Judge says Apple conspired to raise prices on e-books

[deminks]

Source: Reuters

NEW YORK (Reuters) - A federal judge on Wednesday ruled that Apple Inc conspired to raise the retail prices of e-books, and said a trial for damages will follow.

The decision by U.S. District Judge Denise Cote in Manhattan is a victory for the U.S. government and various states, which the judge said are entitled to injunctive relief.

The publishers have already settled with the federal government on e-book pricing.


Read more: http://www.sun-sentinel.com/business/yourmoney/sns-rt-us-apple-ebooks-20130710,0,499144.story

---

I'm surprised they are not screaming about price fixing being a freedom of speech or something. Corporations are people, my friend. /sarcasm off

[frazzled]

1. Why is Amazon allowed to get away with price-fixing?

Personally, I think this was a poor decision. Publishers should be able to set the prices for their books, and not be strong-armed by Amazon. The Apple deal was a means of the publishers trying to take back control of their product. The industry (as we know it) will not survive with this situation.

On the surface, the DoJ’s action may seem perfectly reasonable. The antitrust enforcers charged that five big publishers conspired with Apple to raise the prices of e-books by creating a new regime in which the publishers, rather than the retailers, priced their books.
Absent any other consideration whatsoever, higher prices do indeed result in a bad outcome: namely, fewer books in the hands (or on the screens) of American citizens.
But while cheaper e-books might be a good short-term outcome for some readers, and for those companies pushing for wider adaption of e-readers, there are significant downsides on the horizon. The DoJ’s action effectively robs publishers of the ability to price their own products and robs other retailers of any hope of competing effectively with Amazon. Hence the DoJ has all but guaranteed a future in which readers end up with fewer well-edited books—both physical and electronic—and in which writers feel less free to speak against concentrated power.

. . .

Lower prices enable horizontal predation; when a fatly capitalized retailer (like Amazon) wants to bankrupt its less-wealthy direct competitors, it simply undersells them day after day after day. Furthermore, lower prices can be used in vertical predation, against producers; when a powerful retailer (like Amazon) wants to extract more wealth from its now-captive suppliers, it can set prices to promote those firms who accept its terms and to punish those who resist.

. . .

The intellectual and legal “regime” that guides enforcement of our anti-monopoly laws dates to 1981, when a strange coalition of consumer activists on the left and Chicago School “market fundamentalists” on the right joined to promote a new frame, designed in theory to promote the “welfare” of the “consumer” rather than the well-being of the citizen. The main goal was no longer competition but lower prices.

http://www.slate.com/articles/technology/future_tense/2012/04/e_book_price_fixing_amazon_is_the_real_bad_guy_.single.html

I should add: Didn't publishers ALWAYS set the prices of their books, not the retailers? I mean, what were those prices on the inside of the jacket cover or the back of the paperback FOR? And bookstores could not decide they would sell for less or more.

[sir pball]

3. No, publishers have generally never set the price. The jacket number is just a suggestion.

Apple entered into agreements with the major publishers to move away from the "wholesale model" to the "agency model" and push them into a scheme that would force Amazon to raise its prices.

In the wholesale model, which is the usual way of selling physical books, the publisher sets a suggested retail price, but sells the books outright to the retailer at a wholesale rate. After that, the retailer is free to sell the books at whatever price they choose. Amazon works on this model; they purchase the ebooks from the publisher at the publisher's price and then sell the books for whatever price they choose. Amazon was in fact selling ebooks for below wholesale, as a loss-leader to get people to buy Kindles, and to drive traffic to their site in general.

