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Apple $450 Million e-Book Settlement Wins Court Approval

samzenpus posted about a month and a half ago | from the red-light-green-light dept.

Books 93

An anonymous reader writes A week after Judge Denise Cote put forward concerns over a proposed settlement with consumers over e-book price-fixing in the iBookstore, she has given Apple preliminary approval for its $450 million settlement. "The proposed settlement agreement is within the range of those that may be approved as fair and reasonable, such that notice to the class is appropriate," Cote said. "Preliminary approval is granted." Cote set a final fairness hearing for Nov. 21.

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Read: tax deduction (0)

Anonymous Coward | about a month and a half ago | (#47595993)

Money like this could change the world.

Re:Read: tax deduction (1)

Anonymous Coward | about a month and a half ago | (#47596271)

Money like this could change the world.

No.

It's hard to find out exactly how many eBooks are sold annually, but best estimate I can find is around 400,000,000 copies annually in the USA alone. Apple has 30% of that market and conspired to increase the price to consumers between $3 and $5 per copy.They also reduced competition by conspiring with publishers to refuse to distribute books by authors signed to Amazon.

That means they cost book buyers somewhere between $360,000,000 and $600,000,000 more per annum than if they hadn't colluded, not counting network effects on non-Apple pricing.

That would suggest that even after paying the suit and potential restitution, Apple made a sound commercial decision to collude with publishers, and on that basis will continue to seek opportunities to overcharge customers in other areas. .

In other words, no, this will not change anything.

Re:Read: tax deduction (1, Troll)

Noah Haders (3621429) | about a month and a half ago | (#47597137)

just because some of the companies are trying to dump ebooks on the market to drive competitors out of business, doesn't mean a coalition of fair pricing is conspiring to fleece the consumer. what will suck for the consumer is when the competitors go out of business and a sole seller is left, who then squeezes all the money out of the book industry. the results? I hope everybody likes reading fan fic and cheap romance novels.

Re:Read: tax deduction (2, Insightful)

Anonymous Coward | about a month and a half ago | (#47597217)

doesn't mean a coalition of fair pricing is conspiring to fleece the consumer.

We'll go to the agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that's what you want anyway.

Steve Jobs, 2010.

Re:Read: tax deduction (1)

Anonymous Coward | about a month and a half ago | (#47597301)

You're a thief endorsing thievery.

"Macmillan frankly acknowledged in writing to the trade in the Spring of 2010, one of its goals in moving to the agency model was to “[i]ncrease[e] prices” of e-books.

Penguin’s McCall wrote, “Agency is anti-pricewar territory. We don’t need to compete with other publishers on the price of our books.” Penguin executives told authors after signing the Apple Agreement that they had “fought to protect high prices; . . . fought against $9.99 pricing” to demand higher, “better” prices. It continued, “who knows, it is $14.99 this year, but in a few years it may be $16.99 or $19.99.”

HarperCollins recognized that, with the Apple Agreements, Apple had become the “gatekeeper” on e-book pricing “for the industry.” As Cue admitted at trial, raising e-book prices was simply “all part of” the bargain in creating the iBookstore.

Re:Read: tax deduction (1)

Noah Haders (3621429) | about a month and a half ago | (#47600113)

As Cue admitted at trial, raising e-book prices was simply “all part of” the bargain in creating the iBookstore.

here's the thing you refuse to acknowledge: they were raising the book *to sustainable levels*. it's like when china comes to dump junk on the US market to drive US out of business and take all of it for themselves. is that what you want? to US be the bitch of china or amazon?

Re:Read: tax deduction (1)

Sockatume (732728) | about a month and a half ago | (#47598725)

You know, publishers did have negotiation options other than "form a price-fixing cabal".

Re:Read: tax deduction (1)

Plumpaquatsch (2701653) | about a month and a half ago | (#47598867)

You know, publishers did have negotiation options other than "form a price-fixing cabal".

Not really, because we have an n-prisoners dilemma here. Standing up against Amazon in negotiations only works if all publishers do. And the only way to make sure of that is breaking the law.

Recent month's show exactly hat happens if you stand up against Amazon on your own.

Re:Read: tax deduction (1)

Sockatume (732728) | about a month and a half ago | (#47605503)

If the publishers really wanted to "stand up to Amazon" they would've banded together and stopped selling Amazon books rather than banding together to continue selling books through Amazon, but make more money doing so.

Re:Read: tax deduction (1)

Plumpaquatsch (2701653) | about a month and a half ago | (#47605891)

If the publishers really wanted to "stand up to Amazon" they would've banded together and stopped selling Amazon books rather than banding together to continue selling books through Amazon, but make more money doing so.

Actually they make less money that way - but your notion that they still would have needed to violate the law is noted.

Re:Read: tax deduction (1)

Sockatume (732728) | about a month and a half ago | (#47647571)

There's nothing stopping organisations forming cooperative agreements so long as they are not inherently anticompetitive. Remember: they got sued not because they banded together, but because they banded together to set prices.

Re:Read: tax deduction (1)

Plumpaquatsch (2701653) | about a month and a half ago | (#47649033)

Actually, Amazon has just redefined "collusion" as speaking out against Amazon. Didn't you get the memo yet?

