Court finds Apple colluded on e-book price fixing scheme with publishers

posted at 10:41 am on July 10, 2013 by Ed Morrissey

A federal court paved the way to take a big bite out of Apple for its attempt to wrest control of the e-book market from Amazon.   The US District Court in Manhattan ruled that Apple colluded with publishers in a price-fixing scheme that made e-books more expensive to consumers, and set the stage for the next phase of the trial to determine damages:

In a decision that could reshape how books are sold on the Internet, a federal judge ruled that Apple Inc conspired to raise the retail prices of e-books in violation of antitrust law, and called for a trial on damages.

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. …

Only Apple went to trial, while the publishers – Lagardere SCA’s Hachette Book Group Inc and Macmillan, News Corp’s HarperCollins Publishers LLC, Pearson Plc’s Penguin Group (USA) Inc and CBS Corp’s Simon & Schuster Inc – settled with the U.S. government and the states.

Cote said the conspiracy resulted in prices for some e-books rising to $12.99 or $14.99, when Amazon had sold for $9.99.

“The plaintiffs have shown that the publisher defendants conspired with each other to eliminate retail price competition in order to raise e-book prices, and that Apple played a central role in facilitating and executing that conspiracy,” Cote said.

“Without Apple’s orchestration of this conspiracy, it would not have succeeded as it did in the spring of 2010,” she added.

The settlement with the publishers earlier probably made this outcome inevitable, but Apple tried to fight it by claiming that the negotiations were handled separately — and contentiously.  The Wall Street Journal offers more background on the testimony:

Mr. Cue testified that Apple clashed with the publishers repeatedly about pricing as the company rapidly tried to negotiate agreements with the publishers before the iPad was unveiled in late January 2010. Mr. Cue said that HarperCollins, for example, wanted to set a $18-to-$20 price for best sellers and new releases and withhold books from Apple’s online book store: both nonstarters for Apple.

“I struggled and fought with them about many, many things,” Mr. Cue said. “If they had been talking to each other, I would assume I would’ve had a much easier time getting those deals done.”

David Shanks, chief executive of Penguin Group (USA), separately testified that Penguin tried to get Apple to abandon a price-matching provision and caps on pricing. “I did not get the deal I wanted, but I wanted to be sold to Apple’s customers,” Mr. Shanks said.

However, Russell Grandinetti, vice president for content for Amazon’s Kindle e-reader device, testified that the publishers gave him an ultimatum if the company didn’t switch to an agency model: they would withhold newly released books from its digital bookstore for months.

Instead, the government argued, Apple essentially set the price for books and pressured publishers to push the same deal with Amazon:

In closing statements in June, Mark W. Ryan, a Justice Department lawyer, said that Apple’s agreement with the publishers created price caps for best sellers and new releases, but publishers quickly adopted those prices—$12.99 to $14.99—as the going rates for e-books.

“This is an old-fashioned, straightforward, price-fixing agreement,” Mr. Ryan said.

Next comes the damage phase, which may end up costing Apple a very large chunk of cash.  Most of that will end up in government coffers, apparently, rather than in consumer pockets.  Don’t expect anything to change hands except appeals motions, because both sides have the resources and the motivation to take this all the way up the chain to the Supreme Court.  At some point, though, cooler heads may prevail and a settlement might be found, especially now that Apple has lost on the finding of fact level.

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FANTASTIC!

I buy a lot of books from Amazon. I have given my entire family Kindles.

I HOPE that this will mean that book prices will now drop to $9.99 again for new releases.

It would be great to get a refund, but mostly, I want the price to drop or at least be variable. Some authors are better than others.

barnone on July 10, 2013 at 10:50 AM

D’OH!

workingclass artist on July 10, 2013 at 10:50 AM

Price Fixing?

Among corporations?

In America?

To screw the consumer?

Saywhaa….?

budfox on July 10, 2013 at 10:52 AM

It would be great to get a refund, but mostly, I want the price to drop or at least be variable. Some authors are better than others.

barnone on July 10, 2013 at 10:50 AM

I you bought in the timeframe of the case, you’ll have a class action notice in your mail/email in the near future.

Normally, I’d say prices would drop after this ruling, but if it didn’t effect Amazon’s revenues, they’re not going to do it willingly.

budfox on July 10, 2013 at 10:54 AM

do no harm and all that…google, apple, etc. bunch of posers on the left aren’t they?

