Apple and book publishers are facing a trial next year over the allegations they colluded on ebook prices to squeeze Amazon out of the market. Judge Denise Cote told the fruity firm and the two bookhouses that haven't settled, Penguin and Macmillan, that the case will start in June next year, Bloomberg reported. Three other …
too late book publishers!
already buying all my books from amazon (if not with glossy paper then kindle -type books) and a handful from apple (the interactive books).
all this just looks market fight to me, why is there anything wrong? amazon does it right to sell normal books cheaper, me thinks, it's not normal to pay more than 10 euros for a book that you finish reading in 8 hours tops. Kindle books should actually be even less, like 5 euros always, if they don't use extensively pictures.
Apple made just one mistake
They would have got away with this but for their 'favoured nation' clause meaning no-one could undercut their pricing. Had they gone with the sort of model that Amazon are using it would have been fine and a small variation would have been acceptable under the 'breaking the monopoly' standpoint but for some people doing it the same way as everyone else just can't be accepted.
Re: Apple made just one mistake
(I'm getting myself ready to be shot down in flames for missing a point...)
Was that a mistake or a valid business statement, that is used in contracts all over the place. Paraphrasing, but I'd guess "To be an Apple partner, and thus gain limited entry to our walled-garden, we have to get the same good deals as everyone else. Offering an additionally discounted version to someone else would show this partnership is not respected, and would therefore become null and void."
So yes, Apple batters them with a 30% cut of the list price, but expects the same list price as that given to Amazon, B&N etc. Is that a mistake? Perhaps Apple's actions and proposed contracts have prompted Macmillan, Penguin et al to review and fix their prices regardless of the distributer, and if that is what the publishers have done, is that Apple's doing?
Re: Apple made just one mistake
>> So yes, Apple batters them with a 30% cut of the list price, but expects the same list price as that given to Amazon, B&N etc. Is that a mistake?
I see where you're coming from, but in a free market where I make some sort of widget, then it should be up to me how much money I'm prepared to sell them for. So lets say I'm happy to sell each widget for £1, that's not the retail price, it's what I'm prepared to sell it for.
Under Apple's system, they take 30% of the retail price, so I'd need to set the retail price at £1.43 so that after Apple takes it's 30% cut, I'm left with £1. The guys selling widgets down on the market might be happy working with only 5% margin, so he could sell them at £1.05 and I'd still get my £1/widget.
Apple don't like this, it makes them look expensive so they've done two things :
1) The "favoured nation clause" which says I can't allow my widgets to be sold cheaper anywhere else. It may well be that I make more sales from the market stall holder - so I don't want to push the price up there. That means I'm more likely to have to accept a lower price for widgets sold by Apple - perhaps only 75p. That's a big chunk out of my income.
2) Apple also prohibit me selling my widgets to users directly - if they are to be used with iStuff, then I can only sell them through Apple. So I can't direct people to buy from the market stall, they have to go into the expensive shop run by Apple.
It may be that I consider the "added value" from Apple to be worth it - they sell it, collect the money, etc. But I may already have a working relationship with the stall holder and be happy with that. It should be my choice.
Incidentally, Amazon also have this anti-competitive "most favoured nation" clause in their contracts. Given the combined market power of Apple and Amazon between them, I fail to see how on earth either is good for the consumer.
As to the argument that Amazon is dumping to kill competition, well we already have laws to govern that - did any of these other businesses make any complaint ?
Re: Apple made just one mistake
Thanks Simon. But that still doesn't show that Apple have done anything illegal. Favoured nation means that Widget maker will make more money for eveyone but Apple. That's a choice, and a free choice for a free market, the widget maker makes to have his widgets sold to a new audience. Widget Inc signs up to the deal knowin the consequences for all the sellers it supplies to, and in the long run probably makes more money cos the other costs go up. That would shirley not be illegal of Apple unless they sat down and prescribed to Macmillan, Penguin et al their exact sales strategy
And Apple haven't said they can't sell their widgets anywhere else. I can even use Safari on an iPad to by a book from Amazon and download it to my Kindle App, and no money goes to Apple even though they hold the same ebook on the iBooks catalogue. That fulfills the free market aspect too...
My take is that the Feds have realized that they bit off too much with this one. They were probably expecting all parties to settle and now face a challenge.
OTOH, Apple's MFN clause is ripe.
I'm expecting a settlement to be announced in the quiet period after the U.S. elections and before the inauguration. MFN will go away but most everything else will stay as-is.
On non-bestsellers are often several HUNDRED percent.
Even on bestsellers they're high. This used to be justifiable 50-60 years ago but given the way the world works now, they're in cloud cuckoo land if they want to hang onto those margins.
I collected a _lot_ of grief from local booksellers for selling in technical books at 1/2 the price they wanted to charge, based on next day delivery. Even then I was making a tidy profit. Unsurprisingly a lot of those booksellers went to the wall during the 2000s as more people discovered how much they were being overcharged.
Cartel activities are prevalent worldwide in the publishing industry - and all this apple vs amazon vs retailers stuff is just the tip of an iceberg of planetary proportions.
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