Re:Read: tax deduction (1)

arkhan_jg (618674) | about a month and a half ago | (#47600651)

Under Amazon's retail agreement, the publisher's set the book price that amazon paid. Amazon then set the price for customers - amazon had various prices for books, rather than a flat rate. Some were loss leaders - a common enough tactic in the retail world, big book chains do it all the time - but amazon's ebook division was profitable on its own merits - something a DOJ investigation confirmed. That's not dumping, and there were other competitors in the ebook space that were also profitable. If the publishers weren't happy with their margins - which were comparable to other retail models - they were fully entitled to go to amazon and negotiate new retail rates individually, just like they do with other book retailers.

Apple looked at that model, saw they weren't going to make their usual profit margin, and went to the big publishers. Apple said 'we'll let you set the final customer price, we'll take 30%, and an agreement that you won't let any other seller undercut us'. The publishers saw this is as a chance to raise prices and make more profit, and stitch up amazon at the same time. The publishers went to amazon all around the same time, and said, 'these are the new terms. Agree to them, or no more ebooks'. Given Amazon then was facing a choice between no ebooks at all, and the new terms, they rolled over.

Collusion to raise prices is illegal, for very good reason - it defeats the purpose of free markets, that of delivering the best product for the lowest price. And that was what they did. Higher prices across the board, more profit for apple and the big publishers, with no improvement to the product, through collusion. If the publishers wanted higher prices, they could have charged them to amazon individually; or set up their own book store with higher prices. And that would have been competition. But they chose not to compete in the marketplace, but arrange a back-room stitchup deal to raise prices for customers. And all the publishers have now settled with the DoJ for doing so.

Apple could have competed with Amazon; there was nothing stopping them setting their own prices, and making it so easy to use that people would use them instead even if they were more expensive for some books. Or offer other value-added services. Or shock, actually compete on price, it's not like apple was some startup tight on cash! They chose not to do any of that. And now they have to pay for the harm they did - which was artificially higher prices for books. They didn't increase competition; they made a deal with the publishers to lock in a higher profit margin for themselves and nobble their competitors at the same time. That's the exact opposite of competition.

Re:Read: tax deduction (1)

Noah Haders (3621429) | about a month and a half ago | (#47601793)

it defeats the purpose of free markets, that of delivering the best product for the lowest price.

[citation needed]. Whose definition of "purpose"? The definition that supports your argument? funny how that happens.

And that was what they did.

more profit for apple and the big publishers, with no improvement to the product

[citation needed] true, on day 1 the product is the same from day -1, but over time, more money would allow for greater investment in better products. but like most americans you can only see until the end of the fiscal quarter.

Re:Read: tax deduction (1)

Plumpaquatsch (2701653) | about a month and a half ago | (#47602025)

but amazon's ebook division was profitable on its own merits - something a DOJ investigation confirmed.

And how did that "investigation" look? They kindly asked Amazon. Not to mention that apart from the loss leaders and the low profit ebooks from classic publishers, Amazon not only had the Kindles with their (at the time) high markup, they also had Kindle Direct Publishing, with a healthy 65% margin from the selling price at almost zero cost to them. It's easy being profitable with margins like that - even when you make massive losses on your bestsellers.

Re:Read: tax deduction (0)

Plumpaquatsch (2701653) | about a month and a half ago | (#47598401)

Money like this could change the world.

No.

It's hard to find out exactly how many eBooks are sold annually, but best estimate I can find is around 400,000,000 copies annually in the USA alone. Apple has 30% of that market

We don't have to go any further to know you are full of shit.

Re:Read: tax deduction (1)

gmhowell (26755) | about a month and a half ago | (#47598517)

Does Amazon compensate their shills with free eBooks and movie streams, free Prime, discounts on purchases, or just filthy lucre?

pocket change in Apple's world (2, Informative)

turkeydance (1266624) | about a month and a half ago | (#47596051)

take it and it's over. it's only USD$ after all, and they'll print some more.

Re:pocket change in Apple's world (1)

Intrepid imaginaut (1970940) | about a month and a half ago | (#47596111)

Eh, a half billion used to sound like a lot of money at one time.

Re:pocket change in Apple's world (2)

lennier1 (264730) | about a month and a half ago | (#47596817)

Nowadays that's like half a lawsuit against Samsung.

Re:pocket change in Apple's world (0)

Anonymous Coward | about a month and a half ago | (#47599185)

For us normies, $450m - if well managed - can last forever and provide a very generous annual income even if shared among 30-40 people (and, barring acts of nature/greed, will remain at $450m or higher after a lifetime or three)...

Re:pocket change in Apple's world (1)

gumbi west (610122) | about a month and a half ago | (#47596291)

The fed has almost a century of history of hitting it's target monetary growth target of 2%. At what point will the sun arriving every morning convince you that it will arrive tomorrow?

Re:pocket change in Apple's world (0)

jbmartin6 (1232050) | about a month and a half ago | (#47596407)

What monetary growth target is that? The one they stopped setting in July of 2000?

Re:pocket change in Apple's world (1)

Jane Q. Public (1010737) | about a month and a half ago | (#47596425)

No. The one that has accelerated under Obama.

Haven't you noticed food prices going up? Surprise! Food hasn't been getting any harder to grow. We're producing more than ever before. So it's not "market forces". What could it be?

Short-lived commodities like food are among the first to be seriously affected by inflation. Add to that a wholly unjustified rebound in housing prices, and inflation has actually been pretty high.

I don't know what kind of "monetary growth" it is that you're referring to, but it isn't the supply of dollars. That hasn't gone down, even though it should have a long time ago. And if you're trusting "official" government figures for inflation, you're a fool.

