

Apple, publishers 'sued for price fixing' - yariang
http://www.google.com/hostednews/afp/article/ALeqM5hg3Qe5XrIb-vs2SxDp7BBT8GFgVg?docId=CNG.a2db03834cda342663b48fb1e7f322ce.2d1

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ben1040
I know I have bought less ebooks since the agency model came into play and a
lot of paperback books on Amazon suddenly became three or four dollars less
than the Kindle version.

I certainly haven't stopped buying them altogether, but when it was priced at
ten bucks or less it was in impulse buy territory.

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jannes
I don't understand why they aren't selling ebooks for the same price as
printed books, minus the production costs. That would be fair.

Discriminating certain distribution channels might be good for profits, but I
think it's clearly unethical.

~~~
cowboyhero
Because they're desperately trying to protect the sales of hardcover books,
and, in part, trade paperbacks. They don't want to risk cannibalizing sales.

Consumers look at ebooks like another variation of the same product.
Publishers don't. To them, it's an entirely separate entity. To them, the
question you're asking could be (very roughly) translated to "I don't
understand why concert tickets aren't the same price as a CD. It's the same
music."

It's a bit backwards, and the same kind of thinking that made the MPAA
consider the VCR a threat to movie theaters and the MLB think that nobody
would buy tickets to the ballpark if games were broadcast for free on TV.

But I can understand why they're doing it. An enormous part of their legacy
business model is wrapped up in hardcover book sales.

As for production costs, it would only be paper, printing, and distribution.
Nobody ever thinks about pre-production costs or employee costs in
professional editors, typesetters, and jacket design. That's a lot of dough
that they have to lay out that still needs to be paid out whether we're
talking ink or bits.

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gdilla
If you really want to dig deep into how the publishing industry works, how
they think, and what the real story is behind ebooks and pricing, check out
Mike Shatzkin's blog at <http://www.idealog.com/blog/>

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NathanKP
As much as I like Apple and ebooks, it sickens me that they want to charge
more than $10 for best selling ebooks. It is an electronic file. I am willing
to pay more than $10 for a physical paper book I can hold in my hand, but I
can't see spending more than $2-$3 for an ebook. And so I rarely buy ebooks,
even though I want to, because I can't see the economics behind doing so.

If ebooks are going to be just expensive as paper books then I'm going to buy
paper books. Apple and the ebook publishers are just shooting themselves in
the foot.

~~~
capnrefsmmat
Printing cost of a paper book is only $3-4, so even eliminating the cost of
printing, ebooks would still be expensive. I suspect most of the cost of books
goes to marketing and promotion, not printing and binding.

<http://www.millcitypress.net/book-printing-costs.aspx>

~~~
scott_s
That's the difficulty with books. People fee like they've paid for the
physical object in their hands, when really, they've paid for all of the work
that went into making that object possible.

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fpgeek
Even better (from the perspective of those suing), it appears that Apple and
at least one publisher (Simon and Schuster) might be "cheating" on the agency
model:

[http://theorangeview.net/2011/08/is-simon-and-schuster-
cheat...](http://theorangeview.net/2011/08/is-simon-and-schuster-cheating/)

As the iBookstore seems to be the only bookstore with this kind of special
deal, that certainly adds some evidence pointing towards collusion.

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nirvana
As as side project I helped a friend publish a small book on Amazon for the
Kindle. At the time we looked into doing the iBooks Store, but it was not yet
open to self publishing.

Apple's requirements for pricing were as follows:

1\. You could set whatever price you wanted. (e.g.: Apple doesn't fix the
price at anything specific) 2\. If you sell the book electronically elsewhere,
you cannot sell it on iBooks Store for more than the price you sell elsewhere.
3\. Apple gives you %70 of the sales.

I don't see how this is price fixing, nor is it trying to keep the prices
higher. You can sell on the kindle for the same amount as the iBooks Store.

Amazon's terms: 1\. You can set the price as you like. 2\. You get a variable
cut of the sales (sometimes it is %30 to you, %70 to amazon.) 3\. Amazon can
change the price if they want and sell your book for less, and pay you less.

So, yes, it is true that Amazon can run specials where they sell your book for
$0.99 to drive traffic to the store, and when they do it, they do it at your
expense.

I believe the facts don't support an allegation of price fixing.

As to the idea that Apple was "trying to run the kindle out of business",
that's an allegation that is true of every instance of competition. If someone
prices an android tablet that is competitive with the iPad feature-wise at
half the iPad's price, that's "trying to run the iPad out of business" as
well. It is what you're doing when you compete for sales, you want all of them
to go to you and none to your competitor.

