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Battle Over Minimum Pricing Heating Up

kdawson posted more than 5 years ago | from the can't-charge-that dept.

Businesses 272

The Wall Street Journal is covering developments in the gathering battle between manufacturers and retailers / discounters, especially online ones, over minimum prices. Earlier this year the Supreme Court upheld the right of manufacturers to enforce price floors for their products. Since then, manufacturers have increasingly been employing service companies like NetEnforcers to snitch on discounters who offer goods below "minimum advertised prices" (or MAPs), and to send DMCA takedown notices to the likes of eBay and Craigslist for below-minimum offers. Separately, the Journal reports that a coalition of discounters and retailers is using eBay as a stalking-horse in a campaign to get consumers, and then politicians, fired up enough to pass legislation outlawing MAPs.

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FIRST TROUT! (-1, Offtopic)

Anonymous Coward | more than 5 years ago | (#26019653)

I AM A FISH!

Re:FIRST TROUT! (-1, Offtopic)

Anonymous Coward | more than 5 years ago | (#26019957)

This probably gives away whom you voted for.
Gills we can believe in!

Lalala... (0)

Anonymous Coward | more than 5 years ago | (#26019661)

Free market here we go!

MAP vs Price Fixing (0)

Anonymous Coward | more than 5 years ago | (#26019665)

One is business as usual and the other results in a class action lawsuit.
But what's the difference really? Besides wholesalers vs retailers setting the minimum price?

Re:MAP vs Price Fixing (3, Informative)

matt4077 (581118) | more than 5 years ago | (#26019879)

The difference is that price fixing involves multiple (competing) sources agreeing on a minimum price. This minimum pricing scheme just concerns one manufacturer's product. You're free to buy from a competitor. Now, even if these contract terms are voided by law, a manufacturer can still easily charge a minimum price - their own price charged to retailers. Minimum pricing is more about protecting certain retail outlets than about gauging the consumer.

Re:MAP vs Price Fixing (5, Informative)

Meest (714734) | more than 5 years ago | (#26020113)

Exactly. Protecting the Dealers from other dealers is the reason for MAP Pricing.

I worked in pro audio for 5 years. MAP is very prevailent in that market. I live in North Dakota. Its not like I sell 1000 dollar speakers every day like Musician's Friend does. So if I'm a dealer and the 1000 dollar speaker costs me 800 dollars. plus 70 dollar shipping. I'm making 130 dollars per speaker.

If there is no MAP. then The online retailer is able to then sell the speaker for say 850 dollars and and then sell more, getting better pricing so that the speaker may only costs them 700 dollars. well now they're able to sell it for less than what the smaller local dealer can and still make a profit. and make up the extra amount in gross sales. Isn't this reminding you of Wal-Mart?

These companys want to keep their local dealers open. They want to have a place for you to take your unit back to for support. if they don't have MAP there is no reason for that local dealer to even been selling the product if they can't even be competitive with the pricing.

Make sense?

Re:MAP vs Price Fixing (0, Insightful)

Anonymous Coward | more than 5 years ago | (#26020331)

and if you can't compete go out of business that's how it is supposed to work. Goods should be as cheap as possible that still keep them selling.

Re:MAP vs Price Fixing (3, Insightful)

Sen.NullProcPntr (855073) | more than 5 years ago | (#26020457)

and if you can't compete go out of business that's how it is supposed to work. Goods should be as cheap as possible that still keep them selling.

No, that may work in some businesses but in others it results in higher prices and worse service.
As the GP points out;

These companys want to keep their local dealers open. They want to have a place for you to take your unit back to for support. if they don't have MAP there is no reason for that local dealer to even been selling the product if they can't even be competitive with the pricing.

Once all the small companies go out of business the big guys can raise their prices above where they were when they had competition.

Re:MAP vs Price Fixing (5, Interesting)

ratboy666 (104074) | more than 5 years ago | (#26020487)

I sell "dual core intel computer with 2gb" for $1000 (or even more). Now, the customer *could* go to tigerdirect.ca and buy the "same" system for a few hundred dollars. I make my client VERY aware of that option. Really, I don't want any buyers remorse or anxiety over purchasing a system from me.

But... on-site setup, customized media software, lifetime labor, quality parts, little to no noise, and a nice pvr case.

Let's see tigerdirect.ca compete with that.

If *all* you are doing is selling the speakers -- I don't have much sympathy. Take your $50 dollar profit, if that's all you can get. Buy more speakers, and go "internet" as well.

MAP *does* gouge the consumer; if only to keep your business model afloat.

Personally, I think that MAP is designed to protect "reputation". Without the need for anyone to apply any extra elbow grease.

Re:MAP vs Price Fixing (1)

Meest (714734) | more than 5 years ago | (#26020729)

Just a quick question.

Are you an authorized dealer with Intel, the case manufacturer, and the Ram Manufacturer? If you are I'm sorry as this won't apply.

But with speakers There are dealer minimum sales to stay a dealer. So for JBL lets say I need to sell 15,000 in speakers a year.

If I can not sell that many speakers, I can not stay a dealer, therefor I can not become an authorized parts dealer, and I am not authorized to handle warranty work for speaker issues. Therfore A speaker I sell to a customer that has a warranty issue I can not handle.

Therefore How do I sell a speaker to a customer if I am not an authorized dealer? If I sell it to them they will not have a warranty? Sure I can get it through a distrubutor but thats being shady to the customer, and downright bad business.

Re:MAP vs Price Fixing (0)

Anonymous Coward | more than 5 years ago | (#26020967)

Why then, does the manufacturer offer pricing discounts based on quantity? It is the manufacturers fault for creating the situation where speakers can be sold at a cost below the price than wholesales for some retailers.

Re:MAP vs Price Fixing (1)

Meest (714734) | more than 5 years ago | (#26021133)

It's not just because of the discount. Lets go back to the 800 dollar cost. Internet store company sells 20 of the 1000 dollar speakers a month. Well now it can put all 20 of those on a pallet and stock them because it knows it can sell them.

20 speakers will give you free freight because of the order size (Just like at many other stores you may order stuff from)So now the speaker costs 70 dollars less per speaker. Now that store may feel like selling alot of speakers for less than the normal amount to make the same amount of money with more volume since they bought 20 speakers and they want to make sure they sell them all that month so they don't have any carry over to the next month when they order another 20. They now again have an upper hand on the smaller dealer.

Raw numbers will let a dealer outperform another dealer.

Government-granted monopoly (2, Interesting)

tepples (727027) | more than 5 years ago | (#26020239)

This minimum pricing scheme just concerns one manufacturer's product. You're free to buy from a competitor.

Unless the product has no close substitutes, and the state enforces this lack of close substitutes.

Mr. Looomis may have problems of his own. (1)

Samschnooks (1415697) | more than 5 years ago | (#26019681)

He developed software to track the company's authorized dealers and prices. From there, he devised companion software to identify online sales that were discounted. This put the stereo discounting to an end, Mr. Loomis says. In 2003, he launched NetEnforcers using similar software.

Mr. Loomis may be in violation of any NDAs and non-compete agreements he may have signed with his employer for whom he designed this very lucrative software for.

Just saying.

