Apple wants ebook price class action suit thrown out Apple may be keeping quiet publically about allegations of antitrust violations in ebook pricing, but a court filing in a class action lawsuit last week shows that Cupertino doesn't think too much of the claims. The motion to dismiss the case, filed in a New York court, gave a particularly scathing view of the argument against …
Also a bit f***** rich from a company that chases others for copyright infringement as their fondleslab is a rectangle with a touch screen. Or that they swipe to unlock their phone and all the other shit that there's prior art for. Looks like trying to stifle or destroy competition is in their DNA.
Hope Apple gets taken to the cleaners on this one as by their standards, they've nicked someone else's idea.
evil evil evil
The real issue, at least from a US legal viewpoint, is that Apple instigated a price fixing model for the eBook industry. That little bit about publishers couldn't set one price for it and then turn around and sell the book more cheaply to Apple's rivals. While that is not strictly price fixing (Apple will claim the publishers can drop the price for everyone), it still has the same effect of artificially raising prices and stifling price competition between different eBook sellers.
That guaranteed lowest price clause everybody is complaining about is actually standard contractual language for many commercial operations in the US, including discount distribution centers and manufacturers.
For example, lets say I run a small manufacturing plant that specializes in precision machining. And one day I come up with an idea for a new heating mechanism for experimental equipment. But I need some cash to be able to spin up the new manufacturing line. And the best way for me to get that cash is to get a loan from the bank. But the bank wants some proof that I'll be able to pay it back, so I go sign a contract with a well known big industry player, like HP back when H and P were still running it. Now, HP actually like my new design and want to buy enough units so 75% of my new manufacturing line is running full tilt. But they don't want to get screwed by either a competitor or even me offering it at a substantial discount from what they can sell it at given the price I gave them on the initial contract. So they include a clause that says if I sell it to someone else cheaper, I have to give the same price to them. Apple did the same thing.*
In point of fact, what actually is illegal in the US would have been for Apple to engage in the sort of coordinated discussions that would have enabled them to follow the "accepted norm" for the suit.
*a lot of actual events in there, with a few outright fabrications (although possible) and misdirects so it doesn't match up to reality, and hopefully enough obfuscation to protect the OEM, who was and probably still is a small but important player in the market.
"As Apple pointeed out, how exactly is this strategy of charging more for ebooks supposed to eliminate the competition?"
That's not the issue - the issue is that Apple demand control over pricing by any competitors (via the "cannot sell for lower than the Apple price" clause) PLUS this has increased the cost of books (as publishers would have to stop Amazon from discounting to avoid breaking that clause).
It seems pretty obvious price fixing from the info provided here...
While we're on the subject of artificially lifting the price of ebooks, HM Revenue & Customs decision to levy VAT on ebooks didn't help here either.
The European Commission should maybe take some action nearer at home before having a go at Apple. Or ideally at the same time as.
(Although I fear the "solution" found would be to levy VAT on dead-tree books too.)
No. Or rather, it's a very ineffective ban as I'm still using it daily.
The only change is that to buy books, you must go to your browser and go to www.amazon.co{m,.uk}, where as before there was a button in the kindle app that took you to www.amazon.com (so it didn't put you on the right store if you were a UK user).
Plaintiffs contend Apple acted as a coordinating hub even though they explicitly acknowledge Apple was a new entrant (not a dominant distributor),
Regardless of whether I agree or disagree, I was under the impression that the point was more about leveraging a monopoly in one area (tablets), to enter a new market? Given the number of iDevices out there, a publisher would be foolish to say no to the idea?
I could be wrong, but to me the case seems to be more about the end result and whether Apple abused a position in other markets?
Am I misinterpreting?
The one you are outlining is NOT the one which was filed against Apple. What has been contended is that Apple effectively colluded with publishers and distributors to set prices in an existing market. The mechanisms described are faulty and therefore that case is faulty.
The one you describe might be feasible, but even at that I think it has a steep climb to make. In order to get there, you have to give Apple monopoly control of the e-reader market. Given Kindle's dominance, and Android's growing market share in the phone market (which I expect will soon extend to fondleslabs as well) I think Apple wins that with a "we aren;t the dominant market size player, just the dominant high quality segment" argument.
