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DoJ Files Suit Against Apple, Ebook Publishers

Unknown Lamer posted more than 2 years ago | from the project-gutenberg-accused-of-price-fixing dept.

Books 235

forkfail writes "The Department of Justice has filed suit against Apple and a number of book publishers, including Hachette SA, HarperCollins, Macmillan, Penguin and Simon & Schuster, claiming that they worked in collusion to artificially rig prices on eBooks."

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Having solved all other problems (0, Flamebait)

colin_faber (1083673) | more than 2 years ago | (#39645039)

They finally decide to tackel the horrific affects of book publisher collution with Apple.

Re:Having solved all other problems (2)

Jeng (926980) | more than 2 years ago | (#39645069)

Yes, yes they are.

Can you express why they shouldn't be doing this?

Re:Having solved all other problems (1)

Anonymous Coward | more than 2 years ago | (#39645257)

They finally decide to tackel the horrific affects of book publisher collution with Apple.

Yes, yes they are. Can you express why they shouldn't be doing this?

My take is that they seem to be a stalking horse for whoever has the most influence in government. Copyright law grants limited monopolies to these publishing companies for a work, including setting whatever price they like. Amazon was dumping books below cost (literally buying a license at one cost and selling below that cost) in order to build market share locked into their proprietary system and try to establish monopoly influence in ebook readers and online ebook sales. Apple provided a competing service that included letting the publishers set the final price because Apple was just running the service, not setting any prices. So the only real collusion possible would be if publishers agreed together to set a certain minimum price for ebooks in general (something not shown yet).

So my question for the feds would be, "if you've looked into this, why aren't you charging Amazon with dumping since it is illegal under antitrust law?" In the long run is it really better to let Amazon lock users into proprietary formats that only work on their DRM filled device? At least with Apple there are now multiple DRM filled devices for consumers to choose from and Amazon can't use artificially low prices on a few selected works to lure users onto their locked down platform. It also promotes a fairly open standard ebook format and provides the possibility for third party ebook readers to compete based upon no DRM and guaranteed access to your works once they are purchased.

Re:Having solved all other problems (4, Informative)

Zerth (26112) | more than 2 years ago | (#39646033)

Dumping is the act of charging a lower price in a foreign market than one charges in the domestic market. They are not dumping, they are selling loss leaders, an action common in every brick and mortar supermarket or electronics store.

Re:Having solved all other problems (0)

Anonymous Coward | more than 2 years ago | (#39646093)

Certainly Apple is within their rights to let the publishers set their own price. They are not, however, within their rights to collude with the publishers to force Amazon to sell at the same price. Especially since some other ebook distributors were unable to meet these same demands and could no longer sell those publishers books.

Re:Having solved all other problems (4, Interesting)

DurendalMac (736637) | more than 2 years ago | (#39645365)

Because after decades of $100+ physical textbooks from the major publishers, they go after far cheaper eBooks while they're still young.

Why they didn't go after publishers a LONG TIME AGO and only choose eBooks now is beyond me...

Re:Having solved all other problems (1)

DurendalMac (736637) | more than 2 years ago | (#39645639)

Well, I stand at least somewhat corrected. Not all of the eBooks are cheaper. Some of them are actually more expensive, which is absurd. I'd think the publishers would love them because students can't buy used eBooks, but this may have merit. Still, it's frustrating that they do this only now when the price-fixing has been going on for years and years in physical books.

Re:Having solved all other problems (4, Insightful)

Albanach (527650) | more than 2 years ago | (#39646001)

they go after far cheaper eBooks while they're still young.

Do you have an example of a major textbook that's "far cheaper" in ebook format?

Usually I see at most a 10-20% difference. For that you get a book you cannot write in, and which has no resale value. Many paper textbooks can be resold for 40-50% of their purchase price.

Re:Having solved all other problems (5, Insightful)

oodaloop (1229816) | more than 2 years ago | (#39645073)

I think the DoJ may be able to do more than one thing at a time.

Re:Having solved all other problems (0)

Anonymous Coward | more than 2 years ago | (#39645143)

Looks like. [justice.gov]

I could rant and complain about the cases they choose to ignore for political reasons, but I'd rather be happy that some division in there is doing something useful today.

Re:Having solved all other problems (1)

BrooksMarlin (141819) | more than 2 years ago | (#39645079)

John Gruber.....is that you?

Re:Having solved all other problems (4, Insightful)

Troyusrex (2446430) | more than 2 years ago | (#39645101)

Well, price rigging is an important issue. If it were gas that they were doing this with and your gas started costing $4+ a gallon you'd care more. Oh... wait....

Re:Having solved all other problems (2, Insightful)

Moryath (553296) | more than 2 years ago | (#39645193)

You'll never get gas price rigging solved.

The Republicans don't want it solved, they've blocked EVERY attempt to put proper regulation on the oil speculation market (which is where the prices are being driven up far beyond normal market pricing) because they get tons of donations from the oil speculators and kickbacks from oil industry execs in exchange for federal subsidies.

