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Apple's lawyer said the agency model is beneficial to both consumers and markets

The e-books price-fixing trial with Apple has begun, and a U.S. government lawyer accused Apple of conducting shady business practices with the five book publishers. 

"Apple told publishers that Apple - and only Apple - could get prices up in their industry," said Lawrence Buterman, a lawyer at the U.S. Department of Justice (DOJ). 

Buterman also added that Apple's agency model with publishers (where publishers set the price and Apple takes a 30 percent cut) hurt consumers by raising prices. 

"Overall, average prices of e-books went up, costing consumers millions of dollars," said Buterman.

The three-week trial, which started yesterday, concerns the DOJ's lawsuit against Apple in regards to its method of fixing prices for e-books. 

Orin Snyder, Apple's attorney, disagrees with the DOJ's statements. 

"What the government wants to do is reverse engineer a conspiracy from a market effect," said Snyder. "Agency [model] is good and beneficial to consumers and markets."

Snyder added that DOJ's evidence, such as emails from former Apple CEO Steve Jobs, will likely be misinterpreted. He also said that average e-book prices fell after Apple entered the market, dropping from $7.97 to $7.34.


Apple is the target of the e-books investigation along with book publishers Hachette Livre (Lagardère Publishing France), Harper Collins (News Corp., U.S.A.), Simon & Schuster (CBS Corp., U.S.A.), Penguin (Pearson Group, United Kingdom) and Verlagsgruppe Georg von Holzbrinck (owner of inter alia Macmillan, Germany). However, all the book publishers have already settled with DOJ, so Apple is the only company going to trial. 

This all started in April 2012, when the U.S. Department of Justice (DOJ) sued Apple and the five book publishers over anticompetitive practices concerning e-book sales. The book publishers were accused of partaking in an agency sales model with Apple, and the publishers could not let rivals sell the same book at a lower price. Traditionally, publishers sell physical books to retailers for about half of the cover price, which is considered a wholesale model. Retailers then had the ability to sell those books to customers for a lower price if they wanted to.

But when e-books came along, this model was challenged. Amazon started selling best sellers for as low as $9.99 to encourage its Kindle e-reader sales. Publishers were not happy with this because they thought the prices were too low.

However, Apple attempted to resolve this when it struck a deal with publishers to implement the agency model in 2010. This helped Apple at the time of its iPad and iBooks launch. But its deal with publishers made it seem like an attempt to thwart Amazon's dominance.

In April of this year, DOJ used an old email from former Apple CEO Steve Jobs as evidence in the e-books case. The email (dated in 2010) from Jobs to James Murdoch of News Corporation said, "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.”

U.S. District Judge Denise Cote, who is overseeing the trial, said last month in a preliminary hearing that the e-books price fixing case seemed to fall in favor of the DOJ
 
"I believe that the government will be able to show at trial direct evidence that Apple knowingly participated in and facilitated a conspiracy to raise prices of e-books, and that the circumstantial evidence in this case, including the terms of the agreements, will confirm that," said Cote.

Source: Reuters



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This is why so many people dislike Apple
By retrospooty on 6/4/13, Rating: 0
RE: This is why so many people dislike Apple
By BRB29 on 6/4/2013 12:39:41 PM , Rating: 1
No restraints huh?


By retrospooty on 6/4/2013 1:56:02 PM , Rating: 2
Sometimes, it just gets tiring reading all of the BS this company pulls. WFT. You have highly competitive and profitable products. You dont need to be such weasels, just produce, thats all you gotta do.


RE: This is why so many people dislike Apple
By testerguy on 6/4/13, Rating: -1
RE: This is why so many people dislike Apple
By testerguy on 6/4/13, Rating: -1
By retrospooty on 6/4/2013 2:12:32 PM , Rating: 2
Whatever man. You're either delusional or you're full of shit and I don't really care which... Neither deserves any more time.


RE: This is why so many people dislike Apple
By Tony Swash on 6/4/2013 3:12:16 PM , Rating: 1
quote:
"Your holding it wrong".


http://dontholditwrong.tumblr.com


By retrospooty on 6/4/2013 3:30:20 PM , Rating: 2
Anything to distract eh?

So, An issue on one model from one other maker excuses the asinine arrogant comment from the CEO blaming customers? What about the price fixing? What about the ridiculous PREPLANNED lawsuits in the Patent war Apple started?

http://arstechnica.com/tech-policy/2013/06/apple-b...

Just stop. Your beyond ridiculous.


RE: This is why so many people dislike Apple
By Motoman on 6/4/2013 3:41:29 PM , Rating: 2
You could stop feeding the troll...


By retrospooty on 6/4/2013 3:55:17 PM , Rating: 2
I am not feeding TS, at least I don't see it that way. I'm just not letting his never ending disinformation campaign go challenged. I put it out in the open.


RE: This is why so many people dislike Apple
By Tony Swash on 6/4/2013 3:53:31 PM , Rating: 1
quote:
So, An issue on one model from one other maker excuses the asinine arrogant comment from the CEO blaming customers?