Apple put a set 30% margin on eBooks in order to remove any other eBook publishers from its in app payment system. As 30% margin is also exactly what apple takes for every transaction that goes though its systems...
So as an iDevice eBook publisher using iTunes payment system you have 0 margin...
I think the 30% model makes *a lot* of sense for all of the new forms of electronic media, whether its software, books, or movies. You can argue it should be less, but I think the model itself makes sense. It really makes them more of a distribution platform than a retailer. This opens the doors for self publishing the same way it has paved the way for independent game developers.
With the addition of "can't be cheaper somewhere else" though, it becomes a stickier problem, and makes the price fixing suit seem more plausible. If the books can't be sold cheaper, and publishers are setting the price, it sounds like price fixing to me.
If there was price fixing would we see this?
Book Title | Amazon Kindle | Apple iBookstore
Thinking, Fast and Slow | Amazon: $15.00 | Apple: $12.99
Free Range Learning: How Homeschooling Changes Everything | Amazon: $16.30 | Apple: $8.99
Turning Learning Right Side Up: Putting Education Back on Track | Amazon: $25.54 | Apple: $23.99
Unschooling Rules: 55 Ways to Unlearn What We Know About Schools and Rediscover Education | Amazon: $9.95 | Apple: $2.99
Colleges That Change Lives: 40 Schools That Will Change the Way You Think About Colleges | Amazon: $10.88 | Apple: $12.99
The Willpower Instinct: How Self-Control Works, Why It Matters, and What You Can Do To Get More of It | Amazon: $14.94 | Apple: $12.99
Willpower: Rediscovering the Greatest Human Strength | Amazon: $16.06 | Apple: $14.99
Are You Smart Enough to Work at Google? | Amazon: $11.85 | Apple: $9.99
Civilization: The West and the Rest | Amazon: $21.50 | Apple: $16.99
Too Big to Know: Rethinking Knowledge Now That the Facts Aren't the Facts, Experts Are Everywhere, and the Smartest Person in the Room Is the Room | Amazon: $17.15 | Apple: $12.99
Born to Rise: A Story of Children and Teachers Reaching Their Highest Potential (Preorder) | Amazon: $16.97 | Apple: $12.99
Most of these titles are actually cheaper on Apple's store.
Well, yes.
Price fixing is more about ensuring the cost of things stay high.
A better route would be to look at prices before Apple entered the market and then compare afterwards. If prices are higher then it's possible (but not a dead cert) that there's fixing.
There's more to price fixing than saying "We'll all charge 99p for a can of beans" it's more a case of "None of us will charge less than 99p for a can of beans"
Yes, most of those titles are cheaper on Apple's store, but that's the point - the allegation is that Apple are mandating the same book* can't be cheaper elsewhere, not that it can't be more expensive elsewhere.
* I'd guess that means the same edition, which might (or might not) explain the one that's cheaper on Amazon in your list. Or there might be another explanation.
I'm sorry but:
"Price fixing is an agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level by controlling supply and demand."
That's clearly not what's happening when the stores have books at different prices.
Your post - downrated to -10, is the perfect example of just where the readers on this site stand which seems to be somewhere between personal greed and 'must never let real facts get in the way' of my irrational self-loathing and hatred of Apple. The idiots have taken over this asylum....I know, I know, it is El Reg, but really...what's in it for all these fruitcakes?
Thanks for the comparisons by the way.
"But the publishers want Agency Pricing. That's price fixing by definition."
No it's not! It just means they pay an agency commission.
The publisher sets the price and Apple takes their commission.
The publisher can set whatever price they like. It makes no difference to Apple.
For example. Publisher A decides it wants to sell Book A for £10. That's fine, Apple takes their 30% as the retail outlet - a mere £3.
Publisher B decides to sell its Book B at £15.00. That's fine, Apple takes their 30% as the retailer - this time it's £4.50.
Then Publsher C sells cheap books at £5.00. Apple still take their 30% - a pathetic £1.50
So where's the price fixing there?
And your final comment "It's not SRP it's YOU MUST SELL AT THE PRICE WE TELL YOU."
Please explain who telling who in your scenario. Because in my scenario I only see a publisher setting prices as it wishes. - I don't see anyone telling it what price to sell at.
We've been here before in the EU and the "Agency Pricing" model is clearly illegal. They'll get hit with a fine of a few hundred million euros, none of which will go to the people the publishers ripped off.