Re:Having solved all other problems (5, Insightful)

Anonymous Coward | more than 2 years ago | (#39645467)

It has nothing to do with whoever is in office. The US has no control over an internationally traded commodity and never will. The US can only *temporarily* affect the market. The US can dump several million barrels on the market and OPEC will just cut production the same amount. No effect. So regardless of which party you hate they can do nothing and anyone claiming they can is a liar.

Until the US can import no oil at all they are subject to the international price and even then I am not certain though I would think you would have more power to control domestic prices if it is all internal. Now the subsidies are another matter, but I don't know enough about them to know whether they are having an effect, positive or negative, on domestic oil prices.

Re:Having solved all other problems (0)

Anonymous Coward | more than 2 years ago | (#39645555)

He's TEAM BLUE and so TEAM RED is to blame. Can we get the opinion of someone from TEAM RED? What's that you say? TEAM BLUE is to blame? Interesting.

We don't need opinions like yours. Independent, rational thought has no place in our society.

Re:Having solved all other problems (0, Flamebait)

Moryath (553296) | more than 2 years ago | (#39645605)

WRONG!

Right here, moron [howstuffworks.com] .

The problem is that in the 1980s and 1990s, Republicans were GLEEFULLY GETTING SPECULATION REGULATIONS REPEALED. It's the same sort of crap in other markets (see: Republican repeal of Glass-Steagal separation of banking and stock market) that caused the Bush Depression.

Re:Having solved all other problems (2, Informative)

Anonymous Coward | more than 2 years ago | (#39645969)

Caused???? Are you crazy, the 'Bush Depression" was caused by every idiot that bought a house they knew they couldn't afford if there was any kind of ripple in their finances. Truth be told both parties were responsible for the trouble we are now in. The Pub's repeal the controlls and the Dem's pushed bad policies based on the belief that 'everyone had the RIGHT to be a homeowner' (wether they could afford it or not).

Re:Having solved all other problems (0)

Anonymous Coward | more than 2 years ago | (#39646315)

mod up

Re:Having solved all other problems (0)

Anonymous Coward | more than 2 years ago | (#39646435)

So more government regulations on top of an already over regulated free market? Umm no thanks ... How about we solve our own problems instead of letting the government do it. They have such a great track record ...

How about we use the oil we have, drill, or partner with Canada and stop using Middle Eastern Oil. There are many options, letting the government control anything is never a good choice.

Re:Having solved all other problems (1)

jrroche (1937546) | more than 2 years ago | (#39645237)

They finally decide to tackel the horrific affects of book publisher collution with Apple.

I can understand why, but I think you're mistaking the DoJ for the DoE, which, apparently, does have some problems with spelling education it needs to work out.

Re:Having solved all other problems (1)

Anonymous Coward | more than 2 years ago | (#39645591)

The Department of Energy (DoE) has nothing to do with eduction. What you're looking for is the United States Education Department (ED)

Look mah! (0)

Anonymous Coward | more than 2 years ago | (#39645049)

Iz Christmas!

link to complaint (1)

Anonymous Coward | more than 2 years ago | (#39645083)

http://online.wsj.com/public/resources/documents/ebooks04112012b.pdf

Really? (-1, Redundant)

Hatta (162192) | more than 2 years ago | (#39645091)

Aren't eBooks cheap enough as it is? Doesn't the DoJ have bigger fish to fry? When can we expect RICO charges against Lloyd Blankfein?

Re:Really? (5, Insightful)

Anonymous Coward | more than 2 years ago | (#39645125)

Well. Since ebooks seem to be priced at higher than print book prices....no. no they are not cheap at all.

Re:Really? (-1, Troll)

Hatta (162192) | more than 2 years ago | (#39645507)

I suppose so. But I still don't see any reason why this would be a higher priority than punishing the criminals who crashed the world economy in 2008.

Re:Really? (3, Informative)

getNewNickName (980625) | more than 2 years ago | (#39645687)

It's the difference between wholesale and agency models that brings about the curious discrepancy in prices. Print books fall under the wholesale model: they are bought at a discount from the publisher and the retailer gets to set the price they sell at. Whereas for eBooks, sold under the agency model, publishers set the price on the book and the retailer gets a percentage of the sale. Under the wholesale model the retailer can choose to make a particular book a loss-leader or negotiate a deeper volume discount so that they can offer lower prices. The retailer has no control over the pricing for the agency model.

Re:Really? (3, Interesting)

ZombieBraintrust (1685608) | more than 2 years ago | (#39646043)

The agency model is what Apple and the publishers are being sued over. The retailer doesn't have control over price because of the price fixing. Thus you get wierd things like ebooks costing more than discounted physical books. I think physical books will still sometimes cost more than ebooks even if the agency model goes away. At some point physical bookstore need to clear their inventory. They do this by selling unwanted books at cost. Ebook stores don't have inventory issues so they will never offer discounts. Of course no one cares about this. These are unwanted books. People don't like the price difference on best sellers on release day. That problem will be solved.

Re:Really? (4, Informative)

SJHillman (1966756) | more than 2 years ago | (#39645313)

Although some eBooks are cheap or free, most of the popular ones cost as much or more as their dead tree counterparts

Re:Really? (4, Informative)

cpu6502 (1960974) | more than 2 years ago | (#39645551)

Well here's the spin I just heard on MSNBC (you can decide how accurate it is). "The standard price for ebooks was $9.99 but when Apple started selling them, they colluded with the publishers and raised that price to 14.99 or even 19.99. So claims the DOJ."

