Apple Loses Ebook Price Fixing Appeal, Must Pay $450 Million 97
An anonymous reader writes: A federal appeals court ruled 2-1 today that Apple indeed conspired with publishers to increase ebook prices. The ruling puts Apple on the hook for the $450 million settlement reached in 2014 with lawyers and attorneys general from 33 states. The Justice Dept. contended that the price-fixing conspiracy raised the price of some e-books from the $10 standard set by Amazon to $13-$15. The one dissenting judge argued that Apple's efforts weren't anti-competitive because Amazon held 90% of the market at the time. Apple is unhappy with the ruling, but they haven't announced plans to take the case further. They said, "While we want to put this behind us, the case is about principles and values. We know we did nothing wrong back in 2010 and are assessing next steps."
Good (Score:1)
Now go after Amazon.
70% kindle commission is redonkulas.
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But it *is* 70% to Amazon for books between $0.99 and $2.98. Maybe that's justified by the fixed costs Amazon faces, which are a greater percent of a smaller price, but it still seems absurd to me. Of course my response is just to not price ebooks under $2.99, and then I can avoid it.
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But it *is* 70% to Amazon for books between $0.99 and $2.98. Maybe that's justified by the fixed costs Amazon faces, which are a greater percent of a smaller price, but it still seems absurd to me. Of course my response is just to not price ebooks under $2.99, and then I can avoid it.
But it's proof Amazon is preventing authors from selling ebooks below $2,99. And thanks to their most-favourite-nation-clause, they also prevent that on all other places that sell ebooks.
Ohh, DOJ! We have a new victim for you!
Unless of course you want to prove your in cahoots with them. Who watches the watchers again?
warning shot (Score:1)
This is a warning shot over the bow for Apple before the record industry tries to retaliate for the Beats/Apple Music subscription services' pay-out structure.
Things have changed at Apple. (Score:2)
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Why would they have to pay taxes on repatriated money? Does that really make any sense to you? It isn't profit coming in, it is revenue which is going towards a fine, and corps only pay taxes on profit, not revenue.
Oh No. (Score:5, Funny)
You mean Tim Cook might have to deal with a slightly less than full scrooge mcduck swimming pool? The inhumanity!
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Little known fact: If you jump into a swimming pool filled with gold coins, you will end up in a coma.
Another little known fact: If you try to catch a comet by its tail, you will end up in a coma.
e-book prices HAVE been too high. (Score:4, Insightful)
Every publisher believes that the e-books don't really compete against one another in price because each one is unique. They aren't interchangeable...someone won't say "wow, I bet I can get this same book cheaper somewhere else..."
But they are wrong. Lately, people have been able to get the same book cheaper by buying a used physical copy (still cheaper even after shipping costs). But, apart from that, when the price of a book exceeds the potential customer's sense of the book's value, they absolutely will buy a completely different book instead.
No product is immune to market forces, which is a good thing, and price-fixing harms the majority.
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Every publisher believes that the e-books don't really compete against one another in price because each one is unique. They aren't interchangeable...someone won't say "wow, I bet I can get this same book cheaper somewhere else..."
But they are wrong.
Exactly. People might not be able to buy that particular book for less money, but maybe they can find a book in the same genre for less money. The only reason someone would be set on one particular book is either a) it's an author they know and enjoy, or b) that particular book got great reviews or was recommended by a friend.
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Strangely enough, on Kobobooks.com or Google Play for many books I can find 2 versions for different prices. Usually from different publishers.
Of course, it could be that this is only because I'm living in Europe and there is some overlap in publishing rights. But still.
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My local library lends out ebooks now. Some DRM schemes allow lending to friends. There is always piracy too. If you charge too much, people will find other ways to read books. Particularly if your book is aimed at teenagers who don't have much money, you need to account for that.
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Every publisher believes that the e-books don't really compete against one another in price because each one is unique. They aren't interchangeable...someone won't say "wow, I bet I can get this same book cheaper somewhere else..."
But they are wrong. Lately, people have been able to get the same book cheaper by buying a used physical copy (still cheaper even after shipping costs). But, apart from that, when the price of a book exceeds the potential customer's sense of the book's value, they absolutely will buy a completely different book instead.
No product is immune to market forces, which is a good thing, and price-fixing harms the majority.
I don't agree. There are certain authors whose books I buy as soon as they are published. In the past this meant buying a hardback edition which is more than twice the cost of a paperback.