The agency model, on the other hand, is a newer construct where the publishers do contractually set the price, and then give the retailers a percentage (30% in Apple's case) of the sale. It turns the bookseller into an agent of the publisher rather than an independent business. That's fine in and of itself, but Apple had a clause inserted in their agency contracts requiring the publishers set the retail price on the iBookstore below any other retail price, whether from an agent or an independent retailer. So if Amazon were to have an ebook priced below wholesale (which is ostensibly the publisher's "cost"…$10+ is a ridiculous figure for an ebook but that's a different argument), the publishers would have to sell the book through Apple at Amazon's price, while giving Apple their 30% and taking a loss on the rest. This leveraged the publishers to threaten Amazon with witholding of new releases and bestsellers; that's the crux of the DOJs argument and quite rightly price-fixing - if Amazon chooses to lose money on sales that's their own business, it's how the market works.

Good summary here.

[frazzled]

5. Amazon's predatory practices are well known in the publishing industry

They've been fighting their strong-arm tactics for years. Not just here in the US but in Europe, too.

I try almost never to buy books from Amazon, and am fortunate to have some high-quality independent bookstores to patronize. However, I can tell you that in the more than 40 years of adult life that I've been buying physical books, aside from remainder tables, the jacket price is always the price you pay at a bookstore. It's how they stay in business, and why there are so very very few book sellers left, except around academic communities.

The agency model is going to ruin the quality of the publishing industry.

[TM99]

8. Your post doesn't make sense.

While I definitely bemoan the loss of brick and mortar bookstores, Amazon can not be predatory by virtue of the actual facts. They are following the standard wholesale pricing model as detailed in the off-site link. They may sell for less than the MRP, but Amazon has already paid full wholesale price for the books to the publisher and the publisher has already paid the author irrespective of Amazon's retail pricing to the consumer. If they wish to take a loss, then no one but themselves would be potentially harmed. And in the case of eBooks, they did better financially due to their Kindles. There is nothing illegal or predatory in what they did here.

Your last sentence is correct. The agency model will ruin the quality of the publishing industry. Therefore, you should be applauding the outcome of this DOJ case against Apple. The agency model is what Apple pushed and broke the law on with collusion with the publishers. The only company truly being predatory here is Apple. They extorted costs from first from the publisher and then take their cut from the consumer by elevating the price above the market price. Through their collusion and deals, they forced Amazon to raise prices on eBooks across the board which is again detrimental to the consumer.

I am sorry but it doesn't get any more predatory than that.

[frazzled]

10. They don't get the standard wholesale pricing

They have strong-armed publishers into steep discounts on the wholesale prices, as well as demanding what publishers have claimed are astronomical jumps in co-op pricing.

what has publishers riled, behind the scenes, is aggressive moves the retailer is making in its demands on co-op anddiscounts. A number of sources in the industry, all of whom spoke to PW on the condition of anonymity, said the retailer is, in certain cases, threatening to stop selling titles from companies who won't pay up.

Many sources said Amazon has been asking for a steeper wholesale discount on books. (Although e-books are sold on the agency model, print books continue to be sold on the wholesale model, in which retailers purchase titles at a certain percentage off the list price.) Co-oprequests from Amazon have also escalated, according to a number of insiders. Although publishers and distributors regularly have discussions with Amazon about these issues--negotiating the terms on these matters is a standard aspect of doing business--the retailer's requests, in recent weeks, have sent shocks through many in the industry, some of whom are worried about what will happen to their books if they cannot meet the demands.


Publishers and distributors have called the latest negotiations with Amazon the most adversarial to date, and many have noted that, for the first time, the retailer is outlining co-op costs for digital, as well as print. Amazon has, as some sources explained, long been pressuring publishers to provide ancillary content on the pages where their books are sold, from videos and q&a's to links to similar books. That content has always been something publishers have had to both pay for and provide. In the latest negotiations with Amazon, sources told PW, the price of providing that content has jumped to what sources say are astronomical percentages (but those sources would not provide specific numbers).

http://www.publishersweekly.com/pw/by-topic/industry-news/bookselling/article/49874-is-amazon-pushing-publishers-to-brin

C'mon, you're not really standing up for Amazon's practices, are you? Either in digital or print. Why do you think the publishers went to Apple? They were bleeding and wanted to find a way around the Amazon stranglehold.

[TM99]

12. So what?

I mean seriously here.

