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Apple and UK firm appear ready to fight DOJ lawsuit on e-book collusion, despite other publishers settling

The U.S. Department of Justice has filed a formal antitrust lawsuit against gadgetmaker Apple, Inc. (AAPL) and several top book publishers, claiming they conspired to drive up profits at the expense of free competition.

I. Apple Profits From E-Book Price Bump

Controversial business mogul Rupert Murdoch, owner of News Corp. (NWS), sent shockwaves through the e-book industry when he brokered a deal with Apple to sell best-sellers for as much as $14.99 USD on the first generation iPad.

But the so-called "agency pricing" scheme didn't necessarily benefit the publishers.

Steve Jobs
The e-book price increase was the brain-child of late Apple CEO Steve Jobs.
[Image Source: The New York Times]

It all stemmed from a scheme spearheaded by late Apple CEO Steve Jobs.  He wrote one of the publishers in an email published by the DOJ, "Throw in with Apple and see if we can all make a go of this to create a real mainstream e-books market at $12.99 and $14.99."

In the Walter Isaacson biography of the late chief executive, Mr. Jobs recalled his pitch as, "We'll go to [an] 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."

Under the scheme, Apple would get 30 percent of the cost -- similar to its app revenue split.  That worked out to about $3.90 USD on a $12.99 book, or $4.50 on a $14.99 book.  While the publisher's total take might have been a bit higher than the cut of the $9.99 e-book pioneer Amazon.com, Inc. (AMZN) charged, it was clear Apple was pocketing the majority of the price increase.

II. Cornerstone of Deal was Apparent Collusion

But the publishers bought the deal, as it allowed them to push for similar terms with Amazon.  In fact, Apple's deal reportedly demanded that any publisher selling books in iTunes could not sell its books for a lower price at a rival outlet.  The publishers used the deal as ammo to broker more lopsided deals with Amazon in that they pocketed a higher rate and bumped the price.

Faced with threats of severed supply, Amazon begrudgingly caved in and raised its prices.  The publishers' gamble had paid off.

The price transition was widely viewed as more destructive to Amazon's sales than Apple's given that Amazon sold to budget-savvy customers, where as Apple peddled its product to consumers willing to pay steep markups for perceived quality.

pile of books
Apple's e-books deal offered little benefit to consumers. [Image Source: Getty Images]

Amazon already offered cross-platform e-books and unlike Google Inc.'s (GOOG) efforts, Apple's iPad e-book store did not look to offer out-of-print works.  In other words, while the iPad drove up e-book prices, it did little to put e-books in the hands of consumers that would not already have had them.  Thus the deal did not seem to benefit anyone but Apple and the publishers, at the expense of customers.

But just because Apple's deal wasn't good for customers, didn't necessarily mean it was illegal.  Or did it?

III. DOJ Takes Action

Antitrust laws in the U.S. and Europe prevent top competitors in a market from making joint pricing decision (colluding) to drive up prices on consumer goods.  By all appearances that was precisely what Apple and the publishers had just orchestrated.

Thus over a year after the iPad launch, pressure on Apple began to turn up:

Dec. 6, 2011: The European Commission opens a formal antitrust investigation in e-book price fixing.
Dec. 7, 2011: The U.S. Department of Justice opens up a sister investigation into the price fixing.
Mar. 1, 2012: Top e-book publisher Random House (owned by private German firm Bertelsmann AG) announced it is bumping prices for libraries by 300 percent.
Mar. 7, 2012: Apple's third generation iPad launches.
Mar. 8, 2012: Rumors break that the DOJ is preparing to sue Appleet al.
Apr. 11, 2012: Rumor had it that the suit would land today.

The U.S. DOJ today made good on rumors and filed a suit against Apple and five publishers -- News Corp.'s HarperCollins; CBS Corp.'s (CBS) Simon & Schuster; UK publisher Pearson plc's (LON:PSON) Penguin and MacMillan units; and The Hatchett Group, a subsidiary of French publisher Hatchette Livre, which in turn is a child of French conglomerate Lagardère (EPA:MMB).

Department of Justice
Only Apple and one publisher are fighting the suit.  Apple wouldn't even dignify the U.S. government with a public response. [Image Source: AP]

To recap, that's two U.S. media conglomerates, plus Apple, a UK media congomerate, and a French multi-industry conglomerate who have been targeted in the suit.