Shouldn't need a new law, but... (5, Insightful)

Pokey.Clyde (1322667) | more than 5 years ago | (#26019687)

From TFA: eBay and discount retailer Costco Wholesale Corp., opponents decided to lobby for a bill now pending in Congress that would make minimum-pricing agreements a violation of antitrust law.

Shouldn't existing law prevent MAPs already? This sounds an awful lot like collusion and price-fixing to me. But since the Supreme Court has already said that manufacturers can enforce price floors, it sounds like new legislation is definitely needed.

Re:Shouldn't need a new law, but... (2, Informative)

Smallpond (221300) | more than 5 years ago | (#26020039)

Price fixing implies different manufacturers colluding, which is not the case for MAP. MAP is about protecting the seller channel for a specific brand. Some product that is sold well above the cost to make and is sold through specific channels - like Bose or Apple. The folks competing with those sellers can sell something else for much less, just not the branded product.

Re:Shouldn't need a new law, but... (1)

maxume (22995) | more than 5 years ago | (#26020219)

Companies should be able to protect sales channels, but if stuff leaks out, the legal process should focus on punishing the leak, not the downstream beneficiaries of the leak, and the onus should be on the company to show proof that a merchant should be complying with the MAP, not just a magic smash-wand.

Minimal Pricing = Legal Monopoly? (5, Insightful)

Manip (656104) | more than 5 years ago | (#26019699)

How can minimal pricing be legal or logical?

If I sell you an apple from my apple tree then what right should I have to say that you sell that apple at? Or what rights do I have to then your apple at all?

Obviously the original manufacturer has certain rights like copyright, trademark, but I fail to see how these right extend to something like price further down the supply chain.

This whole system just seems abusive and will make it harder for competition to ensue which last I checked was meant to be what a capitalist society was all about.

Re:Minimal Pricing = Legal Monopoly? (4, Interesting)

theaveng (1243528) | more than 5 years ago | (#26019735)

Precisely, and here's a quote from that article:

NetEnforcers alerts its clients including Sony Corp..... they can allege that the discounter's use of the product's name or image constitutes trademark or copyright infringement, in an effort to force the seller to stop listing the discount....

So if I have a brand-new, never-used Sony PS3 and for whatever reason I decide to duimp it for cash, I might list it for $200 on amazon oe Ebay. BUT then along come the "netenforcers" claiming I violated the MAP, or I violated copyright, or some such bs, and yank my listing straight off Amazon/Ebay.

They shouldn't be able to block my sale of my product! I can set any damn price I feel like setting, even as low as a penny, because *I* own it.

Re:Minimal Pricing = Legal Monopoly? (3, Interesting)

theaveng (1243528) | more than 5 years ago | (#26019793)

NetEnforcers says that this year through Oct. 13, it helped shut down 1.2 million seller pages on eBay

Frak. That's a lot of takedowns and I bet most of them were completely harmless and legal. I had one of my auctions yanked last year, not by these people but by some lawfirm in California because they BELIEVED my copy of Star Trek TNG season 1 was an illegal copy. I called this lawfuck...er, firm and tried to reason with the man in charge but he refused to listen. He just kept repeating that if I list TNG-1 a second time, he'll prosecute and yelled loud enough for my secretary to overhear the threats.

I ignored him and relisted it anyway... fortunately the threat turned out to be the babbling of a power-tripping, windbag lawyer... it sold and my customer was happy. I hate corporations, I hate lawyers, and I hate politicians that serve corporate masters.

Re:Minimal Pricing = Legal Monopoly? (1)

homer_s (799572) | more than 5 years ago | (#26019813)

They shouldn't be able to block my sale of my product! I can set any damn price I feel like setting, even as low as a penny, because *I* own it.

Unless you signed a contract with the manufacturer saying that you would do no such thing.
(Needless to say, didn't read tfa; have no idea if that is the case here).

Re:Minimal Pricing = Legal Monopoly? (0, Redundant)

theaveng (1243528) | more than 5 years ago | (#26020545)

I didn't sign a contract, so I'm not bound by Minimum Pricing, but that doesn't stop NetEnforcers. They falsely tell Ebay or Amazon that my PS3 sale violates copyright, and thereby get my listing removed.

That should not be allowed.

Re:Minimal Pricing = Legal Monopoly? (3, Insightful)

ObsessiveMathsFreak (773371) | more than 5 years ago | (#26020043)

I can set any damn price I feel like setting, even as low as a penny, because *I* own it.

No. You don't own it. That was the end result of the supreme court decision. You no longer own the goods you buy. You only have a "licence" for them. Just like in the software industry.

Manufacturers took their cue from software developers. They wanted the ability to sell a product, yet maintain ownership. They got it. When the day comes and you cannot sell or paint or add and extension to your "Hometech" built house because the company still holds rights over it, then the gravity of the court decision will truly hit home. You can't own anything anymore without a company charter and a team of high priced lawyers.

Re:Minimal Pricing = Legal Monopoly? (2, Insightful)

theaveng (1243528) | more than 5 years ago | (#26020571)

Hmmm. No wonder Thomas Jefferson advised the Supreme Court could not be trusted.

not for second sale (4, Interesting)

aepervius (535155) | more than 5 years ago | (#26020119)

There is no minimum rpice for second sale. The MAP they are trying to enforce is for distributor and first sale. Please note that I disagree with the MAP, I jsut wanted to point out that as a second sale they would have no right to enforce a MAP. YMMV by country, but usually second sale right is that you can put whatever price you wish. Even 1 cent if you want. Not so for retailer and distributor.

they don't seem to be distinguishing (4, Informative)

Trepidity (597) | more than 5 years ago | (#26020999)

You're correct legally, but NetEnforcers et al seem to be demanding that eBay take down all sales of new products below the minimum price, assuming that these must be prohibited first-sales.

Re:Minimal Pricing = Legal Monopoly? (2, Interesting)

Teun (17872) | more than 5 years ago | (#26020127)

They won't block your sale.

But they might block the sale of the guy who signed a contract (MAP).

One of the reasons is that manufacturers want several outlets selling their product, allowing one, probably a very large one, to sell it below a certain price could cause other suppliers to stop distribution or even go under.
The end result would be that the large supplier, say Walmart, would become the only retailer and thus dictate his pricing to the manufacturer.

Here in Europe there is a fear only internet shops can survive, thus having a very negative effect on the regular shops and the livelihood of our city centers.
This requires some careful balancing of various interests.

Re:Minimal Pricing = Legal Monopoly? (2, Insightful)

bencoder (1197139) | more than 5 years ago | (#26020557)

This requires some careful balancing of various interests.

Not at all... let it happen. High street shops go under, at first this means less high street shops. But that causes prices for renting high street shops to go down until it becomes profitable again, the shops come back and prices work out to be where they should be without "careful balancing".

Re:Minimal Pricing = Legal Monopoly? (1)

theaveng (1243528) | more than 5 years ago | (#26020613)

>>>They won't block your sale.

They already have. They falsely told Ebay that my store-bought DVD was an illegal copy, and the sale got yanked. So yes they can block my and your private sales.

Re:Minimal Pricing = Legal Monopoly? (1)

Teun (17872) | more than 5 years ago | (#26020849)

Which got jack shit to do with a MAP. the subject of the article.