Amazon is fighting for wholesale pricing on eBooks as well as print. Why should publishers get to use one model for one type of book and another for the other? There is no valid reason except for the publishers to make more and more money. Print the book, convert to an eBook, and make twice the profit.

If the publishers want to fight Amazon on the wholesale pricing of eBooks, I support that. But when they collude with a third party, Apple, to break the law, then no I don't support that.

Why are you supporting it? Is it just because you 'hate' Amazon and 'love' Apple? They are both big corporations that have done shitty as well as decent things. I don't love Amazon but in this instance, Apple and the publishers chose the illegal and unethical approach to fighting Amazon's business practices. They got their hands smacked as well they should.

[frazzled]

14. Because I work in the publishing industry

Granted, in the nonprofit sector, so I'm generally not working for the big publishing houses. But this cost-cutting seeps down to academic presses and museums for whom I do work.

Maybe it's not clear that publishers need to hire editors, designers, and tons of other professionals (as well as pay rights for images and other materials) in order to publish a good quality book (whether it is print or even just digital). Being at the lower end of the spectrum--I do substantive editing, copyediting, fact checking, etc. for books, on a freelance basis--I have seen my income diminish greatly over the past 15 years. I actually get paid less today for working on a book than I did fifteen years ago. And publishers are hiring fewer and fewer in-house editors and designers. The quality lessens, the workers get stiffed.

This isn't just about a few fat cats at Random House selling the latest poorly edited topical book or bodice buster. It's the whole industry. When Amazon becomes the only bookseller, a monopoly, we're going to see the numbers and quality of what is published continue to diminish. And lots of bad writing, non-existent design, unchecked facts, etc.

Why should Amazon get to make all the money as it continues to squeeze the publishing industry--both commercial and independent? People actually, you know, WORK in these industries.

[TM99]

15. People work in all sorts of industries.

I can see wanting to protect your job and your pay. But, what Apple and the publishers did was illegal....period. It will not help customers nor publishing industry workers to have the agency model that Apple was pushing replace what you see as the equally negative model of Amazon's.

So if you only accept what Apple did because you are solely concerned with your job, thank you for being honest. It does not change the ethics nor the legalities.

So, just because 'people actually, you know WORK in these industries', it does not excuse the unethical or illegal business practices.

And right now Amazon is still far from being the 'only' bookseller. We have bad writing, non-existent design, unchecked facts not because of their retail practices but because of your industry's current business models and practices. You personally may not be responsible, and I fully get that, but the fat cats at Random House sure are. They are not hiring editors like yourself due to Amazon, they are just acting like most all corporations today - cut the labor, out source what you can, and focus solely on profits over quality.

And contrary to your assumptions, I do know a bit about the industry as an outsider as my partner is a published poet and fiction/romance writer.

[frazzled]

22. Good lord

That's the only response I can think of to this incredibly shortsighted, illiberal post.

[TM99]

23. How about an actual response to my points instead?

And do forgive me for not being as 'liberal' as you would prefer me to be.

[Llewlladdwr]

27. I'm sure the buggy whip industry would agree with you.

Evolve or die....

[RobinA]

24. From What I've Seen

lately, it's not clear that publishers hire editors, period.

[rebecca_herman]

28. Because print books are actually purchased and e-books are licensed

Amazon never takes ownership of the e-books the way they do with print books. The e-book remains the property of the publisher and is licensed. So why should they be able to destroy the price of something they did not and never will own, and as a result take away choices from consumers like me who want to buy print books at physical bookstores which are threatened by Amazon's predatory business tactics?

[TM99]

31. No.

Amazon is on the side of the customers in this instance.

You have for one reason or another bought into the idea that 'digital' is somehow different and special. It is not. There is no reason to consider a digital copy of a book, a video game, an album, etc. to be different than an analog copy of the same text. So no, publishers should not have the ability to 'lease' me a damned book. If I pay the money for it, it is mine. It is not something I have licensed for use.