DanMan on July 10, 2013 at 10:55 AM

So, what should an e-book cost? If they’re that much cheaper than hard copies, won’t that impact retailers?

changer1701 on July 10, 2013 at 10:57 AM

So lemme get this straight… Amazon sells books for .99 and forces publishers to go along with it.
Apple works with publishers to get them to standardize on a market price similarly to how Borders and Barnes and noble do.

So books from the Apple store cost 100% more than the same books from Amazons store but both are less than the books puchased from brick and mortar stores…

But Apple is guilty of price fixing?

BS.

Skywise on July 10, 2013 at 10:57 AM

So, what should an e-book cost? If they’re that much cheaper than hard copies, won’t that impact retailers?

changer1701 on July 10, 2013 at 10:57 AM

They should theoretically be pretty inexpensive, but they haven’t been lately. At least not with bestsellers and new releases. The cheaper e-books tend to be from lesser known authors who actually want to encourage impulse buying from consumers(imagine that!). I love reading e-books, but I refuse to shell out $12-15 for one considering you can get a used copy of virtually any book on Amazon for just a few bucks(and most of that is the shipping cost).

Doughboy on July 10, 2013 at 11:04 AM

And never mind the fact that the government does JUST this with milk prices…

Skywise on July 10, 2013 at 11:15 AM

So lemme get this straight… Amazon sells books for .99 and forces publishers to go along with it.
Apple works with publishers to get them to standardize on a market price similarly to how Borders and Barnes and noble do.

So books from the Apple store cost 100% more than the same books from Amazons store but both are less than the books puchased from brick and mortar stores…

But Apple is guilty of price fixing?

BS.

Skywise on July 10, 2013 at 10:57 AM

Yeah I’m missing it too. If Apple sets prices by conspiring with Apple’s competitors, that’s price fixing. If Apple sets prices by negotiations with distributors, that’s done a million times a year in business and it’s called contract negotiations.

slickwillie2001 on July 10, 2013 at 11:20 AM

Designed in California!

Flange on July 10, 2013 at 11:20 AM

There is now such a thing as Amazon Derangement Syndrome.
Bezos is driving the traditional publishing world nuts. They were forced into this price fixing thing by their hatred and fear of him.
I’m not kidding.

vityas on July 10, 2013 at 11:23 AM

It will be appealed.

albill on July 10, 2013 at 11:24 AM

Justice Department calls e-book ruling a victory for consumers and ‘critical step in undoing the harm caused by Apple’s illegal actions’ – @ericengleman

5 mins ago by editor
==========================

canopfor on July 10, 2013 at 11:28 AM

Yeah I’m missing it too. If Apple sets prices by conspiring with Apple’s competitors, that’s price fixing. If Apple sets prices by negotiations with distributors, that’s done a million times a year in business and it’s called contract negotiations.

slickwillie2001 on July 10, 2013 at 11:20 AM

It’s collusion because Apple and the distributors worked together to force a direct competitor, Amazon, to raise their prices. Amazon previously sold the books at a loss to entice customers and guarantee brand loyalty. Their competitor, Apple, didn’t like that and the publishers didn’t like it either because they didn’t want the savings in ebooks to go to the consumer.

It’s rather straightforward.

njrob on July 10, 2013 at 11:32 AM

Amazon previously sold the books at a loss to entice customers and guarantee brand loyalty.

njrob on July 10, 2013 at 11:32 AM

Isn’t that what Standard Oil was accused of? Growing up in Detroit during the 70s all I heard was Toyota was illegally dumping their cars in America this way.

Flange on July 10, 2013 at 11:39 AM

It’s collusion because Apple and the distributors worked together to force a direct competitor, Amazon, to raise their prices. Amazon previously sold the books at a loss to entice customers and guarantee brand loyalty. Their competitor, Apple, didn’t like that and the publishers didn’t like it either because they didn’t want the savings in ebooks to go to the consumer.
It’s rather straightforward.
njrob on July 10, 2013 at 11:32 AM

Then Amazon could continue to sell at a loss. The fact is Amazon wasn’t selling at a loss… Amazon was price fixing with the producers at a cheap point to outsell the brick and mortar shops and the producers were losing money left and right.

Apple came in at a higher price point to entice producers away from Amazons lower price point as give the producers income at a fairer level more commensurate with paper book revenues.