Re:Minimal Pricing = Legal Monopoly? (1)

kramerd (1227006) | more than 5 years ago | (#26020499)

No, they cant do they, you arent in the business of selling PS3s. There is no manufacturing, marketing, or selling cost for used items. Accordingly, under the right of first sale, you can sell your PS3 for whatever amount you wish.

If you enter into the business of selling PS3s, then you have to factor in a price floor for the amount the system actually cost you in production/selling costs. It did not take a supreme court decision to make this a law; it has always been illegal to sell items below cost for the purpose of competition. The supreme court decision simply upholds this law.

This is news for nerds, not news for chicken little. The sky isnt falling, and your head is intact.

Re:Minimal Pricing = Legal Monopoly? (1)

nabsltd (1313397) | more than 5 years ago | (#26021115)

NetEnforcers alerts its clients including Sony Corp..... they can allege that the discounter's use of the product's name or image constitutes trademark or copyright infringement, in an effort to force the seller to stop listing the discount...

So if I have a brand-new, never-used Sony PS3 and for whatever reason I decide to duimp it for cash, I might list it for $200 on amazon oe Ebay. BUT then along come the "netenforcers" claiming I violated the MAP, or I violated copyright, or some such bs, and yank my listing straight off Amazon/Ebay.

Because eBay is so stupid about such things, your listing will get yanked, but it's not because there is any law behind Sony on this.

Sony's trademark rights are there to prevent confusion, so that people know what they are actually purchasing is what they expect. If you have a real Sony PS3 (and I don't know of any "Sorny" knockoffs of the PS3), then you can use the Sony and PS3 logo in your ad as long as you note that they are trademarks of Sony.

Second, unless you are using Sony copyrighted pictures of the PS3 in your auction, they have no copyright claim against you. If you took your own picture or used the eBay stock photo, you are fine.

Historically, minimum price enforcement came in the way of advertising support. Basically, Sony would pay Best Buy some money that would be used to make sure the PS3 gets highlighted in the Best Buy TV ad. If Best Buy wanted this money, they had to follow the rules that Sony set down about minimum pricing. If they didn't care, they could do whatever they wanted. Since every legitimate website and B&M now easily gets around MAP by hiding the price with "too low to advertise", they all follow MAP rules to get that advertising money. But, because they have to do that, they pressure Sony to stop other stores from advertising low prices (because they can't come up lowest on price search engines anymore), even if there is nothing illegal about it.

Re:Minimal Pricing = Legal Monopoly? (0)

Anonymous Coward | more than 5 years ago | (#26019765)

Maybe I am not understanding this well enough but to me it sounds more like this scenario:

Company A produces widget WA and sells it for $5.

Company B buys widget WA from the market and produces widget WB (which incorporates WA) and sells it for $4 (dumping price to gain market).

This is the description of the problem.

The right way would be that Company B always sells WB at a price > $5 so that a customer cannot buy WA at a lower price than WA.

Of course, if WA is something generic that company A does not have IP for then this would not apply and company B can sell WA for any amount they see fit.

Re:Minimal Pricing = Legal Monopoly? (1)

WhatAmIDoingHere (742870) | more than 5 years ago | (#26019933)

Not at all.

It's more like if you buy a pallet of PS3s and turn around and sell them for a dollar over what you paid, which would still be pretty far under the MSRP.

Re:Minimal Pricing = Legal Monopoly? (3, Interesting)

matt4077 (581118) | more than 5 years ago | (#26019845)

If you, when buying the apple, agree not to sell it for less than $x, and agree to only sell it under the same requirement for subsequent owners, you entered a valid contract. I can see the argument that Minimum Prices are a bad idea and should be abolished, but it's dishonest to deny the possibility of such contracts, and the freedom to enter into contracts also deserves some consideration.

Re:Minimal Pricing = Legal Monopoly? (4, Insightful)

Urkki (668283) | more than 5 years ago | (#26019861)

If I sell you an apple from my apple tree then what right should I have to say that you sell that apple at? Or what rights do I have to then your apple at all?

Simple. Before selling that apple, you make a contract that says what the buyer can do with it. If he does something else with it, it's a breach of that contract.

So if we want to prevent for example these MAPs, or any other similar thing, we need a law specifically saying that such contracts aren't valid.

It's always a trade-off, because here we have two private parties (seller and buyer), and then we make legislation about what kind of contracts they may make between them. Ie. it limits freedom of people and freedom of trade. Then again, it may help prevent monopolies or other bad stuff that would in effect limit freedoms even more.

As far as I can see, it's a slippery slope both ways, and right now it's earthquake season too... We need to try to stay at the top, but it requires constant vigilance.

Re:Minimal Pricing = Legal Monopoly? (1)

Ihmhi (1206036) | more than 5 years ago | (#26020649)

When the Hell did I sign a contract saying I can't sell stuff *I* bought for less than X amount of money?

Re:Minimal Pricing = Legal Monopoly? (0)

Anonymous Coward | more than 5 years ago | (#26019971)

Are we talking about minimum advertised prices or minimum prices to sell? Certainly if you buy a large stock of merchandise, myself as a supplier could ask you to sign a contract. We'll give you the bulk discount if you agree not to advertise it below a certain price, thus giving everyone who sells the product a certain amount of protection. It also stops the brand from becoming undervalued. If some people are selling at $149, others $199, and still others $249 (MSRP), your brand is now valued at $100 less. People selling at MSRP are now considered overpriced, rather than regularly priced. It messes with consumers' perception (stupid people consider higher priced better, but with prices that range that much, may see you as overpriced, when in fact you're in line with the margins everyone else is selling at).

With MAP, you can still get sales by marking it under, but you're going to have to do some kind of BS like: "$1499 before $500 in savings" or "Click here to see price in cart." This is not the same as: "Don't sell this below $XXX or else we won't supply you." The latter is most definitely illegal. With the former, the company could still minimize the mark up in order to make a bunch of sales, just they'll have to rely on word of mouth or funny advertising "Prices so low we can't tell you!"

In any case, MAPs shouldn't apply to used sales like Ebay/Craigslist. If you sell new, you should be bound by the same rules the big box retailers have to play with.

Re:Minimal Pricing = Legal Monopoly? (1)

Chysn (898420) | more than 5 years ago | (#26020049)

> If I sell you an apple from my apple tree then
> what right should I have to say that you sell
> that apple at?

MAP does not claim any jurisdiction on the selling price of an apple. If you have a store that sells, to slightly warp your analogy, Apples, and Apple has a product that has a MAP of $149.00, there's absolutely no law or contract provision that forces you to sell that Apple for $149.00. You can sell it for $89.00 if you want to.

If the Apple company were to tell you that you can't sell Apples for $89.00, that would be illegal. But they can ask that you not use their logo or trade name in an advertisement that SAYS and Apple is $89.00, and it's legal for them to enforce that as a condition for selling Apples to YOU, the retailer.

They want to protect the perceived value of their trade name and products. And brick-and-mortar retailers approve, because it helps to level their playing-field with online or catalog retailers with less overhead. And making brick-and-mortar dealers happy is important to companies that make things like Apples because it provides a way to let shoppers actually taste their Apples in the real world.

