Apple $450 Million e-Book Settlement Wins Court Approval 93
An anonymous reader writes A week after Judge Denise Cote put forward concerns over a proposed settlement with consumers over e-book price-fixing in the iBookstore, she has given Apple preliminary approval for its $450 million settlement. "The proposed settlement agreement is within the range of those that may be approved as fair and reasonable, such that notice to the class is appropriate," Cote said. "Preliminary approval is granted." Cote set a final fairness hearing for Nov. 21.
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Money like this could change the world.
No.
It's hard to find out exactly how many eBooks are sold annually, but best estimate I can find is around 400,000,000 copies annually in the USA alone. Apple has 30% of that market and conspired to increase the price to consumers between $3 and $5 per copy.They also reduced competition by conspiring with publishers to refuse to distribute books by authors signed to Amazon.
That means they cost book buyers somewhere between $360,000,000 and $600,000,000 more per annum than if they hadn't colluded, not c
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doesn't mean a coalition of fair pricing is conspiring to fleece the consumer.
We'll go to the agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that's what you want anyway.
Steve Jobs, 2010.
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"Macmillan frankly acknowledged in writing to the trade in the Spring of 2010, one of its goals in moving to the agency model was to “[i]ncrease[e] prices” of e-books.
Penguin’s McCall wrote, “Agency is anti-pricewar territory. We don’t need to compete with other publishers on the price of our books.” Penguin executives told authors after signing the Apple Agreement that they had “fought to protect high prices; . . . fought agai
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As Cue admitted at trial, raising e-book prices was simply “all part of” the bargain in creating the iBookstore.
here's the thing you refuse to acknowledge: they were raising the book *to sustainable levels*. it's like when china comes to dump junk on the US market to drive US out of business and take all of it for themselves. is that what you want? to US be the bitch of china or amazon?
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You know, publishers did have negotiation options other than "form a price-fixing cabal".
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You know, publishers did have negotiation options other than "form a price-fixing cabal".
Not really, because we have an n-prisoners dilemma here. Standing up against Amazon in negotiations only works if all publishers do. And the only way to make sure of that is breaking the law.
Recent month's show exactly hat happens if you stand up against Amazon on your own.
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If the publishers really wanted to "stand up to Amazon" they would've banded together and stopped selling Amazon books rather than banding together to continue selling books through Amazon, but make more money doing so.
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If the publishers really wanted to "stand up to Amazon" they would've banded together and stopped selling Amazon books rather than banding together to continue selling books through Amazon, but make more money doing so.
Actually they make less money that way - but your notion that they still would have needed to violate the law is noted.
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There's nothing stopping organisations forming cooperative agreements so long as they are not inherently anticompetitive. Remember: they got sued not because they banded together, but because they banded together to set prices.
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Under Amazon's retail agreement, the publisher's set the book price that amazon paid. Amazon then set the price for customers - amazon had various prices for books, rather than a flat rate. Some were loss leaders - a common enough tactic in the retail world, big book chains do it all the time - but amazon's ebook division was profitable on its own merits - something a DOJ investigation confirmed. That's not dumping, and there were other competitors in the ebook space that were also profitable. If the publis
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it defeats the purpose of free markets, that of delivering the best product for the lowest price.
[citation needed]. Whose definition of "purpose"? The definition that supports your argument? funny how that happens.
And that was what they did.
more profit for apple and the big publishers, with no improvement to the product
[citation needed] true, on day 1 the product is the same from day -1, but over time, more money would allow for greater investment in better products. but like most americans you can only see until the end of the fiscal quarter.
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but amazon's ebook division was profitable on its own merits - something a DOJ investigation confirmed.
And how did that "investigation" look? They kindly asked Amazon. Not to mention that apart from the loss leaders and the low profit ebooks from classic publishers, Amazon not only had the Kindles with their (at the time) high markup, they also had Kindle Direct Publishing, with a healthy 65% margin from the selling price at almost zero cost to them. It's easy being profitable with margins like that - even when you make massive losses on your bestsellers.
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Money like this could change the world.
No.
It's hard to find out exactly how many eBooks are sold annually, but best estimate I can find is around 400,000,000 copies annually in the USA alone. Apple has 30% of that market
We don't have to go any further to know you are full of shit.
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Does Amazon compensate their shills with free eBooks and movie streams, free Prime, discounts on purchases, or just filthy lucre?
pocket change in Apple's world (Score:3, Informative)
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Eh, a half billion used to sound like a lot of money at one time.
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Nowadays that's like half a lawsuit against Samsung.
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The fed has almost a century of history of hitting it's target monetary growth target of 2%. At what point will the sun arriving every morning convince you that it will arrive tomorrow?