Re:pocket change in Apple's world (1)

jbmartin6 (1232050) | about a month and a half ago | (#47598923)

You completely understood the term "monetary growth target". The "target" is the key word here, where the Fed would say that they wanted growth in the money supply to match some target. In 2000 they stopped issuing the money supply target. This was back when they claimed there was some connection between money supply and economic results. Now they don't make that claim for the most part and have even stopped tracking certain measures of money supply.

Re:pocket change in Apple's world (1)

jbmartin6 (1232050) | about a month and a half ago | (#47598941)

Ugh of course that first line should say "misunderstood"

Re:pocket change in Apple's world (1)

Jane Q. Public (1010737) | about a month and a half ago | (#47601095)

You are correct. I missed the word "target".

Given that, though: while they may have stopped publishing a target, they certainly have not stopped expanding the money supply. And the fact that they've "stopped tracking some measures" is rather ominous.

And I doubt they've really stopped tracking them. They just aren't publishing them, because they don't want people to panic. But a lot of economists aren't being fooled. Many have been raising alarm bells. Not to mention those who warned about these policies up front.

Re:pocket change in Apple's world (1)

jbmartin6 (1232050) | about a month and a half ago | (#47601369)

Yes, they stopped stopped publishing the measures since they no longer kept to a 'target' as the parent had claimed. As far as I can tell, it stays relatively non-inflationary as long as that extra money doesn't circulate. Since a lot of it just sits in an account to polish up the banks' balance sheets we avoid most of the inflation. Plus the velocity of money is very sluggish. The financial markets are all on edge wondering when the Fed might act to pull some of it back as velocity picks up. Regardless, even if the Fed doesn't track those measures there are plenty of other people who still do.

Re:pocket change in Apple's world (1)

Jane Q. Public (1010737) | about a month and a half ago | (#47602139)

Go compare prices in the supermarket to what they were 3-4 years ago. Then come back and tell me again why it's not inflationary.

Re:pocket change in Apple's world (1)

jbmartin6 (1232050) | about a month and a half ago | (#47602387)

I didn't say it was not inflationary, I said we avoid most of the inflation. There was an implied "most of the inflation some models might expect given the growth in the money supply"

Re:pocket change in Apple's world (1)

Jane Q. Public (1010737) | about a month and a half ago | (#47605001)

As far as I can tell, it stays relatively non-inflationary as long as that extra money doesn't circulate.

It sure sounded like you were saying that to me.

Further, most of the money isn't "sitting there". Housing is booming again, and Wall Street is at record highs again. The overall economy might be sluggish that that doesn't mean the cash itself is stagnant. We have easily identifiable bubbles going on, even now.

Re:pocket change in Apple's world (1)

jbmartin6 (1232050) | about a month and a half ago | (#47605455)

relatively

Re:pocket change in Apple's world (1)

Jane Q. Public (1010737) | about a month and a half ago | (#47615369)

Relative to what? This was my point: inflation is NOT low. It is quite high right now. Despite "official" government figures.

Re:pocket change in Apple's world (1)

jbmartin6 (1232050) | about a month and a half ago | (#47616417)

Inflation is quite low right now relative to Weimar Germany, for example. Or the inflation experienced by Zimbabwe and Argentina at various points in the past.

Re:pocket change in Apple's world (1)

Plumpaquatsch (2701653) | about a month and a half ago | (#47616743)

Inflation is quite low right now relative to Weimar Germany, for example. Or the inflation experienced by Zimbabwe and Argentina at various points in the past.

Heck, inflation right now is quite low compared to 2007 - who was PotUS back then again? Obama? Clinton?http://www.usinflationcalculator.com/inflation/historical-inflation-rates/

Re:pocket change in Apple's world (1)

Jane Q. Public (1010737) | about a month and a half ago | (#47623033)

Heck, inflation right now is quite low compared to 2007 - who was PotUS back then again? Obama? Clinton?http://www.usinflationcalculator.com/inflation/historical-inflation-rates/

If you knew how CPI was actually calculated, you would never have posted that link. These are exactly the "official" government figures that don't come close to reflecting reality.

According to CPI, Chateaubriand is equivalent to a rump roast, and a 10-acre estate with a mansion is economically equivalent to a 0.25-acre plot with a 3-bedroom home. That may be a very slight exaggeration, but not much.

It's just not a reflection of reality, and hasn't been for decades. It's designed to hide inflation.

Re:pocket change in Apple's world (1)

Plumpaquatsch (2701653) | about a month and a half ago | (#47623815)

So why don't you show us the real real figures, instead of just pretending you have any?

Re:pocket change in Apple's world (1)

TubeSteak (669689) | about a month and a half ago | (#47597061)

Knowing how these things work, Apple will probably use it as a tax write down.

Very disappointing. (0, Troll)

jcr (53032) | about a month and a half ago | (#47596163)

The charges were bullshit from the get-go, and they were filed because Amazon pays a hell of a lot more bribe money in Washington than Apple ever will. Steve would have fought this to the supreme court.

-jcr

Says the guy with the mac.com e-mail address... (1)

Chibi Merrow (226057) | about a month and a half ago | (#47596181)

...

Re:Says the guy with the mac.com e-mail address... (0)

Anonymous Coward | about a month and a half ago | (#47603471)

says the guy with the

mrmerrow@monkeyinfinity.net email address

Enjoy the spam.

Re:Very disappointing. (0)

Anonymous Coward | about a month and a half ago | (#47596191)

When there are e-mails directly implicating Apple and all of their co-conspirators have already settled, yeah, the charges must have been bullshit from the get-go. Apple fanboys, everyone.