When all physical means of communication have converted to digital, are you OK with never owning anything you purchase? Are you fine with just renting, leasing, or licensing all of your music, software, videos, books, etc.? Well I am not.

I love physical books and have a library that is huge. I continue to buy them from local bookstores as well as from Amazon. I do the same with my LP's, CD's, DVD's, and video games. When I purchase a digital album it is no different than if I purchase a physical one.

So the idea that publisher's should somehow get special dispensation on the licensing of digital eBooks by colluding illegally with Apple has no connection whatsoever with your last statement that somehow this also impacts how Amazon affects print books in bookstores. Simply, it does not. Amazon is following the same wholesale model of media sales as the physical bookstore you are going to locally.

[rebecca_herman]

32. Right now, legally, they are licensed

If you don't like it, you can try and fight to change that, but they are licensed, and never belong to the retailer. Personally, I buy physical copies whenever I can. I don't see digital as an improvement at all for most things. I like it for email and chat, but I will always buy the blu ray or the book, never a digital copy.

And yes, it does effect bookstores, who are hurting financially. But you are biased towards Amazon and refuse to see how they are trying to use predatory pricing (in a way real booksellers can't afford to do because they sell only BOOKS and not a million other things like toilet paper and flat screen TVs and every other random thing you can think of to make up the loss) to become a monopoly. This hurts every consumer that doesn't want to buy books from Amazon. Amazon does nothing for me as a consumer. In fact, they try to actively hurt me as a consumer by doing everything they can to take away my option to shop somewhere else.

[TM99]

33. No, it is not 'legally' licensed.

If it was, then Amazon would be breaking the law for buying eBooks wholesale and selling them at their own pricing. Also an EULA is not a valid legal document.

I am not biased towards Amazon. That is the tired canard that weaker minds pull out when the facts do not line up the way they want them to.

I do not in any grand way 'love' Amazon. I do, however, in this instance support the resolution of an anti-trust lawsuit against Apple and the publishers with regards to collusion, price fixing, and attempting to foist the agent model on consumers. In this instance, which is what this thread topic is about, I am against Apple and for Amazon because in this instance, it is better for us, the consumers.

That does not apply in other instances, and if you want to start a separate topic elsewhere, then we can discuss the effects that all online businesses, including Apple's App Store and Amazon have had on the brick and mortar businesses they are replacing from the Mom & Pop's computer store to the local bookstore.

[rebecca_herman]

36. E-books ARE licensed

you don't own them. you can't legally give them away, or leave them to someone when you die. They just aren't owned the way physical items are owned. If you think property laws need updating due to digital technology, then you have the right to your opinion. But nope, you don't own the e-book, neither does Amazon. The e-books are never even actually "bought" wholesale. There isn't a quantity of them sitting somewhere. A licensed copy is generated when the customer pays.

Also, you DO NOT, and NEVER will, speak for all consumers. Don't presume to speak for me. Ever. What the DOJ has done for me as a consumer was not good, it is tragic. I LOVE bookstores. Amazon wants bookstores GONE. They want a monopoly. And the DOJ has made that even easier for them.

You DO NOT speak for all consumers.

[joshcryer]

38. Erm, that depends, if they're DRM free...

...then they may be copied freely.

Also they may be jailbroken from their DRM with the correct software.

So there is a physical copy of the data.

[rebecca_herman]

39. I think all the e-books in question had DRM

Pretty sure all the big 6 (now big 5, and why aren't they Random Penguins? Missed opportunity there....) use DRM. You can figure out how to remove it but I think that's technically not quite legal.

[joshcryer]

45. That's entirely up to the author.

You can add DRM to your published works or not.

Copyright is what is supposed to keep people from illegally distributing your works (without permission).

Jail breaking devices is perfectly legal.

[TM99]

41. Right back at you.

You DO NOT speak for me either.

I love bookstores too, but I also do not like Apple and Publishers colluding, price fixing, and breaking laws because they want more profit and control. That doesn't help consumers....ever!

[PoliticAverse]

26. We know from this lawsuit why Publishers went to Apple. Because Apple allowed them...

to collude and fix prices.

