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Books EU Government The Courts Apple

EU Targets Apple In Ebook Investigation 99

Posted by timothy from the how-many-eu-commissions-are-there? dept.
nk497 writes "The European Commission is investigating Apple and five publishers regarding ebook pricing, after raiding ebook firms earlier this year. 'The Commission will in particular investigate whether these publishing groups and Apple have engaged in illegal agreements or practices that would have the object or the effect of restricting competition,' the watchdog said."
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EU Targets Apple In Ebook Investigation More

EU Targets Apple In Ebook Investigation

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  • of course they have. What else do you call it when everybody has to sell things at the same price?

    • Not sure if there is a name for: "we all buy the book from the same publisher and they charge all of us the same price, so we happen to sell it at the same price to the consumer. Why? Because we happen to have the same percentage commission rate." ... Maybe there is a german word for that.

      • Re: (Score:1)

        by Anonymous Coward

        Incorrect. These particular publishers will not do business with anyone who does not sell at the *exact* price they set. No sales or discounts allowed.

      • I agree with this. The publishers can charge whatever price they want for the book. They hold the copyright for the book. It's not like you can just go to some other publisher and get the same book at a lower price. The retailers all have to make money on it. You can only lower your selling price so close to the cost price. Everyone sells XBox 360 (or any other console) at the same price too (at least within a single country), but you don't see anybody crying foul over that.Everybody sells everything a

        • Re:duh (Score:4, Informative)

          by apcullen ( 2504324 ) on Tuesday December 06, 2011 @11:07AM (#38280668)
          Certainly publishers should be able to charge what they want for a book. The rest of what you say is good only... not true. You can find video games on sale for different prices from different stores. If you don't see different products at different prices, you're just not looking hard enough. Modern warfare 3 sells for $59 most places, but I managed to find it for $52. Lots of things go on sale. I could buy the hunger games trilogy in Hardcover from Barnes and Noble for $30 or from Amazon for $22. But the ebooks were the same price everywhere (and inexplicable more expensive than the hardcovers). Nobody cries foul because for other items because, while everyone buys things at the same price, they don't all take the same amount of profit and resell it at the same price. At least they don't have to. Ebooks are a problem because publishers have contracts explicitly saying how much profit a company can, and has to make (the "agent" model).

          • That's one thing that's annoyed me about digital purchases, the prices seem to stay higher for a longer period of time. With a book you want to sell it. Every week that you don't sell it you've wasted shelf space. Publishers are wasting storage space holding these books and will eventually remainder them. But online... well there's no inventory pressure on you to drop prices. Same with games; in a month you'll see the price of a game drop already if it's in stores, probably a big drop after holidays,

      • Re:duh (Score:5, Informative)

        by Anonymous Coward on Tuesday December 06, 2011 @11:18AM (#38280806)

        Maybe there is a german word for that.

        Actually, in Germany book sellers are required by law to sell books at the same price (at least those from German publishers). And for that, there is indeed a word: "Buchpreisbindung".

        However the sellers are quite creative at it: You may sell damaged books at lower prices, and therefore you quite often find "damaged" books where the only "damage" is the text "Mängelexemplar" ("flawed exemplar") on them.

        • This was also the case in the UK when the Net Book Agreement [wikipedia.org] was in force in the early 90's.

          For a while, everyone played ball, the smaller retailers were able to stay in business because nobody could undercut them, and a book cost the same price no matter where you bought it. Two larger booksellers (Dillons and Waterstones) then started to exploit a loophole by either punching a hole in the cover, or marking the edge of the pages with a pen. Then they could sell books at a discount as they were "damaged goo

        • Maybe there is a german word for that.

          Actually, in Germany book sellers are required by law to sell books at the same price (at least those from German publishers).

          Of course they don't have to do that for foreign books, that's why English language books are far cheap..., no wait, they actually cost at least 3 times the UK price printed on them.

      • Re: (Score:2)

        by fedos ( 150319 )

        But this isn't what happens in the book industry. The next time you purchase a physical book, look around and you will find that the publisher has printed the price on it. Publishers don't sell the books for the same price to all retailers, who all then use the same profit margin to come up with a price point. The publishers instead tell retailers what they can sell the books for. No other consumer market works this way.