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Haven't you noticed food prices going up? Surprise! Food hasn't been getting any harder to grow. We're producing more than ever before. So it's not "market forces". What could it be?
Short-lived commodities like food are among the first to be seriously affected by inflation. Add to that a wholly unjustified rebound in housing prices, and inflation has actually been pretty high.
I don't know what kind of "monetary growth" it is that you're referring to, but
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Given that, though: while they may have stopped publishing a target, they certainly have not stopped expanding the money supply. And the fact that they've "stopped tracking some measures" is rather ominous.
And I doubt they've really stopped tracking them. They just aren't publishing them, because they don't want people to panic. But a lot of economists aren't being fooled. Many have been raising alarm bells. Not to mention those who warned about these polici
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As far as I can tell, it stays relatively non-inflationary as long as that extra money doesn't circulate.
It sure sounded like you were saying that to me.
Further, most of the money isn't "sitting there". Housing is booming again, and Wall Street is at record highs again. The overall economy might be sluggish that that doesn't mean the cash itself is stagnant. We have easily identifiable bubbles going on, even now.
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relatively
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Inflation is quite low right now relative to Weimar Germany, for example. Or the inflation experienced by Zimbabwe and Argentina at various points in the past.
Heck, inflation right now is quite low compared to 2007 - who was PotUS back then again? Obama? Clinton?http://www.usinflationcalculator.com/inflation/historical-inflation-rates/
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Heck, inflation right now is quite low compared to 2007 - who was PotUS back then again? Obama? Clinton?http://www.usinflationcalculator.com/inflation/historical-inflation-rates/
If you knew how CPI was actually calculated, you would never have posted that link. These are exactly the "official" government figures that don't come close to reflecting reality.
According to CPI, Chateaubriand is equivalent to a rump roast, and a 10-acre estate with a mansion is economically equivalent to a 0.25-acre plot with a 3-bedroom home. That may be a very slight exaggeration, but not much.
It's just not a reflection of reality, and hasn't been for decades. It's designed to hide inflation.
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Knowing how these things work, Apple will probably use it as a tax write down.
Says the guy with the mac.com e-mail address... (Score:2)
...
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So, you think that a store shouldn't be able to set final prices with it's wholesalers? I agree that wholesalers conspiring is problematic, but I don't get there being a problem when a wholesalers and a retailer set prices together.
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Yep, the charges were legitimate. Anyone who reviews the case should be able to reach that conclusion. Even I did, and I'll cop to being biased in favor of Apple (I like to think of myself as a recovering fanboy, who still likes them, but who doesn't continue to engage in the blind zealotry).
That said, while the charges were legitimate, the sentencing was anything but. Cote granted an unprecedented level of access and authority to the court-appointed auditor compared to other similar cases, and she also app
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Punitive fines make perfect sense, I agree. Where I disagree is that the fine here is representative of the damage done, as it is supposed to be. From what I understand, treble damages are typical in cases such as these where the actions taken were willful, yet I can't figure out any way that $450M could reasonably be considered fair, even having taken treble damages into account.
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Yes, it's not as though Apple consipred to increase the prices that consumers paid when buying elsewhere. Oh wait ... yes Apple did just that!
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Apple conspired to unsettle a monopsonistic price fixing scheme by introducing competition. Yes, they correctly pointed out that prices would rise when the monopsony ended, but I think the justice department really slipped a disc on this one.
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So, let me get this right: you admit that Apple committed the crime, but don't think they should do the time... because Amazon?
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Re:Very disappointing. (Score:4, Insightful)
He did no such thing.
He admitted that Apple conspired with publishers. That's the crime Apple were convicted of, because conspiring to raise prices is, you know, an actual, real crime under US law.
Apple broke up Amazon's monopoly.
What monopoly? The conspiracy's goal was to force Amazon to sell ebooks for more than it wanted to. They were trying to make readers pay more for their books. What's so great about that, exactly?
Because they did so, authors no longer had to just take whatever Amazon was willing to let them have.
Uh, what? Authors take whatever the publishers are willing to let them have. What does Amazon have to do with what publishers pay their authors?
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Couldn't, and can't they still, just choose not to sell their books on Amazon? Is someone or some law forcing publishers to make their books available in Amazon's store?
Sure, why not stop selling at the one place that sells 75% of all ebooks. Well, that would work if all the publishers conspired to do that. Else it would kill you.
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In this case, I'd rather have Amazon than Apple - I can read my Amazon Kindle books on the Kindle, iOS, Android, Blackberry, Windows, Windows Phone and a whole host of other places, while I can read my Apple iBooks on ... an iOS device.
