. The publisher sets the price, not Amazon. When you submit a book for resale on Amazon they take their 75% or 32% cut depending on what you select (books under $2.99 are generally only eligible for the 75% cut).

    A lot of independents have been working the 99c book sale pricing but lately we've been finding that it's just about impossible to make any sort of sane living at those levels, so we're gravitating more to the $1.99 and $2.99 brackets, sometimes pushing to $4.99 if it's a book from a popular series (Amanda Hocking, David Dalglish etc).

    I'd be very surprised if any action is taken against Amazon, while they do have a strong hold on the distribution market of eBooks they aren't (yet!) controlling the publishing prices.

    Most of us are just self-publishers in the eBook market, it's almost like the whole OpenSource software movement all over again.

    http://elitadaniels.com/ [elitadaniels.com]

    • by rolfwind (528248)

      When Amazon controls that much of the market and takes that big of a cut (really, how do they justify that?), they ARE setting the price upwards.

      • by inflex (123318)

        It's only that big a cut on books under $2.99. Over $2.99 it's back down to 35%, which is actually a bit lower than some other distributors.

        • by 0123456 (636235)

          I don't know about other countries, but in America Amazon pay 35% royalties under $2.99 and 70% at $2.99 and above. A trade publisher typically pays 15-20%.

  • by Anonymous Coward

    That's just the result of absurdity of the 'price-fixing' idea; in a standard competitive market, the price goes down to fixed+variable costs. The problem is that for ebooks, there are ultimately negligible variable cost AND no further fixed costs involved. Therefore the "equilibrium" price for abook according to "standard model" is basically 0.

    If you use standard economic model, you can prove that there is price fixing. Because the price is 0 and there is no other way that the price could long-term be high

  • by captjc (453680) on Thursday December 08, 2011 @05:22AM (#38300738)

    Seriously, Good luck. As much as I would love to see something good come of this (such as ebooks NOT being the same price if not higher than the printed version which happens in some cases, especially after the printed book goes in the "bargain bin"), I doubt anything useful will happen. Either there will be some punitive fines which will get passed to the consumer, or money will change hands and the problem will be swept under the rug or "justified" in some legal jargon that will set a bad precedent that will poorly influence cases involving price-fixing of digital goods yet to come.

    • by T Murphy (1054674)

      punitive fines which will get passed to the consumer

      If only some eBook sellers are hit, then the fines cannot easily be passed to the customer, as they have to keep up with the competition. If they raise prices, they lose customers to the competitors who are able to remain profitable thanks to their lack of fines.

      Of course, anti-competitive penalties usually are too small to matter, or most of the industry colludes and there is no fine-free major competitor to prevent a fine-induced price-hike. That just means we need bigger penalties until companies see i

  • by bhunachchicken (834243) on Thursday December 08, 2011 @06:03AM (#38300910) Homepage

    I've spoken to a few publishers about this sort of thing, and they've told me the following:

    You are not and never have been paying for the cost of the book, but the words and the story contained within.

    They've never explained why a hardback costs twice as much, though.

    They need to charge as much as they do for the cost of a book because they have a number of overheads and they need to get back the advance they paid the author. There is a lot of risk involved in publishing a book, due to the subjective nature of storytelling.

    Why pay advances at all? Isn't that basically just a form of credit? Apparently, a lot of books don't earn out their advance. This makes no sense to me, whatsoever. Why not just pay higher royalties quarterly, when you know what the book has actually made. This reduces your risk and allows you to invest the accrued money for a period before handing over the author's share.

    If you self publish a book (that they didn't want to publish) then you are both impatient and doing the work of the Devil.

    Sure, not every book needs to be published, but given that I've spent around $50 on crap books this year, I don't really think they should get their knickers in a twist over someone selling a book for $3. I'd rather pay $3 on a crap book, than $12. Also, what are they REALLY scared of?

    The publishing industry is a really strange beast, that I'm sure which anyone has at one time worked within or tried to get published in probably knows. It's a bit of a circle jerk, with a lot of cliques and infighting. It's also somewhat fascist in places.

    • Re: (Score:3, Insightful)

      by Anonymous Coward

      Why pay advance? Because if you don't pay an advance payment, e.g. 1/3 of royalties, the author probably won't even be willing to start to work. Remember there is competition between publishers, and the publisher who offers an author the highest advance gets the book. Would you work for 6 months or a year writing a book, without getting paid up front? Even just a small share? If your job is writing, advances are your income. You don't want to finish your work first and then get paid months after.

      You probabl

      • by 0123456 (636235)

        Would you work for 6 months or a year writing a book, without getting paid up front?

