DOJ May Sue Apple Over eBooks As Early As Tomorrow

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According to this Reuters report, the Justice Department could file suit against Apple as early as tomorrow for eBook price fixing.

The Justice Department is investigating alleged price-fixing by Apple and five major publishers: CBS Corp's Simon & Schuster Inc, HarperCollins Publishers Inc, Lagardere SCA's Hachette Book Group, Pearson and Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck. A lawsuit against Apple, one of the parties not in negotiations with the Justice Department for a potential settlement, could come as early as Wednesday but no final decision has been made, the people said.
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Wait, what? Did these companies charge the DOJ more then they should of? Seems like a bad idea haha.
 
I don't see how allowing publishers to charge their own prices is price fixing.. I do think that ebooks should be cheaper than their paper counterparts.. but if they can sell them at higher prices and people are willing to buy, I'd say that is for the market to bear.

I guess it would be debatable as to whether or not "You can set your price here, but you can't sell anywhere else for less than here.. and we still get our 30% cut" equates to price fixing..

I thought price fixing only really came into play when multiple companies agree to charge the same amount for something and not to lower prices.
 
Andrmgic said:
I thought price fixing only really came into play when multiple companies agree to charge the same amount for something and not to lower prices.
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Which is what happened. Prior to Apple, eBooks were sold using wholesale pricing. This means that the publisher decided how much money they wanted per copy sold and told the retailers like Amazon. The retailers then decided what to charge. They could have as much or little margin as they liked, even sell at a loss if they wished to use it as a loss leader.

Apple wasn't ok with that, because they knew Amazon would undercut the massive margins Apple wanted (please don't repeat the bullshit Apple doesn't make money on digital sales, go look at the investor information). So Apple did a little meet n' greet with the publishers and told them that they could only sell on iTunes if they sold for the same retail price everywhere else.

They made the publishers switch to what is called agency pricing. With that, they dictate the final retail price to the retailers. Doesn't matter if the retailer would be willing to take less of a margin, or has a lower overhead or something, they dictate the price. With that Apple no longer had to compete. Their prices were equal to the rest.

Well that's where the suit is coming from (it's not the only one, there's a class action and the EU is looking at this). It is collusion to fix prices, and it isn't allowed.

J. Random company can do agency pricing if they wish, on their own. For example Denon does agency pricing and they'll drop any vendor who refuses to play ball and only gives warranties if you buy from an approved vendor. However they do it of their own accord. Yamaha, Pioneer, etc don't do it and Denon doesn't do it because they colluded with a vendor, they do it because they think it is the way to do business (for some reason).

However a vendor and a bunch of publishers can't all get together and agree on it for the purpose of screwing other vendors, and to fix final retail prices of books nearer to each other so they don't have to compete on price.

Also Jobs fucked up on this one, he admitted it to the press that this was going to happen. Not quite directly, but still it is out there, and it will be used.
 
Okay so locking ebooks at $14.99 is price fixing but locking songs at $0.99 isn't. Makes sense to me
 
VIC-20 said:
Okay so locking ebooks at $14.99 is price fixing but locking songs at $0.99 isn't. Makes sense to me
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As far as I'm aware, iTunes songs don't have the "This is the price we're selling it at, and you can't sell it any cheaper anywhere else or we won't carry it" stipulation that books from Apple do. This policy alone isn't price fixing, it's the way Apple went about making it happen with the book publishers. Rather than say "That's just the way we do it, deal with it" to the publishers and having them figure it out, Apple apparently colluded with them to bring up the price. At least, that's how I understand it. I could be completely wrong here.
 
It's not that Apple forced the publishers in to anything. To combat Amazon, Apple offered up the sweet deal to the publishers (they wanted that with Amazon anyway). Suddenly, the publishers could sell as they wanted with Apple, and so started refusing wholesale pricing to Amazon. They were able to say "either use this model that sucks for your customers, or we'll only sell through Apple".

The publishers were in the wrong as much as Apple, and the result is we pay more per ebook than we did before Apple and the publishers did this. All ebooks from these publishers went up by $3-$5 it seems.
 