Sharis Pozen, head of the DOJ's antitrust division, told reporters, "This took place at the highest levels of these companies.  Executives knew full-well what they were doing.This action drove up e-book prices virtually overnight.  Let me be clear: When companies enter agreements that prevent price competition, that is illegal."

Similar litigation is expected to drop shortly in the EU.

IV. Publishers Rush to Settle, Apple and UK Publisher Alone Vow to Fight

While the EU tends to seek punitive damages, the primary goal of the DOJ appears to be to enable a market "reset" scrapping the price-fixing provisions of Apple's deal and forcing e-book makers to cooperate with Amazon on lower priced options.

The deal could be a big boost to Amazon's increasingly promising tablet efforts.  It could also boost Barnes & Noble, Inc. (BKS) whose budget e-readers and e-book market have proven a solid challenger to larger players like Amazon or Apple.
The settlement and reduced e-book pricing could add extra fuel to Amazon's Kindle Fire.

Ms. Pozen discusses the potential of settlement, stating, "The settlement will begin to undo harm and restore price-competition.  It will result in lower e-book prices and provide a more open and fair marketplace."

So far, HarperCollins [source], the Hatchette Group [source], and Simon & Schuster [source] -- also the target of lawsuits from state attorney generals -- agreed to settle.

Apple and the Pearson plc subsidiaries refused to settle.  This could put them in a pretty bad spot.  While the other publishers refused to admit guilt in their settlements (as is typically the case), their decision to opt to quickly settle looks rather damning.

The Cupertino gadgetmaker did not even dignify the U.S. government with a public response, yet.  But soon it may have to respond in court.

Sources: DOJ [press release], [case], CNN



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I heard a great comment that reminds me...
By retrospooty on 4/11/2012 5:06:22 PM , Rating: 5
It was from some stand up comic that I cant remember the name of but it went....

Do you find yourself often having disagreements with your friends and family? Are you often fighting with co-workers and other associates over various issues? Well, hte issue is, YOUR AN A$$HOLE!. It cant be all of them, you are teh one with the problem!

Apple really needs to take a look at themselves and evaluate why they cant get along anywhere with anyone. .




RE: I heard a great comment that reminds me...
By Motoman on 4/11/2012 5:13:06 PM , Rating: 2
...for what possible reason would Apple worry about "getting along" with others? It's doing just fine being a douchebag.


RE: I heard a great comment that reminds me...
By Tony Swash on 4/11/12, Rating: -1
By lagomorpha on 4/11/2012 6:00:13 PM , Rating: 5
The world loves a bastard


By MechanicalTechie on 4/11/2012 7:20:25 PM , Rating: 4
OMG again you defend Apple?

What must they do in order to pull your lips from their a$re?


RE: I heard a great comment that reminds me...
By Tony Swash on 4/11/12, Rating: -1
RE: I heard a great comment that reminds me...
By Tony Swash on 4/11/12, Rating: -1
By MechanicalTechie on 4/11/2012 7:59:37 PM , Rating: 5
So its good that conglomerates to work together to push prices up and dictate conditions to 3rd party pricing in order to line their own pockets?

I guess anyone stupid enough to buy an iPad deserves all the arse raping Apple can dish out... but to artificially jack up prices is nothing more than pure greed!

But lets face facts as if you care..


RE: I heard a great comment that reminds me...
By The Raven on 4/12/12, Rating: -1
By The Raven on 4/12/2012 9:33:39 AM , Rating: 2
But I should be clear that I agree with the OP here. Nevertheless, even @HoLes have rights and people have the rights to hang out with @HoLes if they want.


By hiscross on 4/18/2012 4:00:46 PM , Rating: 1
So true about the govt. Go work for them, go on paid trips, just remember to pay the hooker in advance.


By xti on 4/12/2012 10:06:42 AM , Rating: 2
stop being poor.


RE: I heard a great comment that reminds me...
By Jeffk464 on 4/12/2012 5:08:19 PM , Rating: 2
Unfortunately this effects more than just ipad owners, it effects everybody that reads electronic books. I'm not sure its entirely apples fault though they probably took a lot of convincing to do to get publishers on board with ebooks they were afraid of piracy and devaluing the price of books. It also to apple to convince the music industry that they should sell mp3's online.