Thank God that Samsung are so much more sensitive when they say this in the Samsung Galaxy 4 manual on Page 8:

Do not cover the antenna area with your hands or other objects. This may cause connectivity problems or drain the battery.

Samsung's beautiful and thoughtful prose just exudes the customer care, love even, that Samsung is so famous for, and which Apple so obviously lacks.


By retrospooty on 6/4/2013 3:59:00 PM , Rating: 2
So you don't think it's better to have it in the manual as far as where to hold it if signal loss is an issue? Yes it is better to not notice the problem prior to shipment, then to blame the customer, then fix it later on?

Sorry Tony that wasn't even a nice try. You don't have a leg to stand on here. Like an extremely weak argument. Better luck next article.


RE: This is why so many people dislike Apple
By Tony Swash on 6/4/2013 4:10:51 PM , Rating: 2
quote:
Yes it is better to not notice the problem prior to shipment, then to blame the customer, then fix it later on?


So when is the fix for the Galaxy 4 due?

Let's hope it's quicker than the non-existant fix for the Galaxy 3 which had this to say on page 13 and 128 of it's manual:

Do not touch the or cover the area around the antenna with your hands of other objects.

Apparently doing so "may result in reduced call quality or cause the device to emit unintended levels of radio frequency energy" Yikes!

Page 174 Galaxy 3 manual


By retrospooty on 6/4/2013 4:15:33 PM , Rating: 2
I'm still not seeing where this article or thread is about Samsung in any way shape or form. Read it again, it's about Apple and price fixing. This spawned a discussion about all the other dirty tricks Apple pulls. Where did Samsung come into it? do you seriously think no one sees you trying to totally distract from the subject matter? You are getting more and more transparent as time goes by


RE: This is why so many people dislike Apple
By sprockkets on 6/4/2013 8:10:29 PM , Rating: 2
quote:
So when is the fix for the Galaxy 4 due?


WTF?

Never, since it wasn't an issue to begin with, neither with any of those other phones on that stupid blog.

The SG4 has internal antenna's which aren't exposed via the outer metal banding like the stupid iphone4 had, allowing people to bridge one to another greatly attenuation it, versus a little like every properly made phone out there.

I mean, they only fixed it on the verizon version, then the iphone4s and above, but no, that isn't an admission of guilt, ever.


RE: This is why so many people dislike Apple
By Tony Swash on 6/4/2013 8:35:43 PM , Rating: 1
quote:
The SG4 has internal antenna's which aren't exposed via the outer metal banding like the stupid iphone4


So I guess Samsung made a silly blunder when they posted this graphic showing the antenna areas on the outside of the phone that should not be touched by the users hands?

http://dontholditwrong.tumblr.com/post/51587492179...

And when the official manual for the Samsung Galaxy S4 says on page 8 -

"Do not cover the antenna area with your hands or other objects. This may cause connectivity problems or drain the battery."


- they are actually talking about users putting their hands inside the handset?

I knew that that most Samsung phones were big but I hadn't realised they were that big!


RE: This is why so many people dislike Apple
By sprockkets on 6/4/2013 9:04:05 PM , Rating: 1
God you are so stupid/trolling.

GO FUCK YOURSELF!


By testerguy on 6/5/2013 3:59:10 AM , Rating: 1
Funniest self-humiliating response ever.

If you run out of arguments, caps lock + swearing.

Always a winner.


By croc on 6/5/2013 6:42:53 AM , Rating: 2
Do you still beat your wife?


By retrospooty on 6/4/2013 4:02:46 PM , Rating: 1
BTW... I should also point out that nowhere in the article or the thread you're replying to is Samsung mentioned. None of this has anything to do with Samsung. We are talking about Apple and the dirty tricks they pull, and you are trying to change the subject to a competitor issue.

MegaFail


RE: This is why so many people dislike Apple
By Tony Swash on 6/4/2013 4:14:17 PM , Rating: 1
You are the one who brought up the iPhone antenna issue in a discussion about e-Books.

Stop being a cry baby.


By retrospooty on 6/4/2013 4:18:41 PM , Rating: 2
It was a discussion about the dirty tricks that Apple pulls. you brought in Samsung which was totally off topic to avoid the subject and you know it, because your precious darling company is being insulted and you just can't handle it and you have no excuse for it. Who's being a crybaby? Really man you're too old for that.


RE: This is why so many people dislike Apple
By Fleeb on 6/4/2013 4:30:24 PM , Rating: 2
All antennas, if covered with any object will have connectivity issues. This is the reason why you may get bad reception inside elevators with aluminum all around.

Back when the iPhone antenna issue was mentioned, defenders would always point out it is the same thing for the all devices with antennas. You do understand the fundamental difference between antenna issues, don't you? What happens when you possibly short the antenna when touching the black strip that separates the two antennas in the iPhone? Of course, instead of acknowledging that it can happen, you do remember what Jobs said, right?


RE: This is why so many people dislike Apple
By Fleeb on 6/4/2013 4:52:33 PM , Rating: 2
Also, the issue is not about holding the device wrong. It was about acknowledging a possible design flaw. Of course, that iteration of iPhone was supposed to be flawless. The personality of Jobs would not allow that.