Consumers still had a choice between amazon, apple and traditional book stores.

But now the government has determined that raising prices is bad… Unless you’re a gas station or grocery store or government entity or… Gasp… Medical insurance…

It’s BS. And this snacks of nothing more than political blackmail.

Skywise on July 10, 2013 at 11:39 AM

Not really.

Amazon was selling e-books at $9.99 as a loss-leader. Apple couldn’t afford to do that. But if e-books cost $12.99 – $14.99 on an iPad, but $9.99 on a Kindle, why would a consumer purchase an e-book from Apple? Therefore Apple pressured book publishers to set prices at the higher rate and those publishers banded together to force Amazon to sell e-books at those higher prices. As a result, and to let consumers know that their hands were tied, Amazon had disclaimers on many of the e-books that noted the prices were set by the publishers. That’s the collusion.

bigdubs on July 10, 2013 at 11:46 AM

So, what should an e-book cost? If they’re that much cheaper than hard copies, won’t that impact retailers?

changer1701 on July 10, 2013 at 10:57 AM

Well, they certainly shouldn’t cost $7.99. Not when the same book in paperback is that price. And, especially not when publishers for years were claiming the price increases on books were because of the rising cost of paper! The publishers are colluding on prices, in order to keep the brick & mortar stores open. (If e-books are marked up the same percentage over cost as paper books, they’ll massively undercut paper books and – ostensibly – kill the b&m stores.)

GWB on July 10, 2013 at 11:46 AM

Amazon was price fixing with the producers at a cheap point to outsell the brick and mortar shops and the producers were losing money left and right.

Skywise on July 10, 2013 at 11:39 AM

Huh?!?

GWB on July 10, 2013 at 11:48 AM

Skywise on July 10, 2013 at 11:39 AM

You have literally not a single clue what you are talking about.

thphilli on July 10, 2013 at 11:48 AM

So lemme get this straight… Amazon sells books for .99 and forces publishers to go along with it.

No. No force involved. Amazon’s contracts were not exclusive. The publishers were free to contract with Apple as well.

Apple works with publishers to get them to standardize on a market price similarly to how Borders and Barnes and noble do.

…and in contracts to specify that Apple was to be the sole distributor, thus causing restraint of trade and harming Amazon.

So books from the Apple store cost 100% more than the same books from Amazons store but both are less than the books puchased from brick and mortar stores…

But Apple is guilty of price fixing?

BS.

Skywise on July 10, 2013 at 10:57 AM

See previous blockquote. Certainly not BS.

This is a big part of the reason why I do not buy Apple products. They have bundled their software and hardware in a way which IBM lost an anti-trust suit over. Their only saving grace is that there is another competitor (Microsoft) with greater market share. That may well be why Microsoft saved Apple from demise in the early 1990′s — so as to have a foil for any anti-trust concerns…

The other players (the publishers) in this settled with the Government and admitted guilt. Apple alone decided to duke it out in court, and lost due to the action of its co-conspirators, which completely undercut its case.

unclesmrgol on July 10, 2013 at 11:51 AM

I buy books occasionally for my Kindle, but mainly is just check them out from the library…you should try that if you haven’t. You occasionally have to wait for the e-book to be released by another patron, just as you had to do with print copies. If my loan is about to end, and I haven’t finished the book, I just turn my wireless off and finish at my leisure.

kirkill on July 10, 2013 at 11:53 AM

Huh?!?
GWB on July 10, 2013 at 11:48 AM

Amazon didn’t sell at a loss… They contracted with the producer what they were going to sell the books for.

Skywise on July 10, 2013 at 11:56 AM

…and in contracts to specify that Apple was to be the sole distributor, thus causing restraint of trade and harming Amazon.

unclesmrgol on July 10, 2013 at 11:51 AM

Oh… Exclusive contracts are illegal….

That’s why Macy’s is suing Martha Stewart for selling her exclusive line at JCPenneys?

If the publisher wants to sell into a limited market that’s their RIGHT.

Skywise on July 10, 2013 at 12:02 PM

I had noticed Kindle book prices weren’t as cheap as they used to be on Amazon.

When I first got my iPad I checked out ebooks and about the same time the Kindle app came out for the iPad. In functionality, availabilty of titles, and price Amazon’s Kindle app won over ebooks.