By Jeffk464 on 4/12/2012 5:15:49 PM , Rating: 2
Why should a book written by one person cost me $10 to read when a movie involving a small army to make only costs me $1.30 to rent from redbox?


By Cheesew1z69 on 4/11/2012 8:29:45 PM , Rating: 2
Again? That's all he does.


By damianrobertjones on 4/12/2012 3:34:33 AM , Rating: 3
Tony... if you've ever worked at PC World, Currys, Dixons or Comet (I worked at Dixons) you'll understand how silly people can be. It makes ZERO difference if the product is poor or the company bad, as usual, customers will buy as their friend has one.


RE: I heard a great comment that reminds me...
By Tony Swash on 4/12/12, Rating: -1
RE: I heard a great comment that reminds me...
By vol7ron on 4/12/12, Rating: 0
By The Raven on 4/12/2012 9:53:29 AM , Rating: 4
I think the reason you enjoy his posts is kind of like why some people watch reality shows filled with crazy people..."We'll at least I'm not as crazy as that person! I feel so much better about myself!"


By The Raven on 4/12/2012 9:55:20 AM , Rating: 1
quote:
Apple's competitors mostly cannot match

Wow you have really softened your stance!


RE: I heard a great comment that reminds me...
By bupkus on 4/12/12, Rating: 0
RE: I heard a great comment that reminds me...
By The Raven on 4/12/2012 10:15:46 AM , Rating: 2
quote:
Praising a business's performance as one's only metric is like gauging the performance of our financial markets by the number of new billionaires in the U.S.
Oh boy here I go again defending Tony :-O~=~=~ (If you are wondering...bacon strips)

He said that they are rich and highly popular. As opposed to Exxon or what have you.


By bupkus on 4/12/2012 10:58:00 AM , Rating: 2
My point is if there is a violation of existing laws in the process of making profit an enterprise should not be praised. The other metric is our laws that restrict activities where one or a group can create a contrived choke point on a vital product resulting in an increase in cost punitive to the end recipient and benefiting only those involved in collusion.

If this were the food industry its effects would be more obvious. The availability of the written word is just as vital to the public good.


RE: I heard a great comment that reminds me...
By kleinma on 4/11/2012 5:24:33 PM , Rating: 3
Wasn't that the late, great George Carlin?


By stardude692001 on 4/11/2012 9:42:37 PM , Rating: 1
only Carlin could come up with a statement good enough to be rated up on Dailytech even when it is full of spelling errors.


RE: I heard a great comment that reminds me...
By retrospooty on 4/12/2012 7:35:12 AM , Rating: 4
Another good one comes to mind.

Just think how stupid the average person is... Now think, half of everyone is even dumber than that guy.


By The Raven on 4/12/2012 9:59:15 AM , Rating: 2
He stole that one from my college professors. "Look to your right...look to your left...one of those are too stupid to focus and pass this class."

The wording may not be verbatim but that is how I recall it.


By The Raven on 4/12/2012 10:00:52 AM , Rating: 2
I think Carlin would have something to say about everyone kissing his a$$ now that he is dead.


RE: I heard a great comment that reminds me...
By someguy123 on 4/11/2012 6:39:57 PM , Rating: 3
The problem is that their family and friends adore them. They have a massive cult of fans that literally worship everything do.

Apple is like that uncle you see every weekend with a bright smile and happy attitude who wanders during the night stabbing homeless people.


By wordsworm on 4/11/2012 7:47:33 PM , Rating: 1
Well someone has to do something about all the homeless people...


RE: I heard a great comment that reminds me...
By Tony Swash on 4/12/12, Rating: -1
By The Raven on 4/12/2012 10:28:20 AM , Rating: 1
quote:
Scott Turow, president of the Authors Guild said this: "Amazon was using e-book discounting to destroy bookselling, making it uneconomic for physical bookstores to keep their doors open... Two years after the agency model came to bookselling, Amazon is losing its chokehold on the e-book market: its share has fallen from about 90 percent to roughly 60 percent... Brick-and-mortar bookstores are starting to compete through their partnership with Google, so loyal customers can buy e-books from them at the same price as they would from Amazon. Direct-selling authors have also benefited, as Amazon more than doubled its royalty rates in the face of competition... The irony bites hard: our government may be on the verge of killing real competition in order to save the appearance of competition."
As biased as I may toward anyone in a guild I take issue with the fear that closing bookstores is necessarily a bad thing. This guy is saying that the same system that prices a greeting card same as a novel shouldn't go away. I say to hell with "book selling". Think about it. When was the last time someone 'SOLD' you a book? It was probably your friend and not someone in a store. Let the authors write and take the bulk of the money home. And any author that disagrees must be a moron or one of the 'winners' that that archaic system rewards.


