Apple being sued for price fixing

[exile]

This is one of the dozens of articles that's out there right now. U.S fed.govt and 15 states suing Apple and other publishers for ebook price fixing. What do you think?

Link to USA today's news article


"Rutro..." - Scooby

 

[Skull One]

I can't wait for Apple to lose.

 

[wholesalestunna]

I can't wait to see the outcome of this suit. I think the ebook prices are ridiculous. There's no way that an ebook can cost the same or more than a hardback version. They don't have to print it, use paper, ship them, or pay employees. They make a killing off them at $16 a pop.

 

[Seadog]

The problem is not Apple, but the publishers. In order to get the publishers on board, Apple had to put together a pricing plan that they would agree to. Even so, the ebook pricing was contentuous. And if the standardized price for ebooks is price fixing, then what about the music pricing? This really sounds like politics more than anything else.

 

[beesknees]

Right. Apple and the publishers are not on the same level. This would make more sense if Apple, Amazon, and B&N were conspiring to price fix.

 

[Skull One]

The problem is not Apple, but the publishers. In order to get the publishers on board, Apple had to put together a pricing plan that they would agree to. Even so, the ebook pricing was contentuous. And if the standardized price for ebooks is price fixing, then what about the music pricing? This really sounds like politics more than anything else.

Actually Apple is at fault. Apples's contract states that the publisher can not sell their ebook for a lower price than what is set on iTunes. That is 100% price fixing. The reason the publisher were sued was because they agreed to the contract and then enforced it throughout their business model. Which was in their best interest due to the higher profit margins. Which means they reach the level of collusion.

Apple is going to lose. It is simply now a matter of how much.

 

[beesknees]

Actually Apple is at fault. Apples's contract states that the publisher can not sell their ebook for a lower price than what is set on iTunes. That is 100% price fixing. The reason the publisher were sued was because they agreed to the contract and then enforced it throughout their business model. Which was in their best interest due to the higher profit margins. Which means they reach the level of collusion.

Apple is going to lose. It is simply now a matter of how much.

I disagree. Apple may have asked for it but all the publishers had to do was say no. It hurts Apple more than the publishers if they don't have a contract because in this business content is king. If Amazon routinely has the selection you are looking for and Apple doesn't you will eventually stop trying to buy from Apple.

 

[Skull One]

I disagree. Apple may have asked for it but all the publishers had to do was say no. It hurts Apple more than the publishers if they don't have a contract because in this business content is king. If Amazon routinely has the selection you are looking for and Apple doesn't you will eventually stop trying to buy from Apple.

You may disagree, but that doesn't change the facts of the issue or the laws that were broken.

The publishers didn't say no. Which is why it reached the level of collusion. And the reason they didn't say no? It allowed them to make higher profit margin based on the market reach Apple already had in hand.

BTW, there are publisher that did say no. They are not being sued.

 

[beesknees]

You may disagree, but that doesn't change the facts of the issue or the laws that were broken.

The publishers didn't say no. Which is why it reached the level of collusion. And the reason they didn't say no? It allowed them to make higher profit margin based on the market reach Apple already had in hand.

BTW, there are publisher that did say no. They are not being sued.

The distinction is that Apple didn't set the prices, the publishers did. At worst Apple is an accessory and I don't even know how that works with a corporation.

Apple asked them to break the law. They chose to do it.

 

[Seadog]

The reason the publishers demanded the agency model was because Amazon was undercutting everyone else. To monopolize the market, Amazon would sell books below costs. Their plan was to run everyone else out of business, to be honest. You do not see Barnes and Noble, or any other bookstore in very good shape right now. Amazon has cut them off at the knees. Once they had the publishers having to deal with Amazon for the vast majority of sales, Amazon could dictate what price the publishers sold books to them. There are laws against this practice in some states, because it is unfair commerce.

The problem is that the publishers have been making obscene profits off books for so long that they do not want to lose their money. Amazon was making things where the publishers would have to bow to them to sell books. So one dictatorship was replacing another. Apple's compact was a compromise that allowed a consistent book pricing without giving one vendor absolute control.