If that is true, it's called price-fixing and forming a cartel. It is illegal under U.S. Consumer Protection Laws (antitrust).

 

Re:Really? (5, Interesting)

canajin56 (660655) | more than 2 years ago | (#39645805)

Don't know if the "collusion" bit is true, but Shyster and Shyster books are all $19.95 on Amazon and Kobo, even while the paper version of the same book is going for $6. They used to be less than the paperback, which is why it made economic sense to buy an ereader, since you'd eventually make the money back in book savings. Now you're paying treble for a book you cannot lend, resell, or give away.

Cheap enough? (1)

Comboman (895500) | more than 2 years ago | (#39646091)

Lets see. I can download a best-selling song for $0.99. I can download a best-selling app for $1.99. I can download a best-selling book for $19.99. Yeah, something's wrong there. At the very least, ebook prices should be closer to paperback prices than hardcover prices. Ideally they should be similar to song & app prices.

I hope they get raked over the coals for this (5, Insightful)

Golgafrinchan (777313) | more than 2 years ago | (#39645095)

This was such a blatant price-fixing scheme among the publishers that it's surprising to me that it took the DOJ this long to take action. That said, based on what I've read I'm not completely convinced of the extent to which Apple was involved in this. Yes, they agreed to the new agency pricing model, but it seems to me that they could try to argue, "Hey -- the publishers came to us with this idea. We didn't know they wanted to go that route to reduce competition and put pressure on Amazon! Honest!" But if there's a paper trail mentioning Amazon, I think Apple is toast.

And regardless, I hope the publishers get crushed on this one. While I won't go so far as to suggest that they don't serve any useful purpose anymore (as some people do), they _are_ dinosaurs and need to be dragged into 21st century competition. This should do it.

Re:I hope they get raked over the coals for this (2, Interesting)

Anonymous Coward | more than 2 years ago | (#39645175)

wasn't it in steve jobs biography him stating that ebooks couldn't be cheaper than in the itunes store or he wouldn't allow them to be in the store at all? That seems that Apple would have actually been the driving force.

Re:I hope they get raked over the coals for this (1)

Anonymous Coward | more than 2 years ago | (#39645475)

That's not price fixing that's aggressive negotiation.

Price fixing is when competing entities collude to avoid having to compete with each other on price. Say Big Toothpaste saying, we're all charging X per tube that way we don't have a race to the bottom and everyone gets a profit.

What Apple did was say: You want to sell through our store? Than you have to agree to this contract. Take it or leave it, we're not listening to a counter offer. That contract hapens to include a clause saying that you wouldn't give one of Apple's competitors a better price. Which is less restrictive than the fairly comon exclusivity clause which says you can't sell to anyone but us until this contract ends.

Now it is also possible that Apple made other agreements with the publishers that are price fixing. But requiring that they get the lowest price you offer is not in and of itself price fixing.

Re:I hope they get raked over the coals for this (5, Informative)

Richard_at_work (517087) | more than 2 years ago | (#39645223)

One of the things that might bury Apple is the "you cant have your ebook priced cheaper anywhere else" requirement - with the price including Apples cut.

Re:I hope they get raked over the coals for this (0)

DurendalMac (736637) | more than 2 years ago | (#39645385)

That only applies to iBooks specifically built with Apple's software. You can have the same content sold elsewhere, just not built with the iBook builder.

Re:I hope they get raked over the coals for this (2)

Richard_at_work (517087) | more than 2 years ago | (#39645505)

Nope, I heard about the above issue when iBooks was first released, well before the builder software was publicly released for general usage.

Re:I hope they get raked over the coals for this (1)

DurendalMac (736637) | more than 2 years ago | (#39645663)

And Apple clarified the license shortly after the controversy erupted over the issue. They don't have exclusive rights to the content, just the specific iBook built with their software.

Re:I hope they get raked over the coals for this (3, Informative)

Richard_at_work (517087) | more than 2 years ago | (#39645533)

Also meant to say, the issue you are thinking of was the "Apple claims ownership of anything produced with the iBook builder", not what Im talking about.

Re:I hope they get raked over the coals for this (1)

DurendalMac (736637) | more than 2 years ago | (#39645675)

Ah. I'll have to take a look at this part, then.

Re:I hope they get raked over the coals for this (1)

MyNameIsFred (543994) | more than 2 years ago | (#39645581)

Actually, I doubt that this will be a problem. Such language is fairly common, it is known as the most favored nations clause [esourcingforum.com]

Re:I hope they get raked over the coals for this (2)

makomk (752139) | more than 2 years ago | (#39646179)

A "most favoured nation" clause restricts the price that company A can charge company B for something. Apple's restriction is different - they limit the price that company A can allow company B to resell its products to consumers for, which is price fixing.