Re:Very disappointing. (1)

gumbi west (610122) | about a month and a half ago | (#47596279)

So, you think that a store shouldn't be able to set final prices with it's wholesalers? I agree that wholesalers conspiring is problematic, but I don't get there being a problem when a wholesalers and a retailer set prices together.

Re:Very disappointing. (0)

Anonymous Coward | about a month and a half ago | (#47596385)

The problem was that the Wholesaler and Retailer A were also setting the price for Retailer B. I think you need to read up on the case first before drawing conclusions and taking sides.

Re:Very disappointing. (2)

Anubis IV (1279820) | about a month and a half ago | (#47596731)

Yep, the charges were legitimate. Anyone who reviews the case should be able to reach that conclusion. Even I did, and I'll cop to being biased in favor of Apple (I like to think of myself as a recovering fanboy, who still likes them, but who doesn't continue to engage in the blind zealotry).

That said, while the charges were legitimate, the sentencing was anything but. Cote granted an unprecedented level of access and authority to the court-appointed auditor compared to other similar cases, and she also appointed a personal friend of hers who is being rather handsomely compensated by Apple to the tune of $1000+ an hour. There's also the fact that she admitted to having engaged in illicit communications with him regarding the case behind closed doors without Apple or other parties present and that she's been trying to put restrictions on entirely unrelated parts of Apple's business (e.g. the App Store). There's also the question of how a $450 million judgment can be considered fair when the entire market had revenues of less than $3B/year at the time this stuff was going on, Apple only ever had around 10% of the market (i.e. $300M in revenue), and the amount of illegal profit they made in excess of their legitimate profits would have only been only a minuscule fraction of that.

So, they definitely deserve to be slapped. And they definitely deserve to be slapped even harder for doing it intentionally and willfully. But this judge is doing some nutso stuff. Just as I think even the most die-hard fanboy should be able to come around on agreeing that Apple is guilty if they just review the information that's available, I also think even the most die-hard Apple hater should be able to come around on agreeing that this judge is not acting in a fair and just manner if they review the information that's available.

Re:Very disappointing. (1)

gfxguy (98788) | about a month and a half ago | (#47599799)

So the fine was punitive, not compensatory. I have no problem with that.

Re:Very disappointing. (1)

Anubis IV (1279820) | about a month and a half ago | (#47600043)

Punitive fines make perfect sense, I agree. Where I disagree is that the fine here is representative of the damage done, as it is supposed to be. From what I understand, treble damages are typical in cases such as these where the actions taken were willful, yet I can't figure out any way that $450M could reasonably be considered fair, even having taken treble damages into account.

Re:Very disappointing. (1)

gfxguy (98788) | about a month and a half ago | (#47600225)

Well then you should be asking Apple, as it was their proposed settlement that was accepted. Maybe your numbers are wrong.

Re:Very disappointing. (1)

whoever57 (658626) | about a month and a half ago | (#47596199)

The charges were bullshit from the get-go

Yes, it's not as though Apple consipred to increase the prices that consumers paid when buying elsewhere. Oh wait ... yes Apple did just that!

Re:Very disappointing. (0)

gumbi west (610122) | about a month and a half ago | (#47596269)

Apple conspired to unsettle a monopsonistic price fixing scheme by introducing competition. Yes, they correctly pointed out that prices would rise when the monopsony ended, but I think the justice department really slipped a disc on this one.

Re:Very disappointing. (1)

0123456 (636235) | about a month and a half ago | (#47596371)

So, let me get this right: you admit that Apple committed the crime, but don't think they should do the time... because Amazon?

Re:Very disappointing. (1)

jcr (53032) | about a month and a half ago | (#47596399)

you admit that Apple committed the crime,

He did no such thing.

Apple broke up Amazon's monopoly. Because they did so, authors no longer had to just take whatever Amazon was willing to let them have.

-jcr

Re:Very disappointing. (3, Insightful)

0123456 (636235) | about a month and a half ago | (#47596423)

He did no such thing.

He admitted that Apple conspired with publishers. That's the crime Apple were convicted of, because conspiring to raise prices is, you know, an actual, real crime under US law.

Apple broke up Amazon's monopoly.

What monopoly? The conspiracy's goal was to force Amazon to sell ebooks for more than it wanted to. They were trying to make readers pay more for their books. What's so great about that, exactly?

Because they did so, authors no longer had to just take whatever Amazon was willing to let them have.

Uh, what? Authors take whatever the publishers are willing to let them have. What does Amazon have to do with what publishers pay their authors?

Re:Very disappointing. (0)

Anonymous Coward | about a month and a half ago | (#47596427)

Couldn't, and can't they still, just choose not to sell their books on Amazon? Is someone or some law forcing publishers to make their books available in Amazon's store?

Re:Very disappointing. (1)

Plumpaquatsch (2701653) | about a month and a half ago | (#47602657)

Couldn't, and can't they still, just choose not to sell their books on Amazon? Is someone or some law forcing publishers to make their books available in Amazon's store?

Sure, why not stop selling at the one place that sells 75% of all ebooks. Well, that would work if all the publishers conspired to do that. Else it would kill you.

Re:Very disappointing. (1)

Richard_at_work (517087) | about a month and a half ago | (#47597755)

In this case, I'd rather have Amazon than Apple - I can read my Amazon Kindle books on the Kindle, iOS, Android, Blackberry, Windows, Windows Phone and a whole host of other places, while I can read my Apple iBooks on ... an iOS device.