        What it looks like the EU is complaining about is ebook publishers making agreements wit

        • Re: (Score:2)

          by 0123456 ( 636235 )

          The publishers instead tell retailers what they can sell the books for.

          So perhaps you can explain why the book store I walked past yesterday had a sign in the window saying '30% off all hardbacks'? Or, indeed, why I almost never see a book on Amazon for sale at the 'retail price' without a discount?

          This publisher-set pricing is exclusive to e-books, not to paper books.

          • Re: (Score:2)

            by lgw ( 121541 )

            The biggest difference here is illustrated by Amazon: they are a physical book retailer, but an ebook publisher. Book publishers always set the prices they charge to their customers - the retailers. But for ebooks the publisher is used to selling directly to you. Apple's idea that the ebooks sales process needs middlemen is the oddball part of all this.

        • Thats called a "sugested retail price". Comic books do it too. The store can sell it at any price they want, though. However, if the store wants one of those contracts where the publisher will take books back if unsold, they may demand the sugested retail price be used unless otherwise authorized for liquidation purposes.

          Next time you go to a Borders.... oh wait... next time you go to a B&B, you may see they put a their own price sticker over the printed price. They mostly repsect the print price, tho

      • Re: (Score:3)

        by mjwx ( 966435 )

        Not sure if there is a name for: "we all buy the book from the same publisher and they charge all of us the same price, so we happen to sell it at the same price to the consumer. Why? Because we happen to have the same percentage commission rate." ... Maybe there is a german word for that.

        Kollusion?

    • You'd call it the Net Book Agreement.
      http://en.wikipedia.org/wiki/Net_Book_Agreement [wikipedia.org]

      It operated from 1900 through to the 1990s in Britain. During this time high street had book sellers of all sizes, from the big chains to the small independents. Since it's demise, independents have trouble competing with the chains, and most have gone to the wall. Now some of the big chains of booksellers are going to the wall because of supermarkets and Amazon. Give it another 10 years and there will be nowhere on the high

    • Business as usual.

      For companies in an oligopoly basically offering identical products, there are 3 basic ways they can make more money than they do now:
      1. The big box retailer strategy: Lower their price, and hope that the extra volume more than makes up for the reduced margin.
      2. The airline strategy: Raise their price, and hope that their competitors follow suit.
      3. The cell phone strategy: Lower prices on a loss leader to gain customers, lock them in without them noticing, then raise prices and fees and th

      • Lock them in without them noticing? When's the last time you signed a contract without noticing? If ever, you have bigger problems to worry about (not to mention said contract is also invalid). The problem isn't that consumers don't notice, it's that they don't care.

        • There are a couple of ways of doing this:
          - Include a clause that allows you to change the terms at any time without notifying customers or providing any sort of consideration. If you look for it, you'll find it buried in the fine print of all sorts of consumer contracts. Yes, this is a stupid contract to be signing, but many people don't read the fine print or don't realize what that clause means if they see it. The courts have sometimes ruled those contracts invalid, but for most people it's more expensive

          • Include a clause that allows you to change the terms at any time without notifying customers or providing any sort of consideration. If you look for it, you'll find it buried in the fine print of all sorts of consumer contracts. Yes, this is a stupid contract to be signing, but many people don't read the fine print or don't realize what that clause means if they see it. The courts have sometimes ruled those contracts invalid, but for most people it's more expensive to sue than it is to just pay up.

            You can c

        • Re: (Score:3)

          by Zebedeu ( 739988 )

          Most people don't realize that they're paying a very high monthly fee for that cool new smartphone.

          Some of my friends cringe when I say my smartphone cost 500€. It's only natural, since they paid 100-200€ for an equivalent device.
          What they fail to understand is that while they're locked into expensive contracts, I'm paying around 10€ per month (8€ internet + admittedly few calls and SMS) on my prepaid card without any sort of obligations.

          It's the same way that printer manufacturers reali

          • Like I said, the problem isn't that people aren't aware what they're getting in to, it's that they don't care (enough to look into alternatives). Through their actions, people are saying that they care more about convenience (the convenience of the readily available option) than cost. It's not like we live in the dark ages where this information isn't readily available to anyone who cares enough to look.

    • It seems the same thing happens with Apple hardware too. Same price everywhere.