Re:I hope they get raked over the coals for this (1)

ZombieBraintrust (1685608) | more than 2 years ago | (#39646221)

The link you provides state the following:

How do you enforce this? The amount of work that would be necessary to track down these competitive bids is prohibitive and might not be legal, in some cases. For that matter, why not just run a reverse auction if you suspect better pricing is available?

Re:I hope they get raked over the coals for this (1)

getNewNickName (980625) | more than 2 years ago | (#39645751)

One of the things that might bury Apple is the "you cant have your ebook priced cheaper anywhere else" requirement - with the price including Apples cut.

The above clause doesn't seem to hurt consumers, we all get cheaper prices so why would the DoJ have an issue with it? The issue is whether the agency model of selling books is causing prices to be artificially inflated over the wholesale model.

Re:I hope they get raked over the coals for this (3, Insightful)

ZombieBraintrust (1685608) | more than 2 years ago | (#39646267)

They have an issue with it because they can show that prices went up not down. You can't say the contract was pro compitition and then have a uniform price increase amoung all the publishers involved.

Re:I hope they get raked over the coals for this (1, Insightful)

DurendalMac (736637) | more than 2 years ago | (#39645395)

The thing is....why didn't this happen YEARS ago with physical books? Those have been price gouged for a long, long time, especially when they have 12 editions with maybe a handful of pages' worth of difference between the first and the last.

Re:I hope they get raked over the coals for this (4, Insightful)

Golgafrinchan (777313) | more than 2 years ago | (#39645579)

It's an interesting point. But the reason is that to my knowledge, there _wasn't_ any price fixing prior to ebooks. I believe that publishers have always sold physical books to retailers using the wholesale model, and then leave it up to the retailers to set the price paid by customers. As long as the publishers didn't conspire to set those wholesale prices collectively, then there's no price fixing. There may have been some 'tacit' collusion (in that they don't formally agree upon prices, but that they follow each other like airlines), but that's generally not illegal in the US.

The issue in this case is that there _is_ evidence that the publishers collectively decided to adhere to the same pricing scheme. That is illegal.

Re:I hope they get raked over the coals for this (1)

grriffin (960397) | more than 2 years ago | (#39646309)

You're talking specifically about text books, right? I think there are other market forces at work with text books. For instance, students are required by the school/professor to buy a specific edition of a specific book. That right there eliminates text books from the discussion here doesn't? The suit is about allowing a book seller to buy books at a wholesale price, and then sell them for whatever margin they choose above that. Apple wanted to keep their 30% cut like the app store, and talked the publishers into changing the system to let the publishers set the consumer price, while the seller gets a specific cut of that price. This eliminates an advantage that one seller has over another, because they can't choose to sell at a lower price to draw customers. Where the problem with textbooks is that the publisher merely has to pressure the state/school/professor to require a new edition for a class. Where you end up buying the book after that deal is made doesn't affect the price that much.

Re:I hope they get raked over the coals for this (5, Insightful)

k4hg (443029) | more than 2 years ago | (#39645631)

Apple will not be toast.

Worst case they pay a small (for them) fine without admitting wrongdoing, and promise never to do it again. What happens then?

Well, Apple can sell their books at cost or below because their profit comes from hardware. The iTunes store is a tiny blip in Apple's revenue, and ebooks a small part of that tiny bit. The publishers can raise the price Apple, Amazon, and others pay for ebooks, and will to preserve their income. Amazon gives away their hardware at cost, so somewhere they need to start making profit on media. It is widely believed that Amazon is selling many books below publisher's cost in order to drive others out of the business. Once it is clear that Apple can (and will because they have lost the agency model) match Amazon's prices and is in the ebook business to stay, Amazon won't be so anxious to lose money. Then prices will come back to where they have been, maybe even higher.

Apple still breaks records every quarter, Amazon chugs along on its slow growth curve, the publishers keep making some money, and 99% of authors still starve. Nothing's going to change.

Re:I hope they get raked over the coals for this (4, Insightful)

ColdWetDog (752185) | more than 2 years ago | (#39645791)

Nobody is getting 'crushed' on this. At worst, a couple of publishers and Apple will pay a fine. Most likely they will sign something that said 'we didn't really do anything, but we agree not to do it again'. Some lawyers will make money. The DOJ lawyers will carve another notch in their desks.

Consumer prices won't go down. (But they will go up).

Yay! Class action? (1)

cpu6502 (1960974) | more than 2 years ago | (#39645097)

Last time the DOJ sued a cartel (CD companies), I and several family members got $25 each for refunds. It was the punishment for overcharging and price-fixing.

Finally the E-Book Publishers are getting caught (1, Insightful)

gubers33 (1302099) | more than 2 years ago | (#39645111)

While the oil companies continue to make record profits as they keep the price of gas jacked up... cause that isn't collusion.

Re:Finally the E-Book Publishers are getting caugh (3, Informative)

neochubbz (937091) | more than 2 years ago | (#39645243)

You do realize that the price of crude oil (and therefore gasoline) is determined by the spot market, and therefore the oil companies have (almost) nothing to do with the price of gasoline you pay at the pump?