By retrospooty on 6/4/2013 5:19:54 PM , Rating: 2
Sadly he doesn't care about facts, he was here only to distract from the issue that made apple look bad.


RE: This is why so many people dislike Apple
By Tony Swash on 6/4/13, Rating: -1
By retrospooty on 6/4/2013 7:17:15 PM , Rating: 2
"Let's see........."

Guess what, the Ford Pinto from the 1970's had major quality problems, but its not relevant to Apple price fixing, or their nasty tactics. Are you that desperate to change the subject or are you just going senile old man? You reply to my pointing out your Samsung distraction with more Samsung distraction... Interesting. Do you think that I care about Samsung because I don't, not at all. I have no intention of buying any product they currently have, not one of them interests me. Why do you keep bringing Samsung into this discussion even after pointed out that you are using it as a distraction? (I know, I know. "ya, but Samsung...")

"As for the ridiculous eBooks legal action. Before the Apple iBooks initiative Amazon was close to securing a monopoly position in the ebooks market with a 90% share, a position Amazon's strategy was deliberately intended to achieve. Apple challenged that monopoly and, bizarrely, as a result is being legally challenged via anti-trust laws."

Oh, thank you Apple for RAISING prices on us all and stopping a monopoly. What a hero... Oh, wait, that was illegal and now they are in trouble for it. Not even a nice try at spin.

This link is from Solandri's post below...

http://www.the-digital-reader.com/wp-content/uploa...

Maybe better that you just read the whole thing. I dont want to restate what has been stated already. If you are going to comment, try and make it relevant.

http://www.dailytech.com/Article.aspx?newsid=31689...


RE: This is why so many people dislike Apple
By testerguy on 6/5/2013 4:04:35 AM , Rating: 2
quote:
Also, the issue is not about holding the device wrong. It was about acknowledging a possible design flaw.


You're accusing the 'defenders' of defending illogically, but you're attacking illogically.

I actually owned the iPhone 4. However I held it, I could never, ever, make it lose its signal. The videos I saw in which users did manage to make it lose signal, they had to grapple with the phone and hold it in such a way that no normal person would ever hold their phone.

The phone itself continues to be used to this day - in my case I never used a case, and it achieved one of the highest customer satisfaction ratings of any phone.

Now who is desperate to make a point here, calling it a 'design flaw'. I ask you how is it a design flaw if during normal use it never causes a problem (and actually the external nature of the antennas caused improved signal in some situations). Then there is the point that this trait is common to almost every phone, which is where the 'don't hold it wrong' link comes in. Pretty much every mainstream phone claims that if you hold it in a specific way, you may lose signal or drain the battery.

I have never understood the sensationalism with people like you who honestly believe that you're making a point with it. And Steve Jobs' reply of 'you're holding it wrong' - was ironically precisely correct. His point was simple, hold it like you would normally hold any phone. It comes across badly only to people desperate to latch onto anything negative Apple wise. Which is a lot of people who have been confined to this website because they were rejected everywhere else.


By retrospooty on 6/5/2013 10:12:47 AM , Rating: 2
Talk about illogical... You had one and it didnt happen to you so its not an issue? Clearly it happened to alot of people. Clearly it didn't happen to that extent on iPhone 1-3G and clearly Apple fixed it on the later Verizon iPhone 4 and all iPhone 4S. So a problem existed that Apple fixed. Nothing wrong with that in itself. It happens.

The asinine thing was the "Your holding it wrong" comment from the CEO. It should have been "We acknowledge there is a signal attenuation issue when held a certain way. We are working on a fix- a workaround is to hold it this way [then explain how to hold it, or where to find instruction]". Get it? I know you are slow, so let it sink in for a while.


RE: This is why so many people dislike Apple
By testerguy on 6/6/2013 3:20:26 AM , Rating: 2
quote:
Talk about illogical... You had one and it didnt happen to you so its not an issue?


Why on earth do I even write concise, accurate points, which already cover your nonsense questions, if you lack the capability to read it:

To quote me:

quote:
it achieved one of the highest customer satisfaction ratings of any phone


I wonder if those customer satisfaction ratings consisted of just my experiences, or a LOT of customers. Hmmm, there's a thinker...

quote:
Clearly it happened to alot of people


Sorry, why is that clear? Where is your evidence for the number of people affected? All that happened was that it became a sensationalist story and Apple issued free cases as a PR exercise. I've seen nothing whatsoever suggesting the problem was real and widespread, and the customer satisfaction surveys paint a very different picture.

quote:
Clearly it didn't happen to that extent on iPhone 1-3G and clearly Apple fixed it on the later Verizon iPhone 4 and all iPhone 4S


Again, the fact that they removed the ability for a user to hold a phone in a very obscure way to reduce signal doesn't mean that real users of the iPhone 4 were affected. It just means that Apple didn't want another PR disaster. It also, by the way, proves that the nature of the design itself (having antennas on the outside) wasn't necessarily a flawed concept.

quote:
The asinine thing was the "Your holding it wrong" comment from the CEO.