By Dorkyman on 4/12/2012 12:53:35 PM , Rating: 1
Tony, read today's Wall Street Journal article about this. My takeaway after reading it was that Apple's fingerprints (Jobs, specifically) are all over this.

And it's irrelevant that Amazon had a 90% share beforehand. That's precisely why Apple did what it did--to take market share from Amazon.

The WSJ article mentions that the people involved in these negotiations were fully aware of the illegality and were very careful to erase any email traces.


RE: I heard a great comment that reminds me...
By SonofaSteve on 4/12/2012 2:28:02 PM , Rating: 2
haha you sound like someone trying to tell a joke but only knowing the punchline

Apple is a business entity not a family and business partners disagree all hte time
if family are like samsung but samsung is only interested in their profits then doesn't that make you a devils advocate
Apple doesn't fight with co-workers they fight in a free market where amazon already ahs a monopoly
your punchline makes no sense so it might be that you're an a44hole chump
Apple gets along with partners who play nice and if you don't want to play nice then they'll kick your a44holyness around hte block
kthx


By retrospooty on 4/13/2012 1:53:26 PM , Rating: 2
Oh goody. Another no life loser that created a login here for the sole purpose of defending Apple against all the negative opinions. Get a life and a woman FFS!


By dark matter on 4/12/2012 4:17:30 AM , Rating: 2
Share a few songs on bit torrent, get hit with a fine x10000 your lifetime earnings.

Deliberately collude with others to fuck over a whole market segment, get hit with a fine that you make in a hours business.

Remind me why we should tolerate this kind of shit?




By ShieTar on 4/12/2012 4:36:43 AM , Rating: 2
You were fined 25 billion dollar for sharing songs via bit torrent? You need a better lawyer!

Seriously, why don't you wait for the outcome of the lawsuit before complaining about it?


By TheJian on 4/12/2012 8:59:44 AM , Rating: 4
LOL. We don't need to see the results to realize Apple will care nothing at all about the fine. Microsoft, Intel etc. They will all continue to break every law they can because if you make 60bil over 10 years (Intel) and the govt only slaps a puny 1.4bil you just laugh and continue to break every law possible. Microsoft made a good 30bil before getting nailed for around 3-5bil (after multiple suits paid to EU, etc). What do you think that tells a business? If I was a business that even made a billion and you fined me half of that every year I'd still break the law every year until you fined me MORE than I MADE by screwing you. Get off your high horse, all companies will do this (that's what the monopoly laws are supposed to stop). In these cases even the EU's fines are ridiculously tiny.

Apple will only learn if this is a $15-25billion fine. The punishment to business doing this should be tied to the size of their bank accounts :) The highest Microsoft paid to the states (13 if memory serves, that nailed them) was around 25million (california I think). They basically paid under a 400 million to remain a monopoly. WTF? Microsoft should be 3 companies and should have had all profits stripped that were made during the law breaking crap. They are STILL a freaking monopoly! Ideally I'd take 50-75 billion from apple and spread it evenly to their competitors :) That would be the last time a company decided it was worth ripping us off. Or heck, just fine them the 50-75 billion and start a public non profit internet company that will put faster pipes all across the country so we can all get internet at unlimited for say $30 like it should be at 50-100Mbit.

If it only takes a good $20bil to upgrade a whole network I say take it from the thieving companies and build us an A$$ kicking network OWNED BY THE PUBLIC. With provisions that no company can ever buy it or own it. If they see they make nothing and it always costs MORE to BREAK the law than follow it, this crap would end quickly.


By Cheesew1z69 on 4/12/2012 8:56:09 PM , Rating: 1
They aren't a monopoly, and they never were....

"The plaintiffs alleged that Microsoft abused monopoly power on Intel-based personal computers in its handling of operating system sales and web browser sales. The issue central to the case was whether Microsoft was allowed to bundle its flagship Internet Explorer (IE) web browser software with its Microsoft Windows operating system."

And what they bundle with their OS, really should be of no concern to anyone.