Re:Finally the E-Book Publishers are getting caugh (1)

SJHillman (1966756) | more than 2 years ago | (#39645333)

Not to mention that taxes account for a sizeable portion of what you pay at the pump - one of the big reasons states like NY and CA are so much more expensive than their neighbors.

Re:Finally the E-Book Publishers are getting caugh (0)

Anonymous Coward | more than 2 years ago | (#39645455)

Not to mention that oil companies decid how much oil gets pumped and how much gets refined and any nation that goes against them suddenly gets hit with a rain of bombs (a sizable portion of which are paid for at taxpayer expensive i.e. all of them).

Re:Finally the E-Book Publishers are getting caugh (1)

swillden (191260) | more than 2 years ago | (#39645517)

You do realize that the price of crude oil (and therefore gasoline) is determined by the spot market, and therefore the oil companies have (almost) nothing to do with the price of gasoline you pay at the pump?

Come on, man, don't you know that high prices are rock solid evidence of anti-competitive collusion? You must be a one-percenter.

Re:Finally the E-Book Publishers are getting caugh (1)

Anonymous Coward | more than 2 years ago | (#39645621)

You do realize that the price of crude oil (and therefore gasoline) is determined by the spot market, and therefore the oil companies have (almost) nothing to do with the price of gasoline you pay at the pump?

You do realize a market consists of suppliers and consumers. How would suppliers have nothing to do with the price? Oil producers know full well that how much they produce (or refine) has a lot to do with how much they can sell it for.

Re:Finally the E-Book Publishers are getting caugh (0)

Anonymous Coward | more than 2 years ago | (#39645347)

Yeah, because oil companies are getting away with it, everyone else should, makes sense, you should be a politician.

The oil companies aren't the ones jacking it up (1)

Quila (201335) | more than 2 years ago | (#39646139)

For example, Exxon's profit on a gallon of US retail gasoline is about seven cents. They have big numbers in profit because of the large amount of product they sell.

In fact, of all industries, oil and gas has one of the lower profit margins, far outpaced by the likes of soft drinks, electronics and chemicals.

Your state and the federal government takes many times more than that in taxes. So if you want to demonize someone for gouging you at the pump, look at your politicians, especially the "green" ones.

Re:Finally the E-Book Publishers are getting caugh (1)

cpu6502 (1960974) | more than 2 years ago | (#39646457)

The oil cartel OPEC does not fall within EU or US juris diction. I thought that was bleedin' obvious.

Just wrong on all counts (5, Informative)

etresoft (698962) | more than 2 years ago | (#39645159)

I have a book in the iBookstore. I set the price on it. Apple sells it for that price and gives me 70%. I have the same book in the other bookstores. I have no control over the price. They give me what they want, which is half of what Apple gives me. I have no choice or say in the matter. And the Department of Justice sues Apple? That's just wrong.

Re:Just wrong on all counts (4, Insightful)

gstrickler (920733) | more than 2 years ago | (#39645227)

I have the same book in the other bookstores. I have no control over the price. They give me what they want, which is half of what Apple gives me.

If you have control over whether it's in those other bookstores, then, yes, you do have control over the price. You don't like their terms, don't publish it there. That's how you control it.

Re:Just wrong on all counts (2, Interesting)

Anonymous Coward | more than 2 years ago | (#39645315)

If you have control over whether it's in those other bookstores, then, yes, you do have control over the price. You don't like their terms, don't publish it there. That's how you control it.

The problem being, what if there is only one option that dominates the industry by luring people in by selling Hunger Games below the price they paid for it? Everyone buys that reader, uses the built in store, and you can either pay them what they ask or go away and not do business. That is why establishing dominance through dumping is against antitrust law, which is what Amazon was doing. Why is the DOJ not going after Amazon again?

Re:Just wrong on all counts (1)

milbournosphere (1273186) | more than 2 years ago | (#39645349)

My understanding of the issue is that the speaking point isn't that they're setting the price, but rather that they require you to sell your book for at least that price if you put your book in another book store. Basically it ensures that iBooks is on-par with the lowest price available. Is my understanding incorrect? I'm not a publisher or a writer, but stacking it so that iBooks has the lowest price available seems to be kind of shifty.

What is shifty about wanting the best price? (1)

perpenso (1613749) | more than 2 years ago | (#39645563)

What is shifty about wanting the best price? If Store A sees that Store B is getting a better price from the manufacturer of course Store A wants the manufacturer to match that price.

Re:What is shifty about wanting the best price? (1)

milbournosphere (1273186) | more than 2 years ago | (#39645747)

But REQUIRING it? I don't think Apple should be able to affect your pricing model on somebody else's store. What if Amazon (for example's sake) wants to feature a book put it book on sale to generate more purchases? If that sale price falls below Apple's pricing, the author suddenly finds himself between a rock and a hard place. I don't think it's fair to require the author to choose between taking Amazon's offer or keeping their book on iBooks.

Market Structure (2)

alexander_686 (957440) | more than 2 years ago | (#39645953)

What is (alleged) to be happening is that Store A (Apple) sees that Store B (Amazon) is getting a better price, so they pressure the publisher to raise the price they sell to Store B (Amazon). The publishers are happy to follow Apple’s lead and crank up the price for everybody.