But the thing is, for any logical person - that comment simply makes sense.

If someone comes to me and says 'my beer glass isn't working, when I hold it upside down, the beer pours out' - I would have a similar response. If you use devices in a deliberately obscure way intending to cause a problem, which no normal person would do - you shouldn't be surprised if there is a problem. Using the phone normally yields no problem, and I don't think that people really need instruction on how to hold their phone. ANY normal grip would be perfectly fine. It was people deliberately seeking to reduce the signal who were able to show issues, no more.


By retrospooty on 6/6/2013 8:09:02 AM , Rating: 2
"Why on earth do I even write concise, accurate points, which already cover your nonsense questions, if you lack the capability to read it"

I dont know why you bother... The issue is I seee through your "half truths" and call you on it... And will again.

You are far more angry than intelligent and you are losing again. You are way to steeped in denial and throwing out half truths to even have a conversation with. Either denial, or just trying to argue to prove you aren't a wrong as we know you are. What evidence? The evidence that later came out when Apple ADMITTED AND FIXED THE ISSUE you heaping moron!

Also here... with references to the Anandtech article http://arstechnica.com/apple/2010/06/putting-hard-...

"As long as you have a signal strong enough to show five bars on your iPhone 4—between -51dBm and -91dBm—a 24dB drop in signal strength shouldn't drop your call or data connection. However, Apple only uses a very small range of signal strength for showing four or less bars, from -91dBm down to the usable signal cutoff of -113dBm. If your iPhone displays four bars or less, a 24dB attenuation will cut the signal below the useable limit. That's definitely a significant problem—one that Apple has so far failed to address adequately"

Everything I said in my last post covers it. The asinine thing was the "Your holding it wrong" comment from the CEO. It should have been "We acknowledge there is a signal attenuation issue when held a certain way. We are working on a fix- a workaround is to hold it this way [then explain how to hold it, or where to find instruction]".

Now you have been proven wrong AGAIN... Go slink off for another few weeks so you can pretend this didnt happen. AGAIN. See ya next time.


Am I reading this wrong?
By BRB29 on 6/4/13, Rating: 0
RE: Am I reading this wrong?
By Motoman on 6/4/2013 1:18:43 PM , Rating: 2
They formed a cartel and participated in price-fixing. That's illegal, period.

Anyway, the publishers should be having their profit margins go through the roof. The cost to produce a real book is very high...equipment, labor, materials, factory, etc. The cost to produce an e-book is, well, not significantly higher than zero.

The entire cost of production and distribution has essentially been cut completely out of the equation. The editor saves the final version and emails it to Amazon. Done. Revenue from that point forward is practically 100% profit.

I have no idea what the publishers are whining about.


RE: Am I reading this wrong?
By testerguy on 6/4/13, Rating: -1
RE: Am I reading this wrong?
By Motoman on 6/4/2013 1:50:29 PM , Rating: 5
Wow you're lost.

OK sure, we'll let the courts play this out. So if you want to keep your head firmly planted in your a$s for a while and pretend what Apple was doing was legal, you just keep on doing that.

As for manufacturing and distribution costs of books, you're so far off the charts it's not even funny. You're trying to claim that that cost is ~3% of the book's price. That's a ridiculous lie.

Granted that dedicated publishers with their own facilities will have a tighter control on manufacturing costs than a 3rd party provider, here's a good look at what it would cost an average Joe to get a book manufactured in volume by a legitimate book manufacturer:

http://connect.lulu.com/t5/Product-Pricing-Informa...

If you ordered 10,000 copies of a 200 page 6x9 paperback, in black & white and no other frills, it works out to something like $5.80 per book. And that's just manufacturing cost - you've got distribution costs on top of that. So if you sell your paperback for ~$12, about 50% of it is already caught up in manufacturing alone.

Even if you cut that in half for a publisher that owns it's own manufacturing facilities, you're still at 25% of price for manufacturing before factoring in distribution costs. Hell, even if the big publishers can do it at a quarter of what it costs a self-publisher, it's still ~12.5% before you box it up, load it on trucks, and ship it around.

So...your 50p per £15 book? Please. Stop spilling your stupid on the internet.


RE: Am I reading this wrong?
By retrospooty on 6/4/2013 1:54:12 PM , Rating: 2
"Stop spilling your stupid on the internet."

It's all he's got. He could spill his pompous and arrogance as well, but it wouldn't matter. ;)

Defending their BS lawsuits, defending their "superior" products, defending the crappy moves they make and now defending the price fixing... Ugh. I don't even have the words to describe what a ridiculous waste of skin this clown is.


RE: Am I reading this wrong?
By testerguy on 6/5/13, Rating: -1
RE: Am I reading this wrong?
By BRB29 on 6/4/2013 1:38:23 PM , Rating: 1
Yes but they used to sell books for $40+. The cost of printing and shipping per book is much less than $5.

You also forget that there's a fixed cost to their operation before variable cost. They still have to print books, just much less. The fixed cost is still there while the variable costs decreases. Overall, their operation and production expense is there. With the decrease in ASP and profits per book, they are in grim financial situation. Publishers really need to restructure and be more efficient instead of suing people for money.