What's really strange is that any publishers actually made any such agreement with Apple in the first place:

If the publishers were previously willing to price ebooks lower, it means they believed they could sell more copies and make more money that way...and if colluding with competitors to fix prices would have helped them make more money, they would likely have done so already without Apple's prodding. Is the Apple market really so big that accessing it is worth Apple dictating the terms that apply to all other sales? (Maybe...maybe Apple fans are more likely than others to buy DRM'ed ebooks regardless of the restrictions and terms of use?)
 
Quite the abuse of market size (one could almost say monopoly) powers. *cough* *ahem*
 
The publishers WANTED the agency model.. amazon was the only big game in town with their millions of kindles sold and had refused their bid to raise the prices.

Apple comes along and says "Sure, we'll play ball with you. Give us our 30% cut and don't sell via amazon for less than us and we've got a deal"

That doesn't strike me as price fixing.. just the publishers don't want to sell their books for lower prices..

The only reason Apple made this deal was to attempt to undermine Amazon's veritable monopoly on the ebook market with the Kindle by enticing publishers to join them by allowing them to set the pricing for their own books instead of selling wholesale to amazon and amazon selling them at a loss to build their marketshare.

At any rate, it should be interesting to see how this pans out.
 
Andrmgic, that's quite Interesting...well, we'll see how that actually works for them, I guess.

These publishers are pretty arrogant to think they can dictate market prices and still prosper: It's the buyer that sets the market price, not the seller. When the seller refuses to price according to the demand curve (ESPECIALLY a seller with unlimited supply and zero-cost copies), it means they simply lose sales and make less money than they otherwise would...and if they're abusive jackasses about their terms, and they refuse to sell consumers what they want at a reasonable price, that antagonism will only hurt them in the long run as well.
 
Andrmgic said:
and don't sell via amazon for less than us and we've got a deal"
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Thats where it becomes price fixing. In the US, its a free market, and it is unlawfull for Apple to tell the publishers that they cannot sell their wares to any competer they want at any price they want.
 
Who wanted it, or didn't want it, is irrelevant. When all the major publishers, and Apple, get together and collude to drive up the price of books across the board and ensure that nobody can compete on price ... then you have price fixing and it is illegal. As noted, if just one publisher did it ... no big deal. It is the collusion of all major publishers and a retailer (Apple) to fix the prices at higher than current market value (what Amazon, Kobo, Borders, etc were selling at) that is illegal.

That said, Apple wanted it. They admitted they wanted it. That aspect is very well documented. I'm not sure if the publishers wanting agency pricing across the board is as well documented. I think it makes sense that they would want it, sure, but making sense and having evidence is another thing. But, that said, you don't have to have evidence they wanted it prior to the talks with Apple. The act of price fixing is where the problem is, not the intent prior to the Apple talks.
 
Steve said:
According to this Reuters report, the Justice Department could file suit against Apple as early as tomorrow for eBook price fixing.
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Alot of these companies listed here are School companies, Pearson for one is a major book source for colleges (especially MATH). According to what I see here, they are charging alot more for the digital book than the physical book, which is ridiculous.
 
FrEaKy said:
Alot of these companies listed here are School companies, Pearson for one is a major book source for colleges (especially MATH). According to what I see here, they are charging alot more for the digital book than the physical book, which is ridiculous.
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That shouldn't surprise me as much as it does...textbook publishers are the WORST. They make pointless revisions constantly and schmooze/pressure professors to adopt them, so students regularly have to buy new instead of using the same old 20-year introductory text like you'd expect for stable subjects. They artificially create the need for their product, and it's a total racket, much like the student loan system that pumps excessive/endless money into demand.

SCSI-Terminator, it's a bit odd that you refer to the free market and price fixing laws under the impression that they're in agreement. Technically, price fixing laws are a clear indication that the market is regulated/managed rather than free. A real free market would allow market players to contract with each other however they like without government cracking down on colluding oligopolies/cartels...but then again, a completely free market wouldn't have limited liability corporations, the DMCA, or even copyright laws, so the landscape would be entirely different to compensate. (I'd love for copyrights to be at least reduced to a ten-year limit...that would do a lot to address the situation.)