What you really want to do is study the structure of the market. The buyer, seller, and the middle man gains in a transaction – If they didn’t then there would be no transaction. However, the next question is how the gains are split. Does 80% of the gains towards the seller or only 20%. The lawsuit alleges that Apple et.al. restructured the marketplace so more gains would roll towards the Publishers (and thus indirectly hitting Apple’s competitor - Amazon)

Re:What is shifty about wanting the best price? (1)

recoiledsnake (879048) | more than 2 years ago | (#39646159)

What is shifty about wanting the best price? If Store A sees that Store B is getting a better price from the manufacturer of course Store A wants the manufacturer to match that price.

The issue is not about the manufacturer's price to stores A and B, but the sale price.

Store B can't discount it below Store A's sale price(which has 30% profit margin built into it). So if Store B is okay with just 20% margin, they can''t sell it for that, because that would violate the manufacturer's contract with store A not to have it on sale anywhere for less. Note that the manufacturer's price is the same to both stores in this example.

Re:Just wrong on all counts (0)

Anonymous Coward | more than 2 years ago | (#39645859)

Preferred customer agreements happen all the time. The big deal here is that the switch from "we promise to sell this to you at the lowest cost" to "we promise you will be able to set the resell price for everyone else by forcing our other customers to match or exceed your retail, even if they are more efficient or are willing to sell at a loss".

By gaining the ability to set the actual retail prices instead of merely the "manufacturer's suggested retail price"(which almost nobody actually uses), the publishers then engaged in price fixing.

They'll have a tough time proving that the publishers colluded directly, but Apple has set themselves up to be included as either the intermediary or the mastermind of the idea.

Re:Just wrong on all counts (-1, Offtopic)

sujan444 (2605375) | more than 2 years ago | (#39645361)

I have a book in the iBookstore. I set the price on it. Apple sells it for that price and gives me 70%. I have the same book in the other bookstores. I have no control over the price. They give me what they want, which is half of what Apple gives me. I have no choice or say in the matter. And the Department of Justice sues Apple? That's just wrong.

fine how to make money [vuthang.org]

Re:Just wrong on all counts (1)

uniquename72 (1169497) | more than 2 years ago | (#39645421)

The point is that price-fixing is anti-consumer. Of course it works out great for you; you're not the consumer.

Re:Just wrong on all counts (1)

StormReaver (59959) | more than 2 years ago | (#39645451)

I have a book in the iBookstore.

You wield no market power, so you can do whatever you want with your book price. The publishers targeted by the lawsuit exert a combined market power so great as to be able to control the market when in collusion. This is why they are being sued, and rightfully so.

Re:Just wrong on all counts (1)

PaulMorel (962396) | more than 2 years ago | (#39645543)

What he's referring to is the fact that Amazon retains the right to cut the price of the books in their Kindle Store without compensating the author. So even if your book costs $20 normally, Amazon can put your book on sale for $1 and give you the same percentage - NOT THE SAME AMOUNT.

Re:Just wrong on all counts (0)

Anonymous Coward | more than 2 years ago | (#39645897)

Woah, there! Slashdot is a forum where people complain about companies and rich people to get them to offer their products for free and give away their source code. Giving the business perspective is just wrong and goes against the nature of the forum. People please downvote the above post to preserve the integrity of an open forum.

Re:Just wrong on all counts (1)

recoiledsnake (879048) | more than 2 years ago | (#39646251)

I have a book in the iBookstore. I set the price on it. Apple sells it for that price and gives me 70%.

I have the same book in the other bookstores. I have no control over the price. They give me what they want, which is half of what Apple gives me. I have no choice or say in the matter.

And the Department of Justice sues Apple? That's just wrong.

Eh what? The problem is that Apple is forcing the 30% margin on all sellers.

Lets take your example and you set your price at $10 at iBookstore. Apple takes $3 and gives you $7.

You want to sell it at Amazon so you sell the book to Amazon at the same $7. But Amazon HAS to sell it at $10. They cannot take only $2 and sell it at $9 because of your contract with Apple to not have it on sale anywhere else for less than $10. This is price fixing and artificially raises the cost of the books to the consumer for Apple's profits.

Imagine if Walmart put this rule saying that no store can sell any products that they sell at a lower cost.

Cause and Effect (1)

ZombieBraintrust (1685608) | more than 2 years ago | (#39646549)

They are not claiming that independent authors are conspiring together to set prices. Clearly there is no price fixing going on among indepedents. Books from independents are cheap and sold at several price points. They are saying the publishers conspired together not to compete on price. They are saying Apple assisted them.

They are asking why prices went up from $9.99 to $14.99 uniformly for ebooks sold by publishers after Apple entered the market. New competition is supposed to drive prices down not up. Costs didn't go up. Demand didn't go up. Supply did not go down. Ebooks didn't suddely become longer or increase in quality. The only thing that changed was that the publishers met with Apple and set prices.

DoJ money grab (1)

sl4shd0rk (755837) | more than 2 years ago | (#39645181)

I'd like to think that the DoJ is actually interested in keeping the future of published works out of proprietary formats but I know better.