We all know they're all still holding us by the throat with text book pricing for school. Those authors barely gets any money yet the books are outrageously priced. They changed the book around without adding anything new and call it a new edition to make more money. Publishers are really disgusting and I hope they get their wake up call. Anybody trying to make money off broke college students trying to make it through school is evil.

quote:
They formed a cartel and participated in price-fixing. That's illegal, period.

I looked at ebooks for school and reading all the time. The same book is cheaper on amazon than apple. How is that price fixing?


RE: Am I reading this wrong?
By Motoman on 6/4/2013 1:54:45 PM , Rating: 2
quote:
The book publishers were accused of partaking in an agency sales model with Apple, and the publishers could not let rivals sell the same book at a lower price.


I don't know what to tell you about why you might find the ebook cheaper on Amazon at the moment. The core of the Apple cartel was about not letting anyone else sell the books any cheaper, and that verbiage was in their contracts.

I don't believe that your manufacturing & distribution cost estimate is correct, but even if we pretend it is that's $5 that goes right back into their pockets.

I agree about your points on textbooks...to a point. Sure, we can complain about how overpriced they are, but accusing a company of being "evil" because they seek to maximize there revenue is off-kilter. They're charging a price that the market is apparently willing to bear. And that's about all that can be said about that.s $5 that goes right back into their pockets.

I agree about your points on textbooks...to a point. Sure, we can complain about how overpriced they are, but accusing a company of being


RE: Am I reading this wrong?
By BRB29 on 6/4/2013 2:30:23 PM , Rating: 1
quote:
Sure, we can complain about how overpriced they are, but accusing a company of being "evil" because they seek to maximize there revenue is off-kilter. They're charging a price that the market is apparently willing to bear. And that's about all that can be said about that.s $5 that goes right back into their pockets.


How could you say that when the class specifically state I have to use that ISBN and there's only 1 publisher. Schools usually have a close relationship with publishers. Amazon and many other book retailers made text books cheaper. The new thing publishers are doing now is make "special" edition books for that specific school. Usually there's hardly any difference besides a CD and account for some online study guide/quizzes.

Yea I go to GMU and I was forced to buy GMU edition books all the time. The book itself has no difference with the regular version. It comes with a CD and account that you cannot get anywhere else unless you buy that book there new. It normally cost an additional $50-100. Buying a used book is useless because the teacher requires you to complete online materials.

Then when I dig deeper I hear from the staff and several professors that the school has a contract with publishers. Several professors also have contracts with them.

I think you may have been out of school in a long time. Education is a business these days and a lucrative one.


RE: Am I reading this wrong?
By Motoman on 6/4/2013 2:52:34 PM , Rating: 2
Oh, believe me, textbooks were horrendously expensive when I was in school too. The contracts and such have been the norm for decades. None of this is new. Well...any online bits would be new since I was in school...the internet had just begun at that point. I was one of a select few students who was allowed to remotely access the school's mainframe (via my boss 2400 baud modem) to do my programming work.

This was a time when IBM sponsored our computer labs...some of which were OS/2. And our school had one of hte first 1Gb hard drives ever produced for "mass consumption" - it was about the size of a mini-ATX tower by itself and cost something like $2,000.

So yeah...long time ago. But the same issues were at play. If colleges wouldn't accept the contracts and students wouldn't go to those schools and pay their costs, then things would change. They may ultimately anyway, with the needed concern for the cost of education at the moment.


RE: Am I reading this wrong?
By lightfoot on 6/5/2013 11:10:49 PM , Rating: 3
The publishers have already admitted guilt and have settled with the Department of Justice.
Per the New York Times, the reason books are currently cheaper on Amazon:
quote:
The settlement calls for the three publishers to end their contracts with Apple within one week. The publishers must also terminate contracts with e-book retailers that contain restrictions on the retailer’s ability to set the price of an e-book or contain a so-called “most-favored nation” clause, which says that no other retailer is allowed to sell e-books for a lower price.


Their contracts with Apple have already been deemed illegal. The book publishers broke the law. The only question that remains is would they have been able to do it without Apple's help. The very likely answer is "No." It is very unlikely that the publishers could have coerced Amazon, Walmart, or any other retailer into the agency model had Apple not forced the issue.

Keep in mind too that the Most-favored nation clause by its self does not constitute price fixing. Only the combination of the MFN and the mandatory 30% cut that Apple takes does.

For example: A publisher sells a book to Amazon for $10. Amazon chooses to sell that book at cost. The publisher still gets $10, Amazon sells more books and more Kindles, and customers pay less. Everyone wins, with the possible exception of Barnes and Noble and Border's.

Then Apple enters the market and tells publishers, "you can't allow Amazon (or anyone else) to sell the same book for less than us." (This is the most-favored nation clause.) They then tell the publisher that they will take 30% of the sale price right off the top and only pay the publisher the remainder. The only benefit to the publisher is that they get to set the price. The publisher then has to go to every other book seller in the world and tell them what price to sell their books for. (This is called the "Agency" model, where the seller acts as an agent of the publisher.) The publisher also doesn't want to be paid less than they were before, so they set the price to $15 dollars (this allows Apple to take their 30% cut and still leave at least $10 for the publisher.)

