Apple probed by EC antitrust arm over ebooks market Brussels opened a formal investigation into the sales of ebooks in Europe this morning to determine whether five publishers, with the help of Apple, had breached competition rules within the EU. In a statement, the European Commission listed News Corp-owned, US-based Harper Collins; France-based Hachette Livre, which is owned …
So are they signing exclusive deals or price fixing? it seems that it's just a rumour at this point that is being investigated.
Normally is it price fixing, but books from different publishers don't tend to compete with each other. The other option is they all agreed to sell only on iTunes, but why would they do that when it would seriously restrict sales of their product?
But, apparently, these guys won't let them.
Browse through the Amazon Kindle store. Its a damn good bet that any e-book whose price makes you exclaim foook ME! will be published by one of those under investigation and have a "This price was set by the publisher" label in the description.
AFAIK, Amazon was happily selling eBooks (along with several others) as they do real books: i.e. buy the book from the publisher, sell it, with a negotiated wholesale price paid to the publisher, and then Amazon free to set their price (subject to competition).
That's where Apple came along to demand a chunk of the pie. They didn't want anyone selling for less than them, so they and the publishers forced a different model. In effect, it means the publisher is selling the book to the consumer, and gives a cut to the retailer. It amounts to price fixing, and is the reason many Kindle books now say "This price was set by the publisher"
Note: the above is what I understand from the articles I have read. There may be inaccuracies, but I believe the overall story is correct.
No, but Apple developed the Agency model which now controls prices from the big-6 publishers for eBooks in the U.S. and apparently Europe. Until Apple got involved eBook prices were set by Amazon, just like any other retail product. Now most eBook prices are set by the publishers.
The Net Books Agreement was the target of two investigations.
In the first one (1962) it was found to be great ("was of benefit to the industry, since it enabled publishers to subsidise the printing of the works of important but less widely-read authors using money from bestsellers.")
Then only in 1997 was found to be illegal after all. Then - due in great part to this - almost all small bookshops closed since supermarkets and Big Co undercut them all.
Now it's gotten so bad even large companies like Borders have failed.
So maybe it wasn't such a bad idea after all. It's just how you weight the pros and cons at each given time.
@+++ath0
The "con" is being expected to pay more for an eBook than the hardback version of the same title. An eBook that often has serious formatting problems and is doesn't appear to have been proof read. It seems these publishers think OCRing a book and releasing it as-is is good enough to, not only ask, but demand a premium price.
Why shouldn't publishers be allowed to set the selling price of their own books, is it really better that large companies who only push the bits around get to decide it?
The old model IMHO just encourages predatory pricing and a rich get richer scenario. Eventually it gets to the point where the retailer effectively dictates the wholesale prices they tolerate - just like the never ending battle over the price of milk from large supermarkets.
Maybe consumers get a few deals out of it, but overall it's doesn't really improve the quality of the product or richness of the ecosystem.
Simples, really. Agency model harms overall competition - between agents (no incentive for a shop to compete against Amazon; no incentive for a publisher to sign more agents than minimum necessary), between titles (you buy what publishers want to sell you, not what market priced as a good title at good price) and between publishers (if they set the price, who is to say they don't agree on it first?).
I lived in centrally planned economy and I know from experience it does not work. As you browse through Kindle section on Amazon it should dawn on you, too.
No shop can really compete with Amazon, as the rapid desertification of the high street shows. If you even try you get swallowed up (proof: Book Depository being bought by Amazon)
Is it that great to have a policy that drives profit margins down to even negative levels - until we get down to a single surviving retailer?
Because Publishers aren't fixing the price that they want to sell the book for, they are fixing the price that everyone else is allowed to sell at. So if Amazon wants to sell at 20% margin instead of 30% they can't.
I suspect the issue is that Apple wanted to protect its margins so it "arranged" that the publishers don't allow Amazon (as a retailer) to compete on price with Apple. There was competition and now there isn't.
The publisher can always set the wholesale price for books, its retail competition that Apple may have been trying to stifle. Retail in this case is of an undifferentiated product (an ebook is an ebook) with very low distribution costs. For Apple to compete they would be competing head-to-head with Amazon's retail experience.
Apple has itunes, which is a fairly compelling story for apple device owners, Amazon has a much broader product range, economies of scale and can reach any device. Who will buy or use an ipad if the same product is cheaper elsewhere? The last thing apple wants to do is cut margins or have to monitor the competition to see if they are competitive. They want to be a one-stop-shop for content producers and consumers. Being cheap is not what apple does so they need to stop everyone else from being cheap to maintain sales.
There are some things that apple do well and have value - timemachine makes backups easy enough for normal users and having backups adds value to their products. Just inflating selling prices is not adding value, its profiteering. I wish apple would concentrate on doing things better rather than using politics and the legal system or backroom deals to try to squash the competition.
Isn't Apple relatively a minnow in the publishing ocean (electronic or otherwise)? How on earth are is it going to restrict competition when it has such a tiny share of the market? Or is Apple incidental to the actions of large publishers who control most of the content? I feel this story is lacking some essential information.
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