Re:DoJ money grab (1)

Richard_at_work (517087) | more than 2 years ago | (#39645247)

Why should the DoJ care which way the market goes on formats? Thats a different issue, not one covered here.

Way to go feds! (1)

Anonymous Coward | more than 2 years ago | (#39645213)

Attack America's last successful company, good job.

Collusion is everywhere (-1)

Anonymous Coward | more than 2 years ago | (#39645245)

I don't understand why they choose a relatively minor, non essential industry to pick on. Oh yeah, I forgot.. We're in the middle of a major campaign season. Gotta look good to the rubes back home.

I just bought a test prep book at Amazon (5, Informative)

gelfling (6534) | more than 2 years ago | (#39645253)

The paperback was $38 shipped and the downloadable version was $97. Excuse me but that's insane.

Re:I just bought a test prep book at Amazon (1)

SJHillman (1966756) | more than 2 years ago | (#39645375)

eBooks take the "convenience fee" to the extreme, but it's really no difference than TicketMaster charging me $10 to buy the ticket online or my water providr charging $2 to pay online (on top of the 3% credit card fee). Reserving a campsite online was also $9 extra.

Re:I just bought a test prep book at Amazon (0)

Anonymous Coward | more than 2 years ago | (#39646193)

Excuse me, but it's a lot different.
Since there's zero costs to print and ship, it should be cheaper not way more expensive.

Re:I just bought a test prep book at Amazon (1)

cpu6502 (1960974) | more than 2 years ago | (#39645715)

It doesn't happen often but sometimes the e-edition is cheaper. One of my magazines, Fantasy & Science Fiction, is 1/3rd the cost through the electronic edition versus the paper edition. i.e. I save ~$24 per year.

Re:I just bought a test prep book at Amazon (0)

Anonymous Coward | more than 2 years ago | (#39646265)

Actually, except for some text books and pre-release editions, All of the e-books I have purchased have been same or less than paperback price.

Re:I just bought a test prep book at Amazon (4, Informative)

getNewNickName (980625) | more than 2 years ago | (#39645913)

The paperback was $38 shipped and the downloadable version was $97. Excuse me but that's insane.

This is probably an extreme example of the difference between the wholesale vs the agency model pricing. The retailer sets the price under the wholesale model, while the publisher set the price for the agency model. In this case the publisher wanted to sell at $97 while the retailer, with its deep wholesale discount, chose to sell it at $38.

The Goverment Helping The Little Guy (2, Funny)

assertation (1255714) | more than 2 years ago | (#39645337)

Wow, the U.S. government helping people who are not rich, who do not run corporations? Are the Republicans on sabbatical?

Re:The Goverment Helping The Little Guy (0)

PPH (736903) | more than 2 years ago | (#39645449)

Are the Republicans on sabbatical?

No. They're busy biting each other in the ass over the next GOP presidential ticket.

Re:The Goverment Helping The Little Guy (0)

cpu6502 (1960974) | more than 2 years ago | (#39645799)

If you think the D's are any better than the R's you've not paid attention these last 6 years (when the D's controlled the Congress and/or presidency). Right now I'm not really seeing any difference. No change.

And in defense of the Republicans, this isn't the first time the DOJ acted to sue a cartel. There was the CD cartel in 2002, the lawsuit levied against Paypal in 2003, the investigation of Toyota for engines that failed after only ~25,000 miles (started in 2005 and still ongoing), et cetera. All under a Republican administration.

Re:The Goverment Helping The Little Guy (0)

Anonymous Coward | more than 2 years ago | (#39646205)

Wow, the U.S. government helping people who are not rich, who do not run corporations? Are the Republicans on sabbatical?

The above statement assumes that Democrats do not have their share of greed, graft, incompetence, and imbeciles. Oh wait, this is /.

Anti-competitive behaviou: Price fixing vs Dumping (2, Informative)

Anonymous Coward | more than 2 years ago | (#39645351)

It is worth mentioning that it is widely believed that price fixing by Apple et al is a response to perceived dumping (selling at a loss) by Amazon.
In other words, it may be a case of using one form of anti-competitive behaviour (price fixing) to battle a different form of anti-competitive behaviour (dumping).
http://www.theglobeandmail.com/news/technology/tech-news/us-sues-apple-publishers-on-e-book-agency-model-price-fixing/article2398161/

Since launching the Kindle in 2007, Amazon has made a point of offering best-sellers for $9.99. The discount is so deep from list prices of $20 and more that it's widely believed Amazon is selling the e-books at a loss as a way of attracting more customers and forcing competitors to lower their prices. Amazon also has been demanding higher discounts from publishers, and stopped offering e-books from the Independent Publishers Group, a Chicago-based distributor, after they couldn't agree to terms.

When Apple launched the iPad two years ago, publishers saw two ways to balance Amazon.com's power: Enough readers would prefer Apple's shiny tablet over the Kindle to cut into Amazon's sales and the agency model would stabilize prices. Apple's iBookstore has yet to become a major force, but publishers believes the new price model has reduced Amazon's market share from around 90 per cent to around 60 per cent, with Barnes & Noble's Nook in second at 25 per cent. The iBookstore is believed to have 10 to 15 per cent.