In this case:
1. Apple (and all other book sellers including Amazon) win - they are guaranteed a 30% margin on all sales.
2. The publishers don't lose (or gain) anything other than a possible change in the quantity of books sold.
3. The customers (at all booksellers) lose - they pay more for the same book.

Understandably the Department of Justice shredded those contracts. Consumers were clearly being harmed by a cartel of book publishers. The question remains, was it Apple's fault?

I think that the key finding will be that all the book publishers strongly resisted the most-favored nation clause. The only reason that any of them agreed to it was because Apple required it. In my book, that makes Apple guilty.


RE: Am I reading this wrong?
By invidious on 6/4/2013 1:39:09 PM , Rating: 2
The criminality of price fixing is not dependant on industry wide culpability or the degree which it is successful.

We aren't presented with the technical details here, but the fact that Apple's argument is anything other than "no we didn't price fix" is a pretty good indicator that they did in fact price fix. Their roundabout argument that price fixing is "good for the market" and thus good for the consumer because a consumer needs a strong market in which to consume is one that reeks of guilt.


RE: Am I reading this wrong?
By Solandri on 6/4/2013 2:45:05 PM , Rating: 2
quote:
now it's apple's fault that publishers wants more money per book? Books are still cheaper on amazon.

Apple's part was to require that they always get the lowest (higher) price:
quote:
The book publishers were accused of partaking in an agency sales model with Apple, and the publishers could not let rivals sell the same book at a lower price.

The writing isn't very clear, but Apple required that the publishers couldn't allow anyone (including Amazon) sell for a lower price than Apple. That's how Apple got involved in this whole mess.

Basically, every seller wants a higher price. It's one of the fundamental forces which makes the market function (the other being buyers wanting a lower price). But the market doesn't allow them to raise prices at will. If one seller raises his prices, his customers flee to another seller with lower prices, and he loses money. OTOH if his prices are too low, he can't stay in business. That balance between fear of fleeing customers and fear of going out of business is what establishes the true market price.

The way to circumvent this market mechanism is for sellers to collude together. If all of them raise prices together, then buyers have nowhere to flee to, and the higher price sticks.

So there's nothing wrong with publishers wanting more money per book. And if they can swing a deal where Apple has to charge more money per book than Amazon in order to make a profit, then all the more power to them. If Amazon's prices are too low, then Amazon will go out of business leaving Apple as the dominant ebook seller. If Apple's prices are too high, then people will buy from Amazon instead, and Apple will be forced to lower their prices or go out of business (well, out of the ebook business).

But the moment Apple required that the publishers always give Apple the lowest price, it became industry-wide price fixing. That eliminated the price differentials in the market which make the market function.


RE: Am I reading this wrong?
By BRB29 on 6/4/2013 2:56:00 PM , Rating: 2
I understand what you're saying. I'm just asking why amazon books are still cheaper. Maybe they're selling at a loss.

I think this case has greed written all over it. Publishers wanted more per book. Then they got the price hike from these contracts with Apple. Apple makes more money and now they're complaining that Apple hurts the consumer costing them millions. WTH? they wanted to raise the price. Did they think that their price hike wasn't going to cost the consumer more than Apple's? The publishers are as guilty as apple and they're using a BS excuse to sue them.


RE: Am I reading this wrong?
By Motoman on 6/4/2013 3:18:06 PM , Rating: 2
Greed? Duh. See: capitalism. Nothing new here.

quote:
The publishers are as guilty as apple and they're using a BS excuse to sue them.


No, the publishers aren't suing Apple - the government is. And the publishers. They're all in this together.


RE: Am I reading this wrong?
By Solandri on 6/4/2013 3:22:26 PM , Rating: 1
Answered in the article:
quote:
Apple is the target of the e-books investigation along with book publishers Hachette Livre (Lagardère Publishing France), Harper Collins (News Corp., U.S.A.), Simon & Schuster (CBS Corp., U.S.A.), Penguin (Pearson Group, United Kingdom) and Verlagsgruppe Georg von Holzbrinck (owner of inter alia Macmillan, Germany). However, all the book publishers have already settled with DOJ, so Apple is the only company going to trial.


RE: Am I reading this wrong?
By Reclaimer77 on 6/4/2013 10:46:17 PM , Rating: 2
Okay dude, perhaps you should look up what "price fixing" means before you open your mouth?


Lost my money
By DrApop on 6/4/2013 1:33:09 PM , Rating: 2
From the day the publishers banned the retailer (amazon) from selling ebooks at a price the retailer wanted to sell it at, was the last day I bought a best seller. And I have cut way down on my purchase of major publisher mass market ebooks as well.