~~~
healsdata
The allegations stem from the agency model that was forced on Amazon by the
big six publishers when the iPad launched. Previous to that model, Amazon
treated eBooks like they did everything else -- they'd buy them at a wholesale
price and then sell them at whatever price they wanted. That included, to my
understanding, selling them at a loss so they could sell more Kindle hardware.

Under the agency model, the publisher sets the retail price instead of the
wholesale price. So Amazon now has to sell it at that price. This is probably
different than the deal you got with Amazon since you don't have the leverage
that the big six have.

The agency model also includes other stipulations to protect the traditional
publishing model. One example is that many eBooks don't launch for several
weeks after the hard cover books. My understanding from listening to Robb Wolf
and Tim Ferris talk about their recent book launches is this helps the NY
Times Best Seller rating in some way.

As a consumer, I use Amazon for their discounted prices. Recently when I
wanted a book, I could pay $49.99 at the local B&N or $32.95 at Amazon plus
$3.99 for one-day shipping. However, had I wanted to get the same book in
digital format, my options were $39.99 at Amazon or $39.99 at Barnes & Noble.

~~~
nirvana
How was the agency model forced on Amazon? Apple offered a better deal, and if
I recall correctly, even before the iBooks Store had launched, Amazon changed
their terms to offer the same deal. Amazon offered this same deal to everyone,
including us. I'm not under a misunderstanding of what the deals are... I
think you believed what you read in this press release and took it at face
value.

A "model" cannot include "other stipulations". It is simply a broad
description of an arrangement. There are many books that are not available for
the Kindle or on iBooks, and it has been many years since they were published.

In short, the linked to article is FUD, Amazon chose to meet Apple's terms
because they rightly recognized they were more competitive.

I agree, it is stupid that you can buy the physical book for less than the
ebook. However, no matter how stupid it is, it isn't price fixing.

~~~
capnrefsmmat
Amazon chose to meet the publishers' terms because publishers began to
withdraw books from Amazon:

> Macmillan CEO John Sargent had been meeting with Amazon to discuss getting
> full control over e-book prices, but Amazon refused to budge and all
> Macmillan's books were temporarily removed from Amazon—including the print
> versions. Amazon eventually relented and is allowing the books back on site,
> and is going along with Macmillan's demands for higher e-book prices.

> At issue is Amazon's practice of setting nearly all new e-book releases at
> $9.99 no matter what it's paying the publisher. This means Amazon may be
> paying the publisher $14 per title, for example, but is intentionally taking
> a loss on sales in order to push cheap e-books to Kindle users.

[http://arstechnica.com/gadgets/news/2010/02/publishers-
conti...](http://arstechnica.com/gadgets/news/2010/02/publishers-continue-
pummeling-amazon-over-e-book-prices.ars)