Re:Anti-competitive behaviou: Price fixing vs Dump (1)

gmuslera (3436) | more than 2 years ago | (#39645789)

Why is a loss selling a digital version of a book at the same or similar enough price as the paper version, that have a physical space, a bunch of intermediaries, have to be transported (sometimes overseas) and must be stocked by libraries while covering in the price not selling all, or being stolen or whatever? The price of ebooks should be 99% author profit, and still would make a huge profit for amazon/apple/b&n/etc.

Re:Anti-competitive behaviou: Price fixing vs Dump (2)

cdrguru (88047) | more than 2 years ago | (#39646161)

First off, the publisher doesn't have any of the issues that you are talking about - printing and shipping books is really cheap. Maybe $2 for most soft-cover books and maybe $0.25 to ship it (with others in a box) anywhere in the US. After it gets there, it is the book store's problem which does not affect the price the publisher is charging. Same thing with getting stolen - not the publisher's problem.

Most of the book's cost is the editing and promotion. No editing has been tried and it sucks. You can find many self-edited books for the Kindle on Amazon and almost universally they aren't worth the $0.99 they are charging for them. Authors are not editors. Promotion isn't optional either - if you don't get the book noticed, nobody will buy it. Promotion isn't all advertising to the consumer, either. There is a lot of promotion that goes on just to get a book store to put it on the shelf or a reviewer to bother to read it instead of the hundred other books they got that week. So the reviewer reads it, writes about it and the book store puts it on the shelf because money was spent promoting it. End result is people hear about it and buy it.

Want to guess how many books are produced each week that nobody knows anything about? Promotion is the only way out of that trap.

If you can figure out how to replace editing and promotion (which is what the publisher does and nearly all of what they do) and get rid of the publisher, great. But not doing those things is not an option.

By the way, I'll bet you didn't know that publishers do not print books - that is done by a book printing company which is usually far, far away from the publisher. Again the publisher provides editing and promotion and that is about all they do.

Re:Anti-competitive behaviou: Price fixing vs Dump (1)

cpu6502 (1960974) | more than 2 years ago | (#39645909)

Contrary to popular belief, there is nothing illegal about selling at a loss. Microsoft does it with Windows. Apple does it with OS X. Sony and Nintendo and Sega do/did it with their consoles. Shaver and razer makers do it with with their shavers/razers (and make money off the replacement parts like blades). Stores do it with "loss leaders" like $50 bluray players that cost $150, in order to attract customers to the building.

None of that is illegal, and neither is what amazon is doing with its low-priced kindles and ebooks.

So what? (0)

Anonymous Coward | more than 2 years ago | (#39645387)

This is the number 2 ebook retailer was trying to gain share on number 1 - while if the allegations are true there is some element of anti-trust, this is not like the number 1 trying to drive the number 2 into the ground.

Assuming there is antitrust here and there is a settlement, the really interesting thing will be how it plays out. The DOJ will not remove the books of these publishers from Apple - that would hurt the consumer who could not longer get them on their iPad without using Amazon's Kindle app, and if they went that route they are awarding Amazon a monopoly on these five publishers' books and the cost to consumers would rise.

So most likely everyone will pay the DOJ some money and agree not to do it again. The income for these publishers drops, so what will they do? Yes, raise the wholesale prices on Amazon and Apple. Remember. Apple makes it money on hardware, the iTunes store is a tiny part of their revenue and ebooks a small part of that. So Apple sells ebooks at cost - this doesn't help us, because that cost has just gotten greater and the net is the same for us. If it plays out this way, Amazon is the big loser - they give away hardware t cost to sell ebooks, if they now have to give away ebooks at cost to match Apple's prices, where do they make money?

The way I see this playing out is a tiny pinprick for Apple, a wash for the publishers and the consumers, and a bit of a hit for Amazon.

What about audio books? (2)

PaulMorel (962396) | more than 2 years ago | (#39645461)

I'm glad they finally got around to this, but what about audio books? The same scheme appears to be in place. It's absolutely ridiculous that I can buy a hollywood (or indie) movie download for $5-$10, but it costs me $10-$30 for an audio book.

It’s a niche market (1)

alexander_686 (957440) | more than 2 years ago | (#39646047)

The market for audio books is small compared to printed books or movies. Hiring good talent to make decent audio books is higher than you expect (And this is something that you want – I listened to some pretty bad audio books in my life.) So you have higher fixed costs per unit sold – have to make up the difference someway.

It’s one of the reasons why I get most of my audio books via the library.

Re:What about audio books? (1)

Firethorn (177587) | more than 2 years ago | (#39646153)

audio books lack the extreme profitability of an initial movie release to recover the majority of the costs, plus there's not as large of a market for them.

Of course, the larger price tag does tend to reduce the audience even more.

2 topics (2)

bryan1945 (301828) | more than 2 years ago | (#39646069)

1) Collusion- OK, that bad.
2) Publisher/seller model. Why couldn't the publishers sell the e-books (individual ID per copy) to the end sellers at a price, just like they do now for physical books. Then the end seller could decide on the end price. I admit I don't have any e-books, so I'm not conversant in this area.

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