By SonofaSteve on 4/12/2012 2:36:50 PM , Rating: 2
seems like the law is working fine maybe you're just poor
pirates should be hit harder you make the internet a bad place and harm profits for legit business that pits partners against each other f*** u
can't wait for hte new laws to take away your freedom to steal


Rotten Apple
By nofumble62 on 4/11/2012 10:14:29 PM , Rating: 5
I have several magazine subscriptions. My wife was tired of them, and she tosses them out even before I could read the papers.

Wish that I am able to read magazine out of the Kindle or iPad. That would save me with the aggravation, tree, mailing cost, etc. Everyone is a winner, right?

Well, when I checked the price, they wanted to charge me more than I would have paid for print edition. I said F no.

Pretty sure the Apple deal had something to do with it. They deserve it.




RE: Rotten Apple
By The Raven on 4/12/2012 10:43:18 AM , Rating: 3
Well said.
Especially this part...
quote:
I said F no.
If only more people would do that we would end up with more economic/tech progress in the market.


RE: Rotten Apple
By simsony on 4/12/2012 5:56:34 PM , Rating: 2
Vote up!

As an early a dopter, I have seen prices rise after the Apple deal. I have stopped purchasing ebooks and emags.

People are confusing a monopoly, with abuse of monopoly position. Being a monopoly is NOT illegal. Apple has a monopoly position on mp3 players and tablets. Intel for desktop chips, facebook for social networking. Not illegal.

Price fixing IS. You cannot demand a minimum margin AND the lowest price. This is where things go wrong and illegal. You are not allowing the price discovery of a free market.

Mr Author's guild wants to keep his publisher friends happy I think. If publishers don't want to deal with Amazon, they can easily create their own storefront, these aren't physical books.

All greed. Glad the DOJ is taking it up. If Amazon abuses their monopoly and breaks the law, then they should sue them too. Until then, for this case, Amazon is innocent.


Slam
By Hector2 on 4/11/2012 5:42:21 PM , Rating: 3
It'll be a slam dunk for the DOJ. It's pretty obvious that there was collusion and price fixing. Not even Apple's iBillions can change that.




RE: Slam
By SilthDraeth on 4/11/2012 6:26:21 PM , Rating: 3
Hopefully. I am a huge supporter of Amazon, and as far as I know, they are all about serving the needs of their customers.

I know some companies have issues because Amazon can operate and sell at a lower overhead than brick and mortar stores, ie you can get that 99 cent usb cable instead of paying $19.95 for it.

Also, people crying about the lost tax revenues.

But that aside, I haven't read any major news articles about Amazon pulling shady deals to purposely screw someone else over.


RE: Slam
By SonofaSteve on 4/12/2012 2:43:57 PM , Rating: 2
o dam collusion to compete against amazon who already have a stranglehold
you're some expert now are you? sources? am looking for obviousness
looks like Apple wanted to compete against competitors and the publishers got together to make it happen
Apple would have gotten their share of profits no matter the price it was the publishers who made the fatal choice


Seems Pretty Clear
By Theoz on 4/11/2012 5:40:16 PM , Rating: 2
Price fixing with horizontal competitors is per se illegal. It is absolutely mind-boggling to me that these publishers (horizontal competitors) thought they could all get together and fix prices, with Apple in on or encouraging the collusion. I wonder if Apple is like most major companies in having a mandatory competition law awareness program for executives or if the holier-than-thou and do-no-wrong attitude either got in the way of such a program or caused the executives to ignore it.




RE: Seems Pretty Clear
By dark matter on 4/12/2012 4:13:53 AM , Rating: 3
Apple is too big to care about whatever fine is imposed.

It knew it was in the wrong.

But the result was worth the cost.

This is what happens when the law is such an ass that sharing a few songs costs a person millions in fines when they earn peanuts yet when a company earns more than the government and rips the whole population off they get a slap on the wrist.


RE: Seems Pretty Clear
By ritualm on 4/12/2012 6:52:00 PM , Rating: 2
Here's how you know why Apple did it: look at its stock prices.


Terms of the settlements?
By tayb on 4/11/2012 5:43:12 PM , Rating: 3
So these publishers settled. What are the terms of the settlements? Is the entire deal with Apple nullified or is it just a slap on the wrist and business as usual? Is it really okay to collude and reap benefits for two years and get a slap on the wrist by quickly "settling" without even admitting guilt? How does the settlement actually help consumers??