        You think you get an advance before you write the book? Perhaps if you're Stephen King, but not if you're Joe Nobody.

        You don't want to finish your work first and then get paid months after.

        You do realise that you probably won't get the whole of your 'advance' until a year or more after the book is published?

        You probably think the book industry is some kind of money making machine. It is not.

        Publishers have fancy New York offices. Writers have day-jobs in Walmart. Book sales are down, but profits are up, because publishers are typically getting 50% of the cover price of an e-book sold on Amazon while the author gets around 15%.

        50% of the sale price of a product

    • by rklrkl (554527) on Thursday December 08, 2011 @08:11AM (#38301504) Homepage

      Paying advances allows the author to actually pay their bills whilst working on the book. However, you'd expect publishers to offer authors other models that might result in a bigger overall payout for the author if the book is really successful (e.g. smaller advance/higher royalties or even no advance/even higher royalties) if the author is already wealthy enough not to need the money right away. It's also not clear what happens if the book doesn't sell enough to cover the advance - does the publisher swallow that or does the author have to pay it back? I guess it depends on the contract.

      As for e-books, it's clear to anyone that e-books should cost less than the physical version - it *must* be cheaper to distribute the electronic version than the physical one. How much less is up to debate, but even a nominal amount (e.g. 10%) would at least encourage more e-book sales if nothing else. A good example of publishing greed this year is that the #1 Amazon book of 2011 was the Steve Jobs biography. amazon.com has the hardback at a decent $17.87 (basically half price) - the Kindle version is $20.67 - WTF! It's price-gouging on e-books lke that which puts people off buying them and they end up pirating them.

      • by 0123456 (636235)

        Paying advances allows the author to actually pay their bills whilst working on the book.

        Not when the average advance is down to around $5k. Plenty of writers who've dropped their publisher and started self-publishing have said that they earn more money more regularly than they did before.

        As to e-book prices, publishers don't want people buying e-books because their entire business model is based around control of the print distribution market. There's no need for a publisher when you can just write a book and upload it to Amazon, rather than having to go through a publisher because most book s

    • by 0123456 (636235)

      Apparently, a lot of books don't earn out their advance.

      Note that 'earning out the advance' doesn't mean 'making a profit'; most books will be profitable well before the advance is earned out. And a writer whose books don't earn out probably won't be published for long.

  • Cheap eBook Webstore (Score:5, Informative)

    by splutty (43475) on Thursday December 08, 2011 @09:02AM (#38301824)

    Probably interesting to most Slashdot readers, but I have most of my ebooks from a webstore called www.webscription.net

    The publishers here include ones such as Baen, Del Rey, Tor, etc.

    Fairly focused on SciFi/Fantasy, but almost all their books are in the $4-6 price range, a lot of them are older books, they have a quite extensive free library, and allow you to download in a number of formats, all DRM free.

    Jim Baen alone has probably done more for the SF/Fantasy book world than any other publisher out there and I find the fact his publishing company stands behind this very promising.

    And as a sidenote to all you US readers that think not a lot is done for disabled veterans: They give away everything for free if you're one..

    • by Anomalyst (742352)
      Another thumbs up for Baen's Books, check out the free earlier works of David Weber and John Ringo. Hours of enjoyment for no cost. Discovered that I like Lois McMaster Bujold from a samp[e and have subsequently paid cash for other books by her.
    • by powerlord (28156)

      One more huge thumbs up for www.webscriptions.net !

      Baen also has monthly bundles (going back to 1999 when they started publishing eBooks if I remember correctly).

      Each "WebScriptions" bundle costs ~10-18$ (depending on the year) and contains ~6 books. Basically, everything in that months "Monthly drop" including a "new hardcover" or two, a few "soft cover releases" and the rest filling out from the back catalogue.

      Its a great way to fill out an eLibrary if you're into Sci-Fi/Fantasy. As an added bonus, chec

  • by killfixx (148785) * on Thursday December 08, 2011 @09:22AM (#38301980) Journal

    Before Apple colluded with publishers to offer books at a significantly higher price than Amazon et al., were doing, there wasn't any problem with the existing structure.

    C'est la vie...

  • Does it harm the consumer if the majority of authors give up in disgust?

    Does it absolve Apple and Amazon that the consumers wallow in boneheaded thrall to convenience?

  • by teambpsi (307527) on Thursday December 08, 2011 @10:37AM (#38302650) Homepage

    While touted as replacements for traditional dead tree varieties, ebook book owners should have the same rights to lend and transfer on a 1:1 basis as they see fit.

    Perhaps look at how the BitCoin "public transaction" model works to manage the lending (DRM) ??

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