The publishers have truly lost me as a customer. There is plenty out there to read...and much of it very good that comes from smaller/independent publishers or Amazon publishing




Yep
By Hector2 on 6/4/2013 1:52:05 PM , Rating: 2
It's price fixing, plain and simple. The already-published email by Jobs and the publishers make this really clear. All that's left to do is assess the fine and corrective actions --- unless Apple can buy off the decision makers




By Bateluer on 6/5/2013 4:44:15 PM , Rating: 2
Anyone who was reading ebooks on Kindles at the time of the iPad's launched watched ebook prices jump 50-100% overnight. Stalled the consumer driven ebook industry for years.




!
By kileysmith104 on 6/9/2013 11:03:47 AM , Rating: 2
Carter. I agree that Doris`s blurb is inconceivable... on wednesday I got a great BMW after having earned $9805 this last four weeks and-even more than, $10 thousand last munth. without a doubt it is the coolest job I've ever done. I actually started six months/ago and almost straight away started bringing in at least $74, per-hour. I went to this website,, Bow6.comTAKE A LOOK




Bad title
By Dr of crap on 6/4/2013 12:34:57 PM , Rating: 1
Once again the journalist, I use that term loosely, give out the wrong info. Yes Apple made millions, but "each" consumer didn't over pay millions, at best they over paid up to a hundred or a bit more.

Wrong, yes. Class action will not give those all their over paid money back.




Good DOJ graphic
By Solandri on 6/4/2013 6:48:56 PM , Rating: 1
The DOJ filing has an informative graphic that lays out visually exactly what happened to ebook prices consumers saw as a result of this price fixing:
http://www.the-digital-reader.com/wp-content/uploa...

Random House (light grey line) and the non-major publishers (dark grey line) stuck with wholesale pricing. All the other lines you see switched to Apple's agency pricing during the first week of April, except Penguin (beige line) who switched in late May. So when Snyder says:
quote:
Snyder [...] also said that average e-book prices fell after Apple entered the market, dropping from $7.97 to $7.34.

he's being extremely duplicitous. The average price fell because the agency pricing raised prices for ebooks from all the publishers who signed on with Apple. Sales of their books declined, meaning ebook prices from Random House and non-major publishers still using wholesale pricing represented a larger share of the overall average.

Apple then pressured Random House to go along with its agency pricing scheme, or face banishment from Apple's store. Random House finally caved and signed with Apple in Jan 2011. Because they initially resisted the industry conspiracy, the DOJ did not include them in the lawsuit.
http://www.nytimes.com/2013/05/15/technology/us-no...

Full PDF if you want to read it (the above graphic was the only picture I saw, though there are a few interesting charts).
http://www.justice.gov/atr/cases/apple2.pdf




Question marks over Amazon
By testerguy on 6/4/13, Rating: -1
RE: Question marks over Amazon
By BRB29 on 6/4/2013 1:52:27 PM , Rating: 2
Predatory pricing is when you price products below cost to knock out smaller competitors. That is not the case here.

Kindle Fire and cheap ebooks are like their advertisement campaign. I own a kindle fire HD, it's just a content and shopping device. You will end up spending much more money on other products and contents than ebooks.

It is not selling at a loss either. It has a gross profit margin but a negative net profit.


RE: Question marks over Amazon
By testerguy on 6/4/13, Rating: 0
RE: Question marks over Amazon
By BRB29 on 6/4/2013 2:20:45 PM , Rating: 2
quote:
They may well be doing it to prevent smaller competitors, but that is NOT what predatory pricing means anyway


The definition of predatory pricing is

quote:
The act of setting prices low in an attempt to eliminate the competition.

http://www.investopedia.com/terms/p/predatory-pric...
http://en.wikipedia.org/wiki/Predatory_pricing
http://www.thefreedictionary.com/predatory+pricing

Usually, if you are pricing below direct costs then you will be red flagged and reviewed. It is not easy to prove because it is hidden deep within accounting data. Some CFOs will fake accounting data also.

Amazon business strategy is to drive their main cash cows. It's pretty obvious they want to get people hooked onto their ecosystem by selling cheap Kindle Fire and ebooks. They started with books and have a reputation for it. Now they're using it to attract people and drive product sales.

You also noticed they have free student accounts with a lot of free stuff and discounts. They're getting students hooked onto it to ensure business in the future.

I'm sure they don't make money off amazon prime either. But amazon prime gets people hooked and buy a lot more stuff. $80 is very low for everything they're giving you. That's probably below cost also.


RE: Question marks over Amazon
By testerguy on 6/5/2013 3:32:09 AM , Rating: 2
Sigh...

quote:
They may well be doing it to prevent smaller competitors, but that is NOT what predatory pricing means anyway


Key part of this sentence which YOU made out was the definition of predatory pricing - SMALL. The point I was making is that they DO NOT have to be small. Hence your own definition:

quote:
The act of setting prices low in an attempt to eliminate the competition.


... proves MY point, not yours.

Whether Amazon's strategy is to 'get people hooked' or not is irrelevant. If part of their strategy to 'get people hooked' is to reduce prices deliberately aiming to eliminate the competition, it could be predatory pricing. As per your own definition.