And you forget that authors and publishers also had to take whatever Apple was willing to give them - don't even start to kid yourself that Apple is the altruistic good guy in this, they required publishers and authors to not sell their ebooks cheaper anywhere else when they were sold through iBooks. Thats bad enough in my book.

Re:Very disappointing. (1)

Gr8Apes (679165) | about a month and a half ago | (#47599275)

In this case, I agree with the publishers, and Apple, and disagree with Amazon. Amazon had been brute forcing publishers to accept Amazon's set prices, not allowing publishers to set their own prices. Apple wanted to allow publishers to set their own prices. Think Walmart here, the same thing applies. Philosophically, Apple and the publishers are in the right. Amazon is abusing an effective monopoly position by saying "sell at our prices or hit the road". Apple said "sell at any price you want, as long as that price is equal to or less than the lowest price you sell elsewhere".

Re:Very disappointing. (1)

Richard_at_work (517087) | about a month and a half ago | (#47601125)

Amazon has as much monopoly position in eBooks as Apple has in smartphone apps - they have their own ecosystems but thats it. I can buy eBooks elsewhere, and publishers can even create their own apps and distribute their own products without Amazons involvement at all. EBooks is possibly the easiest market to break into.

The fact that you see nothing wrong with Apples requirements says loads - so its ok to set prices across your ecosystem and everyone else ecosystems (which is what Apple was doing) but setting prices on just your own ecosystem is completely wrong...?

Re:Very disappointing. (1)

Plumpaquatsch (2701653) | about a month and a half ago | (#47602705)

Here's an example what happens when Amazon dominates a market: http://gigaom.com/2014/02/27/a... [gigaom.com]

"I'm altering the deal. Pray I don't alter it any further."

Re:Very disappointing. (1)

Richard_at_work (517087) | about a month and a half ago | (#47605565)

Right, I can buy audiobooks from many different sources, so Amazon is hardly dominating the market, and also are you saying a company is never, ever, ever allowed to vary anything?

Re:Very disappointing. (1)

Plumpaquatsch (2701653) | about a month and a half ago | (#47605885)

Right, I can buy audiobooks from many different sources, so Amazon is hardly dominating the market, and also are you saying a company is never, ever, ever allowed to vary anything?

Any party to a contract should be able to just change their part of the deal? Are you serious?

As for audiobooks - sure, you can buy them at a lot of places. Download however - and you are pretty much stuck with Audible.

Re:Very disappointing. (1)

Gr8Apes (679165) | about a month and a half ago | (#47618979)

The fact that you see nothing wrong with Apples requirements says loads - so its ok to set prices across your ecosystem and everyone else ecosystems (which is what Apple was doing) but setting prices on just your own ecosystem is completely wrong...?

The fact that a publisher setting their own price on your market with the only requirement of that market being that it is equal to or lower than any other market you sell in seems perfectly fine. Apple is not setting a price, the publisher is free to set any price they want anywhere they want to sell. Amazon, however, is setting the price, regardless of what price you want to sell your product for.

Re:Very disappointing. (2)

Sockatume (732728) | about a month and a half ago | (#47598687)

I don't see how installing oneself as the head of a cabal of basically the entire US ebooks market is breaking up a monopoly.

Re:Very disappointing. (3, Informative)

Anubis IV (1279820) | about a month and a half ago | (#47596799)

Apple engaged in illegal activity, willfully so, and they rightfully should be slapped for it. But so did Amazon, yet they've been able to get away with it so far because the one's being hurt by them aren't the general public.

The author's guild has outright claimed that they think Amazon is breaching the Sherman Antitrust Act [nytimes.com] . Most people seem to forget that those laws apply to not just monopolies (when you're the only seller), but also to monopsonies (when you're the only buyer), and that the abusive monopsony Amazon has with regards to the publishers in this market is exactly what pushed the publishers into engaging in their own illegal activities. Which isn't to say that Apple or the publishers were justified in doing what they did because Amazon screwed them first. They weren't. Full stop. But that also doesn't mean that Amazon is justified in doing what it's been doing just because the publishers engaged in illegal activities too.

Negotiating hard is one thing, but they've held around 90% market share with eBooks for awhile now, and as virtually the only buyer in that space, Amazon has a responsibility to not abuse their monopsony, yet they have failed to do so at every turn. Anyone who Googles around for about 5 minutes can turn up a dozen examples of Amazon abusing their dominant position to force the publisher's hands. Delisting books right as major releases are about to come out, refusing to ship copies they have so that shipping times go from days to weeks, forcing the publishers to change packaging with minimal notice or else. These are all part and parcel in dealing with Amazon.

Apple deserves to be punished. Make no mistake about that. But Amazon has yet to get what it deserves, simply because it was smart enough to make sure that it hurt people no one feels sorry for.

Re:Very disappointing. (1)

Chibi Merrow (226057) | about a month and a half ago | (#47604075)

I always found it amusing that the Author's Guild always seems to enthusiastically back whatever it is the publishers want to happen, even to the detriment of their supposed constituency...

I'd rather hear [theguardian.com] from [blogspot.com] authors [hughhowey.com] , personally, than a group that fought against libraries/universities making electronic archives [techdirt.com] of books for research...

Look, if authors/publishers aren't happy with Amazon, they don't have to do business with them. They can sell their books direct to the customer, even in a format the user can load right onto their Kindle, nothing's stopping them. Saying Amazon is the "only buyer" is B.S. The term 'buyer' doesn't mean anything (in the way you're using it) when you're dealing with purely electronic goods. Amazon doesn't "buy" an inventory of ebooks to sell, there's no supply to monopolize.

