back to article Publishers stand behind Apple in ebook price-fixing fight

The five publishers involved in the Apple ebook lawsuit-o-rama have filed a formal objection to the remedies proposed by the US Department of Justice after Cupertino lost its court battle concerning alleged price fixing. "Despite achieving their stated goal of returning price competition, plaintiffs now seek to improperly impose …

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WHAT?!?

You plan on keeping us from price fixing, just because you found we illegally colluded to fix prices? That's just unfair!

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Anonymous Coward

Businesses

Businesses get on with business and Governments interfere.

At the end of the day it's all about money and profit, the bigger the profit, the bigger the cut the Government wants of it. If they don't get enough they change the rules.

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Holmes

Re: Businesses

There's a word in business and it makes all the difference to getting a kicking in court like this did and not getting such.

The word is 'honest' as in 'doing honest business'.

Mind you as with many things these days (peace, democracy, freedom, privacy, etc) the word 'honest' means what you want it to if you're in a position to try to redefine it.

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Facepalm

Re: Businesses

Except in this case they changed the rules to get less.

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Stop

Re: Businesses

'Mind you as with many things these days (peace, democracy, freedom, privacy, etc) the word 'honest' means what you want it to if you're in a position to try to redefine it.'

Honestly, is this news to you? It always has been the case, and always will.

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Ultra-aggressive tax policies might not be illegal, but woe unto you if you slip up somewhere else, the penalties are going to be harsh.

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They do have a point, kinda, in that this is a business model that's used many times in many industries.

For example, if you buy a car from a dealership, the car manufacturer may have agreements in place with the dealership specifying a minimum price below which the dealer can't go. Same with a bunch of other industries.

Not saying that's good. Just the opposite, in fact; I wish the DOJ would pursue vertical price-fixing in other industries as aggressively as it's pursuing this. Price fixing on an ebook might cost me three dollars; price fixing on a car will likely cost me hundreds, or even thousands.

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Not exactly the same since few car dealers have the clout to cajole all car manufacturers into fixing the prices so no other dealer could sell at a lower price. If one dealer did have that much sway and tried the same thing it is hard to believe that the DOJ wouldn't come down on them just as hard even if the automakers settled and it would hurt the automakers margins. I look at as a lie down with dogs get up with fleas thing.

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" few car dealers have the clout "

"few car dealers have the clout to cajole all car manufacturers into fixing the prices so no other dealer could sell at a lower price."

No, but all the car dealers in a state can ban together to push through legislation that forbids *all* car manufacturers from selling direct to the public, cutting out the middle man and saving buyers thousands.

http://tv.msnbc.com/2013/06/28/tesla-vs-the-auto-dealers-of-america/

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Anonymous Coward

The kind of business model that is being practiced by Apple and the publishers is the same one that was used by Standard oil. What is forgotten is that the publishers are equally guilty as Apple when they cooperated in price fixing. I am glad that the government has acted in this area. We need more of this kind of action!!!

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Meh

I just brushed over your comment being it was posted AC (as usual), but then something dawned on me.

After Big Oil was found guilty, the sucked it up and took it. So what does that say about Apple & Co. when even Big Oil is more ethically sound?

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Re: " few car dealers have the clout "

At first blush, I think Tesla would have a good case for challenging the constitutionality of those state laws based on the dormant commerce clause since these laws effectively regulate interstate commerce which is a power not given to the state. I also think it should be trivial for Tesla to file the necessary paperwork and grease the right palms pay the required fee to declare its centers as dealerships since in theory they should have equal protection under the law. Then again, I'm not some political wanker who is paid to be obstructionist.

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Anonymous Coward

Oh the irony

So the problem here is essentially that Apple and the publishers did not collude sufficiently in agreeing to the same settlement.

But I still don't get it. The publishers have settled and part of that is that they can make deals with ebook settlers. The Apple remedy is essentially saying that Apple is not a nice ebook seller. The publishers are still allowed to enter agreements with any ebook seller that has not been found guilty of price fixing. That rules out their best paying customer? Too bad, so sad.

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Re: Oh the irony

More to the point they're saying they're being punished because they can't sell books via Apple. But the DoJ has said that apple must allow ebook sales via google / amazon et al. Surely that circumvents the 'we're losing out our apple customers' complaint the ebook pubs have, right?

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jai
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Re: Oh the irony

i think the publishers fear is that Amazon are now free to discount books as much as they like, because there's no competition. so the publishers will see all their profits disappear now.

Also, as Apple are now banned from using this model for 5 years, they'll be entering a price war with amazon to get the ebook business, so the two of them will drive ebook pricing through the floor.

great for customers, yes

but rubbish for authors, who'll get even less after the publishers take their cut

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Anonymous Coward

Re: Oh the irony

Not exactly rubbish for authors. It's not like Amazon are going to be paying less to the pubs than before. Lets look at it this way.

Old / new way: Publisher sells 'digital license' for the books to amazon. $1000 for 100 books. works out $10 per book. After that the publisher has made their thousand. The problem is the publisher is selling the book in stores for $15. Amazon is selling it for $9.99 The publisher is still however making a pretty good profit.

Agency model: Amazon etc let the publisher put theif book on the storefront. The publisher sets the price and takes a portion of the profits. Amazon etc take the rest of the profits. Normally the split is in the storefronts favour.