All these Apple analogies (5, Informative)

v1 (525388) | more than 5 years ago | (#26020639)

I find humorous. No one has mentioned Macintosh computers. Apple has a very interesting way to get around this problem. They have a MAP but they don't really need one.

Reason is, they sell them to you (the retailer) at VERY near their online store's price. When you, as an Apple Authorized Reseller sell a mac, you send proof of your purchase to them, and at the end of the month you get a check from them. Depending on a wide variety of factors, basically "how much you've behaved like Apple WANTS you to behave as their representative", that determines the amount of cash they give you back per machine. They call it "metrics". We call it "kickbacks".

AARs don't make ANY money on selling a mac. Many of them even LOSE money. But those BDU checks are what make their profit.

This has several interesting effects. First off, when a customer calls us asking about prices for all the systems, we can just direct them to the online Apple store, because all our prices will be the same as theirs, and will be the same as all our competition's. Second, Apple still holds us to MAP, so we can't sell at a loss to make more with the BDU checks. Third, we don't have to worry about direct competition in our market because no one else can sell below MAP, because everyone that's getting the computers from Apple directly has to sell at that price so they're not available anywhere below MAP to be bought "wholesale" and then retailed elsewhere.

The only two problems this causes us is #1 we have no way to compete with the deals Apple offers, such as discounts on ipod with computer purchase, or especially the student discount. #2 some of the places like Mac Warehouse get around this by throwing in free stuff like printer or memory upgrade and that's hard for us to compete with.

This whole thing wouldn't normally work because if Apple makes a price drop when a new model comes out, everyone would be stuck with merchandise they paid more for than they can sell for, so Apple also cuts us checks for any unsold inventory to make up the difference when they drop a price. (they call it "price protection")

The BDU checks and the price protection both are at Apple's discretion, so it gives them a lot of leverage to tell us what we can and cannot do. So even though we're independently owned/operated, we have to basically do whatever they say, or they'll cancel our AAR status and we lose the BDU checks and price protection and that puts us out of business. Really annoying when Apple does something like prohibit us from selling iPhones, and then turns around and lets places like Best Buy and Wal Mart sell them. Sort of a swift kick in the balls and we have no real recourse but to bend over and take it. For example, if Apple catches us selling an iPhone we'd get delisted instantly. If we were caught so much as displaying a pre-release of any Apple software, such as Snow Leopard or the new Aperture, same thing. So in this respect, the manufacturers can have a lot of control over their retailers - it goes far beyond just MAP.

I don't know for sure, but it seems like their preventing us from selling iPhones is something that should be illegal? Apple is notorious for taking steps to eliminate competition within their market, specifically from their partners. "competes with an Apple product" is the #1 reason for iPhone apps to be rejected by Apple from being sold on the Apple Store.

Re:Minimal Pricing = Legal Monopoly? (1)

nabsltd (1313397) | more than 5 years ago | (#26021157)

If the Apple company were to tell you that you can't sell Apples for $89.00, that would be illegal. But they can ask that you not use their logo or trade name in an advertisement that SAYS and Apple is $89.00, and it's legal for them to enforce that as a condition for selling Apples to YOU, the retailer.

No, they can't stop you from using their trademark or logo when selling, since you are selling real Apple products and not fakes.

Trademark is to prevent confusion for the consumer, not to allow the holder of the trademark to control the mark in all instances. As long as you note that the marks you use are trademarks held by Apple, you are in the clear, legally, although it might be expensive to prove it.

The only thing Apple can legally do is stop selling you products directly.

but you DIDN'T buy that apple (4, Interesting)

Anonymous Coward | more than 5 years ago | (#26020185)

Retailers are only consignment dealers, they don't buy anything up front. The manuftcr stocks their stuff on the floor, and the BestBuy remits as each item goes past the register. It's a form of floor planning like car dealers. If the item disappears from stock without going past the register (stock shrinkage aka employee theft) Apple eats it.

Since the mfr assumes the risk, then the mfr sets the terms and prices. This is how WalMart "Keeps Prices Low."

If the stores actually bought this stuff from the mfr as it came into the store, then it would be their property to dispose of as they see fit. But we don't.

Re:Minimal Pricing = Legal Monopoly? (1)

wlandman (964814) | more than 5 years ago | (#26020363)

You are missing the whole idea of minimal pricing. If you sell your apples, and I sell my apples, I have no right to tell you what minimum price to sell your apples at.

However, the minimal pricing that is discussed here is wether or not a manufacturer has the right to say "Don't sell my product below a minimum price". Essentially, it is used by manufacturers to artificially keep the value of the products up.

A lot of automotive parts manufacturers have this. Also, some manufacturers (Royal Purple Synthetic Oils) refuse to sell to Walmart, because they fear by doing so, would lower the selling price and perceived quality of the product.

I feel that if the courts do not allow manufacturers to set the minimimum selling price, then in a certain way their rights are violated. If I produce high quality apples that you want to resell, why shouldn't I be allowed to limit the minimum price you can sell them at?

Re:Minimal Pricing = Legal Monopoly? (1)

Mr. Slippery (47854) | more than 5 years ago | (#26021041)

If I produce high quality apples that you want to resell, why shouldn't I be allowed to limit the minimum price you can sell them at?

Why should you? Using government force to get me to do something should be the exception, not the rule. You say "it is used by manufacturers to artificially keep the value of the products up" - why should the government help you keep prices artificially high? There might be justification for that in some special cases (for example, agricultural price supports keep farmers in the black during times of glut so they'll still be there in times of drought or famine), but I don't see one for ordinary consumer goods.

I bought your widget - or more precisely, the widget that used to be yours. You got paid. It's mine. You're finished, over, out of the picture, take the money that used to be mine and go home. That's what "bought and sold" means. If you want to dictate my actions after that, then you haven't really sold it and I haven't really bought it. If you want to dictate my actions, we have another sort of transaction called "hiring", where for an exorbitant fee I can be persuaded to perform various actions from my extensive skill set for your benefit.

In a sane world, after I've bought it I can give that widget away, sell it for twice what I paid for it, paint it red and glue bits of garbage to it to make a sculpture out of it, take it apart to see what makes it tick, or take it out in a field and smash it with a sledgehammer. If any of these things make it harder for you to sell widgets in the future, well, tough tittie.

Re:Minimal Pricing = Legal Monopoly? (0)

Anonymous Coward | more than 5 years ago | (#26020385)

http://en.wikipedia.org/wiki/Conditional_sale

In most developed countries there is a concept called "contracts" which allow people to create agreements with conditions more complex than "You take my apple. I take your money"

Is this free market? (3, Insightful)

GreatBunzinni (642500) | more than 5 years ago | (#26019707)

How exactly could a market be described as "free" if a single market actor is able to force other market actors to not sell the goods at a price they see fit?

Re:Is this free market? (0)

Anonymous Coward | more than 5 years ago | (#26019733)

Simple, ask spun and he will surely spi^h^h^h report the facts to you as to how this is somehow "capitalism at its finest"

Re:Is this free market? (1)

characterZer0 (138196) | more than 5 years ago | (#26019771)

I sell you a good and tell you not to resell it less than $50. You freely buy it and resell it for $45. I am then free to not sell you any more.

I cannot imagine that Craigslist is doing anything other than telling the companies to take a leap. Ebay, on the other hand, has shown a willingness to bow to outside pressure at the expense of its users.

