Print 10 comment(s) - last by sigmatau.. on Sep 20 at 8:55 PM

Apple and the four publishers offered to let Amazon and other retailers sell e-books at a reduced price for two years

Apple and the four major book publishers under the EU microscope have officially offered a solution to their e-book troubles: allow Amazon and other e-tailers to sell e-books at a discount. 

This proposal was originally brought up back in August, where Apple and publishers Harper Collins (News Corp., USA), Simon & Schuster (CBS Corp., USA), Hachette Livre (Lagardère Publishing France) and Verlagsgruppe Georg von Holzbrinck (owner of inter alia Macmillan, Germany) attempted to settle the investigation by the European Commission. Penguin, the fifth book publisher involved in the case, did not submit a settlement proposal.

The proposal is that the publishers will not restrict or limit an e-book sellers' ability to set, change or reduce e-book prices for two years. They also won't interfere with an e-book retailer's choice to offer discounts. 

In addition, Apple and the publishers have agreed to suspend "most favored nation" contracts for five years, which stopped publishers from allowing other e-book sellers, like Amazon, sell e-books at lower prices than Apple. 

The Commission said it is considering the settlement proposal offered by Apple and the four publishers. It will now allow third parties to offer their opinions, and in one month, the Commission will decide to either end the investigation or continue. 

While the EU investigation may soon come to a close, the same can't be said for the U.S. Department of Justice's investigation into the same issue. DOJ sued Apple and the same five publishers in April 2012, and soon after three publishers made settlement deals with the government (Harper Collins, Simon & Schuster and Hachette Livre). 

Apple, Penguin and Macmillan, on the other hand, will duke it out with the DOJ at the U.S. bench trial on June 3, 2013.

Source: Reuters

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By Shadowself on 9/20/2012 10:33:38 AM , Rating: 4
In addition, Apple and the publishers have agreed to suspend "most favored nation" contracts for five years, which stopped publishers from allowing other e-book sellers, like Amazon, sell e-books at lower prices than Apple.
I just love how people continue to write this backward to the way it really works. And because virtually everyone sees it backward to reality the regulators (and courts), relying on public perception, get it backward too!

The quote says that "something" stopped publishers from allowing Amazon to sell at prices below prices than Apple.

In reality, the "most favored nation" clause is not that. It is a "best customer" clause.

The clause stated that no matter what price the publishers authorized *anyone* to sell their books at, Apple would be allowed to sell the books at that lowest price.

The publishers had absolute control. They could set *any* lowest price they wanted. They just had to allow Apple to sell at that same lowest price. The publishers were never forced by some outside (outside the publisher) force to set any specific price for anyone. All the "best customer" clause really said was that Apple would be allowed to sell to Apple's customers at the lowest price available. Thus Apple's customers were guaranteed to have "best customer" status with each publisher that sold through Apple.

Apple's customers were not guaranteed preferential status ("most favored nation" status) they were guaranteed not be be in a disadvantaged position ("best customer" status).

If the publisher authorized Amazon or B&N or Walmart or anyone else to give a book away for free, the clause required the publishers to authorize Apple to give the book away for free.

RE: Backward
By Rukkian on 9/20/2012 11:52:59 AM , Rating: 2
There is really no difference in what you are saying and what others are saying, you are just sugar-coating it. Yes, Apple has to be allowed to sell at the same price, but they also want 30% of the sale price, so all publishers raised the minimums by 30-60% so they could still make more money, and effectively raised all prices for consumers cause now Amazon could no longer sell the books for the same price they used to sell them for.

RE: Backward
By Tony Swash on 9/20/2012 12:37:08 PM , Rating: 2
Yes, Apple has to be allowed to sell at the same price, but they also want 30% of the sale price,

What percentage of the sale price does Amazon take?

RE: Backward
By Tony Swash on 9/20/2012 12:45:20 PM , Rating: 2
I found the answer to my question

This site shows a comparison of the maximum eBook royalty rates offered by, Barnes & Noble, Apple iBookstore, etc. This is the percent of the book’s list price that the publisher (or you, if self-publishing) will receive if an eBook is sold through the following vendors:

It appears that Amazon takes a bigger cut than Apple except in the $2.99 to $9.99 category where Amazon take the same 70% as Apple but in addition charges delivery charge based on file size.

The Apple terms are more generous than Amazon's.