Also, the timeline paragraph is just silly.




RE: Terms of the settlements?
By Theoz on 4/12/2012 9:48:23 AM , Rating: 2
It will be interesting to see if the EU goes after this as a criminal violation. Price fixing often lands people in jail.


Price Fixing...
By eek2121 on 4/11/2012 10:08:32 PM , Rating: 3
Actually, it has little to do with the actual 'price fixing' of the publishers. It has to do with Apple creating a 'floor' for competitors. Basically Apple said 'you can't let anyone else charge less for books then us.' This is wrong. The entire market is built around competition. Not between publishers, but between retailers. Amazon can charge what they want, google, etc. When you start using your authority to fix those prices, that's when you run afoul of the law. They almost did the same thing with the app store, but backed off.




RE: Price Fixing...
By FredEx on 4/12/2012 1:23:08 AM , Rating: 2
Well said.

It surprises me that there are people out there that support Apple saying they can do whatever they want. They must like taking it up the a**.


A repeat...
By masamasa on 4/12/2012 11:05:38 AM , Rating: 2
One more monopoly abusing power. This a repeat of Microsoft's run in with the DOJ, except it seems Apple is far more arrogant. I hope it comes back to bite them in the ass, but I doubt it since they are sitting on a billion dollars in cash.




RE: A repeat...
By ritualm on 4/12/2012 7:02:15 PM , Rating: 2
quote:
One more monopoly abusing power. This a repeat of Microsoft's run in with the DOJ, except it seems Apple is far more arrogant. I hope it comes back to bite them in the ass, but I doubt it since they are sitting on a hundred billion dollars in cash.

FTFY

Problem is, Apple does not have a monopoly on ebooks, what it did was price-fixing ebooks. A better comparison to DoJ v. Apple is DoJ v. record labels on their MAP pricing scheme for music CD sales (read: price-fixing on CDs). It is not the same as a monopoly.


If anyone wonders why I hate Apple....
By jnemesh on 4/12/2012 11:20:21 AM , Rating: 2
THIS is one huge reason! All of the Apple fanboys keep saying in the forums "if you dont like Apple, don't buy their stuff!". Well, I don't, and never will, but because of their dominance in the music, tv, movie, and book industries they are STILL taking money out of my pocket! I have bought HUNDREDS of ebooks through Amazon...and I INSTANTLY felt the pain from this shady deal they made with the publishers! I was happily buying ebooks, primarily older titles, for $4-$6 per book. Apple steps in, and IMMEDIATELY, the prices for older books go to $9.99, new titles are as much sometimes as the HARDCOVER versions! This is an anti-trust violation of the highest order, and it is BLATANT! The DOJ should go after Apple for all they can!




By SonofaSteve on 4/12/2012 3:00:47 PM , Rating: 2
nobody cares why you hate Apple esp not Apple
obviously Apple hating is the trend when you gotta qq just like Apple is obviously guilty which is why they're fighting the DOJ lol perhaps DOJ should crawl up RIMs a$$ then maybe people can get better competition oh wait DOJ lubs their crackberry for what? i would bet the choice of personal key to encrypt government bbm


a fair fine
By loboracing on 4/12/2012 8:26:02 AM , Rating: 3
I think a fair fine would be 30% of all e-book revenue taken in from the Apple app store.




By Integral9 on 4/12/2012 11:47:01 AM , Rating: 2
Who's banking on the Amazon price increase (that apparently was forced upon them) and how much actually goes to the Authors of these works? If Apple is getting 30% (WOW!) and the publishers are getting 30-40%, is Amazon pocketing the rest or do books sold on Amazon put more in the pockets of the Authors?




Let's get this at least a bit correct...
By Shadowself on 4/11/12, Rating: -1
RE: Let's get this at least a bit correct...
By whoisnader on 4/11/12, Rating: -1
By StevoLincolnite on 4/12/2012 1:38:44 AM , Rating: 2
quote:
Common Jason, do some more research before bashing Apple.


What's there to research? Apple got together with book publishers to raise the prices. Steve Jobs said it himself.

It's the same situation which we had with DRAM years ago where companies got together to price fix. With that removed... Ram has never been cheaper.

