The EU is willing to consider settling its differences with ebook publishers and Apple if they're willing to make some sacrifices, the European Commission's antitrust chief said. The commission is in the midst of an investigation into whether Apple colluded with five major publishing houses to fix prices for digital books in an …
Why is it
That Apple and the book publishers are being offered a free pass here? How come the EU went after Microsoft and Intel with such animosity and fined them big, that when it comes to Apple they say "Well heres what you can do and we will drop the case?". Hipocracy is bullshit, if your going to do that to other big names follow through when it comes to others, in this case Apple. Apple deserves to be fined and fined big time which will hopefully make them see they cannot pull the kind of shit they have been and continue to get away with it.
Not that simple
@James O-Brien: "Why is it that Apple and the book publishers are being offered a free pass here?"
For a start, there hasn't been an investigation or verdict in this matter. Microsoft and Intel were first found guilty and then punished accordingly. The EU and US anti-trust bodies are voicing concerns that this behaviour *might* damage the market, but not that it *has*. If the concerns are addressed, the market is protected.
Secondly, this market has already been subjected to questionable behaviour by Amazon. It seems people have short memories - with at least 90% of the eBook market, Amazon first tried to strangle the existing (paper-based) book market and then to hold the remainder with an iron fist, e.g. http://www.nzherald.co.nz/technology/news/article.cfm?c_id=5&objectid=10791546
Amazon tried to strong-arm publishers into exclusive agreements when Apple first made moves to enter the industry. Anti-trust action would certainly have followed if arrangements between Apple and publishers had been blocked by Amazon. Stating "you can't sell through anyone but us" is far more damaging than stipulating "you can't offer competitors a lower price than you offered us". This is still a (relatively) young market. Now that we have more than one strong player, I think the anti-trust measures are enough to ensure an even playing field.
Re: Not that simple
"Stating "you can't sell through anyone but us" is far more damaging than stipulating "you can't offer competitors a lower price than you offered us"."
Exclusive deals are perfectly legal. Virtually every book deal is an author releasing their work exclusively through a single publisher. Same with games being exclusively released on PS3 or Xbox. Restrictive sure, but perfectly legal.
Demanding control over the prices charged/paid by competitors (as Apple is alleged to have done here) is the textbook definition of anti-competitive.
@Chet Mannly:: "Exclusive deals are perfectly legal. Virtually every book deal is an author releasing their work exclusively through a single publisher."
The exclusivity examples you provided are not equivalent to what Amazon was trying to do. These deals concern individual works, where typically the publisher is investing heavily in promotions. Amazon wanted exclusive rights to *all* e-books provided by *all* the major publishers. In other words, there would be almost no market outside of Amazon. That's very serious in my opinion, especially when you couple it with the fact that Amazon was causing real harm to all other book sellers by selling at a loss (in the way that MS planned to suffocate Netscape by giving away IE). This is temporarily good for customers, but a disaster long-term. Do you think the article I linked to is a fabrication, or doesn't recount a genuine problem?
@Chet Mannly: "Demanding control over the prices charged/paid by competitors (as Apple is alleged to have done here) is the textbook definition of anti-competitive."
Apple has never had (or requested) control over pricing - the agreement with publishers allowed them to set whatever price they wanted. But if the publishers subsequently agreed to a lower price elsewhere, Apple wanted to be offered the same price. How do you see that causing harm to customers or the market?
re: Why is it
I don't think it's quite the same as the Microsoft antitrust case.
and also, i'm not sure how the old method would work with digital formats. The old way, as I understand it, required the likes of amazon to pay half-price for the books it intended to sell. And it could then sell them for whatever price it wanted.
But surely that method is geared for physical books.
For digital books, which applies to Apple more than Amazon, paying half up front doesn't make a lot of sense. Paying just for the exact numbers of books that are sold to customers is a lot easier and makes much more sense. And that is how the agency model works, isn't it?
Re: re: Why is it
The wholesale of books is like paying for a bunch of licences, buy 10000 for a fiver each. Sell em for whatever you want. But don't sell more than 10000. No different to selling physical stock.
Publisher gets his cash and Amazon carry the risk if the book flops.
The agency model is the publisher saying sell the books for what we say or you can't sell em. If they supply them in lots of 1 or 1000 or 10000 it makes no odds. The publisher is forcing everyone to sell their books at a price they decide.
If the seller and the publisher get together and split the final selling price to the consumer they then have a vested interest in keeping the price high.
Hope this helps.
Higher prices not necessarily more profitable
Where sales are price-sensitive, simply raising prices does not insure greater profit. I wouldn't be surprised if all parties actually were to see massively greater sales figures if e-book prices were sharply reduced — seeing as it virtually costs no more to distribute a million e-books than to sell a single copy. I know I would immediately buy hundreds of them, were they offered for a dollar a piece. At current prices though, and seeing as how e-books cannot be resold or even given away, I haven't bought any, and probably never will.
Re: re: Why is it
Amazon never carried the risk on digital books.
The sales model Amazon used for e-books before Apple came out was to give authors only 35% of actual sales.
That's actually still applies for books costing more than $9.99, or many territories.
Info here (see 35% royalty option): https://kdp.amazon.com/self-publishing/help?topicId=A29FL26OKE7R7B
Hardly a "free pass"...
The publishers are going to be found guilty of price fixing in the EU. There's absolutely no doubt about it - none. They know this and there will be contingencies on their books for this from day 1 of the Agnecy Pricing agreement.
The only doubt in all of this is what happens to Apple - its quite likely they are going to take a massive hit due to them being the company setting the "price floor" via the app store. It may be borderline legal in the USA but its most definitely not in the EU.
However none of this money is going to find its way to normal consumers, who are the ones being ripped off NOW.
As such I think the EU is doing the right thing by trying to minimise the harm to consumers, better to get the price-fixing sorted out ASAP than to apply fines 2 years down the line.
Could bail out Greece in one easy move.
Save the Germans from having to do it.
Maybe the simplest approach would to be tell the publishers that any minimum price must be before any agency fees - e.g. in this case it would be ~ 77% of the Apple price.
Combined with some rules about exclusive distribution deals this would provide room for market competition while avoiding predatory pricing.
All Apple have to do is drop the "you can't sell cheaper to any competitor" clause - the indirect control over competitor's pricing is the anti-competitive issue here...