RE: Question marks over Amazon
By BRB29 on 6/5/2013 2:04:11 PM , Rating: 2
Your whole argument actually reads like this
quote:
You can't claim to know Amazons intentions. They may well be doing it to prevent smaller competitors, but that is NOT what predatory pricing means anyway. It refers to any company who offers goods or services way below cost with the aim of gaining market share and a position of power which would enable them to subsequently increase prices. This may or not be the case with Amazon, but we definitely can't categorically state that it isn't.

Don't try to change your story.

A smaller competitor pricing a larger competitor out of business? that's called competition. They have to prove the intent of the pricing. Usually, it's by cost accounting. If you are pricing any products below cost then you are in trouble. A small competitor entering the market cannot win a price war against a larger competitor that dominate the market. They haven't even made profits yet so how could they price it below cost? They'll be out of business before they gain any traction.

On the other hands, the dominant competitor will price products to eliminate targeted smaller competitors locally. As soon as they can prove that, then you are slapped with slapped with predatory pricing. If the large competitor lower prices for their entire product line across all regions then it is legal as long as it is not below cost and it is not temporary.

You have no point besides nitpicking and selectively quoting.


RE: Question marks over Amazon
By retrospooty on 6/5/2013 4:13:33 PM , Rating: 2
"You have no point besides nitpicking and selectively quoting."

LOL... Been there with this guy many times. Hilarious.


RE: Question marks over Amazon
By testerguy on 6/6/2013 3:35:57 AM , Rating: 2
Yeah you've failed to grasp basic logic a LOT.

Not much to be proud of.


By retrospooty on 6/6/2013 8:18:50 AM , Rating: 2
You have no point besides nitpicking and selectively quoting


RE: Question marks over Amazon
By testerguy on 6/6/2013 3:31:59 AM , Rating: 1
My whole argument does indeed read like that, and it's factually the case.

And the quote you posted concisely describes precisely your failings:

1 - You mistakenly thought that predatory pricing was about preventing smaller companies from competing. It isn't. The size of the companies has no relevance whatsoever. Hence my quote 'hey may well be doing it to prevent smaller competitors, but that is NOT what predatory pricing means'.

It remains the case that predatory pricing does NOT mean preventing SMALLER companies from competing.

And the reason why this is NOT 'nitpicking' is that you used the word 'small' companies in this case to try and make out that Amazon couldn't possibly be carrying out predatory pricing against a company as large as Apple. Which is absolute nonsense .

And your second failing, also detailed concisely in my quote you posted, is that you do not know Amazon's intentions . You therefore cannot say that they definitely weren't carrying out predatory pricing.

I really can't understand why you think quoting my own post does anything but prove my points?

quote:
A smaller competitor pricing a larger competitor out of business? that's called competition.


See, again. Your absolute failure to grasp the point being made. The size of the companies has no relevance whatsoever . Your OWN definition of predatory pricing proves that (as I've already told you).

quote:
If you are pricing any products below cost then you are in trouble


Again, more flat out rubbish. You literally have no clue whatsoever. Loss leaders are perfectly acceptable, and any company is well within their rights to sell specific products at a loss. Predatory pricing is a very different animal, and it's typically found with a more widespread culture of loss across an entire department, but that alone isn't enough. It also needs to be more likely than not that Amazon is making that collective loss with a view to removing competition from the industry (ANY SIZED competition). Then, and only then, does it become illegal activity (predatory pricing).

Your final paragraph is basically you doing a complete U-Turn, and instead of stating categorically that Amazon could not be carrying out predatory pricing (which you were saying previously), you're now trying to talk about what predatory pricing is, as if that changes anything. Your paragraph contains a few inaccuracies which aren't worth pointing out.

You say I have no point but what I've been pointing out to you all along is that

a) Amazon's actions with e-books could constitute predatory pricing (something you categorically ruled out previously, yet now say is possible?)

and

b) Predatory pricing has nothing whatsoever to do with the size of the companies involved. You continue to rant about small or large companies, it's irrelevant. And when I pointed out to you that 'small' was not the definition of predatory pricing, you say I'm 'nitpicking'. Completely clueless.

Just learn to read, all of you! LOL


RE: Question marks over Amazon
By BRB29 on 6/6/2013 8:56:44 AM , Rating: 2
What the hell are you talking about?

To prove predatory pricing you have to prove 2 things

1. Price below cost
2. Intent to eliminate competition from market

Both of those cannot be proven here. It's that simple. Amazon is not charging people less than what the publishers are charging them. Amazon is not putting anyone out of business either.

Their Kindle and ebooks are incentives and used as incentives(marketing) for people to enter the amazon ecosystem.

If you accuse amazon of predatory pricing then you might as well accuse apple and google also because they're offering free apps. Free apps is literally below any amount and type of cost.


By retrospooty on 6/6/2013 10:33:11 AM , Rating: 2
"What the hell are you talking about?"

The guy is either mentally imbalanced or he is just trying to defend his position past the point where he lost the debate. Either way LOL.


"I mean, if you wanna break down someone's door, why don't you start with AT&T, for God sakes? They make your amazing phone unusable as a phone!" -- Jon Stewart on Apple and the iPhone














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