Re:Is this free market? (0)

Anonymous Coward | more than 5 years ago | (#26019853)

I sell you a good and tell you not to resell it less than $50. You freely buy it and resell it for $45. I am then free to not sell you any more.

You are correct. However that is not the issue: if I choose to sell the goods for $45 anyway, you have no way to stop me from selling the goods that are already in my possession. You should have made me sign a contract for that to happen.

Basically, what the Supreme Court has done here is award an enforcable contract after the transaction was complete. What the SC should have done instead is refer the arguing parties to basic contract law. If the wholesaler would have sold with a contract, this thing could have been avoided.

Re:Is this free market? (1)

zach_the_lizard (1317619) | more than 5 years ago | (#26019787)

Contracts. If I sell a widget to you, and you sign a contract that says you will sell it at a certain price, then you are bound to do it.

The only time it would not be a free market is if someone (the government, the mafia, or even the company itself) came to the retailers who had no contract in place and held a gun to the owner's head saying, "You will sell it at this price."

Re:Is this free market? (0)

Anonymous Coward | more than 5 years ago | (#26021015)

There have been and always will be limits to what you can enforce in a contract. Pricing used to be considered anti-competitive and wasn't allowed. This decision increased freedom for large corporations (the only ones who do this) and reduces freedom for everyone else. It seems to be the general trend these days.

Re:Is this free market? (2, Informative)

eltonito (910528) | more than 5 years ago | (#26020009)

It might be worth pointing out that hardly anyone experiences a free market in the purest sense of the term. Even so, MAP does not impede a free market. In the majority of market segments there are multiple tiers and multiple marketers within each of those tiers. If Brand X requires a MAP contract and Brand Y does not the market is still free because there are multiple choices available at the wholesale and retail level.

If Sony (for example) wants to enforce a MAP with those retailers/wholesalers they have signed contracts with, I have no problem with it as long as there are other brands available in the marketplace.

Re:Is this free market? (1)

Shajenko42 (627901) | more than 5 years ago | (#26020483)

It might be worth pointing out that hardly anyone experiences a free market in the purest sense of the term. Even so, MAP does not impede a free market. In the majority of market segments there are multiple tiers and multiple marketers within each of those tiers. If Brand X requires a MAP contract and Brand Y does not the market is still free because there are multiple choices available at the wholesale and retail level.

In a free market, minimum pricing wouldn't work because there would be multiple other sellers of identical products. These other sellers would have an incentive to undercut the first seller's terms of sale.

Price limits (4, Insightful)

kvezach (1199717) | more than 5 years ago | (#26019725)

So price floors are good, but price ceilings are bad? As we all know, "only commies allow price ceilings", so this sounds a lot like socialism for the rich and capitalism for the poor.

Re:Price limits (2, Interesting)

Yuuki Dasu (1416345) | more than 5 years ago | (#26019777)

Actually, it's even better.

When you look at America's tax structure, it's clear that we mostly have regressive taxes, i.e. the poor pay a larger percent of their income to taxes than do the rich, overall.

It's socialism for the rich, paid for by the no-safety-net capitalism for the poor.

Re:Price limits (0)

Anonymous Coward | more than 5 years ago | (#26019839)

The poor don't pay taxes at all, you barking nincompoop. Except sales taxes, which don't apply to staples like rent and food in most states.

Re:Price limits (1)

the_bard17 (626642) | more than 5 years ago | (#26020019)

Sounds like your definition of poor and mine differ.

Re:Price limits (0)

Anonymous Coward | more than 5 years ago | (#26020187)

"barking nincompoop"?

If your knowledge of American English is this bad, why should I think you know any more about American taxes? As it happens, clothing and other non-food necessities are taxable. Basic utilities; light, heat, and phone have plenty of taxes and fees. Even in places where food is generally not taxed, there are often many exceptions.

Those below the poverty threshold, about $10,000 don't pay income tax, but they are not exempt from other taxes. And a person earning $15,000 isn't exactly rich either. ... wanker.

Re:Price limits (0)

Anonymous Coward | more than 5 years ago | (#26020037)

It's okay. The rich pay their greater share when the many people without a safety net resort to robbery and other criminal activity, thus providing for: A) a whole new, parallel economy, B) a "security tax" in the form of all those expensive alarm systems, security services and a vast prison system, and C) a community that the rich wouldn't want their children to live in or go to school in, so they pay a "private school tax" or move somewhere expensive to live.

So, they aren't *really* getting ahead. They're just making choices that eventually have other high costs.

Re:Price limits (0)

Anonymous Coward | more than 5 years ago | (#26020359)

So, they aren't *really* getting ahead. They're just making choices that eventually have other high costs.

But are they going to understand that before the country's reduced to the state of South Africa?

Re:Price limits (4, Informative)

maxume (22995) | more than 5 years ago | (#26020321)

False. Here is my source:

http://www.cbo.gov/ftpdocs/88xx/doc8885/EffectiveTaxRates.shtml#1011537 [cbo.gov]

Do you have a source for your claim?

I suppose we could quibble over households vs individuals, but note on that page, there is no instance where moving up into a higher income group results in a cut in overall taxes.

And maybe the wealthy should be paying even higher taxes, I don't know, but the idea that they are paying lower taxes is simply false.

Re:Price limits (0)

Anonymous Coward | more than 5 years ago | (#26020567)

That's only federal taxes. Local taxes, especially sales tax hits the poor the hardest.

Re:Price limits (1)

maxume (22995) | more than 5 years ago | (#26020697)

Sure, but in my state (Michigan), if an individual spent all of their after tax income on goods that had a sales tax, they would be paying a little less than an additional 10.35% to the state (that's 4.35% income tax to the state, and then 6% of what is left, so it will be a little less than 6% of overall income). It happens that food and rent are not taxed (and there is a tax break, for many people, on income spent on housing).

Property taxes are a lot harder to treat (especially when you try to decide how they impact renters), but they are generally pretty much progressive, as people that own/use less valuable property generally pay less (and it is further complicated by the fact that they also generally receive less services).

property taxes (1)

Trepidity (597) | more than 5 years ago | (#26021023)

Property taxes tend to be regressive when look at on income terms, because someone making $1m doesn't on average own a 10x as expensive house as someone making $100k.

Re:Price limits (3, Informative)

Alomex (148003) | more than 5 years ago | (#26020665)

You are only looking at income tax rates. Rich people derive a big portion of their income from capital gains, which is taxed at a much lower rate. The best known example is Warren Buffet, who is taxed a lower rate than his personal secretary (he uses this to support higher taxes on himself).

Re:Price limits (3, Insightful)

maxume (22995) | more than 5 years ago | (#26020759)

Read that link more carefully. They rolled capital gains into the stated incomes.

Warren Buffett is a hilarious special case. The majority of the top 1% do not have millions of dollars of capital gains income, they have millions of dollars of earned income.

I'm not trying to argue about whether the rates are appropriate, I'm just countering the notion that they are heavily skewed downward.

Re:Price limits (1)

Alomex (148003) | more than 5 years ago | (#26020889)

The majority of the top 1% do not have millions of dollars of capital gains income, they have millions of dollars of earned income.