      • That's how most companies operate (suggested retail price), however that's just the products of one company, not like the book market where there are several publishers.

        Apple competes with HP and many others. Amazon suddenly can't compete with Apple, Kobo or others on books because the publishers don't want to!

        This is the publishers doing, never mind Apple.

        • That's how most companies operate (suggested retail price), however that's just the products of one company, not like the book market where there are several publishers.

          Apple competes with HP and many others. Amazon suddenly can't compete with Apple, Kobo or others on books because the publishers don't want to!

          This is the publishers doing, never mind Apple.

          This is mostly true, and there's really no question that the publishers are the "Bad guys" here, except Apple probably included a clause which basically said "fine we'll go for the agency model, but in return you have to guarantee that you're not going to undercut us later" (apple is known to have made deals like this in other fora) So, basically, Apple conspired with the five publishers in their scheme to price-fix the e-book market, something the other booksellers such as Amazon and B&N had been unwi

  • Whuh? (Score:1, Redundant)

    by Moheeheeko ( 1682914 )
    Apple? Practice shady business to limit competition? Nope you must be mistake. St. Jobs the profitable would never allow that.
    • I am not mistake, son. I am disappoint. :/

      Welcome to capitalism, by the way. Hope you enjoy your stay. We'll bill your credit card on departure.

  • Lets not just include Apple (Score:1)

    by Anonymous Coward

    What about Amazon? Or the other big E-book retailers? How often to e-books go on sale? Discounting? Ever see an e-book for 50% off? Not very often I bet. Consider that an e-book costs mere cents to create and able to offer an unlimited supply surely they should have variable prices.

    • Re: (Score:2, Interesting)

      by Anonymous Coward

      The point is that these publishers are dictating the price to Amazon and any other ebook distributors. In order to sell these ebooks, those distributors must sell at the price set by the publisher and are not allowed to give any sort of discount.

    • Every day: http://amazon.com/kindledailydeal [amazon.com]

    • Re:Lets not just include Apple (Score:5, Informative)

      by bkaul01 ( 619795 ) on Tuesday December 06, 2011 @11:00AM (#38280562)

      Paul Thurrott's column [winsupersite.com] on this speaks to that question, and describes the logic of the antitrust investigation pretty succinctly:

      Before Apple's entry, publishers set the wholesale price of books, but retailers could determine the final selling price. But Apple changed that, allowing publishers for the first time to determine the final price at which eBooks were sold to consumers. As a result, the average selling price of new eBooks jumped from $9.99 to $14.99.

      The EC will try to determine if the firms colluded to fix prices and restrict competition. Both charges should be easily proven.

      As I reported in February 2010, while Apple was negotiating with the major publishers, at least one of them, Macmillan, demanded that Amazon raise prices on its Kindle books to match Apple's prices. Amazon, now as then, owns the dominant eBook platform, called Kindle. And Macmillan threatened to pull its books from the Kindle unless Amazon went along with the price hike. After temporarily pulling Macmillan's titles from its store, Amazon capitulated and raised prices as demanded.

      "We have to capitulate and accept Macmillan's terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books," Amazon wrote to customers at the time.

      • "We have to capitulate and accept Macmillan's terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books," Amazon wrote to customers at the time.

        That's exactly the same legal argument that didn't work for Psystar in the US. Maybe such reasoning will have better results in the EU.

        • generally producers that are shown to set that price in collusion with their competitiors are guilty of forming a cartel. IANAL but it appears that telling Amazon to raise their prices means Macmillan was choosing to set a price based on what its competitor set (ie the price on Apple's store).

          They could have told Apple to reduce their prices and they'd probably be guilty just the same, the idea is that they set the price according to the market - not artificially set the prices outside the consumer marketpl

        • Amazon aren't one of the companies being investigated. I guess they are the ones who reported it to the EU and being the first to report it means you get off any fines that are levied.

      • All this is perfectly fine with the DoJ and the FTC as it involves a beloved US cash cow. After all, if the founder didn't have to bother with license plates on his car, why should his corporation have to bother with mere anti-trust issues?

