DoJ Files Suit Against Apple, Ebook Publishers 235
forkfail writes "The Department of Justice has filed suit against Apple and a number of book publishers, including Hachette SA, HarperCollins, Macmillan, Penguin and Simon & Schuster, claiming that they worked in collusion to artificially rig prices on eBooks."
Just wrong on all counts (Score:5, Informative)
Re:I hope they get raked over the coals for this (Score:5, Informative)
One of the things that might bury Apple is the "you cant have your ebook priced cheaper anywhere else" requirement - with the price including Apples cut.
Re:Finally the E-Book Publishers are getting caugh (Score:4, Informative)
I just bought a test prep book at Amazon (Score:5, Informative)
The paperback was $38 shipped and the downloadable version was $97. Excuse me but that's insane.
Re:Really? (Score:5, Informative)
Although some eBooks are cheap or free, most of the popular ones cost as much or more as their dead tree counterparts
Anti-competitive behaviou: Price fixing vs Dumping (Score:2, Informative)
It is worth mentioning that it is widely believed that price fixing by Apple et al is a response to perceived dumping (selling at a loss) by Amazon.
In other words, it may be a case of using one form of anti-competitive behaviour (price fixing) to battle a different form of anti-competitive behaviour (dumping).
http://www.theglobeandmail.com/news/technology/tech-news/us-sues-apple-publishers-on-e-book-agency-model-price-fixing/article2398161/
Since launching the Kindle in 2007, Amazon has made a point of offering best-sellers for $9.99. The discount is so deep from list prices of $20 and more that it's widely believed Amazon is selling the e-books at a loss as a way of attracting more customers and forcing competitors to lower their prices. Amazon also has been demanding higher discounts from publishers, and stopped offering e-books from the Independent Publishers Group, a Chicago-based distributor, after they couldn't agree to terms.
When Apple launched the iPad two years ago, publishers saw two ways to balance Amazon.com's power: Enough readers would prefer Apple's shiny tablet over the Kindle to cut into Amazon's sales and the agency model would stabilize prices. Apple's iBookstore has yet to become a major force, but publishers believes the new price model has reduced Amazon's market share from around 90 per cent to around 60 per cent, with Barnes & Noble's Nook in second at 25 per cent. The iBookstore is believed to have 10 to 15 per cent.
Re:I hope they get raked over the coals for this (Score:4, Informative)
Also meant to say, the issue you are thinking of was the "Apple claims ownership of anything produced with the iBook builder", not what Im talking about.
Re:Really? (Score:5, Informative)
Well here's the spin I just heard on MSNBC (you can decide how accurate it is). "The standard price for ebooks was $9.99 but when Apple started selling them, they colluded with the publishers and raised that price to 14.99 or even 19.99. So claims the DOJ."
If that is true, it's called price-fixing and forming a cartel. It is illegal under U.S. Consumer Protection Laws (antitrust).
Re:Really? (Score:4, Informative)
Re:I just bought a test prep book at Amazon (Score:5, Informative)
The paperback was $38 shipped and the downloadable version was $97. Excuse me but that's insane.
This is probably an extreme example of the difference between the wholesale vs the agency model pricing. The retailer sets the price under the wholesale model, while the publisher set the price for the agency model. In this case the publisher wanted to sell at $97 while the retailer, with its deep wholesale discount, chose to sell it at $38.
Re:Having solved all other problems (Score:2, Informative)
Caused???? Are you crazy, the 'Bush Depression" was caused by every idiot that bought a house they knew they couldn't afford if there was any kind of ripple in their finances. Truth be told both parties were responsible for the trouble we are now in. The Pub's repeal the controlls and the Dem's pushed bad policies based on the belief that 'everyone had the RIGHT to be a homeowner' (wether they could afford it or not).
Re:Having solved all other problems (Score:5, Informative)
Dumping is the act of charging a lower price in a foreign market than one charges in the domestic market. They are not dumping, they are selling loss leaders, an action common in every brick and mortar supermarket or electronics store.
Re:Having solved all other problems (Score:4, Informative)
To be more precise, loss leaders are promotions designed to get people into a store. However if you're selling below cost with the purpose to drive the competition out of the market, that's predatory pricing, which the DoJ will sometimes go after if they can prove you're trying to establish a monopoly.