 

[Skull One]

The distinction is that Apple didn't set the prices, the publishers did. At worst Apple is an accessory and I don't even know how that works with a corporation.

Apple asked them to break the law. They chose to do it.

Apple did set the price. Their contract states that the price must be no lower than the value set on iTunes. That is the very definition of price fixing by federal law. It wouldn't matter if the publisher set the price at $1000 or $1. The law was still broken by Apple when they said X price across all markets.

This is probably the most clear cut case of price fixing and collusion the DOJ has ever had to file. And they are going to win. Why do you think there were publishers willing to settle within 24 hours of the original investigation being opened? Because they knew they were going to lose.

 

[Skull One]

The reason the publishers demanded the agency model was because Amazon was undercutting everyone else. To monopolize the market, Amazon would sell books below costs. Their plan was to run everyone else out of business, to be honest. You do not see Barnes and Noble, or any other bookstore in very good shape right now. Amazon has cut them off at the knees. Once they had the publishers having to deal with Amazon for the vast majority of sales, Amazon could dictate what price the publishers sold books to them. There are laws against this practice in some states, because it is unfair commerce.

The problem is that the publishers have been making obscene profits off books for so long that they do not want to lose their money. Amazon was making things where the publishers would have to bow to them to sell books. So one dictatorship was replacing another. Apple's compact was a compromise that allowed a consistent book pricing without giving one vendor absolute control.

Your theory has one major hole in it. The publishers legally didn't have to sell to Amazon. Just like the publishers didn't have to sign Apple's contract.

Do you know why they did sell to Amazon? Because they were making tons of money.

So regardless of how Amazon sold the books and cut in to poor Barnes and Nobles profit margin, they didn't break any laws. And Amazon is in no way part of the problem.

 

[Seadog]

Actually, the publishers told the DOJ to bring it on. They spent several days in talks, but the DOJ wanted to essentially put things where Amazon would control things. A compromise has to be compromise, not a one sided dictation by DOJ.

Macmillan CEO John Sargent has published an open letter to the publisher's authors, illustrators and agents outlining why it will fight the lawsuit.

It is always better if possible to settle these matters before a case is brought. The costs of continuing—in time, distraction, and expense— are truly daunting.

But the terms the DOJ demanded were too onerous. After careful consideration, we came to the conclusion that the terms could have allowed Amazon to recover the monopoly position it had been building before our switch to the agency model. We also felt the settlement the DOJ wanted to impose would have a very negative and long term impact on those who sell books for a living, from the largest chain stores to the smallest independents.
Sargent notes that Macmillan makes less money under the agency model than it did under the previous wholesale model, but that it made the change to support competitiveness in the market, not stifle it.

 

[Skull One]

Actually, the publishers told the DOJ to bring it on. They spent several days in talks, but the DOJ wanted to essentially put things where Amazon would control things. A compromise has to be compromise, not a one sided dictation by DOJ.

Where did the DOJ state they wanted Amazon to control it?????


At best the DOJ stated one thing about Amazon. Let the market decided the price just like everything else. People buy it, the price isn't too high. They don't, it is. The fact that Amazon couldn't lower the price because of the contractual agreement between Apple and the Publisher is what helped set this lawsuit in motion.

 

[beesknees]

Apple did set the price. Their contract states that the price must be no lower than the value set on iTunes. That is the very definition of price fixing by federal law. It wouldn't matter if the publisher set the price at $1000 or $1. The law was still broken by Apple when they said X price across all markets.

This is probably the most clear cut case of price fixing and collusion the DOJ has ever had to file. And they are going to win. Why do you think there were publishers willing to settle within 24 hours of the original investigation being opened? Because they knew they were going to lose.

I still disagree. Apple did not set the price. They asked for the price they wanted and the publishers set it. It is two different acts. I could ask you to rob a bank but if I don't go with you at worst I am an accessory.