Re:Very disappointing. (1)

whoever57 (658626) | about a month and a half ago | (#47604145)

I think that you are either a knowing astroturfer or a useful idiot. [wikipedia.org]

Amazon has a responsibility to not abuse their monopsony, yet they have failed to do so at every turn.

In the past few months, the Apple fanboys have been promoting the "Amazon has a monopsony" line, which I assume was started by Apple employees in some Apple-related forums.

Perhaps Amazon has a monopsony now, but to suggest that it had one when Apple was organizing its illegal price-fixing is simply counter-factual. The publishers went to Amazon and demanded that Amazon either put up prices or Amazon would not be able to sell eBooks from that publisher any more. Amazon caved, which is a clear indication that Amazon had no monopsony.

Perhaps if Apple had focused on competing using legal means, there would be a more level playing field now.

Re:Very disappointing. (1)

Anubis IV (1279820) | about a month and a half ago | (#47604837)

Despite starting off with an ad hoc attack, it might surprise you to learn that we agree on quite a few points, and I'll bet that we can agree on even more once we're on the same page about what "monopsony" means.

In the past few months, the Apple fanboys have been promoting the "Amazon has a monopsony" line

While you didn't say it, I'm willing to bet that you and I would agree that the term has been widely overused and misused by the Apple faithful (fanboys and reasonable people alike) in the last few months. I think it may have started with Daring Fireball, but I'm not sure. Even so, just because it's being widely misused does not mean that it lacks any merit at all.

Perhaps Amazon has a monopsony now, but to suggest that it had one when Apple was organizing its illegal price-fixing is simply counter-factual. [...] Amazon caved, which is a clear indication that Amazon had no monopsony.

Again, I agree with you (at least in part), but I want to make sure we're on the same page, since I don't see how Amazon's caving has any bearing on whether or not they're a monopsony. So, just to be sure we're coming from the same place, here's the OAED definition:

monopsony
a market situation in which there is only one buyer

With that in mind, the idea that Amazon had a virtual monopsony back in early 2010 when this stuff happened is indisputable, as all of the market share numbers from back then will attest that they sat around 90%, just as they do today. Nook and Kobo were the only notable alternatives, and it was becoming increasingly clear that neither were going to unseat Amazon. Amazon's caving had nothing to do with whether or not they were a monopsony (since the market share numbers don't show much of a change around that time), and everything to do with their leverage simply having been temporarily mitigated.

As for why their leverage wasn't as strong for those negotiations , we can probably chalk it up to two primary factors:
1) There was a valid concern that Apple would enter the space in a big way, breaking up the market.
2) The publishers were colluding with each other and Apple, giving them an illegal advantage over Amazon.

So, I think we would both agree that Amazon was not abusing its monopsony during the early-2010 negotiations with the publishers when the publishers forced Amazon to switch to the agency model and make other changes. But where we might differ is that I would assert that both before and after those negotiations (i.e. before they knew the iPad was coming and after it became clear that the iPad wasn't a threat) we can find numerous examples of Amazon abusing their monopsony to gain unfair advantages.

Which is all to say, I may be a useful idiot (thanks for the link to that, since I learned a new term; though I'm no astroturfer, as my extensive history of thousands of random musings here will attest...plus there's the fact that I'm accusing both sides of acting illegally :P), but even idiots have valid things to say occasionally, and your points would be better taken by idiots if you didn't start off with ad hoc attacks, since you're just stooping to their level and setting them up to not want to listen to anything else you say, ya know?

P.S. Again, I feel compelled to point out that I am not using the term "monopsony" to vilify Amazon or to suggest any inherent wrongdoing on their part, but rather to point out the simple fact that they were and are virtually the only buyer in the market, and that as the only buyer, there are inherent legal responsibilities that are incumbent on them to not abuse their position in an anticompetitive manner (as per the Sherman Antitrust Act). I feel very strongly that it's important to understand that monopsony != evil, since we're surrounded by benign monopolies and monopsonies that we interact with on a daily basis. Amazon itself is a perfect example of both sides to the coin, since it's a benign monopoly in the eBooks space (i.e. hasn't gouged customers even though it could), while at the same time abusing its monopsony (i.e. forcing down the prices it pays towards unsustainable levels for its suppliers).

So, even though a number of others have been misusing the term to connote or denote that the mere presence of a monopsony suggests wrongdoing on Amazon's part, I try to always be careful to qualify my statements (e.g. "abusive monopsony", "misusing their monopsony", etc.) so it's clear the problem is not that they have a dominant position, but rather that they're using it to do stuff they shouldn't be doing.

Re:Very disappointing. (1)

whoever57 (658626) | about a month and a half ago | (#47605097)

monopsony
a market situation in which there is only one buyer

Definition s are wonderful things. For every one, one can find a different definition. So how about this:

If your definition of monopsony is the simple "one buyer", then perhaps, but if your definition is the one that I was using, where the buyer has market power, the evidence is that Amazon did not have this at the time. Perhaps it has now. As with monopolies, having a monopsony is not illegal, it's how you take advantage of it that matters -- as I see that you do note.

So, I will apologise for the attack, partly.

Amazon has a responsibility to not abuse their monopsony, yet they have failed to do so at every turn. Anyone who Googles around for about 5 minutes can turn up a dozen examples of Amazon abusing their dominant position to force the publisher's hands.