Books and other works of creative art are NOT fungible. You can't just replace a novel by your favourite author with a cheaper alternative in the same genre..
"We know we did nothing wrong" (Score:1)
A federal appeals court just said you did. So that's at least twice you've been told you're criminally liable.
Re:"We know we did nothing wrong" (Score:4, Insightful)
Enh... ok.... the pedantic in me is speaking up. Apologies in advance.
Although it may not apply in this case, I feel compelled to point out that "doing nothing wrong" and "not being criminally liable" are two entirely different things. The first is a moral judgement, and the second is decided by law, which may or may not be related to anything moral.
Conversely "doing something that any reasonable person would know is wrong" and "being criminally liable for such action" are two entirely different things as well. You could probably think of several recent examples in the news.
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I'm not sure that's true (I didn't look at his psych report) but that wasn't really the point I was making.
More like, say, (for an extreme example) three intruders break into your house with the intent of doing serious bodily harm to your wife and daughter. You successfully defend your family with that cricket bat you keep leaned up against the corner of your bedroom.
Now, in some places that would be a righteous defense, they take your statement and drag out the bodies. In others, you might be looking at
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I don't think anybody has accused anybody of being criminally liable. nobody's in prison. I think there is civil liability
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Corporations are only virtual people, they cannot be put in prison.
Suckers (Score:1)
"There's a new Apple customer every minute."
E-book prices (Score:5, Interesting)
I'm still irked by the pricing. Now, I don't expect to be able to buy an ebook for the price of a used book, but by golly, I refuse to pay more for the book than I do for a dead-tree version, and given that I'm a halfway 'smart' shopper, 30% under 'list' is the average for me, I can often reach 50% or more, for a book that's not quite a new release. As such, I'm pretty much stuck buying from Baen for now.
They need to hold more sales like Steam. But no, the publishers don't want that. Apple & Amazon don't want that.
Re:E-book prices (Score:4, Insightful)
Why shouldn't you be able to buy it at the price of a used book? After all, you can't resell it. I'd say that's a right worth a lot of money.
Re:E-book prices (Score:4, Interesting)
The fact that you can't resell digital content (at least, not easily) is why Steam has to have regular, massive sales. Players were used to buying games at full price and then trading them in for a good fraction of that back. They were used to picking up used copies for a fraction of retail price, especially for older games.
Steam even mimics the experience of visiting your local game shop periodically and discovering interesting stuff in the bargain bin or used. They have flash sales, very limited time only, aimed at impulse buys and people waiting for some price threshold.
Digital content has to be cheap because it's worth much, much less than physical content due to lack of resales. Publishers are trying to prevent resale of physical copies now by having one-time use codes and DLC tied to the console, but consumers are pushing back by demanding lower prices. It isn't clear which side will win out yet.
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Digital content has to be cheap because it's worth much, much less than physical content due to lack of resales.
True, but given that I wait for said massive sales actually means that I end up paying LESS for my games(on average), than the difference between buying a game new and then selling it to a store like gamestop, and as a bonus I get to keep my game!
So I'd argue that it's not worth that much less, and I still remember reading an article where the author argued that the resale market for games, especially server-dependent online ones, actually drives the price for games UP, and that the continuing profit TO the
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Why shouldn't you be able to buy it at the price of a used book?
It's in the context of it being a 'not quite a new release'. Depending on the books I've bought used, they've often been under a buck.
Still, yeah, the price should decline.
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The problem is the wholesale model in general. All of this distorted pricing in both the physical and virtual spaces comes from the fact that retailers have so much control over the pricing, and are in turn sold physical books at a very low price in recognition of the fact that large tomes of paper are heavy and expensive to move.
Digital sales should never have been wholesale in the first place; publishers should control eBook prices, just like developers do app prices. Meanwhile on the physical side, consi
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Why should digital sale not use the wholesale model?
I do not want the publishers to dictate the price, because they are removed from the customer and thus don't think of the customer when setting prices.
The publishers are the ones that first sell eBooks for the price of the hardcover paper book and only go down with the price when the paperback is released.
It doesn't make sense that the same eBook suddenly should be worth only a third of what I would have had to pay earlier.
Publishers don't understand the d
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The publishers are the ones that first sell eBooks for the price of the hardcover paper book and only go down with the price when the paperback is released.