For as long as those publishers choose to ignore the law, I choose to ignore their copyright. I've gone so far as to tell authors that in recent times.
Its easy enough to find ebooks online for free. I'd prefer that the authors actually got some royalties but I'm fucked if I'm paying a publisher who is clearly breaking EU anti-competition regulations.
I buy plenty of (e)books but (to give an example) I no longer buy any of Terry Pratchett's books due to his publisher. I'm equally sure Mr Pratchett is well aware of people's attitude to his publisher too. Some authors give a fuck and some don't, not sure where Terry stands on it.
However I give you a 2/10 for trolling - just because I replied to you ;)
I recommend reading this quote from the Guardian (on the raids to publishers):
"The agency model is, in effect, a return to the net book agreement in electronic form. Publishers let that go in 1997 – and bitter experience has taught them to regret it. Losing the net book agreement did not lead to greater variety, customer choice, a better deal for producers or for shops (as those on the right claim unfettered competition should). It led to a three-way carve up of the trade between Waterstones, supermarkets and Amazon. Hundreds of viable publishers servicing thousands of shops were swapped for just over a dozen bloated giants with only a small number of effective outlet options.
The stakes are even higher in the new ebook wars, at a time when even Waterstones branches are beginning disappear from our streets. The unspoken purpose of the agency model is to stop Amazon getting a monopoly and becoming pretty much the only effective ebook publisher around.
Without the agency model, Amazon could easily discount everyone else out of contention. With it, publishers and other outlets stand a chance"
I know the history thanks. I'm not going to listen to a whole load of Guardianista bullshit about how inflating book prices and publisher profits means more choice.
It may well do for the well-heeled metrosexual wankers that read the Guardian but the death of the net book agreement meant (at the time) I could buy two books a week instead of one.
So with the greatest respect, fuck off.
Must be real hard for the 150+ books/authors who have got my money in the last year. There's one guy who wrote a cookbook who's made a fortune in the last year due to the evil (according to you*) that is Amazon. The real book was published via a niche printer and that's what ebooks can do fo CHOICE.
I said I don't buy Terry Pratchett books anymore - I have enough respect for the man that I don't pirate them either.
People like you make me sick - everythings fine as long as YOU can afford the books. You neglect to mention the adverse effects the net book agreement had on libraries too.
With no respect at all - do fuck off and take your middle class bullshit with you.
*I notice that Apple is good and Amazon is bad for you. Fanbois 4tw :(
> You neglect to mention the adverse effects the net book agreement had on libraries too.
You have to be fucking kidding me. Have a look around to see how public libraries turned out over the past 15 years WITHOUT the net books agreement.
But yeah go back to sucking the dick of Amazon, Tescos and all the large companies that fucked up honest shops, farmers, the high street and a lot more to come. They pay you in discounted books made in China, so you like it.
That explains a lot.
Go comment on stuff your own side of the pond matey. I remember libraries (in the UK) during the 1980's/early 90's having no more than three copies of any book published in the last 25 years.
When the netbook agreement got ruled illegal (the publishers didn't "give it up" as the Guardianistas would have it) then suddenly lots of new books were available.
Oh and back in your "golden era" of price fixing I don't remember small bookshops selling anything that other than all the major chains. I remember luvvies who looked down their nose at you and deserved to go bust - customer service wasn't anything they ever considered.
Small bookshops who sell niche (valuable) books are just as viable now as they were then.
All you want is to push the price of books up. Simple as that.
That's because (from a quick look at your posts) you are a dedicated Apple fanboi. I couldn't give a toss about Apple in this - I want the publishers fined as they KNOW they are breaking the law. Apple maybe caused this but going after anyone other than the publishers is dumb.
>Go comment on stuff your own side of the pond matey.
Yet here you are commenting on a US court case, where something like the net books agreement wouldn't even be illegal. I'm not a Yank btw, my English education is (not my 1st language) - see how appearances aren't everything?
Look - in the EU, Germany, Italy, Netherlands, Denmark, Austria, Spain, France, Greece, Hungary, Belgium and Portugal all have Fixed Price books policies like the NBA in place even TODAY. Nothing illegal about it in those countries, so your argument that this model is breaking EU competition law is bollocks.