I seriously doubt that. Rich people make most of their money by either owning a business or by stock options (ISOs) if employed high up in a corporation. Both of these are taxed as capital gains.

Re:Price limits (2, Informative)

maxume (22995) | more than 5 years ago | (#26021109)

There aren't that many people that do that, compared to the numbers of people who simply have high earned income working for somebody else. Somehow or another, as a group, the top 1% are paying an effective rate of 30%, so I don't find it particularly likely that the majority of the top 1% are paying less than that (it's mathematically possible, but not likely). I'm not real worried about why they pay those taxes (which is basically what we are discussing).

People like Warren Buffett are certainly getting a sweetheart deal out of that, but he has demonstrated that he is extremely good at deploying capital, so it isn't exactly bad for the country to let him invest his money (and the amount of taxes he pays in real dollars is certainly significant compared to the majority of folks). I guess there could be some work to correct for the difference between the uber-rich and the merely-incredibly-rich, but as a group, they are paying high effective rates. The top 20%, and certainly the top 40%, are not deriving the majority of their income from investments.

One special issue with a guy like Buffett is that he has probably never paid any taxes on more than $55 billion of his nominal wealth. That seems pretty unfair, but on the other hand, he has never accessed any of that wealth either (and Berkshire has certainly paid taxes over the years).

Re:Price limits (1)

baffled (1034554) | more than 5 years ago | (#26021067)

Regardless, your gripes with the tax-system should be directed to your Congressman, not toward rich or poor people.

(Not that I'm accusing you of such; it seems common for people to miss that point.)

price ceilings are actually okay, too (1)

Trepidity (597) | more than 5 years ago | (#26021139)

The Supreme Court overturned the former ban on retail price ceilings a decade before they overturned the one on retail price floors. See State Oil v. Khan [findlaw.com] (1997), which held that a gasoline distributor could put a cap on the retail price the gasoline stations could resell it for.

I don't get it (1, Interesting)

Anonymous Coward | more than 5 years ago | (#26019741)

What's an MAP all about? In the world I thought I lived in, retailers buy their merchandise from wholesalers. Those retailers are then free to handle said merchandise as they see fit, including not selling them at all.

The only argument I see for MAPs is when retailers do not buy merchandise, but act as a middle-men with the wholesaler receiving a percentage cut of the retailers' revenue. And in that case, I agree with the USSC, but then the issue boils down to ordinary contract law. So I don't think this is the case.

So, wholesalers: if you're not happy about how retailers handle your wares: sell it yourself. Otherwise, stop complaining about a market that you chose not to compete in.

Re:I don't get it (1)

cfulmer (3166) | more than 5 years ago | (#26020311)

When you buy something from somebody else, there is a contract of sale that determines the terms and conditions of the sale. The terms of the contract can be in writing, be given orally, or (in the absence of either of those), will go to a set of default terms.

If there's a written contract between a manufacturer and a distributor, one of the terms that the manufacturer can put in the contract is "You will not resell this at less than $X." Or, in this case, "You will not advertise this at less than $X."

It used to be that these clauses were always illegal under US Antitrust law -- it's called "Resale Price Maintenance" (RPM). The Supreme Court's decision said "These are not *always* illegal. Instead, you have to look at the facts and circumstances of the particular case to see if it is illegal."

It's not at all clear that RPM is always a bad thing. If there's a competitive market across product lines, then it doesn't really matter because consumers can always go elsewhere.

That said, I think they're going to get in trouble with bogus claims of copyright and trademark infringement. At best, they might be able to demand that people take their own pictures of the products. But, somebody's going to need to take them on.

Subscribe now? (0)

Anonymous Coward | more than 5 years ago | (#26019763)

"To continue reading, subscribe now" -- why is Slashdot linking to crap like this? Is the WSJ paying Slashdot to help sell subscriptions?

Makes for an awkward situation (4, Interesting)

inflex (123318) | more than 5 years ago | (#26019769)

Enforcing MAPs is often more about maintaining supply chain and sales stability than explicitly trying to be profiteering.

Recently in the model-aircraft world, we had one large online, offshore (Asia) store acquire a large lump of stock from a supplier via proxy (because the supplier explicitly didn't want this online retailer selling their stock), the store promptly dumped the stock into the market at a price within 10~15% of the supplier cost price which was about 30% below MAP (on a $400~$600 item).

This had a couple of immediate effects;
1) Everyone bought stock from the one online store
2) Other major US/Europe stores couldn't match due to legal issues with going below the MAP
3) Said US/European stores stopped purchasing from the factory
4) Existing customers became enraged at the "huge profiteering" (many electronics goods are retailed at roughly 400% of their factory cost or higher)

Ultimately, the factory goes into a situation where they're between a hard place and a rock.

Certainly quite an effective way to crush some competitors in your market space.

We don't like to think that people are carving out huge profits on the items we buy, however the reality is that a lot of what we pay for items -is- profit that pays the wages of people like us who need to buy things to keep on living.

Re:Makes for an awkward situation (5, Insightful)

Locklin (1074657) | more than 5 years ago | (#26019837)

Funny. The "nightmare" situation you describe resulting from a retailer ignoring MAP only becomes a problem because of MAP. 1,2,3 and 4 would not have happened if the regular retailers were "allowed" to lower their prices in response to the current (temporary) situation in the marketplace. Its plain and simple legal manipulation of the retail markets by manufacturers, and hurts everyone else.

Re:Makes for an awkward situation (1)

mkro (644055) | more than 5 years ago | (#26020063)

Doesn't your argument assume that all the stores can afford dumping the prices for an equal length of time? This method sounds like a way to get rid of the smallest shops.

Re:Makes for an awkward situation (1)

inflex (123318) | more than 5 years ago | (#26020145)

Anti dumping laws generally take care of that, of course assuming they're within a jurisdiction where the law can reach ;) Unfortunately the smaller companies are long since dead from it before the law yanks on the collar of the offender and usually then it's all factored in as the "cost of doing business".

Re:Makes for an awkward situation (3, Interesting)

inflex (123318) | more than 5 years ago | (#26020089)

The difference to notice though is that there's a higher cost involved in maintaining a support infrastructure for the product, as apposed to dumping the product and running with the (slimmer) profits.

Essentially the "ultra low cost seller" takes a higher effective profit because they pay no contribution towards maintaining the support network (advertising, support, repairs etc).

You can remove the MAP's, yes, what you'll see then is a lot of retailers refusing to take on the products at the risk of margins going too low to warrant carrying the stock and the after-sale responsibilities.

The problem is in the form of the rogue trader who sells today and is gone 14 days later and yes, customers will and do go and find one of the other resellers to scream and yell when it doesn't work, whom -will- then get shafted if they don't support the item in terms of bad-mouthing (by the customer) or financially (by taking on the problem above and beyond their responsibility - simply to keep the good name). If stores don't like the MAP enforcement then they shouldn't buy the stock to sell. If no one buys the stock then your market has sorted itself out.

MAPs are a minor assurance, from the factory, that when you hand over your money to buy their stock you're not going to end up with something worthless in your hands two weeks later because of some fly by night jerk who submarines the market to make a quick buck and leaves the existing sellers to clean up the mess (as if there aren't already enough market forces pushing against you).