It doesn't make sense that the same eBook suddenly should be worth only a third of what I would have had to pay earlier.
That model actually makes a lot of sense to me. Pay more if you're impatient and want to see it new, pay less when it's older. You see that kind of system regularly with DVDs, where a new release may be $20, but it'll be $15 or $10 after a year, and in the $5 bin a few years later. Computer games, too, except that you're starting at $60 and going down in several steps to $20 and then maybe $10 or $5. What's really amazing is that books are so insensitive to this trend.
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What's really amazing is that books are so insensitive to this trend.
That's the thing; they aren't so insensitive to it. You have the hardback, then the paperback, then they hit the discount racks, used bookstores, etc...
What's amazing is that it's the e-books that are so insensitive to this.
And going by what Baen's released for their policies, it's the distributors such as Apple and Amazon that are pushing not only this, but DRM and such.
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You know, I think since this court case, eBook prices have actually gone up. I mean, when we actually had Amazon, Barnes and Noble and iBookstore competing, you could get books for $10. Now that iBookstore was colluding and banished as a competitor, damn has prices risen.
Yeah, Apple sucks, blah blah blah, but now we have less competition and Amazon's dictating the pricing rules. I don't think the ebook market is as healthy as it was back then, nor as competitive... especially now with Barnes and Noble on li
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Makes sense. I've been looking into this as a self-published author, and your numbers definitely work out, or should even be maybe more extreme. Selling an ebook through Amazon for $5 gives a 70% royalty, or $3.50. Print versions through CreateSpace are going to vary depending on production values, but may end up being around $5 for the cost of creation, and then Amazon will cite a minimum price (I was seeing around $10 or $12, again depending on the number of pages), though that doesn't give the author the
$450 Million (Score:2)
Ok, and with annual sales revenue of 180 Billion (with a B) or thereabouts, $450 Million amounts to the change you'd find under the couch cushions.
At first I wondered why they bothered to even fight it, but then I realized, with that kind of sales revenue, the cost of keeping lawyers on the case is pocket change.
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walmarts annual sales are $482.2 billion (with a B) but that doesn't stop them from doing everything in their power to make as much money as possible and that includes paying as little out as they can. They are just corporations and their goals are to maximize profit. Paying $1 more then is needed will be fought.
Why does apple go through such great lengths to avoid paying any taxes? They can afford to pay, but choose to hire an army of lawyers instead.
They were probably looking to get a "fine" without an
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Enh, to a certain extent true, but there is a cost associated with fighting for that extra $1. At some point it stops being cost-effective. There has to be some reason to fight for the dollar, not just that you smell like sulfur and your part is played by Ray Wise.
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it was a 'figurative $1" not a "literal $1"
Sometimes fighting for small amounts is to prevent that precedent from being used again for larger amounts as well.
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> it was a 'figurative $1" not a "literal $1"
Yes, I realize that. I wasn't just playing with words. Just pointing out that as the reward decreases and/or the total cost to pursue increases, somewhere the lines cross.
> Sometimes fighting for small amounts is to prevent that precedent from being used again for larger amounts as well.
Yes, very true. And one of the factors that may make it worth the cost of pursuing.
Re:$450 Million (Score:5, Funny)
"Ok, and with annual sales revenue of 180 Billion (with a B) or thereabouts, $450 Million amounts to the change you'd find under the couch cushions."
That is 1/4% If you routinely find 1/4% of your annual household revenue in your couch not doing very well.
Even for a household making a modest 30,000$/year; that would be like finding $75 in the couch. Hell, I make several times that per year, and I'd still consider finding $75 in the couch a pretty good day.
Now... http://www.macrumors.com/2014/... [macrumors.com]
According that Apple only had net revenue of $42.1 billion. So that's like our 30k household finding $320 in the couch. A rather nice day I'm sure.
And of that Apple only profited 8.5 billion...so more like the equivalent of finding $1588 in the couch. Come now, that's not couch money anymore... that's getting into hidden mattress money!!
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Since it's a penalty and not a 'find' situation, it's more the equivalent of one of us getting a $320 speeding ticket.
That's fairly significant though it's not financially crippling.
If Apple doesn't want lawyers swarming all over them for loot, maybe they should do what other companies do, actually pay more of the cash excess back to the shareholders as dividends.
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Re:$450 Million (Score:5, Insightful)
According that Apple only had net revenue of $42.1 billion. So that's like our 30k household finding $320 in the couch. A rather nice day I'm sure.
