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The Almighty Buck The Courts Apple

Court Bars Apple From Making Industry-Wide E-book Deals 130

Posted by Soulskill
from the play-nice-with-others-or-else dept.
itwbennett writes "The federal judge presiding over the U.S. electronic books case against Apple has barred the company from striking deals that would ensure that it could undercut prices of other retailers in the e-book market and also prohibited Apple from letting any one publisher know what deals the company is striking up with other publishers. For its part, Apple said it plans to appeal the ruling (PDF), denying that it conspired to fix ebook pricing. Meanwhile, Amazon is alerting customers of their potential payout, which could be as much as $3.82 for every eligible Kindle book."
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Court Bars Apple From Making Industry-Wide E-book Deals

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  • by Anonymous Coward on Friday September 06, 2013 @02:37PM (#44778277)

    Apple has been robbed of justice. Amazon is behind this and they are the ones that should be convicted!

    Robbed of justice? You know that one of the reasons they were convicted were that they had an email from Steve Jobs confirming illegal price fixing?

  • Re:Yay for monopoly! (Score:4, Informative)

    by Microlith (54737) on Friday September 06, 2013 @02:59PM (#44778543)

    Apple said,here is what i am paying, if you let someone else get the book for less, then this is the new price I am paying.

    Not correct at all. The rules stated that if any other retailer sold the book for less than what Apple was, Apple could change their price and take it out of the publisher's percentage. Apple was all about protecting their 30% and not actually competing as a retailer.

  • by Anonymous Coward on Friday September 06, 2013 @03:06PM (#44778629)

    According to Jobs they were not cheaper:

    'We'll go to the agency model, where you set the price, and we get our 30 percent, and yes, the customer pays a little more, but that's what you want anyway.'"

  • by Anonymous Coward on Friday September 06, 2013 @03:28PM (#44778819)

    You weren't paying attention at all. Ebook prices went up after the iBooks thing started, both from Apple and Amazon.

    That's the first hint that something shitty is going on, when you have more competitors in a market and yet the price goes up.

  • by Anubis IV (1279820) on Friday September 06, 2013 @03:43PM (#44778969)

    The payout is a separate thing that's a result of the settlements the DoJ struck with the publishers last year. It's part of the same issue, but it was settled out of court and wasn't part of this case.

    For this ruling, the judge is barring Apple from engaging in "most favored nation" clauses (i.e. "our store will always have the lowest price for your product, or will be tied for having the lowest price") and is forcing them to stagger re-negotiations with the various publishers over the next few years in order to ensure that no collusion occurs. As I understand it, and I may be mistaken, they are not barred from engaging in agency model deals (i.e. "you get to set the price and we'll take X% cut"), which was actually a large part of what led to the price increase in the first place. Prior to that, the industry standard was the wholesale model (i.e. "we negotiate a price that you sell the book to us for, but then we can sell it to consumers for whatever")

    Personally, I think the lawsuit was rather ridiculous, since Amazon was poised to destroy the entire industry, and the shift to the agency model was a necessary one to ensure the long-term health of the industry. Prior to Apple showing up with iBooks, Amazon was in a position to leverage its monopsony on the eBook market (like a monopoly, except it's when someone commands the buying side of the market, rather than the selling side) to force the publishers' hands and demand lower and lower wholesale prices. The publishers recognized the threat that posed them, so they worked out an agency deal instead, which led to lower short-term profits (despite the increased cost to consumers, simply because the agency model took a bigger cut than the wholesale model was at the time), but provided them with long-term control over their own prices.

    Effectively, they took away Amazon's ability to do what was best for itself at the expense of the industry as a whole. After all, Amazon wins by lowering prices regardless of what happens to the publishers: by forcing them out it becomes the de facto publisher for virtually all eBooks thanks to its self-publishing tools, and by lowering their prices to unsustainable levels it pleases consumers and locks some of them into its ecosystem through the proprietary .azw and .kf8 eBook formats. Had the publishers been colluding to increase profits by gouging customers, I'd definitely be in support knocking them around for antitrust stuff, but the fact that they were making less money per unit sold under the agency model tells me that this was a long-term play to stay alive, rather than a short-term one to turn a quick buck at the expense of the consumer, and as such, the DoJ should have left it alone, even if it did increase the cost to consumers.

    (Admitted lack of citation: I did read in multiple places over the last few months that profits were down under the agency model, but I'm knocking this comment out quickly, so I don't have time to look them up. Sorry. Doubters and welcome to doubt.)

Statistics are no substitute for judgement. -- Henry Clay

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