Do you see their residents suffering from lack of books to read, any complaints Many of those countries even do a LOT more reading than the UK! Not to mention they have better library systems.
(have you seen libraries in Germany?)
I've made my points and - with apologies to Norfolk'n'Goode, but he did mention beer - I'm not interested in discussing this more. I can see we'll just agree to disagree all night long. So enjoy your viewpoint and I'll enjoy mine.
You're just being European bigots instead of American bigots. Our pols have passed a law and it must be moral.
Price fixing is not the same as anti-competitive. You can fix to a low price, but it tends to be consumers who want that, not producers. Apple just approved an agreement that said
1. We need to make a fair margin, we think it's 30%
2. We don't care what the actual price is, so we'll sell at whatever you say MSRP is.
3. To protect ourselves and because you are setting the MSRP, you can't set the MSRP lower for anybody else than you do for us*
With that agreement in hand the publishers went to everyone else and offered them the Apple deal. Everybody else agreed the Apple deal was better than what they were getting.
Now, maybe you can argue the PUBLISHERS collaborated to create an anti-competitive environment, but Apple as first movers certainly aren't the guilty party.
* which is not to say they can't lower the MSRP, just that if they lower it for someone else, Apple gets it too. Seems fair to me.
I can't believe how so many are judging this based on completely wrong information.
The 30% commission and the "you can't sell elsewhere cheaper" are just the default rules of the agreement Apple offers to developers on their >>App store<< . The Music store has other rules, as does the iBookstore.
Also, it's quite clear that the larger publishers have other deals in place and are not affected by any this.
One only need to go to Amazon's Kindle front page to see that while the book "Gillespie and I" by Jane Harris costs £4.08 for the Amazon Kindle, the very same book costs £6.99 on the iBookstore.
How would this be possible under the "you can't sell it cheaper elsewhere" rule? Obviously the rule doesn't apply.
So open your eyes and quit imagining things that don't exist.
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So, if they think they can sell more and at higher profit through Apple, let them do so. I just propose to eliminate publishers altogether, and leave only authors and Amazon/Apple in the equation. This would be the most honest and most appropriate decision here...
That's certainly possible these days, however who is going to fund book writing?
Writing a (good) book takes a long long time and is often a full time job. Who'll pay the author during the many months spent working on it? Will he/she be made to survive on their own credit cards? Sounds a very risky proposition.
That's the traditional role of publishers, who fund the book and take on the risk of the book being a complete market flop. Not to mention handle the marketing and so on.
I don't think we can, or will ever be able to do entirely without publishers.
"That's certainly possible these days, however who is going to fund book writing?"
What "funding" are you talking about? I personally know five published writers, and not a single damned one of them was given money up-front for their first novel! Almost everyone already owns a computer with a word processor on it. You don't need anything fancy: as long as the word processor can give you a word-count, you're fine.
As with music, the vast majority of published books and novels out there were written in someone's free time, not by full-time authors. Only three of the writers I know do it for a living all day, every day now. The other two continue to write in their free time while holding down a day-job.
Being able to earn a full-time living income from writing—especially fiction—is extremely rare. You need to be pretty damned good just to get noticed. Terry Pratchett and J.K. Rowling are exceptions to the rule.
So, no, publishers shouldn't be "funding" books. Not most of them anyway. Some markets are exceptions however, such as media-heavy coffee table tomes, or complex textbooks for educational markets (especially if their ebook versions include animations and videos). But for most simple books and novels that are just plain text? There isn't a reader on these forums who lacks the requisite tools to write one of those should they wish to.
"The fruity firm also stipulated that publishers couldn't set one price for it and then turn around and sell the book more cheaply to Apple's rivals. On the strength of Apple's deal, publishers then went to Amazon and asked for the same contract."
That's publishers plural. Finding an idea they like more than competing with each other. It seems to me that Apple is inciting publishers to rig the market in order to harm its competitors, principally Amazon. IANAL but some might even say 'conspiring with publishers to keep prices artificially high'.
Had a Kobo ereader as a gift last year and have watched the price of books going up as more publishers switch to the agency model, also the number of books that I can use the discount codes they regularly send out on are dropping.
There are some ebooks now that are selling for more than I paid for them originally (in electronic or paper format).
Add in stupid stuff like varying release dates and not being able to buy the book online for delivery on release day at a discount, but not being able to get the ebook at the same discount (though the discount didn't apply to instore sales either) and the market is truly getting screwed up.