Not really. $320 is a lot of food money for the family living on $30,000.
It may be the same percentage, but after a certain amount, it doesn't affect your lifestyle(or business) in any real sense.
You think that if Bill Gates lost 1/2 billion overnight, his life would change at all?
I guarantee that the family will feel the loss of $320 far more than Gates or Apple losing $500,000,000.
The fine is a joke. The US needs to start adding in punitive damages to corporate bad behaviour. Off the cuff numbers: If the price fixing gave Apple $1 billion in profit, the fine should be $4 billion.
Even with the fines, it is more profitable to behave badly than it is to be honest. Apple would do it all over again, except try a little harder to get away with it.
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NicBenjamin posting anonymously to avoid undoing mod-points. According to Statista [statista.com], US eBook revenue in 2010 was only $1.52 Bil or so the year this started. If you asdd in the other years Apple's was doing this you get a total of $7.2 Billion. Since Amazon always had much greater marketshare then Apple, unless their profit margin was above 10% $450 Million represents all the profit they made on eBooks during those years and then some extra.
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no mod points here but that's pretty interesting/informative.
-cheers
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100% Correct, this isn't a punishment that will prevent Apple from doing exactly the same thing further down the road.
Damages should be punitive, like what's happening in Sweden, where fines are directly linked to income.
http://www.nydailynews.com/new... [nydailynews.com]
Just to be a bit pedantic.
While the driver were indeed a Swedish national, the infraction, and the fine, happened in Finland.
Finland recently changed their laws to make their speeding ticket fines (and possible other fines) proportional to the perpetrators wealth.
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That is 1/4% If you routinely find 1/4% of your annual household revenue in your couch not doing very well.
Damn it, I moved all the cushions, took the covers off, lifted the whole thing up, and then out of frustration took an axe to my sofa. All I found was 28p in change, a marble and some cat vomit. I really suck at mining my sofa.
Government litigation costs (Score:3)
Next go after textbooks and the schools that make (Score:2)
Next go after textbooks and the schools that make you buy new ones all the time / don't let use old editions
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The government will not do that. Raping the poor and the students is the american way.
So what youre telling us is that lawyers get bank? (Score:2)
So what you're telling us is that lawyers get bank? This money will only fulfill the lawyer's wildest dreams. Yay for them?
Fucking lemmings, all of you. "Justice" system indeed... More like profit "trickling" to the top.
Principles and Values (Score:4, Funny)
SO this means..... (Score:2)
Everyone This thursday, no free bagels at all apple offices. We have to pay the fine.
Yes their thursday bagel expense is about the same as their fine.
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Everyone This thursday, no free bagels at all apple offices. We have to pay the fine.
Yes their thursday bagel expense is about the same as their fine.
US$ 450,000,000.00 divided by 80,000 employees = US$ 5,625.00 per employee. So let's be super generous here and assume that they spend $5 per bagel + Schmear.
Each Apple employee would have to consume 1,125 bagels each time. Assuming each bagel is 87.4 grams and that each employee eats 1,125 bagels, that would make 210 lbs (or 95 kgs) of bagels consumed per employee each Thursday (not including the Schmear).
Of course, I've made other assumptions. I've assumed that only the full time employees got free bagels
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Assuming each bagel is 87.4 grams and that each employee eats 1,125 bagels, that would make 210 lbs (or 95 kgs) of bagels consumed per employee each Thursday
And people wonder why there's an obesity crisis in the US.
Outrageous pricing model. (Score:2)
I work the print communications production business. With todays prices for materials, labor and other intangibles the price to produce a modern paper back book is on the order of about 2 to 4 dollars depending on page count. The price to produce an e-book is mere pennies per sale of an individual downloaded book. E-books have turned out to be one of the biggest rip offs of the second decade of this century. These over priced e-books are a just a cash grab by publishers. It makes you wonder what portion of
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The price companies charge for their product has nothing to do with their cost, regardless of the product. Companies price products based upon how much consumers are willing to pay.
Re:Outrageous pricing model. (Score:4, Insightful)
Only if you are dumb enough to think that the price to the consumer is related to the cost of production. Cost of production may set the minimum that a producer will sell for. The actual selling price is what people will pay. Pretty simple, actually.