It is interesting that I had purchased a 2nd generation Kindle about that time also. The Kindle app on the iPad beat out the Kindle device also. I may one day consider the Kindle Fire, but for now, the iPad still wins.

TerryW on July 10, 2013 at 12:04 PM

Skywise, no not really.

The model is that Amazon elected to sell the books at a discount from MSRP, just as B&N does with bestsellers and other books they are pushing (and, indeed, just as Amazon does with physical books). The business background here is that since Amazon has purchasing power they can negotiate wholesale discounts so, at least on the physical book side, they got the books at a wholesale discount and were able to keep some semblance of a margin.

However, for ebooks the publishers didn’t want to encourage a switch from the traditional distribution model to ebooks, so they were not giving discounts…so Amazon decided they would eat the loss as a way to get people to go to Kindle. And it worked. It worked like crazy, so much so that publishers decided they needed to stem the bleeding and make ebooks less attractive. But they couldn’t do that unless there was another player in the game eith enough clout to be a competitor.

Enter Apple.

Deciding to sell something at a loss isn’t collusion. Coordinating publishers to jack the price up and force a competitor to do the same *is.*

JohnTant on July 10, 2013 at 12:06 PM

Amazon doesn’t set the prices. Publishers do–whether traditional paper publishers aka the ones price fixing–or indie publishers. Amazon may discount from time to time, as does any business. If you see a paperback at $14 and the ebook priced at $13, complain to the publisher.

What should an ebook cost? If you ask a traditional publisher you’ll get one answer. If you ask an indie you’ll get another response–probably around $2.99.

vityas on July 10, 2013 at 12:14 PM

I want to know how many people are going to jail. I was involved with a company that was directly responsible for the vitamin price fixing in the 1990s. We had 4 people go to jail and one deported. We also had to pay a substantial penalty, too.
Apple should be held to the same standards as our employees. However, given the amount of money that they give to the Democrats, this will never happen.

djaymick on July 10, 2013 at 12:20 PM

I would not be surprised if Apple just pulled the
plug on selling e-books.
If Amazon was the only source left
then eventually the government would
shut them down for being a monopoly.
The future will be Apple publishing.
Book writers won’t have any outlets left
to publish at. Then books will cost 99 cents.
Or I guess they could self publish and lose money.

redguy on July 10, 2013 at 12:21 PM

Seriously, what’s the big deal here? All Apple has to do is apologize, problem solved. (/IRS)

Why not, that’s how the government skirts the law so it should be permitted for the rest of us.

Kingfisher on July 10, 2013 at 12:23 PM

However, for ebooks the publishers didn’t want to encourage a switch from the traditional distribution model to ebooks, so they were not giving discounts…

JohnTant on July 10, 2013 at 12:06 PM

Not just not giving discounts, but actually holding the price point well above where it should be based on costs.

What should an ebook cost? If you ask a traditional publisher you’ll get one answer an answer based on his desire to not undercut sales of the physical book. If you ask an indie you’ll get another response–probably around $2.99.

vityas on July 10, 2013 at 12:14 PM

Pert much.

GWB on July 10, 2013 at 12:40 PM

Deciding to sell something at a loss isn’t collusion. Coordinating publishers to jack the price up and force a competitor to do the same *is.*
JohnTant on July 10, 2013 at 12:06 PM

Oh I see… So if Amazon gave the ebooks away for free as then Amazon said we’ll sell em for a penny then Apple is an evil company trying to make money…

Amazon wasn’t forced to do anything. It merely gave power back to the publishers. Amazon could’ve pulled a Microsoft and sold at a loss hoping to continue to gain market share and leverage Apple down.

Skywise on July 10, 2013 at 12:53 PM

Not just not giving discounts, but actually holding the price point well above where it should be based on costs.

GWB on July 10, 2013 at 12:40 PM

Costs are relative to a price point.
Are we going to sue to football stadiums now for colluding to sell us sugar syrup at 20x cost?
Oh wait, that’s the government and you wouldn’t want to take dollars out of government would you? That might lead to starving children.

Skywise on July 10, 2013 at 12:58 PM

Oh I see… So if Amazon gave the ebooks away for free as then Amazon said we’ll sell em for a penny then Apple is an evil company trying to make money…

Amazon wasn’t forced to do anything. It merely gave power back to the publishers. Amazon could’ve pulled a Microsoft and sold at a loss hoping to continue to gain market share and leverage Apple down.