There is a detailed breakdown of Amazon's charges here

RE: Backward
By Trisped on 9/20/2012 6:03:15 PM , Rating: 2
You should read the pages you actually linked to. They are figures for self-publishing . You need to know what rates the big houses negotiated. Small shop/self-publishers often pay more because their volume is usually lower compared to the costs they incur, the big houses have more bargaining power, and self-publishing has been relatively expensive in the past (so their rates would be competitive).

Also, you will note that Amazon does not take a bigger cut. Its cut is the same as Apple if you are on the 70% royalty option. Which option you take is currently up to you.

The fact that delivery cost and tax is baked into the sale price means the royalties will be lower, but it is better for the consumer because there are no hidden taxes or fees. The price you see is what you pay. If you have seen those web listings for $20 products listed for 1 cent but with $35 in "shipping and handling" charges you will understand why they did this.

RE: Backward
By Trisped on 9/20/2012 6:18:42 PM , Rating: 2
Apple's customers were not guaranteed preferential status ("most favored nation" status) they were guaranteed not be be in a disadvantaged position ("best customer" status).
There in you are backwards. The problem was not that Apple had a "best customer" status with the publishers. The problem is that Apple had a "best customer" status and did not allow publishing books in the 7.99-13.99 dollar range. In fact Apple still does not allow vendors set their price, instead forcing them to pick from one of the prices Apple allows (though last I checked you can pick any dollar amount, but the cents stays at .99 unless it is free).

This then meant that any publisher which gave "most favored nation" status to Apple (which was all of them) could not sell a book with Apple which was sold anywhere in the unsupported price range. This then forced publishers who wanted to use Apple's store to sell their products to raise the price of their eBooks to 14.99 at all stores (including Amazon) at 14.99, even if they had previously been selling it at that store for less (like if the book had been selling for 9.99 on Amazon).

While it makes more sense as a consumer to think of the publishers selling to Apple (giving Apple "best customer" status), the model is actually Apple selling its services/products to the publishers.

RE: Backward
By sigmatau on 9/20/2012 8:54:08 PM , Rating: 2
Wow, you just left off the most important part of the formula: profit. As other users have corrected you, it was Apple that always wanted their 30% cut to sell an ebook. Amazon was more than happy to settle for less. If both companies bought an ebook for $10 and Apple of course would sell theirs at $13 to get their 30% while Amazon is not so greedy and wants to sell theirs at $11.

It was Apple's illegal agreement with the publishers to force Amazon to sell their book at the same price as Apple. I mean how else could Apple survive without these type of agreements?

It reminds me of the slime off a snake.

By GotThumbs on 9/20/2012 3:00:57 PM , Rating: 2
"The proposal is that the publishers will not restrict .....for TWO YEARS. In addition, Apple and the publishers have agreed to suspend ... for FIVE YEARS"

So Apples response is....we'll just FRACK the consumers later.

I'm racking by brains wondering WHO THE HE_LL would accept this "Proposal"? Unless the world ends in two years....then there is no REAL correction of the collusion that Apple and the publishers executed...just a delay. The timeline in which a price control occurs.....does not change the FACT that its a price control and anti-competitive.

Can we just shoot the SOB who was was ballsy enough to even submit this joke of a "Proposal" My God, how Fracking stupid are these people....or does Apple think WE are the idiots and will forget about this in time?

It's like a known drug dealer saying in court that he will suspend selling drugs for two years, but then its game on after that. Any judge who remotely considers Apples "Proposal" as a viable choice is asleep at the wheel.

I'm guessing Apple doesn't give its consumers much credit...least I quote the dead Steve Jobs...."You're holding it wrong". Just wish his company died with him. I'm continually disgusted with Apples Method of Operations. Wouldn't be surprised if the mob was used as a model for extorting money.

By sigmatau on 9/20/2012 8:55:36 PM , Rating: 2
Ya, Apple pretty much said we'll fck the customer in 5 years at least.

By danjw1 on 9/20/2012 12:34:29 PM , Rating: 2
So consumers are get overcharged again in 2 or 5 years? How does this deal make one bit of sense, unless the EU commission is getting some fines out of it. Why would anyone think it was acceptable for them to go back to the way it was in 5 years?

"I f***ing cannot play Halo 2 multiplayer. I cannot do it." -- Bungie Technical Lead Chris Butcher
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