Technically speaking, the book publishers probably make more money out of the wholesale method when it comes to the ebooks. But in making more money there, they wind up making less money from the book shops sales since they're at a higher price. Also when it comes to the wholesale model Amazon etc have more ability to barter on the price they buy the books for. Agency model the publisher sets the price where they want, wholesale they get to a point where the choice is $1 per book, or nothing, and they'd prefer profit over nothing.

Personally I actually think that, when it comes to digital publishing, the agency model is best. But only if there's a clause in there that says "the storefront can pass on x% of their takings from the sale, as savings to the customer after x time has passed" meaning that if the book has been on the storefront for a year, Amazon could lower their take from 80% to 60%, giving the customer a 20% discount (like the steam summer sale)

The only major problem with the agency model is taht companies are greedy. By going for digital distribution they technically save a large amount on production / shipping costs, but rather than pass those savings on to the end user, they keep it as excess profits. Even a couple quid cheaper than paperbacks and I'm sure nobody would care at all.

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@jai

Not even great for customers.

Great for customers for a short time.

Right up to the point where the publishing industry dies and consumers can't get books or ebooks at any price.

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@AC: 9th August 2013 13:57 GMT

Except of course that your whole argument is based on two counter-factual assumptions.

The Apple Agency system gave the bulk of the money to the publisher.

The publishers weren't making "excess profit" (by which I assume you mean 'excessive') they were losing money hand over fist and filing for bankruptcy. Apple much as I dislike the company and many of their products, saved the industry. Right up until Bezos greased the right palms to undermine the publishers again.

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Let's see....

Which is worse: "colluding" with publishers to keep their profit margins high enough that they can keep publishing books, or letting Amazon corner the market by loss leading and forcing publishers out of business, so it can achieve vertical integration, and do the whole job, from Walmartizing author royalties to setting whatever price they want, whenever they want?

Both models restrain trade, but one keeps the authors and publishers independent of the booksellers. Choose your poison.

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Re: Let's see....

Not really... The biggest problem for the publishers is that e-books cannot be DRM-ed sufficiently enough to make them behave like dead-tree-format books, where you *need* the physical copy to be able to read a book. If something is popular enough, any digital format will get cracked open, copied, and released into the wild. It's simply a given of the modern digital world, and the comapnies producing "media", including book publishers realise this all too well.

What they, and Apple, tried to do was game the system to push up the price of ebooks at the source so that they could sustain their outdated business model, not unlike the record industry continues to do. The publishers simply do not have a sufficient lobby/enforcement agency like the RIAA in place to cover things up for them, so they got burned.

Amazon made a smart move by "dumping" the e-books they bought wholesale to promote their e-reader to maximise their first-sale gain in the long term, since most people that still *do* read books will buy books regardless. They realised that the e-book price was too high to begin with, since it does not need the whole dead-tree manufacturing/distribution chain which is still incorporated in the price, and that the people who do read books tend to be intelligent enough to notice this, making them much more likely to go look for the "freetard" option of finding an un-DRM-ed copy online.

If publishers folded over this, even though they still received their inflated wholesale prices on e-books, their whole position in the market was untenable to begin with. As far as authors are concerned, there are plenty of self-publishing options, and even dedicated e-publishers that sell directly to the public. If you want to make money by telling stories you simply have to be good enough at it, and put in the legwork to make it a viable living. It's not as if there aren't plenty of examples out on the internet where content is provided for free yet still allow the authors/artists to raise a clutch of kids and run a successful business.

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Anonymous Coward

Re: Let's see....

With the digital age, we really do seem to be getting to a point where a publisher is just a waste of resources.

Sure it made sense before, you write the book, they pay to spellcheck it ,edit it, print it, distribute it, advertise it, sell it. You give them the material, they take the financial risk and make a financial reward.

Nowadays you can write a book, get it spellchecked for fairly cheap, no need to edit it since you aren't going afte ra target demographic, no need to print it because it's electronic, same with distribution. Advertising well, books barely get advertised these days unless they're hits anyway, and with the internet word of mouth can work great. You take your material, you put it on an ebook store, Almost no financial risk, and you wind up with mroe profit than if you'd handed it off to a publisher.

Heck you can even sell paperbacks like this, for less profit of course. (cafe press etc)

You can apply pretty much the same logic to the music scene these days.

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Bronze badge

Re: Let's see....

The results of going 'I don't need no stinking editor!' can be seen on the Amazon Kindle store, and they're not pretty.

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"There's more to the DoJ's remedies, however. The proposal also would require Apple to allow ebook retailers such as Amazon and Barnes & Noble to sell ebooks directly through their iOS apps – a practice Apple now bans"

I can see why Apple is actively defending their stance.

if the DoJ succeeds in this, wouldn't it eventually affect the whole 'freemium' concept for apps, so that developers can sell additional features for the apps without Apple getting a cut?

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Anonymous Coward

Really - can they do that?

Dos the DoJ really have the constitutional/legislative power to force Apple to generally allow sales via Apps, or is this just for book sellers?

It seems that Apple can decide to sell whatever Apps it decides it wants in its store - just like any other store. If Apple do not want to allow secondary sales via Apps it stocks in their store that would seem to be a right of a vendor.

But hey IANAL, I have no clue what legislative hammer was used in this case

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Re: Really - can they do that?

In the current environment, the DoJ doesn't give a shit whether it is constitutional or not.

In this instance*, it seems most of the El Reg readers will cheer them on as they ignore it even as they cry in their beer when they ignore it on other issues.

*Judging from the voting pattern observable on all previous ebook threads. The freetards are winning and won't know what they've lost by winning until it is way too late to recover.

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