Re:Makes for an awkward situation (1)

Jeff DeMaagd (2015) | more than 5 years ago | (#26020163)

I don't know if it's so simple. Stuff like that does protect the smaller retailers from big B&Ms and online stores. Online stores don't have nearly as many expenses and big B&Ms tend to cut costs by just hiring much cheaper, less skilled and largely ignorant workers. In that particular market (hobby model stuff), the small shop tends to have people that know what they are selling, know how to help the customer and have a bigger variety of kits, supplies & equipment. Online, you do get variety, but then there's the issue of time for delivery unless you pay a lot for next day. I am personally getting more and more resigned to having to order things in.

But I see your argument too, I don't really like any entity having undue power over other entities, but that means I should also bring up the government's power to cancel provisions in private contracts because certain groups of lobbyists don't like what's in the contract. Which I think is a more serious issue than the others, and shouldn't be taken lightly. Laws are not very easy to overturn, if a law should have undesirable consequences, there's a good delay and maybe a big fight to overturn it. That part's not so easy, is it?

Re:Makes for an awkward situation (1)

thrillseeker (518224) | more than 5 years ago | (#26020415)

Well, which would benefit the free citizen more - having a bunch of small stores selling products at legally enforced higher than necessaary prices, or being able to freely make a decision about where to buy his product?

Re:Makes for an awkward situation (0)

Anonymous Coward | more than 5 years ago | (#26019929)

2) Other major US/Europe stores couldn't match due to legal issues with going below the MAP
3) Said US/European stores stopped purchasing from the factory

In other words: the factory killed its own market by enforcing arbitrary limits. As soon as one retailer found a way around those limits, the market was dead.

Ultimately, the factory goes into a situation where they're between a hard place and a rock

I don't see where this should affect the factory at all. If the factory does not get the same revenue for every item sold, that's their own fault. For the producer of a good, it should not matter which channels are used to bring the goods to the customer. Of course, unless the producer employs (regional) price fixing which then backfires.

Re:Makes for an awkward situation (0)

Anonymous Coward | more than 5 years ago | (#26020021)

At that point couldn't you send out a notice to your retailers telling them to temporarily ignore the MAP in order to compete with that Asian company? It sounds like your MAP was more of a price floor than advertised price.

Re:Makes for an awkward situation (1)

inflex (123318) | more than 5 years ago | (#26020253)

You can and they did (incidently I wasn't personally involved, just watched the scene from afar, though I am in the industry),

    However once people get a taste of the "very low price", it's a bit tricky to get them back to eating the higher price be it legitimate or not in a reasonable time span.

    Ultimately the debate comes down into a couple of camps;

1) The theoretical market equilibrium / idealism / no-restrictive-laws-or-boundaries / unlimited-market view
2) The "I'm working in the messed up world and as nice as #1 is it's just not working like that at the moment and there's a market saturation point" view
3) ???
4) PROFIT ;)

Re:Makes for an awkward situation (2, Insightful)

Znork (31774) | more than 5 years ago | (#26020061)

5) US/European customers get much higher costs of living due to things like MAP
6) US/European customers/workers, laden with the highly anti-competitive legal structure cannot compete with Asian workers buying products at factory price.

Ultimately, after borrowing to fund their living for some decades, the citizens are stuck between a hard place and a rock, and simply cannot afford to pay the inflated prices anymore, the last few resources have been pressed out, and we get widescale deflation and an economic crash.

The reality is that price diffrentiation driven by copyrights, patents, trademarks, MAP, anti-paralell-import and other anti-competetive laws are one of the fundamental aspects undermining sustainable global trade. Western labour isn't 'expensive' in a vacuum; the whole cost structure in western economy is getting geared towards exacting as much resources out of the citizens as possible. Protecting the revenue stream of one player means you're decreasing the competitiveness of everyone else.

So the markup paying your wage is temporary at best; it's more profitable to pay someone living in a country without that markup to do your job, keep the markup in the country where you live and collect the profit on the difference.

Re:Makes for an awkward situation (1)

Hoi Polloi (522990) | more than 5 years ago | (#26021033)

Regulation that protects my company = good, regulation that protects someone else (or even just all of us) = bad.

Re:Makes for an awkward situation (1)

baffled (1034554) | more than 5 years ago | (#26021107)

Oh sure, $39.99 for a 6ft HDMI cable is necessary to pay for all those hard working Radio Shack [radioshack.com] employees.

What Is The Trademark/Copyright Violation (2, Insightful)

logicnazi (169418) | more than 5 years ago | (#26019855)

It's probably bogus but I can't even figure out what the theory is on which manufacturers sue unauthorized distributors. I mean my understanding of trademark law is that it's uncontroversial that using a product's name to correctly identify the item you are selling isn't a violation of the trademark. Moreover, merely listing the item name isn't enough to create a copyright violation.

I mean I see how this might work against retail operations or online stores. After all they usually need to put up a description of the product, pictures of the box and other information to make it attractive to the customer. No doubt the allegation is that the text on the box or the blurb describing the item are copyrighted. But how does this reach ebay sellers?

some seemed based on contract law (1)

Trepidity (597) | more than 5 years ago | (#26021087)

The case that went to the Supreme Court actually didn't involve a suit against unauthorized distributors at all: the manufacturer simply cut off the retailer from further shipments after they started offering discounts, and the retailer sued the manufacturer over that, alleging an antitrust violation.

re: Battle Over Minimum Pricing Heating Up (1)

Jim_Racine (587812) | more than 5 years ago | (#26019863)

First of all, if the manufacturer sold the product any retailer or online retailer or individual, in a free market, wouldn't it be their right (the second party's right) to try to sell it for what they could or wanted to? Secondly, I wonder if they are going to try anything with the secondary (used) market? Think about it. Congress and the manufacturers saying "We're going to establish minimum and maximum pricing for the second hand market (people that sell used things after they no longer want them). This will potentially affect everything from garage sales to eBay/Craig's List. Just how do they plan to enforce this?

Saturns, anyone? (1)

ScentCone (795499) | more than 5 years ago | (#26019867)

If you don't allow a manufacturer to strike a voluntary agreement with the dealers they choose to use, then they'll eventually just move to a "company store" model. The whole point of a dealer agreement is to support the manufacturer's choices about who they will have supporting, and representing their products to their end users. You are NOT obligated to support MAP prices... as long as you're also not interested in being able to tell your customers that you're an authorized dealer that supports warranties, etc. You can purchase a nice shiny Nikon D700 DSLR from a US dealer, or you can get a cheaper one that's gray-market... and you'll never get Nikon USA to service it, period. They manufacturer doesn't want to have to take up the slack for the work that legit dealers are supposed to be doing. Legit dealers usually make most of their money off of accessories anyway (HDMI cables, for example), and like having a big name-brand item as an anchor/draw in order to do that accessory business. Companies like Sony don't want to have to wear a bunch of customer service complaints about a retail outlet that "can't afford" to take a lot of time taking care of a customer's problem because they gave away all of the margin on the sale.

Re:Saturns, anyone? (1)

Luke has no name (1423139) | more than 5 years ago | (#26020183)

So you're saying: This is a roundabout way of making sure fly-by-night dealers don't make a quick buck. That way, only established dealers willing and able to sell at MAP (and who can sell support and accessories) will be selling a product. Regardless of intention, and while manufacturers have rights to sell to whomever they want, this is basically job protection for legit dealers and milking a minimum amount of money from consumers.