Amazon was paying the publishers the full price they demanded -- the issue was
not about publisher profit. Instead, Amazon intentionally took losses to
promote ebooks as loss leaders. Publishers threatened to remove their books
unless Amazon only sold their books at pre-specified minimum prices.

~~~
GHFigs
Macmillan didn't withdraw their books from Amazon. It was Amazon that dropped
Macmillan.

Edit, for the [citation needed] crowd:

"We have expressed our strong disagreement and the seriousness of our
disagreement by temporarily ceasing the sale of all Macmillan titles." --
[http://www.amazon.com/forum/kindle/Tx2MEGQWTNGIMHV/1?_encodi...](http://www.amazon.com/forum/kindle/Tx2MEGQWTNGIMHV/1?_encoding=UTF8&cdForum=Fx1D7SY3BVSESG&cdMsgNo=1&ref_=cm_cd_et_md_pl&cdSort=oldest&displayType=tagsDetail&cdMsgID=Mx5Z9849POTZ4P#Mx5Z9849POTZ4P)

~~~
fpgeek
Yes, Amazon protested Macmillan's eBook policy changes by the temporary
Macmillan boycott. But don't forget what Amazon was protesting: Macmillan was
refusing to sell eBooks to Amazon at the _higher_ pre-Apple wholesale price
that permitted Amazon to set its own price downstream.

Let me say that again. Macmillan _demanded_ that Amazon pay them _less_ money
per eBook so that Macmillan could control the price Amazon charged the end
consumer. That sounds obviously anti-competitive to me.

------
WoundedMarlin
Edited - My comment earlier was worded poorly and did not come across as I was
hoping.

The price fixing talk did not start with Amazon. It started because when Apple
joined the market the publishers where not going to give them the same deal
that Amazon had forced on them. So I think Apple wanting to get a piece of the
market worked with the publishers and they all set the same pricing. Now it
happened so quickly that people think they fixed the price which I agree they
did. Instead of each one working with apple to come up with there own pricing.

 _This whole price fixing thing came about when Amazon had 95% of the market
share and was able to dictate the prices, since they where the only ones
selling e-books in large amounts. Now that apple is in the market along with
other people Amazon share is at about 55% so they have lost that ability to
control the market._

I do think Apple and the book companies came together to set a hire price and
force Amazon to follow suit or risk not having all the books that Apple would
have.

I do not understand why the books have to cost that much. I agree with
NathanKP in that they are just files and the cost to the publisher is almost
nothing at all. I know they are wanting to make a profit but I think when you
charge more then a paper book something is wrong.

Go all e-books with a lot less paper books and call yourself the greenest in
the business. I find that a lot of companies are scared of change and I am not
sure why. I see change as a great thing that can propel the world in to new
and better technology.

~~~
floppydisk
It seems counter intuitive, but I think it has to do with the opening up of
the ebook market. Several years ago, Amazon offered the only decent ereader in
town--the Kindle. Thus, given the limited market, they could dictate price and
keep the market price low because there wasn't much demand.

Fast forward several years and each of the major bookstore chains offered
their own ebook reader (Nook, Kobo) and tablets started offering ebook
experiences--either through Amazon/Barnes and Noble/Kobo apps or the tablet
creator's own ebook reader (iBooks). The market explodes in terms of the
number of devices people now read on, and publishers start treating ebooks as
an accepted way of offering content--with that comes the high costs in terms
of marketing, promotion, post-production costs (do they do anything special
for ebooks), that kind of thing.

~~~
iand
I'm dubious about this analysis. You seem to be saying that prices were low
when Amazon had a monopoly and prices have risen as competition entered the
market. That's counterintuitive so perhaps I've missed something.

~~~
WoundedMarlin
I am saying the prices where lower then they are now. When Amazon had a almost
all the market share they were able to bully the publishers to the pricing
they wanted. When Apple entered the market publishers stood strong and got
together and got Apple to the prices on there ebook store.

Amazon then was forced to raise there prices if they wanted to get the same
books that Apple got. So yes as the market has grown and there are more
choices the prices have gone up. The publishing industry conspired with each
other to get hire prices.

~~~
jsnell
But by all accounts that spat was not about what Amazon was paying the
publishers. It was about what price Amazon were allowed to sell those books at
to their customers. Those are fundamentally different issues.