As people often point out, anecdotes are not the singular of data. Yes, there are cases of Amazon's behaviour that give cause for concern and probably an investigation is due. But do you honestly think that the publishers are not waging a PR war on Amazon right now?

Re:Very disappointing. (1)

Anubis IV (1279820) | about a month and a half ago | (#47606713)

I hadn't seen it defined that way before, so thanks for pointing that out. It appears that a number of economic sites not only define it as "one buyer", but also tie it to the leverage that is typically associated with that position, whereas most of the general purpose dictionaries simply go for the "one buyer" part and leave out anything else. Whether we lump the leverage in with monopsony or break it out on its own, however, I think we can come to agreement on the facts of the case: Amazon's leverage vanished for a time before returning, their one-buyer position has remained essentially intact since 2009, Apple and the publishers knowingly and willfully acted illegally, and there are anecdotal examples of Amazon acting in ways "that give cause for concern", to borrow your phrase.

I do agree that the publishers are waging a PR war. Absolutely. And I'll even concede that it's possible I overstated Amazon's pattern of behavior, because, to go along with what you said, an anecdote does not a trend make. That's something I can agree with. Even so, those anecdotes are sufficient enough to convince me that an investigation is due. In looking back through my old posts, it actually looks like you and I have discussed some of those anecdotes before [slashdot.org] (and that I might be the reason you associate "monopsony" with Apple idiots :P), so I won't rehash them here. I'll merely point out that our old comments may take on a new light now that we've come to a better understanding of how the other person understood the word "monopsony".

Re:Very disappointing. (1)

whoever57 (658626) | about a month and a half ago | (#47607125)

The oteher part of the definition issu is that the relationship between Amazon and publishers is somewhat unusual. Perhaps unique.

In the case of books, while Amazon may have market power as the single buyer, to some extent, the publishers also have power as the single seller. If Amazon wants to sell (for example) Stephen King's latest novel, there is only one publisher that is selling it. Amazon cannot go elsewhere, just as (perhaps) the publisher cannot go elsewhere to sell the eBook rights.

Re:Very disappointing. (1)

Anubis IV (1279820) | about a month and a half ago | (#47607233)

Quite true. And I'm glad we're on the same page on that one, since a number of people I talk to seem to think that books are entirely commodity items and that the publishers have no leverage of their own at all. Even so, the way things have been playing out, I'd suggest that Amazon still has the bigger stick to shake when it comes to those discussions, since those massive bestsellers that Amazon absolutely needs to carry only come along once in a blue moon. Most of the time, it'll hurt the publishers far more than Amazon if a bestseller isn't available, since people won't go to the extra effort to get it elsewhere.

Re:Very disappointing. (1)

Sockatume (732728) | about a month and a half ago | (#47598707)

I would like to think that a company like Apple could "introduce competition" without having to conspire with every ebook publisher to do so.

Re:Very disappointing. (1)

Plumpaquatsch (2701653) | about a month and a half ago | (#47598721)

The charges were bullshit from the get-go

Yes, it's not as though Apple consipred to increase the prices that consumers paid when buying elsewhere. Oh wait ... yes Apple did just that!

Yeah, if by elsewhere you mean Amazon, and then only for those ebooks Amazon sold far below cost.

Re:Very disappointing. (1)

Chibi Merrow (226057) | about a month and a half ago | (#47599853)

How do you sell an ebook below cost? Do you pay a customer to take it?

Re:Very disappointing. (1)

Plumpaquatsch (2701653) | about a month and a half ago | (#47600993)

How do you sell an ebook below cost? Do you pay a customer to take it?

Is this a serious question?

Re:Very disappointing. (1)

Chibi Merrow (226057) | about a month and a half ago | (#47603831)

Yes, it's a serious question. How do you sell something with a reproduction cost of zero below cost?

Re:Very disappointing. (1)

Plumpaquatsch (2701653) | about a month and a half ago | (#47605905)

Ahh, so you are a moron, not a troll. Fine, I'll still tell you - not only is there production cost, Amazon doesn't produce these ebooks, they buy the right to sell them, and that costs them. And when they sell below that cost, they sell bellow cost. Duh.

Re:Very disappointing. (1)

Anubis IV (1279820) | about a month and a half ago | (#47603193)

You're being obtuse.

When you buy a paperback or hardcover book, only a portion of your money is actually going towards the costs of the paper and ink for your specific copy. Most of it is going towards fixed costs that are spread across all copies. Why would it be any different with eBooks? Even though the marginal cost to "print" an electronic copy may be virtually nil, the authors, editors, advertisers, retailers, lawyers, illustrators, software developers, typesetters, and more all need to be paid, and that happens by amortizing their costs across the sale of all copies, electronic ones included.

I don't buy it. (1)

Chibi Merrow (226057) | about a month and a half ago | (#47603897)

Excluding (only for the sake of argument) outlier cases like textbooks, with significant expense spent on gathering and checking specialized materials, I don't believe for a moment the "fixed costs" for the average mass-published novel, self-help book, or whatever are anywhere high enough to justify the publishers' objections to Amazon's "maximum" price of $9.99 for an ebook. Let's see some actual numbers to back up these assertions.

And even if (again, for the sake of argument) it's true that traditional publishers' costs are high enough to justify $14.99 for an ebook, then maybe they should consider changing the way they do business to bring those costs down instead of illegally colluding to raise prices.