      • Paul Thurrott's column [winsupersite.com] on this speaks to that question, and describes the logic of the antitrust investigation pretty succinctly:

        Before Apple's entry, publishers set the wholesale price of books, but retailers could determine the final selling price. But Apple changed that, allowing publishers for the first time to determine the final price at which eBooks were sold to consumers. As a result, the average selling price of new eBooks jumped from $9.99 to $14.99.

        The EC will try to determine if the firms colluded to fix prices and restrict competition. Both charges should be easily proven.

        As I reported in February 2010, while Apple was negotiating with the major publishers, at least one of them, Macmillan, demanded that Amazon raise prices on its Kindle books to match Apple's prices. Amazon, now as then, owns the dominant eBook platform, called Kindle. And Macmillan threatened to pull its books from the Kindle unless Amazon went along with the price hike. After temporarily pulling Macmillan's titles from its store, Amazon capitulated and raised prices as demanded.

        "We have to capitulate and accept Macmillan's terms because Macmillan has a monopoly over their own titles, and we will want to offer them to you even at prices we believe are needlessly high for e-books," Amazon wrote to customers at the time.

        So instead of Amazon now the publisher has the (price-setting) monopoly on where to get their ebooks. I can see why Amazon doesn't like that.

    • Re: (Score:1)

      by Desler ( 1608317 )

      Consider that an e-book costs mere cents to create

      This just in: products have more to their cost than just the cost of replication and materials. I'm pretty sure the author(s), editors, typesetters, etc. that have a hand in the creation of the work want to get paid, too, no?

  • The Agency Model is a racket! (Score:4, Informative)

    by thesuperbigfrog ( 715362 ) on Tuesday December 06, 2011 @10:59AM (#38280550)
    The Agency Model [zdnet.com] is a racket that takes away a seller's ability to price ebooks how they see fit.

    This is bad for the consumer since it means that market forces have less sway and there is little to distinguish one store from another. You will not find ebooks on sale and there is no point in "shopping around" since the price is the same everywhere.

    If similar agreements were in place for other products, it would cause lawsuits. Imagine if all of the oil products sold by Shell or BP were given fixed prices. Media companies would love to have their own profit-guaranteed cartel and will push for illegal agreements to defend their aging business model.

    • In effect, the Agency Model is illegal price fixing by doing a "de facto" price floor at an unreasonable level, a practice banned by US and European Union antitrust laws. I would not be surprised that as a settlement, the price of new e-books will have a price floor of around US$12 per e-book, not the US$15 to US$16 it is now.

  • Ebooks are Great (Score:5, Insightful)

    by thomasw_lrd ( 1203850 ) on Tuesday December 06, 2011 @11:18AM (#38280802)

    Ebooks are slowly changing the way authors sell their books. No longer do you need a publisher to sell you book. Self-publishing is not only a possibility now, but it is also a reality. The only thing you can get from a publisher now is up front fees and marketing. But with the web, you can do much of that yourself.

    Step 1. Create a company to help authors promote books
    Step 2: ????
    Step 3: Profit

    • Re: (Score:1)

      by Anonymous Coward

      I think that, rather than self-publish, the big opportunity is for small/indie publishers. I've read a few self-published ebooks and I would say that they tend to lack the kind of polish that a good editor can supply. In that sense, I think having a publisher, or at least paying for an editor's services, is essential to the success of these endeavors.

      Small publishers have the chance to help create a new model:

      1. No more big advances. Instead, offer a larger piece of the royalty pie.
      2. Push the quality envel

    • Yes, all you get from a publisher is up-front fees and marketing. And professional editing. And layout and typesetting.

      And the way you say 'marketing' makes it sound like an easy thing. There are a quarter of a million books published every year in North America alone. Writing the first rough draft isn't the hard part. Writing the much better eighth draft is harder. Then getting anyone to read the damn thing, much less pay for it, is hardest.

      No one is getting rich in the book industry. No one. Not the publi

      • You are correct. The reason why it hasn't happened before is that self publishing was hard 10 years ago. It was even hard 2 years ago. You needed money to pay for everything. Now you only need a way to support yourself until you can get the book written. Once there, you can self promote with websites, blogs, twitter, facebook, so on and so forth. Once authors realize this, the book industry can be profitable more profitable because you are no longer beholden to share holders. An author can now pay an

        • Look at Rebecca Blacks Friday song. She has made a shit ton of money from one single all because of the crowd sourcing effects of YouTube... Look at open source projects.