LCD manufacturers did the same, suddenly they plummeted in price, although many manufacturers are now finding it hard to compete like Sony as their TV divisions became a loss maker, I'm not complaining, my bank account thanks me for it.

Lets face it, you're paying those extra prices to line the pockets of Apple, they have a Hundred Billion in cash which is doing *nothing*, the publishers don't get a larger cut, nor do the people who write.

Apple cares for no one, it cares only about profit.
It's not going to send you flowers or cake for buying it's iPhone or iPad, it's just another typical company.
So why the defense people put up for it I will never know.

But one thing I do believe in is ridiculing every company that does tread on the customers, Microsoft has had it, Sony has had it in spades (The faulty battery fiasco, PSN network hacks etc'.)
It just so happens to be Apples turn, which is a good thing, hopefully it wakes people up to the reality that "Hey, they aren't going to treat me like a queen on the disco floor, they just want my money!".


RE: Let's get this at least a bit correct...
By SonofaSteve on 4/12/2012 2:55:08 PM , Rating: 2
So what Apple gets together to compete against a competitor... and partnerships are a bad thing? Amazon could've done the same thing only the publishers said hell no we'll take our chances with Apple at least they know how to fight
When HD-DVD and bluray are dead and partnerships are created so that Amazon can't compete against online site like netflix will you whine about that too? oh no the only place I go must be in collusion with movie producers waaaaaaa


By StevoLincolnite on 4/13/2012 12:23:57 PM , Rating: 2
No, no. I whine about netflix because it is not available in my country.

Also, yes partnerships are a bad thing if it results in price increases across the board.

Essentially you are saying that it's fine to pay higher prices for the SAME product due to anti-competitive practices. - Remember, your words, not mine.

So while we are at it... I have 'ere in my possession some Kangaroo feathers. I'll sell them to you for $1000.


RE: Let's get this at least a bit correct...
By dark matter on 4/12/2012 4:11:39 AM , Rating: 2
Nice essay. But totally full of shit. Stockholm syndrome springs to mind.

What Apple did was say you that NO OTHER competitor can sell cheaper than Apple.

So if you were a book seller, you couldn't have a sale because you can never sell for less than Apple.

That is collusion.

You just must be really thick to defend that practice.


By messele on 4/12/2012 9:02:18 AM , Rating: 1
Dunno, sounds to me that what it actually means is that if an e-seller wants a sale then the publisher has to reduce their prices on the iBook store to match it. Can't see anything that actually prevents competitors from having sales.

Sounds good to me.


By SonofaSteve on 4/12/2012 3:06:38 PM , Rating: 2
What did Apple say now? Has the verdict been decided? You gotta be really thick to miss that Apple is fighting DOJ instead of settle
what collusion? Apple missed the brunch and so did Pearson. Guess that means DOJ is barking up the wrong tree


By Jeffk464 on 4/12/2012 5:38:19 PM , Rating: 2
Doesn't necessarily make him thick, he could be benefiting from Apple. Maybe he is a large stock holder, middle or above employee, or perhaps he gets payed by apple to defend the company online.


RE: Let's get this at least a bit correct...
By simsony on 4/12/2012 6:05:39 PM , Rating: 1
I really don't get how people think Apple is innocent and correct.

If Apple had asked for a 99% cut and the lowest price anywhere, what do you think will happen? The "lowest" price goes up to make up for the 99 %. The price goes up everywhere ELSE!

Anyone who has bought ebooks/emags has seen this happen. Even for those who don't want anything to do with Apple.

That is not free choice or free market. That is abuse of their iPad monopoly!


By messele on 4/13/2012 3:55:20 AM , Rating: 2
Ifs, buts and maybes.

Fact is Apple take a 30% cut on a price that's decided by the publisher. 30% is a sensible margin (gross, not net) for physical presence retailers.

The market has been distorted by Amazon's tactics of fire selling with ridiculously small margins, which along with selective loss-leading tactics in supermarkets is helping very nicely to kill traditional book stores. After all who's going to cover the overheads of a book store with their more expensive titles when you can get the stuff so cheap elsewhere?

I think the bigger picture is lost in all of this, I regret the slowly dwindling presence of proper book retailers, and that's coming from somebody who buys tons of stuff from Amazon.


"Spreading the rumors, it's very easy because the people who write about Apple want that story, and you can claim its credible because you spoke to someone at Apple." -- Investment guru Jim Cramer














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