Re:I don't buy it. (1)

Anubis IV (1279820) | about a month and a half ago | (#47604419)

You're moving the goalposts. I never said anything about the reasonability of Amazon's arguments with regards to $9.99 vs. $14.99, and I have no interest in arguing that point with you (I have opinions on the subject, but they're a separate matter and I've already addressed them in other comments). I was simply providing the obvious answers to your misleading questions.

I would suggest, however, that if you're in favor of taking away the right of owners to price things how they want, the onus is on you, not the other side, to justify that opinion.

Re:I don't buy it. (1)

Plumpaquatsch (2701653) | about a month and a half ago | (#47605983)

You know, if Amazon really thought that all ebooks should cost no more than $9.99, they should cross-finance that price for all sellers, not just their Kindle store. Because all the other stores don't have a money-making machine that allows them to lose money.

Re:Very disappointing. (1)

Whiney Mac Fanboy (963289) | about a month and a half ago | (#47596405)

and they were filed because Amazon pays a hell of a lot more bribe money in Washington than Apple ever will.

It is unclear what you mean by 'bribe' money, but both Amazon [opensecrets.org] and Apple [opensecrets.org] spent huge sums of money lobbying over the last 15 years or so.

Amazon spends more, but not 'a hell of a lot' more. Both organisations do their absolute best to influence policy in their favour. The idea that Apple is somehow pure in this way is fantasy that could only come from the most delusional fanboy.

Re:Very disappointing. (1)

Plumpaquatsch (2701653) | about a month and a half ago | (#47598801)

and they were filed because Amazon pays a hell of a lot more bribe money in Washington than Apple ever will.

It is unclear what you mean by 'bribe' money, but both Amazon [opensecrets.org] and Apple [opensecrets.org] spent huge sums of money lobbying over the last 15 years or so.

Amazon spends more, but not 'a hell of a lot' more. Both organisations do their absolute best to influence policy in their favour. The idea that Apple is somehow pure in this way is fantasy that could only come from the most delusional fanboy.

Bribe money is the money that doesn't show up in official records like your cite uses.

Re:Very disappointing. (0)

Anonymous Coward | about a month and a half ago | (#47604961)

Bribe money is the money that doesn't show up in official records like your cite uses.

Oh, you mean like when you pay Judges to ensure your worthless patents hold up in court to extort money from an overseas competitor?

Re:Very disappointing. (1)

Plumpaquatsch (2701653) | about a month and a half ago | (#47605991)

Yeah, exactly what Samsung uses. You did know that their CEO faced jail time for bribery? Only to be pardoned just before he had to go in?

mod Down (-1)

Anonymous Coward | about a month and a half ago | (#47597605)

fly...3on't fear [goat.cx]

U.S. where companies get away with anything (0)

Anonymous Coward | about a month and a half ago | (#47597923)

Jesus $400 million for a major crime perpetrated by a company... and no jail sentences for anyone? WTF?!?!

The real culprits are the publishers. (1)

gfxguy (98788) | about a month and a half ago | (#47600023)

I've been reading a description of the case, and what Apple did actually seems fair... Amazon was "dumping" in an effort to eliminate competition. Publishers setting prices is no different than video game console manufacturers setting prices, IMO.

The real crime is charging over $10.00 for an e-book at all. I know all the shills for publishers will say the bulk of the cost is in formatting the books, but to charge just as much... and sometimes MORE, than the printed book is absolutely ridiculous... no paper, no typesetting, no big machinery using copious amounts of electricity, no packaging, no delivery people, no trucks, no gas (no pollution!). On top of that, when you're done reading your e-book you can't give it away or sell it like you can a printed book.

I do not care what the shills are saying the bulk of the costs are now; when I was in college, the publishers justified the outrageous price of text books by talking about printing costs, limited runs, shipping small quantities... now that those costs are eliminated, some e-textbooks cost more? They were lying then, or they're lying now... either way I have no sympathy.

How would I handle this situation? I don't know - perhaps not allowing dumping, for one. I don't understand why the publishers were whining about it anyway - they were getting their money from Amazon, it was Amazon taking the loss, but I do believe that dumping is anti-competitive, and I believe in the free market - but I do believe in regulations that help keep it free. Price fixing, collusion, and dumping do not help keep the free market free.

Re:The real culprits are the publishers. (0)

Anonymous Coward | about a month and a half ago | (#47600749)

Except they weren't "dumping". They were using loss leaders. Something virtually every business on the planet does. Publishers do get to set their prices just like video game console manufacturers. The whining of the publishers occurred because after Amazon bought their books they then sold them for less than what they paid for them. Again, they only did this for SOME books which is why it wasn't dumping.

Re:The real culprits are the publishers. (1)

Plumpaquatsch (2701653) | about a month and a half ago | (#47602113)

Except they weren't "dumping". They were using loss leaders. Something virtually every business on the planet does.

Except when your "loss leading" continues for longer periods and many products. Then it's price dumping. Like in this case.

Re:The real culprits are the publishers. (1)

Sockatume (732728) | about a month and a half ago | (#47647625)

Err, loss leaders are the ones who sell a variety of different goods at low prices for long periods. Dumpers sell a specific good at low prices for a short period of time because dumping is inherently unsustainable; if you don't run your rivals into the ground and switch to high cost selling before you run out of capital, your business fails.

Re:The real culprits are the publishers. (1)

Plumpaquatsch (2701653) | about a month and a half ago | (#47649007)

So Amazon is in the clear because they dump for a long time. Because "that wouldn't make sense". Apart from driving all competition out of business because you have the deeper coffers.
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