          A shit-ton of money? Seriously? Grand total, before taxes and any cuts she needs to make to management or to pay costs, the song generated between $25,000-$50,000. As a one-hit fluke that's awesome, but a career it does not make. Randomly being the one video in a million that happens to catch on for a moment is not exactly a strategy you can build a life around. Google "Rebecca black sales" if you want to see the numbers.

          Can you name two dozen OSS projects that are even paying their contributors living wage

      • Tell me again why an eBook needs anything more than A) an author B) an editor (editors can do layout) C) distributor? Well, granted, some books may need illustrations and some people may fuss about making an un-needed "cover".

        Typesetters though? For an eBook? REALLY? Because, I honestly thought that every single text editor out there allows you to, you know, change your own font and font size/style. Even Notepad.

        • 'Changing the font and size' is about the least part of what a typesetter/layout person does. And it's a job that is particularly important for digital media where consciously choosing how things are displayed makes a massive difference to the readability. What font gets used? How large are the indents and how will the book treat text-wrapping for long lines? How are chapters and other headings handled? Are there quotations or other types of inset text?

          God help you if you are doing something actually compli

  • When I wanted to buy a book, and discovered that the hardcover was cheaper than the e-book....So I bought the hardcover.

    There is no _reasonable_ explanation as to why a physical book should be cheaper than 1s and 0s.

    • Re: (Score:2)

      by lgw ( 121541 )

      There is no _reasonable_ explanation as to why a physical book should be cheaper than 1s and 0s.

      Sure there is. The cost the physical ink an paper is maybe 15% of the cost of publishing a book, so you're starting from about the sam eplace price-wise. (Charlie Stross has a great write up on this, at length http://www.antipope.org/charlie/blog-static/2010/04/common-misconceptions-about-pu-1.html [antipope.org] ) Retailers will discount physical books to shift inventory off shelves, something irrelevent to ebooks. Of course, you'd think the publisher would want to discount the ebooks to help build a buzz for a boo

      • Re: (Score:2)

        by esocid ( 946821 )
        My thought was more towards inherent costs, and artificial supply/demand. Physicals carry not only costs to print, bind, but to distribute. Shipping 12 crates of books should cost more than uploading an e-book to a source. When the book is in short supply, and it is in demand, the cost should go up. That is practically an impossibility for an e-book. I'm not sure exactly where you're pointing me. I read through the ebook section and only saw this bit:

        At the same time, something's going to have to give on pr

        • Printing and shipping dead tree books is not that expensive. Setting up a data centre and all the associated payment and fulfilment stuff to run an e-book store doesn't come free. Us slashdotters do like to be paid for our efforts.

        • Re: (Score:2)

          by lgw ( 121541 )

          My thought was more towards inherent costs, and artificial supply/demand. Physicals carry not only costs to print, bind, but to distribute. Shipping 12 crates of books should cost more than uploading an e-book to a source.

          This is the most common misperception about publishing. Read his first couple of essays for a thorough cost breakdown, if you doubt it. The total "physical cost": printing, binding, shipping, etc, is only 10-15% of the cost of publishing a typical book (at least, a novel, nonfiction is different). 85%-90% of the cost is paying the author, the various proofreaders, the typesetters (yes, ebooks also have typesetters), the marketing spend, and on and on.

          Something which _should_ have less overhead, _should_ cost less. Even 2$ less would convince me to not buy in print. And again, that _should_ give more money to authors, although I doubt it does.

          Except that's where you're off - there isn't much less

          • Re: (Score:2)

            by esocid ( 946821 )
            I don't doubt it, it's just counter-intuitive. Thanks for the source, I'll check it out.

  • Slightly OT, but as many reading this probably care about ebook prices: Try the legal search engine in the open source Calibre [calibre-ebook.com]. Besides being arguably the best library management software available it's got a comparison search (called Get Books in the toolbar) which is the most comprehensive I've seen. It'll provide hits from a lot of different stores, but you can configure which ones. Or, if you're comfortable with liberating your legally bought books from their DRM shackles, I heard of this guy called App

  • http://en.wikipedia.org/wiki/Net_Book_Agreement [wikipedia.org]

    But how does one 'deface' an e-book? Remove the DRM?

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