Skywise on July 10, 2013 at 12:53 PM

Actually, Amazon was forced to sell books at a given price point based on the distribution agreements.

It’s pretty standard for some companies to forbid discounts at the retail level in order to preserve brand identity. Such is the case here – publishers got together and told Amazon they had to stop selling ebooks below MSRP. Prior to the iPad that threat would have had no teeth, since Amazon was the BMOC. But since Apple came along *AND* made it clear they had no interest in competing with Amazon on price, they had an opening to force Amazon to abandon the discount model. If Amazon refused they the publishers could pull distribution and focus on Apple.

Simply put, Amazon couldn’t sell at a discount any longer because of the distribution agreements that the publishers revised (apparently at Apple’s behest). Amazon couldn’t “pull a Microsoft.”

Apple isn’t evil for trying to make money…Apple erred in coordinating publishers to force a competitor to raise prices instead of striving to compete with that competitor.

JohnTant on July 10, 2013 at 1:00 PM

Exactly. Publishers threatened to hold back their books unless Amazon conformed to the new pricing/distribution model that Apple set. That’s called forcing.

bigdubs on July 10, 2013 at 1:05 PM

I never did receive my settlement (account credit based on certain ebooks bought) from Amazon that they contacted me about last October.

Maybe that will happen now?

Moesart on July 10, 2013 at 1:08 PM

So lemme get this straight… Amazon sells books for .99 and forces publishers to go along with it.
Apple works with publishers to get them to standardize on a market price similarly to how Borders and Barnes and noble do.

So books from the Apple store cost 100% more than the same books from Amazons store but both are less than the books puchased from brick and mortar stores…

But Apple is guilty of price fixing?

BS.

Skywise on July 10, 2013 at 10:57 AM

The bottom line is Apple was pissed because their customers were purchasing ebooks from Amazon and using the Kindle app to read them, thus “depriving” Apple of revenue from ebook sales. Apple convinced the publishers they could all make more money by forcing Apple’s competitors to sell at a higher price.

Wendya on July 10, 2013 at 1:12 PM

Skywise,

This was all spelled out in the ruling and has been thoroughly explained here. Do you work for Apple or are you just really obtuse?

njrob on July 10, 2013 at 1:12 PM

Apple erred in coordinating publishers to force a competitor to raise prices instead of striving to compete with that competitor.

JohnTant on July 10, 2013 at 1:00 PM

There’s the key.

Costs are relative to a price point.

Skywise on July 10, 2013 at 12:58 PM

Say what? Costs are costs. They don’t change due to supply and demand (of the end product). My point was that the publishers are holding their prices higher than they would be (without collusion and, admittedly, a buying public with more money than brains) if they had the same sort of margins over cost as they do with hardcopies. And, that they are doing so in order to prop up the sales of the hardcopies, in order to keep their b&m stores from going under.

The rest of your comment doesn’t even make sense relative to mine.

GWB on July 10, 2013 at 1:20 PM

Skywise,
This was all spelled out in the ruling and has been thoroughly explained here. Do you work for Apple or are you just really obtuse?
njrob on July 10, 2013 at 1:12 PM

Yeah yeah and Obamacare is just a tax and government is allowed to assassinate US citizens so long as a court says OK.

Apple is a store front and represented (at the time) one of four ebook vendors (assuming kindle, apple, android and nook). They were not a monopoly and the only deals with the publishers were for Apples system only.

If the publishers chose to sell with Apple exclusively that’s their right.
I’m not an apple fanboy but I *am* a content producer… I’ve got a buddy trying to support his 2 kids by supplementing his income by writing eBooks… After spending a year writing a novel and going through editing he’s lucky to bring in a thousand dollars from thousands of sales because ebook prices are too LOW. But tst doesn’t matter to amazon so long as they sell kindles and the publishers have no leverage in this market so you takes what you can gets…

If amazon and apple had colluded together I’d be right here with you guys…
The market HAS to swing the other way sometimes…

Skywise on July 10, 2013 at 1:28 PM

Say what? Costs are costs. They don’t change due to supply and demand (of the end product).
GWB on July 10, 2013 at 1:20 PM

Let me try again… Prices are relative to costs.
They DO change to demand and to what the market will bear.

Like paying 2 dollars for the cost of ten cents of sugar syrup at a football stadium.