[TM99]

40. What is it with people here!?

The publishers couldn't stand up to Amazon's demands so they colluded with another corporation that raised praises for everyone illegally, and that's A-OK because everyone seems to have a hard-on for the 'evil' Amazon.

I do not support the publishers in establishing an agency model that forces retailers to raise prices on eBooks. I do not support the publishers colluding with Apple to illegally do this. I do not support the 'licensing' of eBooks or any digital media as opposed to true ownership of a product purchased.

Those of you in the industry are going to support this, I get that. I do not. And in this instance, yes, I support Amazon because I want to pay $9.99 or less for an eBook and not be forced by publishers and Apple to pay $14.99. I am the consumer here.

[frazzled]

43. Sorry, but here's what

Preface: I made no statement about Apple in my post--only a question about why Amazon is allowed to, frankly, skirt the law--from no less than the very liberal Nation magazine:

Dennis Loy Johnson, co-publisher of the Brooklyn-based independent Melville House, is one of the few publishers who have dared to speak openly about Amazon's bullying. His story is far from atypical. In 2004 a representative of the retailer contacted Melville's distributor demanding an additional discount. Such payments are illegal under antitrust law, which precludes selling at different prices to different customers. Large retailers circumvent this restriction by disguising the extra discount under the rubric of "co-op," money paid to the bookseller for promotional services, often notional. In this case the distributor did not bother with such niceties, describing what Amazon was after as "kickback."

Read more: The Trouble With Amazon | The Nation http://www.thenation.com/article/37484/trouble-amazon#ixzz2YkKT1frF

But I am not making this shit up, questioning where the Amazon shake-down, cheap-to-consumer model will lead us. From today's New York Times, "E-Book Ruling Gives Amazon an Advantage":

“The Department of Justice has unwittingly caused further consolidation in the industry at a time when consolidation is not necessarily a good thing,” said Mark Coker, the chief executive of Smashwords, an e-book distributor. “If you want a vibrant ecosystem of multiple publishers, multiple publishing methods and multiple successful retailers in 5, 20 or 50 years, we took a step backwards this week.”

Some in publishing suspected that Amazon had prompted the government to file its suit. The retailer has denied it, but it still emerged the big winner. While Apple will be punished — damages are yet to be decided — and the publishers were chastened, Amazon is left free to exert its dominance over e-books — even as it gains market share with physical books. The retailer declined to comment on Wednesday.

“Amazon is not in most of the headlines, but all of the big events in the book world are about Amazon,” said Paul Aiken, executive director of the Authors Guild. “If the publishers colluded, it was to blunt Amazon’s dominance.

...

Amazon, its detractors argue, is not a nonprofit or public trust but a hard-nosed company whose investors hope will make lots of money someday soon. It shares closed Wednesday at $292.33, a record.

“The Justice Department’s guns seem pointed in the wrong direction,” Mr. Aiken said.

But the more pressing concern for the industry is the fate of Barnes & Noble. When Borders collapsed two years ago, analysts said there was an unexpected consequence to the loss of 400 stores: the e-book growth rate began to taper off, as readers could no longer examine new titles before ordering them from Amazon.

E-books, in other words, were not a magical technology that could shed all the existing infrastructure of publishing. They needed the existing ecosystem.

“If all of those corporate outlets vanish, there is suddenly a hell of a lot less space devoted to showcasing a large number of titles,” said J. B. Dickey, owner of the Seattle Mystery Bookshop. “We’ll probably see a continuing shrinking in print runs, maybe fewer titles published, fewer authors published and the New York houses retreating into the known best-sellers. Which means more novice and midlist authors scrambling to find a way to stay in print and more authors self-publishing their print books — or more likely releasing their works as e-files.”

http://www.nytimes.com/2013/07/11/business/e-book-ruling-gives-amazon-an-advantage.html?ref=business&_r=0

Amazon is a giant behemoth corporation, beholden to its stockholders and led by a megalomaniac. Is this the party we want to uphold? They make nothing, they create nothing. They've decimated businesses and jobs right and left. Their tactics have been deplored by more than the book industry. I'm with the content creators rather than the sellers on this one ... because when you go against the content (or object) creators in favor of cheap prices for consumers as your goal, you end up with Wal-Mart type domination and a dearth quality. It's not the culture I want to live in. I have no objection to e-tailing. I'm not a Luddite, but I am against unfair practices.