Re:Outrageous pricing model. (Score:4, Informative)
I know for the (originally print-only) technical books I published through "traditional" means, I get less than half of the royalty per copy that I get for a print book, even though the electronic copy is priced the same as the print copy. The way this was explained to me (~15 years ago) was that the publisher would not be able to charge as much for the electronic copy (!), but that is BS because the royalty is a % of the gross book cost and not a % of the sale price, and there is no manufacturing cost to speak of for electronic books (just the initial cost of editing/promoting the book.)
Publishers also hold back thousands of dollars in royalties to cover returns, even for electronic books and even long after the book has gone out of print...
Needless to say, I don't use traditional publishers anymore - even with lower numbers of sales, I've made more on my two self-published books than on the three books I did before that. Not enough to live on (I don't write books for a living) but enough to justify the time spent...
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No appeal? (Score:2)
How is this illegal? (Score:2)
If someone puts something for sale at a certain price and you decide to buy it for that price how is anyone harmed? Now if it was something like health insurance that you are forced to buy under physical threat that's a different story.
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You can set your own prices however you want. What you can not do, and Apple did, is make it so all your competitors must raise their prices to match yours.
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They did not force any competitors to raise their prices. Anybody was free to offer their book for a lower price, as long as they offered the same low price on the iBookStore.
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Completely wrong. Amazon and everyone else were NOT free to offer the books for a lower price, that is the whole point.
In the normal wholesale model, the retailer and wholesaler negotiate a price for the retailer to by the goods. The retailer can then retail those goods for whatever price they want. If some retailer wants a 30% profit on the item, another retailer can take 20% and beat them on price. That is competition.
In a normal, non-fixed, agency model the producer and retailer negotiate the markup.
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No one is harmed. If I drive down an empty freeway at 110 MPH, I'm not harming anyone, either. But that's not what this is about, much like your example.
This is about Apple basically contacting all the publishers and having all of them and Apple collude together to set up prices in such a way that screws a competitor. Sorry--can't do that.
Since you seem to like conspiracies, though, it's kind of like how the oil companies get together to set the price of gasoline...
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Still don't see the harm if Apple and the publishers try to set prices. You. An either deal with Apple or not. It's up to the publishers if they want to make that deal.
As for oil companies they can try to set prices as well. Doesn't work too well because there are great incentives for lowering prices if it will increase total profits.
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Still don't see the harm if Apple and the publishers try to set prices. You. An either deal with Apple or not. It's up to the publishers if they want to make that deal.
It would help if you read up on this case...
Apple and the publishers did not only fix the prices you pay at Apples shop, but they also forced all other ebook retailers to follow the agency model that Apple wanted and pay at least what Apple payed to the publishers.
So this collusion harmed all retailers, and thus all consumers because it removed a lot of choice.
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You keep using the word force. There was no force involved. The publishers just set the terms of the deal to other retailers. The retailers could agree or not.
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https://tidbits.com/article/13912 has a good explanation of why this is illegal and how people were harmed.
In essence there's nothing wrong with putting something for sale at a certain price. However in this case harm was done. the rise in prices hurt consumers, and publishers made less money because quantity of sales were lost and more money was being taken by the distributors.
This becomes illegal because Apple colluded with publishers. The whole point of antitrust law is to prevent prices from rising due
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If someone puts something for sale at a certain price and you decide to buy it for that price how is anyone harmed? Now if it was something like health insurance that you are forced to buy under physical threat that's a different story.
The problem is not that Apple sold things they owned for a price they chose. They didn't. What they did is create a system where publishers set the prices, paying Apple a 30% commission. Still fine. And then the illegal part: they told the publishers that whatever price Apple's competitors sold the product, they had to sell on the Apple platform at the same price (or lower).
So the way that this worked: Penguin's contract might have a price of $9.50 (wholesale) to Amazon for a particular book. Amazon
In the immortal words of Nelson Muntz... (Score:2)
Amazon has sleazier lawyers (Score:2)
How the hell does Amazon walk away from this without a scratch? How are they not getting hammered for anti-trust?
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What have they done that is illegal?
Wait, what innovation now? (Score:2)
17 In late 2007, Amazon.com, Inc. (“Amazon”) introduced the Kindle, a portable
18 device that carries digital copies of books, known as “ebooks.” This innovation
19 had the potential to change the centuriesold process for producing books by
20 eliminating the need to print, bind, ship, and store them.
Amazon "innovated" ebooks? Really?