Re:Saturns, anyone? (1)

ScentCone (795499) | more than 5 years ago | (#26020417)

So you're saying: This is a roundabout way of making sure fly-by-night dealers don't make a quick buck

No, I'm saying that it's a very direct way for manufacturers to help prevent erosion of their reputation. Retailers that don't make enough on the sale to be able to handle the job of selling the product, or who sell the brand without any commitment to supporting the sale afterwards ... if they're still part of the public face of "Sony" as a brand, it hurts Sony.

this is basically job protection for legit dealers and milking a minimum amount of money from consumers

No, it's contract between the manufacturer and the business that wants to represent them by selling their wares. And, not treating a maker's goods as loss leaders and unsupported bad-will sales items isn't "milking" consumers - it's keeping a viable dealer network functioning. That's less expensive for Sony than opening a bunch of Sony stores to replace the work that all of their retail partners are doing, and it's a lot less expensive than what happens to their reputation when more and more of their sales start coming from boiler-room con-man shops in Brooklyn running twenty dodgy web sites.

Nobody has to purchase anything made by Sony. And no retailer has to carry Sony products. If Sony can't offer legit dealers a rational contract, then dealers won't want to touch them. But Sony doesn't want to be Bang & Olufsen, so they approach it differently. And it's up to them. It's all about every party in the picture choosing to be involved with each other. And if you'd prefer to take your business to retailers that don't have a warranty channel available, and which lie about things like which batteries ship with a product, etc., then go for it... but I can tell you who actually gets "milked" when that's how the retail landscape takes over a particular brand... and it's the consumer. Sony doesn't want to swim in those waters, and who can blame them.

Re:Saturns, anyone? (1)

thrillseeker (518224) | more than 5 years ago | (#26020437)

Exactly ... and look at how solid an economy such job protection has given us so far.

oh wait ...

Re:Saturns, anyone? (1)

awfar (211405) | more than 5 years ago | (#26020745)

This is the old stereo store model; you remember, the one you could never afford to buy in? Or like Lisa Simpson moans she can never afford any of Apple's products?

This is all about control, increasing their margins, and creating a profitable, controllable secondary (and price fixing) layer.

Bringing up anything else (like service, whatever that is) is secondary, a smoke-screen. Spin any "service" to someone who makes his bread and butter, or lives and dies, by it. Not someone who lives mostly off the initial sale and who service is a secondary, necessary evil.

You say they make money on their accessories, but that is only because they now actually have to compete on price, but given the chance they will gouge us on price alone -as they have and as I have experienced- for many, many decades.

I say go ahead with the company store model; this simply marginalizes their brand even further, in a world with many up and coming brands; I will still buy wherever and wherever I can.

If Sony doesn't want to handle complaints, then create a good product, not many mediocre ones that break, are obtuse, or of often poor technical quality. Or, get out of the, obviously, profitable market.

Re:Saturns, anyone? (1)

ScentCone (795499) | more than 5 years ago | (#26020921)

If Sony doesn't want to handle complaints, then create a good product

This isn't about "good" products. This is about increasingly complex products. Sony doesn't want to have to run an 800 number to field calls from shoppers who were handed the wrong (or no) cables by a no-margin retailer that refuses to answer questions from the person to whom they just sold a DVR. The retailer can prevent all of that by taking five minutes with the customer during the sale, or by having adequate signage and display info that makes sure the customer understands how the device they're thinking of buying will fit into a 200-variables A/V configuration. The "lowest price on the internet" guys do NOT do such things. But then, they usually aren't legit dealers, either. Sony can just hang up the phone after checking the serial number and advising the shopper to take it back and go instead to real retailer instead of one that refuses to provide support and is dealing in grey market stuff. But Sony won't want to hang up the phone because even though some third party just ripped somebody off (by not providing the support a real dealer is expected to provide along with a Sony product), Sony doesn't want to taint their brand - since the shopper doesn't want to hear about dealer agreements and retail import zones... they just want to record the last episode of Stargate, which is coming on in 30 minutes.

Plenty of people WANT to be Sony dealers. There's no force involved in such dealer agreements. Sony has to turn DOWN the retailers that they don't think are up to the task. If a retailer doesn't like it, they can sell Panasonic instead. Or Brand X from China. And if not a single consumer liked Sony products enough to pay what they are asking for their items, Sony would adjust. But they don't have to, and don't want to. And the government shouldn't step in between them and they retailers that want to sign those dealer agreements just because somebody else wants to have their cake (a Sony product line to sell) and eat it, too (by whoring it out for 5% margins, and skipping out on supporting customers).

Re:Saturns, anyone? (1)

hal2814 (725639) | more than 5 years ago | (#26020771)

"Companies like Sony don't want to have to wear a bunch of customer service complaints about a retail outlet that "can't afford" to take a lot of time taking care of a customer's problem because they gave away all of the margin on the sale."

Ironic that you mention Sony here. Sony is a lot happier selling their products in big box stores where not only do the stores give away the vast majority of the margin on the sale but they also "take care of customers" by expecting Sony to take back any broken hardware, oftentimes long after the warranty would've run out on it. I don't know about Sony specifically but when I bought my HP laptop, there was a sticker just under the top flap begging me to go through warranty rather than return the laptop to the store.

Re:Saturns, anyone? (1)

ScentCone (795499) | more than 5 years ago | (#26020971)

when I bought my HP laptop, there was a sticker just under the top flap begging me to go through warranty rather than return the laptop to the store

Right - because the VAST majority of those returns are from people who simply don't RTFM, and don't understand that Teh Interwebs don't come free in the box... or that WiFi involved other hardware, too. HP would rather take those phone calls and preserve the sale. That's part of their agreement with the retailers. Different products - especially computers - involved different levels of support.

Just bought an HP Mini netbook at Costco. I have NO expectation of Costco providing technical support (though they add a year to the warranty, and will take it back no questions asked), but HP is happy to push those items out through dealers of that kind because HP already has a well-oiled directi support infrastructure in place, and they want to move hardware to compete with Asus and the rest. How they choose to divide the support labor between them and their dealers is and should be up to them. And with that comes the baggage of other contractual terms that define that relationship. If the dealer doesn't like it, they can just choose from a jillion other things to sell. That deal seems to have served HP and Costco both very well - I saw an entire skid of those units sell in less than an hour.

BTW, the HP is a nice little device.

A sale requires the seller's consent (1)

Gothmolly (148874) | more than 5 years ago | (#26019901)

They can set their prices, and then you can choose to resell it at a loss, once you've paid for it. Or has First Sale gone out the window as well?

Re:A sale requires the seller's consent (0)

Anonymous Coward | more than 5 years ago | (#26020933)

basically Asia won't play by your rules so you'd better wake up and smell the change in the air. It's a race to the bottom now and it's probably too late to stuff the genie back in the bottle.

You 7AIL it (-1, Redundant)

Anonymous Coward | more than 5 years ago | (#26020031)

architecture. My Is the ultimate Niigers everywhere the resignation many of us are and, after initial a popular 'news 80s, DARPA saw BSD
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