And you forget that authors and publishers also had to take whatever Apple was willing to give them - don't even start to kid yourself that Apple is the altruistic good guy in this, they required publishers and authors to not sell their ebooks cheaper anywhere else when they
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Amazon has as much monopoly position in eBooks as Apple has in smartphone apps - they have their own ecosystems but thats it. I can buy eBooks elsewhere, and publishers can even create their own apps and distribute their own products without Amazons involvement at all. EBooks is possibly the easiest market to break into.
The fact that you see nothing wrong with Apples requirements says loads - so its ok to set prices across your ecosystem and everyone else ecosystems (which is what Apple was doing) but sett
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"I'm altering the deal. Pray I don't alter it any further."
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Right, I can buy audiobooks from many different sources, so Amazon is hardly dominating the market, and also are you saying a company is never, ever, ever allowed to vary anything?
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Right, I can buy audiobooks from many different sources, so Amazon is hardly dominating the market, and also are you saying a company is never, ever, ever allowed to vary anything?
Any party to a contract should be able to just change their part of the deal? Are you serious?
As for audiobooks - sure, you can buy them at a lot of places. Download however - and you are pretty much stuck with Audible.
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The fact that you see nothing wrong with Apples requirements says loads - so its ok to set prices across your ecosystem and everyone else ecosystems (which is what Apple was doing) but setting prices on just your own ecosystem is completely wrong...?
The fact that a publisher setting their own price on your market with the only requirement of that market being that it is equal to or lower than any other market you sell in seems perfectly fine. Apple is not setting a price, the publisher is free to set any price they want anywhere they want to sell. Amazon, however, is setting the price, regardless of what price you want to sell your product for.
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I don't see how installing oneself as the head of a cabal of basically the entire US ebooks market is breaking up a monopoly.
Re:Very disappointing. (Score:4, Informative)
Apple engaged in illegal activity, willfully so, and they rightfully should be slapped for it. But so did Amazon, yet they've been able to get away with it so far because the one's being hurt by them aren't the general public.
The author's guild has outright claimed that they think Amazon is breaching the Sherman Antitrust Act [nytimes.com]. Most people seem to forget that those laws apply to not just monopolies (when you're the only seller), but also to monopsonies (when you're the only buyer), and that the abusive monopsony Amazon has with regards to the publishers in this market is exactly what pushed the publishers into engaging in their own illegal activities. Which isn't to say that Apple or the publishers were justified in doing what they did because Amazon screwed them first. They weren't. Full stop. But that also doesn't mean that Amazon is justified in doing what it's been doing just because the publishers engaged in illegal activities too.
Negotiating hard is one thing, but they've held around 90% market share with eBooks for awhile now, and as virtually the only buyer in that space, Amazon has a responsibility to not abuse their monopsony, yet they have failed to do so at every turn. Anyone who Googles around for about 5 minutes can turn up a dozen examples of Amazon abusing their dominant position to force the publisher's hands. Delisting books right as major releases are about to come out, refusing to ship copies they have so that shipping times go from days to weeks, forcing the publishers to change packaging with minimal notice or else. These are all part and parcel in dealing with Amazon.
Apple deserves to be punished. Make no mistake about that. But Amazon has yet to get what it deserves, simply because it was smart enough to make sure that it hurt people no one feels sorry for.
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I always found it amusing that the Author's Guild always seems to enthusiastically back whatever it is the publishers want to happen, even to the detriment of their supposed constituency...
I'd rather hear [theguardian.com] from [blogspot.com] authors [hughhowey.com], personally, than a group that fought against libraries/universities making electronic archives [techdirt.com] of books for research...
Look, if authors/publishers aren't happy with Amazon, they don't have to do business with them. They can sell their books direct to the customer, even in a format the user ca
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In the past few months, the Apple fanboys have been promoting the "Amazon has a monopsony" line, which I assume was started by Apple employees in some Apple-related forums.
Perhaps Amazon has a monopsony now, but to suggest that it had one when Apple was organizing its illegal price-fixing is simply counter-factual. The publishers wen
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Despite starting off with an ad hoc attack, it might surprise you to learn that we agree on quite a few points, and I'll bet that we can agree on even more once we're on the same page about what "monopsony" means.
In the past few months, the Apple fanboys have been promoting the "Amazon has a monopsony" line
While you didn't say it, I'm willing to bet that you and I would agree that the term has been widely overused and misused by the Apple faithful (fanboys and reasonable people alike) in the last few months. I think it may have started with Daring Fireball, but I'm not sure. Even so, just because it'
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Definition s are wonderful things. For every one, one can find a different definition. So how about this:
If your definition of monopsony is the simple "one buyer", then perhaps, but if your definition is the one that I was using, where the buyer has market power, the evidence is that Amazon did not have t
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I hadn't seen it defined that way before, so thanks for pointing that out. It appears that a number of economic sites not only define it as "one buyer", but also tie it to the leverage that is typically associated with that position, whereas most of the general purpose dictionaries simply go for the "one buyer" part and leave out anything else. Whether we lump the leverage in with monopsony or break it out on its own, however, I think we can come to agreement on the facts of the case: Amazon's leverage vani
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The oteher part of the definition issu is that the relationship between Amazon and publishers is somewhat unusual. Perhaps unique.