But I don’t see any lawsuits again government owned football stadiums… Who colluded with vendors to set an outrageous price…

Skywise on July 10, 2013 at 1:32 PM

Well good riddence. Usually I’m okay with Apple, but their little price fixing scheme in this case was both obvious and transparent. Before that point I was well on my way towards buying a Kindle. Then, all of a sudden, the price of eBooks went up to be higher than the physical copies, sometimes by a large margin. Considering how much cheaper it is to distribute digitally, that was completely unwarranted. There was no other explanation for it EXCEPT price fixing, especially since it was happening with every title, and every publisher, across the board.

Huge shame that money will end up in government hands though. It’s consumers that were bilked, not the government. :P

WolvenOne on July 10, 2013 at 1:34 PM

Apple is a store front and represented (at the time) one of four ebook vendors (assuming kindle, apple, android and nook). They were not a monopoly and the only deals with the publishers were for Apples system only.

Android is an OS, not a vendor.

And really, Nook is a non-player because they don’t have the market clout that Amazon/Apple have. So really you have two major players, one of which (Apple) got publishers to modify agreements with Amazon and forbid sales points lower than MSRP.

If the publishers chose to sell with Apple exclusively that’s their right.

I don’t believe anyone is saying it isn’t their “right,” but then that isn’t the issue here anyway.

I’m not an apple fanboy but I *am* a content producer… I’ve got a buddy trying to support his 2 kids by supplementing his income by writing eBooks… After spending a year writing a novel and going through editing he’s lucky to bring in a thousand dollars from thousands of sales because ebook prices are too LOW. But tst doesn’t matter to amazon so long as they sell kindles and the publishers have no leverage in this market so you takes what you can gets…

Well, the sad fact is the royalties on physical books for authors aren’t much better, that is unless you’re a Brad Thor or Clive Cussler powerhouse. And really, the margins that Amazon/Apple offers for self-publishers are very competitive with what the publishers offer, and may actually be better.

Saying publishers have no leverage in this market is, frankly, crackers. Publishers control the content, and without content a Kindle becomes a brick. The ebooks market depends on content, and a publisher pulling its library means Amazon has nothing to sell.

JohnTant on July 10, 2013 at 1:40 PM

Apple has always tried to control retail prices, so this is nothing new. It’s why Apple became such a small slice of the overall computer market in the first place. While the IBM-compatible computers were being sold by lots of different wholesalers and retailers competing on price, Apple products were strictly controlled, and you were only allowed to sell them at the retail price Apple dictated.

Hardly a free market.

Still, as long as the products were actually manufactured by Apple, it was their right to refuse to distribute to a retailer unless the retailer agreed to use the price Apple had set.

Trying to move this model to a marketplace where products were not made by Apple was almost bound to result in problems.

So basically Apple tried to encourage all book publishers to exert the same control of the retail price that Apple had been doing. Since this was in effect industry-wide rather than one small segment of an industry, as Apple’s computer business had been, it’s no wonder they finally got their hands slapped.

There Goes the Neighborhood on July 10, 2013 at 1:53 PM

he’s lucky to bring in a thousand dollars from thousands of sales because ebook prices are too LOW.

Skywise on July 10, 2013 at 1:28 PM

Bullhockey. It’s because he’s not selling as many books as he needs. If he can’t get the publisher to sell his books with a decent margin, then he needs to get a new publisher. His books’ prices are low – many others are not. And, the authors are not the ones seeing those extra profits – the publishers are. Every dime they don’t spend on paper and glue and ink is money back in their pocket.

(BTW, an awful lot of people seem to think that selling a book will set them up for life. Only a bestseller will do that – and becoming a bestseller means a lot more than 1,000 copies sold. More like 5,000 per week.)

JohnTant on July 10, 2013 at 1:40 PM

Yes.

GWB on July 10, 2013 at 2:32 PM

Android is an OS, not a vendor.

True but android still has its own reader minus DRM.

And really, Nook is a non-player because they don’t have the market clout that Amazon/Apple have. So really you have two major players, one of which (Apple) got publishers to modify agreements with Amazon and forbid sales points lower than MSRP.

I disagree. Nook was owned by the book store and, as such, had more leverage with the publishers than amazon or apple. Also Apple had marketshare but NOT in the ebook market when they started. They could’ve easily bombed because users wouldve flocked to the cheaper amazon kindle prices which is still available on iOS devices.