This decision was basically a decision against the publishers (that they decided not to fight the government, leaving Apple to do it alone, speaks to the weak position they're already in with respect to Amazon).

So I throw the question back to you: What is it with people here? Are you willing to ignore the huge corporate empire that is Amazon for your cheap ebooks? Do you like the Wal-Mart model of cheap product above all? Because that's what you'll get. If you like cheap product and don't care about the rest of it, that's fine for you. I do not.

And Amazon, too, will fall one day. It was only 20 years ago that the Borders and Barnes and Nobles of the world seemed invincible, squeezing out independent bookstore businesses. Now they are dead. Amazon will get its comeuppance too. It's just a matter of time.

[TM99]

44. You have an agenda.

The topic here is about Apple and publishers being found guilty of anti-trust violations - price fixing, collusion, favored nation status, etc. They admitted to it, and the case was pretty much cut and dried.

You are saying that Amazon is the only apparently 'evil' corporation even though the actual case is not about what Amazon did but what Apple and publishers did.

I support authors but publishers are not the authors, and bluntly you know this. So throwing it right back again into your court - why is it OK apparently for you and others in this thread to be so damned selective about which corporations you have issues with when all parties involved in the case acted deplorably and apparently Amazon does as well with regards to the publishers if not the customers? You are arguing that Amazon is worse than Apple here, and yet, Apple is a highly deplorable corporate entity. Shall we get in to why they are so beyond their obvious illegal activities in this case? I didn't think so.

Big book publishers are very much like other big media providers this way. They screw consumers and they screw the creative ones who 'make' their products. I am a musician, and I know this all to well. My partner is a poet and fiction writer, and I have seen it with her.

You can yammer on about Amazon all you want but in this case, it is the publishers and Apple that got caught breaking the damned law.

I know Amazon has issues. Their warehouses are horrid working environments. And yes, I still have no problem utilizing their services because I can get books I can't get elsewhere much more cheaply, and they provide a marketplace for rare and out-of-print material - music, movies, games, and books - that just can't be found elsewhere. It is not so starkly black and white for me with them. If the DOJ finds that Amazon has broken the law, brings a case against them, and Amazon is found I guilty, I will equally applaud it as I have this one against Apple and this group of publishers.

[joshcryer]

37. They actually sell Kindles at cost, ebooks cost virtually nothing to distribute.

According to this fascinating article it costs about 1/10th of one cent to distribute a 1MB file (general size of an ebook).

So in the end their 30% take is basically utterly pure profit. The cost to distribute is a rounding error to two significant digits!

[melm00se]

21. No.

whenever there is an intermediary between the manufacturer and the customer (aka "reseller&quot , the manufacturer can only suggest a price (hence the MSRP - manufacturer's suggested retail price). What the retailer chooses to sell it for is entirely up to the retailer.

One are that is a little confusing is when a manufacturer does apply a MAP (Minimum Advertised Price). a MAP agreement does not say that a retailer cannot sell for less than that price, just that they cannot publicly advertise a price lower than that. a fine and subtle distinction but an important one.

[onehandle]

2. The goal was to stop Amazon from becoming a monopoly and to help writers.

It worked.



If you think the price of a book should be next to nothing, you can visit your local library.

[Xithras]

6. Doesn't matter much.

1) The goal was to stop Amazon from becoming a monopoly

First, it's not illegal to be a monopoly, and it's certainly not acceptable to break the law in order to prevent a company from becoming one. Monopolies are only illegal when they are abused...and even THEN, it's the GOVERNMENTS job to deal with them. Absent evidence of abuse, if the customers want to shop only from Amazon because they prefer the Amazon pricing model, there is no justification for Apple to break the law in order to gain marketshare.