Re:Really? (Score:5, Informative)
This is exactly what is at issue in the hub-and-spoke model of collusion (cf. section beginning "Information Sharing in the UK") [corrs.com.au] the DOJ is alleging.
Quoting myself from elsewhere [metafilter.com]:
Petroleum Products by Value (Score:5, Informative)
Technically “petroleum products by value” – and that’s important.
First, the US has a lot of refiners. Low cost Nigerian crude oil is shipped to the US, we ship higher cost gasoline, etc. back to Nigeria.
Second, thanks to fracking, we have a lot of natural gas. And we export a lot of that – either directly or indirectly (like Propane, Petrochemical Feedstocks)
Re:It doesn't matter (Score:2, Informative)
I work at a small publisher, there has been a lot of publisher consolidation and that is bringing the number of competitors down which allows the big publishers to price fix.
Us small fries aren't getting hit with this shit.
Re:Really? (Score:4, Informative)
It sounds like the DOJ has evidence that collusion occurred. From the complaint filed today: "As a result of discussions with the Publisher Defendants, Apple learned that the Publisher Defendants shared a common objective with Apple to limit e-book retail price competition, and that the Publisher Defendants also desired to have popular e-book retail prices stabilize at levels significantly higher than $9.99. Together, Apple and the Publisher Defendants reached an agreement whereby retail price competition would cease (which all the conspirators desired), retail e-book prices would increase significantly (which the Publisher Defendants desired), and Apple would be guaranteed a 30 percent "commission" on each e-book it sold (which Apple desired)."
Case information, including the complaint, is here [justice.gov].
Re:Really? (Score:5, Informative)
More text from the complaint [justice.gov] suggesting that DOJ has hard evidence:
"Beginning no later than September 2008, the Publisher Defendants' senior executives engaged in a series of meetings, telephone conversations and other communication in which they jointly acknowledged to each other the threat posed by Amazon's pricing strategy and the need to work collectively to end that strategy. By the end of the summer of 2009, the Publisher Defendants had agreed to act collectively to force up Amazon's retail prices and thereafter considered and implemented various means to accomplish that goal."
"The Publisher Defendants directly discussed, agreed to, and encouraged each other to collective action to force Amazon to raise its retail e-book prices."
"Publisher Defendants took steps to conceal their communications with one another, including instructions to 'double delete' e-mail and taking other measures to avoid leaving a paper trail."
"They received assurances from both each other and Apple that they all would move together to raise retail e-book prices."
"All five Publisher Defendants agreed in 2009 at the latest to act collectively to raise retail prices for the most popular e-books above $9.99. [Then quotes internal email]."
"Apple concluded that competition from other retailers, especially Amazon, would prevent Apple from earning its desired 30 percent margins on e-book sales. Ultimately, Apple, together with the Publisher Defendants, set in motion a plan that would compel all non-Apple e-book retailers also to sign onto agency or else, as Apple's CEO put it, the Publisher Defendants all would say, 'we're not going to give you the books'."
"As it negotiated with the Publisher Defendants in December 2009 and January 2010, Apple kept each Publisher Defendant informed of the status of its negotiations with the other Publisher Defendants. Apple also assured the Publisher Defendants that its proposals were the same to each and that no deal Apple agreed to with one publisher would be materially different from any deal it agreed to with another publisher."
"Each publisher defendant rquired assurances that it would not be the only publisher to sign an agreement with Apple that would compel it either to take pricing authority from Amazon or to pull its e-books from Amazon. The Publisher Defendants continued to fear that Amazon would act to protect its ability to price e-books at $9.99 or less if any one of them acted alone. Apple supplied the needed assurances."
"Near the time Apple first presented the agency model, one Publisher Defendant's CEO used a telephone call, ostensibly made to discuss a marketing joint venture, to tell Penguin USA CEO David Shanks that 'everyone is in the same place with Apple'."
"On the evening of Saturday, January 23, 2010, Apple's Mr. Cue e-mailed his boss, Steve Jobs, and noted that Penguin USA CEO David Shanks 'wanted an assurance that he is 1 of 4 before signing'."
There's about 20 pages worth of evidence, with email and telephone conversations quoted. This will be a big case. It looks like Steve Jobs and the publishing companies' CEOs were personally involved in the conspiracy.