In the case of books, while Amazon may have market power as the single buyer, to some extent, the publishers also have power as the single seller. If Amazon wants to sell (for example) Stephen King's latest novel, there is only one publisher that is selling it. Amazon cannot go elsewhere, just as (perhaps) the publisher cannot go elsewhere to sell the eBook rights.
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Quite true. And I'm glad we're on the same page on that one, since a number of people I talk to seem to think that books are entirely commodity items and that the publishers have no leverage of their own at all. Even so, the way things have been playing out, I'd suggest that Amazon still has the bigger stick to shake when it comes to those discussions, since those massive bestsellers that Amazon absolutely needs to carry only come along once in a blue moon. Most of the time, it'll hurt the publishers far mo
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I would like to think that a company like Apple could "introduce competition" without having to conspire with every ebook publisher to do so.
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Yes, it's not as though Apple consipred to increase the prices that consumers paid when buying elsewhere. Oh wait ... yes Apple did just that!
Yeah, if by elsewhere you mean Amazon, and then only for those ebooks Amazon sold far below cost.
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How do you sell an ebook below cost? Do you pay a customer to take it?
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How do you sell an ebook below cost? Do you pay a customer to take it?
Is this a serious question?
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Yes, it's a serious question. How do you sell something with a reproduction cost of zero below cost?
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You're being obtuse.
When you buy a paperback or hardcover book, only a portion of your money is actually going towards the costs of the paper and ink for your specific copy. Most of it is going towards fixed costs that are spread across all copies. Why would it be any different with eBooks? Even though the marginal cost to "print" an electronic copy may be virtually nil, the authors, editors, advertisers, retailers, lawyers, illustrators, software developers, typesetters, and more all need to be paid, and t
I don't buy it. (Score:2)
Excluding (only for the sake of argument) outlier cases like textbooks, with significant expense spent on gathering and checking specialized materials, I don't believe for a moment the "fixed costs" for the average mass-published novel, self-help book, or whatever are anywhere high enough to justify the publishers' objections to Amazon's "maximum" price of $9.99 for an ebook. Let's see some actual numbers to back up these assertions.
And even if (again, for the sake of argument) it's true that traditional pu
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You're moving the goalposts. I never said anything about the reasonability of Amazon's arguments with regards to $9.99 vs. $14.99, and I have no interest in arguing that point with you (I have opinions on the subject, but they're a separate matter and I've already addressed them in other comments). I was simply providing the obvious answers to your misleading questions.
I would suggest, however, that if you're in favor of taking away the right of owners to price things how they want, the onus is on you, not
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and they were filed because Amazon pays a hell of a lot more bribe money in Washington than Apple ever will.
It is unclear what you mean by 'bribe' money, but both Amazon [opensecrets.org] and Apple [opensecrets.org] spent huge sums of money lobbying over the last 15 years or so.
Amazon spends more, but not 'a hell of a lot' more. Both organisations do their absolute best to influence policy in their favour. The idea that Apple is somehow pure in this way is fantasy that could only come from the most delusional fanboy.
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and they were filed because Amazon pays a hell of a lot more bribe money in Washington than Apple ever will.
It is unclear what you mean by 'bribe' money, but both Amazon [opensecrets.org] and Apple [opensecrets.org] spent huge sums of money lobbying over the last 15 years or so.
Amazon spends more, but not 'a hell of a lot' more. Both organisations do their absolute best to influence policy in their favour. The idea that Apple is somehow pure in this way is fantasy that could only come from the most delusional fanboy.
Bribe money is the money that doesn't show up in official records like your cite uses.
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The real culprits are the publishers. (Score:2)
I've been reading a description of the case, and what Apple did actually seems fair... Amazon was "dumping" in an effort to eliminate competition. Publishers setting prices is no different than video game console manufacturers setting prices, IMO.
The real crime is charging over $10.00 for an e-book at all. I know all the shills for publishers will say the bulk of the cost is in formatting the books, but to charge just as much... and sometimes MORE, than the printed book is absolutely ridiculous... no pape
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Except they weren't "dumping". They were using loss leaders. Something virtually every business on the planet does.
Except when your "loss leading" continues for longer periods and many products. Then it's price dumping. Like in this case.
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Err, loss leaders are the ones who sell a variety of different goods at low prices for long periods. Dumpers sell a specific good at low prices for a short period of time because dumping is inherently unsustainable; if you don't run your rivals into the ground and switch to high cost selling before you run out of capital, your business fails.
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