2) and to help writers.

The cost of ebook publishing is virtually zero. The agreements were with formal book publishing houses, and not with individual writers. The average publisher pays their average authors between 5% and 8% of a books sale price, which begs a simple question...if an e-book sells for $10, the cost of publication is near zero, and the author is only profiting $.50-$.80 per sale, where is the other ~$9.20 going? Publishers could historically justify their slice by pointing at the costs of designing and printing a book, but those costs don't generally apply to e-books. Nowadays it's all profit for the middle men. Apple's price fixing had nothing to do with increasing profits for authors, because authors are screwed by their PUBLISHERS, not the retailers.


Quite honestly, if the publishing industry were structured properly, e-books could sell for $2-$3 and both authors and publishers could make a tidy profit. The fact that they don't has EVERYTHING to do with the greed of the publishing corporations (happily abetted by Apple in this case) and nothing to do with cheap consumers.

[Dreamer Tatum]

9. Is there an app for the talking points you're sent? nt

[savalez]

13. There is.

It's called the Apple Fanboy app.

There's two buttons on it; a Google button and a Samsung button. You click them and get all your BS talking points. If you subscribe you get an extra button - Microsoft. (Amazon coming soon!)

[rebecca_herman]

29. I don't like Apple

I do love print books and bookstores. It broke my heart to lose Borders. I am terrified of the same thing happening to Barnes & Noble. Why should e-book consumers be protected at the expense of other readers? Especially when e-books are not even sold, why should they be priced wholesale? They are licensed and remain the publisher's property - NOT Amazon's.

[joshcryer]

34. The goal was to prop up publishers and sink authors.

Authors (the good ones) make way more money with ebooks than they ever did through publishers.

[TM99]

4. This is good for consumers,

and I applaud the verdict..

The reason why this is a big deal is because Amazon is NOT a publisher. They distribute books. Book stores most certainly can and have set different prices than publishers might want or expect. If the store could purchase in bulk as Amazon does, they can get a sweet deal and then turn that around and offer it to their customers.

Apple and the publishers themselves colluded to stop something that has always occurred. And in the process, Apple, a non-publisher, who wanted to compete with Amazon without competing fairly, was making a little extra cash on the side.

http://www.reuters.com/article/2013/07/10/us-apple-ebooks-idUSBRE9690GE20130710

[taught_me_patience]

16. Actually, volumetric pricing is illegal under Robinson-Patman

Amazon was selling the ebooks for a loss to get to a $9.99 price point. Amazon can bend the Robinson-Patman rules by asking for a larger co-op, which it looks like they are doing. That larger co-op has to be offered to all other retailers, though.

[TM99]

17. For now it looks like they have only bent the rule

and not broken it themselves. If they cross that line, I will be equally as condemning of their practices as I am of Apple's in this case.

[taught_me_patience]

19. As will I

However, under wholesale agreements, it is ultimately up to the publisher to decide whether to offer content at a specific price. Once they offer it to Amazon at that price, then they have to honor it for all direct accounts. It will be the publishers who bend the rules. Now if Amazon uses predatory pricing to gain unfair market advantage, then raises the cost, excessively, to consumers, then I'll have a serious problem with that.

For full disclosure, I worked in sales for the largest media supplier to Amazon for many years. They have been tough but fair (and crafty) in their dealings and I have a tremendous amount of respect for their people and their company.

[TM99]

20. Excellent points

and thank you for the honesty.

[joshcryer]

35. Amazon doesn't sell ebooks at a loss.

They do sell Kindles for the cost to make (at cost), but not at a loss.

[taught_me_patience]

42. Completely wrong

Amazon has absolutely no problem selling at a loss.

http://www.newyorker.com/reporting/2012/06/25/120625fa_fact_auletta

When I worked with them, I've seen them lose over $30/unit (and sold over a thousand units) in order to match another retailers price. Their reason is because they want to be the most customer centric company in the world.