And yet MSRP is still the standard by which all other vendors still sell products…
But it’s only considered bad err because Amazon was giving them away first and then a more sustainable pricing structure showed up.

I call that a bad ruling and demand that Obamacare is subject to the same – price collusion is bad after all…

Saying publishers have no leverage in this market is, frankly, crackers. Publishers control the content, and without content a Kindle becomes a brick. The ebooks market depends on content, and a publisher pulling its library means Amazon has nothing

Skywise on July 10, 2013 at 3:04 PM

he’s lucky to bring in a thousand dollars from thousands of sales because ebook prices are too LOW.

Skywise on July 10, 2013 at 1:28 PM

You sound like a true, dyed in the wool, leftist. You want your and your friend’s lack of success to be subsidized by others and the consumer to be played as a sucker. You’re no different than the movie industry trying to get people to pay $40 bucks for a blockbuster movie to subsidize the garbage they make that lose millions.

njrob on July 10, 2013 at 4:26 PM

njrob on July 10, 2013 at 4:26 PM

Think of Skywise as an Apple-centric version of Libfree. The tech blogs are full of them.

mad scientist on July 10, 2013 at 4:39 PM

Think of Skywise as an Apple-centric version of Libfree. The tech blogs are full of them.

mad scientist on July 10, 2013 at 4:39 PM

I know. It’s why I avoid most of them. Still go to tom’s hardware, but I’m not sure if you’d consider it a techie site.

njrob on July 10, 2013 at 4:46 PM

True but android still has its own reader minus DRM.

That still doesn’t make them a “vendor” or a competitor to be mentioned on a par with Amazon or Apple.

I disagree. Nook was owned by the book store and, as such, had more leverage with the publishers than amazon or apple. Also Apple had marketshare but NOT in the ebook market when they started. They could’ve easily bombed because users wouldve flocked to the cheaper amazon kindle prices which is still available on iOS devices.

And yet MSRP is still the standard by which all other vendors still sell products…

Nook was a move by B&N to try and compete with Amazon. However, Amazon had a huge head start with the Kindle and B&N never caught up. Since B&N couldn’t point to the massive reader sales that Amazon could, they really didn’t have the leverage that Amazon had.

On the other hand, Apple could (and did) point to a kajillion Apple IDs, all associated with credit cards, and make the case that when the iPad/iBooks app was released, they’d have a very serious and hungry market. This was proven with Apple’s experience with the App Store as well as iTunes.

And since I mentioned iTunes that further makes my case for me. Apple’s relationship to the music industry is similar to Amazon’s with ebooks…prior to Apple, music publishers really didn’t want to sell MP3s ala carte, and yet here we are…and I daresay it’s because Apple not only strongarmed the labels but, yes, engaged in similar pricing strategies as Amazon did with the Kindle. With that experience, Steve Jobs quite likely saw how things were going and didn’t want Amazon/Kindle to be the Apple/iTunes of books. So, logically, Apple went after the publishers to eliminate Amazon’s ability to discount.

Inre MSRP, it’s a “suggestion,” not a standard.

But it’s only considered bad err because Amazon was giving them away first and then a more sustainable pricing structure showed up.

The strategy for such things tends to be to engage in penetration pricing and then work on trimming costs to fit there. Market research at the time showed people didn’t want to pay more than $10 or so for an ebook, so that’s a pretty fixed point around which the market had to revolve. However, publishers didn’t want to accommodate that price point in order to preserve the physical market. Bezos therefore began with penetration pricing and took the risk that after he showed enough market penetration, the publishers would have to come down on their licensing fees. He had good reason to think this, because Amazon had serious leverage in the market…no other product came close until Apple. It’s interesting that until Apple engineered this, prices were holding pretty well at the $10 point…simply because publishers had no real option in the ebook space other than Amazon.

I call that a bad ruling and demand that Obamacare is subject to the same – price collusion is bad after all…

Really it isn’t a bad ruling. Apple could have chosen to compete on price. Instead, they engineered a collusion between the publishers so they wouldn’t have to compete on price. Alas, that’s illegal.

Inre Obamacare, I think you’re mixing apples and oranges. Having a group of customers say “this is what we will pay before you have access to our business” is quite a bit different than a group of providers getting together and saying “this is what we will charge.”

JohnTant on July 10, 2013 at 7:05 PM