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DoJ Files Suit Against Apple, Ebook Publishers 235

Posted by Unknown Lamer
from the project-gutenberg-accused-of-price-fixing dept.
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."
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DoJ Files Suit Against Apple, Ebook Publishers

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  • by etresoft (698962) on Wednesday April 11, 2012 @11:12AM (#39645159)
    I have a book in the iBookstore. I set the price on it. Apple sells it for that price and gives me 70%. I have the same book in the other bookstores. I have no control over the price. They give me what they want, which is half of what Apple gives me. I have no choice or say in the matter. And the Department of Justice sues Apple? That's just wrong.
  • 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.

  • by neochubbz (937091) on Wednesday April 11, 2012 @11:17AM (#39645243) Homepage
    You do realize that the price of crude oil (and therefore gasoline) is determined by the spot market, and therefore the oil companies have (almost) nothing to do with the price of gasoline you pay at the pump?
  • by gelfling (6534) on Wednesday April 11, 2012 @11:18AM (#39645253) Homepage Journal

    The paperback was $38 shipped and the downloadable version was $97. Excuse me but that's insane.

  • Re:Really? (Score:5, Informative)

    by SJHillman (1966756) on Wednesday April 11, 2012 @11:22AM (#39645313)

    Although some eBooks are cheap or free, most of the popular ones cost as much or more as their dead tree counterparts

  • by Anonymous Coward on Wednesday April 11, 2012 @11:24AM (#39645351)

    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.

  • 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)

    by cpu6502 (1960974) on Wednesday April 11, 2012 @11:37AM (#39645551)

    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)

    by getNewNickName (980625) on Wednesday April 11, 2012 @11:45AM (#39645687)
    It's the difference between wholesale and agency models that brings about the curious discrepancy in prices. Print books fall under the wholesale model: they are bought at a discount from the publisher and the retailer gets to set the price they sell at. Whereas for eBooks, sold under the agency model, publishers set the price on the book and the retailer gets a percentage of the sale. Under the wholesale model the retailer can choose to make a particular book a loss-leader or negotiate a deeper volume discount so that they can offer lower prices. The retailer has no control over the pricing for the agency model.
  • by getNewNickName (980625) on Wednesday April 11, 2012 @11:57AM (#39645913)

    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.

  • by Anonymous Coward on Wednesday April 11, 2012 @12:01PM (#39645969)

    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).

  • by Zerth (26112) on Wednesday April 11, 2012 @12:04PM (#39646033)

    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.

  • by rsmith-mac (639075) on Wednesday April 11, 2012 @12:44PM (#39646707)

    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)

    by MisterSquid (231834) on Wednesday April 11, 2012 @12:52PM (#39646823)

    Whereas for eBooks, sold under the agency model, publishers set the price on the book and the retailer gets a percentage of the sale.

    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]:

    The publishers know they entered the eBook business because they were afraid of the example of the movie and music industries and rather than allow their "disintermediation" (Sargent's word) they made sure none of them using the agency model would set eBook prices below a certain bar, thus destroying Amazon's so-called "monopoly" position. Apple has a hand in facilitating the price-fixing and should be punished accordingly. The book publishers, on the other hand, deserve to burn in hell.

  • by alexander_686 (957440) on Wednesday April 11, 2012 @01:45PM (#39647703)

    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)

    by Anonymous Coward on Wednesday April 11, 2012 @01:51PM (#39647787)

    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)

    by roothog (635998) on Wednesday April 11, 2012 @02:21PM (#39648149)

    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)

    by roothog (635998) on Wednesday April 11, 2012 @02:42PM (#39648429)

    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.

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