[joshcryer]

46. Oh, right, through publishers.

Who wanted to sell digital copies of books (which cost 1/10th of one cent to distribute) at paper book rates.

Thanks to Amazon we don't have to get ripped off so easily.

[Rob H.]

7. So the judge who said Apple was probably guilty before the trial even started

finds them guilty? There's a shocker.

Judge: Apple probably guilty of e-book price fixing
updated 09:00 am EDT, Fri May 24, 2013

Unusual admission of prejudice ahead of DOJ trial

In an unusual pre-trial "tentative view," the judge in charge of the Apple versus the Department of Justice trial over alleged e-book price-fixing said that the DOJ would likely be able to prove that Apple colluded with publishers to raise e-book prices, despite not having seen all available evidence. This is not the first time Judge Denise Cote has ruled against Apple ahead of a full examination of the facts.

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This is not the first time Judge Cote has sided with Amazon against both the publishers and Apple. In May of 2012, she allowed a class-action civil lawsuit "on behalf of consumers" suing over the alleged price-fixing to go forward ahead of the DOJ trial -- issuing a strongly-worded opinion dismissing Apple's defence that the agency model was better for consumers in the long haul because it preserved both publisher control of pricing and the viable diversity of smaller publishers.

In her opinion, Judge Cote accused Apple of helping facilitate a collusion between publishers that conspired to keep e-book prices slightly higher than Amazon's discounting. It would seem unusual that a second admission of bias by a judge in the case ahead of an actual trial would not be used to have the lawsuit's venue changed, but Apple will likely use the judge's pre-disposition against it as grounds for appeal following any (apparently pre-determined) loss in its initial DOJ trial.

In issuing her latest finding, Judge Cote went so far as to admit that she was already drafting the written decision that would be issued at the end of the proceedings, indicating that she has already made up her mind on the points of law based on evidence previously seen and selected by the DOJ. Preliminary findings such as this one were likely a factor in Penguin's recent settlement in the class-action lawsuits filed by the attorneys general in more than 17 states. It agreed to pay $73 million in various disbursements to settle the suits.

I expect Apple will appeal, given that the judge left the door wide open. Full article here.

[Dr. Strange]

11. Not terribly shocking, given that Apple, the publishers, and everyone else admitted it beforehand.

Apple admits to two key allegations in ebook price fixing case

[Bigredhunk]

18. I'm Not For Amazon Being Mall-Wart'ish

I also think it's ridiculous that e-books cost close to (or even more than) hardcovers, and almost always cost more than paperbacks. I know a lot of people who bought Kindles early on were sold on them by Amazon advertising e-books to be $9.99 or less. Now some of the prices are ridiculous. You're better off waiting to buy a book used or remaindered - if it doesn't sell well or extra stock sits around too long.

It costs less to produce an e-book than it does a physical book. They overcharge for e-books because publishers are scared shitless of the change in their business model. They don't want too many people buying e-books over their physical counterparts. They're doing what music companies did re: iTunes and what movie companies are doing now re: making people wait to rent new movies (hoping they'll buy them instead). They're futilely clinging to an old business model instead of developing great new ones.

[politicat]

30. Any book has sunk costs - editing, typesetting, design, marketing.

It doesn't matter how the book is published -- those costs don't change (or they do, but because editing gets jettisoned and marketing gets skewed away from the mid list.)

The physical printing and transportation of hard copy books is only a small part of a book's actual cost of production. Electronic books have typesetting and and design costs, too. I've marked up ebooks and done pre-press -- the current tools for ebook prepress are much better than they used to be, but it's not as easy as "export text file to .pdf."

The discount on a new release ebook vs a new release hardcover reflects the production reality.

The real losers continue to be the local bookstores, the writers and production staff. Apple just got stabbed for slugging Amazon to stop Amazon from bludgeoning the rest of the industry.

[Tx4obama]

25. Kick n/t