The big problem is that, along with music and movies, the middlemen have got too big. Publishers hold all the power, rather than the authors. What I'd like to see would be that publishers get the rights for the dead-tree editions (maybe with no royalties) and the author gets the worldwide distribution on the ebook. Then the author gets to set the price for the ebook and the publisher still does all the promotion and marketing.
Quite why publishers decided to go to Amazon in the first place, rather than setting up their own sites for selling ebooks, I don't understand. Did they think that e-publishing didn't have a future and wasn't worth investing in? Baen has been doing it, quite successfully, for years.
It is quite funny from Apple to claim they had no market power, and so could not have influenced the publishers. A bit like, when the iPhone came out, they clearly did not have any market power, since they were a new entrant and had never sold a phone; so they could not POSSIBLY have forced AT&T to sell the iPhone without carrier branding, and on terms vastly less advantageous than any other phone.
Yet, they clearly did. You have to admire them for that. But I do not think their "we are new entrants without market power" is going to convince anybody.
I have never been able to figure out why ebooks are often massively more expensive than their paper counterparts. I tried to buy a series of books (each around 8-10cm thick, so big heavy tomes) and they were priced at £50 each for electronic versions but only £25 for the print. I know vat comes into play but it is not that different and the pulped wood is not so drm ridden that it cannot be sold on.
I can't see how anyone but someone who is only interested in making a profit can see how the Agency Model as it is currently implemented as being good. A lot of people seem to only focus on the first part of the model which is the publisher gets 70% of the sale. The big problem is the second part which is that they get to set the prices and other companies become their agents and cannot discount the price.
Amazon used to buy the publishers books at the price the publisher set, then sold it at a price that Amazon decided on which for some books was much lower then the RRP. What is so bad about that model? The publisher gets their pound of flesh and the consumer could buy books cheaper if they "chose to". The only possible loser like in most of the media industry would be the author, but isn't that the fault of the publisher and the Agency Model doesn't seem to do anything to protect them still.
I don't know how they have gotten away with their anti-competitive behaviour of forcing people to use iTunes for so long.
They have had a practical monopoly on MP3 players, smart phones and tablets for years now yet they are still allowed to force their users to buy every bit of content through their store / iTunes. If that isn't making use of a monopoly in 1 industry to unfairly gain advantage in another I don't know what is.
Not strictly true.
Music: You are quite at liberty to purchase CDs and import them in to iTunes. This was its primary function (remember the "Rip, Mix, Burn" adverts?) and it's how I sync most of my music.
Video: OK, a little harder, but you can still rip DVDs to disk, or you can buy the films with a digital copy included. I use Any Video Converter to then transcode them for iPad, PS3 and iPod. Works very well. There are also streaming options from Lovefilm and Netflix for iOS.
eBooks: Calibre. Database, converter and transporter, all in one. I'm hoping he's going to add iBook support too, as well as ePub.
There are ways around iTunes. For me, it's a jukebox and the transport mechanism to load stuff on my iDevices, not a shopping portal.
To expand on KroSha's post:
Music: Or buy MP3s from any online store that sells them and import them to iTunes. I have barely bought any tracks from the iTunes Music Store, but loads from Amazon and eMusic, both of which have handy download applications which automatically sync the downloaded tracks into iTunes. Nobody's forced to even buy downloads from Apple.
eBooks: Not only the marvellous Calibre (with a range of iOS eBook readers available to read the results), but you also have the Kindle app if you want to buy from Amazon, plus the Kobo app, plus Bluefire reader (possibly others) for any ePubs using Adobe DRM and Overdrive for "borrowing" ePubs from libraries. You can avoid both Apple and Amazon if you want with no problem.
Neither of these companies should actually be 'needed' for selling e-books in the 21stC. In fact, the only way they can survive is by some form of anti-competitive behaviour somewhere along the line.
I have no idea what Amazon takes as a cut but Apples 30% is frankly fucking ridiculous as is paypals or any credit cards cut levels of over 1% - you'd think with modern computers moving money around in e-space would actually be cheaper than cash.
The e-book 'publishers' seem to be trying to do to the authors and customers what the music industry does now - screw them for all they can while they can, while the producer and customer are too cowed to cut them out of the equation.
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