I can't say I'm in favor of laws against price fixing, but Apple and the publishing companies shamelessly abuse the law in so many ways to bend consumers over a rusty bench that I don't have any sympathy when they get wrist-slapped either. It's just a shame that it will never make a difference...the entire regulatory system is set up in such a way to undermine small companies and consolidate under the guise of limiting large corporations, and the occasional instances where the big players get wrist-slapped are more like a minor power play within the same crime family than a real battle royale.
 
Not long ago e-books were very cheap. Now, they are just barely cheaper than paper. In general, I stopped buying them unless I find really good deals.
 
It looks as though the rumors we heard yesterday were true. The U.S. government has indeed filed an antitrust lawsuit against Apple today for price fixing e-Books. I was going to go with a "throwing the e-Book at Apple" joke but I decided to spare you guys the agony. ;)

The lawsuit was filed Wednesday in federal court in Manhattan. It said the effort was a response to the success Amazon had in selling e-books for just under $10. The lawsuit said the alleged conspiracy came as Apple was preparing to launch the iPad. It said the alleged conspiracy called for Apple to be guaranteed a 30 percent commission on each e-book it sold.
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I wonder how many people out there are like me. I refuse to buy ebooks because I feel they are way overpriced. Digital copy versus physical copy -- you can not tell me it costs the same to produce. Not to mention possible DRM hassles and an initial investment in an e-reader.

With all that said, I love the idea of having all my books accessible on one device. I love the ability of being able to read books faster (as some studies have shown). I love technology and its endless possibilities. But don't try to feed me a sugar-coated turd and call it candy. It's still a turd!

Take a note from Steam sales - give me very inexpensive ebooks and I'll buy them. Stop price fixing, find the sweet spot, and watch ebook sales explode.
 
Not sure the confusion.... the moment you tell someone you can't sell the product for what you want, that's price fixing.
 
elation said:
Take a note from Steam sales - give me very inexpensive ebooks and I'll buy them. Stop price fixing, find the sweet spot, and watch ebook sales explode.
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The problem comparing the two, is you can trade / lend ebooks on the majority of platforms, killing multiple sales (I buy a book, lend it to my mother, sister, multiple friends) you can't do that with steam games... so the price is justified, so long as it's the same or less then buying the actual physical copy.
 
Apple is the most valuable company on the stock market right now.

No problem officer.
 
Glad this is happening. Other than my love for actually holding a real book, the prices of many ebooks made it seem not worthwhile to me. Now we can have some competitive pricing and real deals! As elation noted, physical and digital books do not carry the same costs, and until that difference is truly realized, I am staying out of the ebook markets.
 
Well. This kills the fanboi argument that Apple is not as evil (or more evil) than Microsoft just on account of never getting the DOJ's attention for anti-competitive abuses.
 
Apple wouldn't really lose much since they've already been doing this for atleast a couple of years now, they could undercut it all the way down to $1 each and it still wouldn't matter.

How far off would it be for Apple to continue overcharging for their ebooks since they do have a contract for it, and everyone else gets to sell their ebooks for what they were originally intended to be priced. One of the prime things that were potentially shown was that ebooks would be cheaper than hardcopies, that is, until Apple caused this debacle.

How much would it affect readers iBooks if they were sold on Apple devices at Apple prices vs eBooks on Android/Kindle devices at wholesale prices?
 
The costs of producing the ebook vs normal book is ESSENTIALLY the same up to a certain point.

paying the author to provide the material
editing said material to final draft format, assigned an isbn number, cover art, the blurb one the back etc.

is the same ebook or print. it is the manufacturing, shipping & storage part that has changed.


ebook only: once it gets to final draft format-provided the author setup the document properly- can be saved in any e-book format in ~10 minutes total- if the document is not setup correctly, then it might take upwards of an hr max to get said book in correct format(publisher should have a default format for all books and all someone SHOULD have to do is import the book file into the default format and then a quick gothru to make sure all the links are formed correctly.

then they have to make sure the cover art, blurb, meta data is all set, upload to the ebook seller's website and done. it now can sell 100 billion copies for no addition cost besides storage/space on website on the company's website.(pennies a month per book)

published book (print):

has to arrange and pay for printing, get said books sent to warehouse storage from printer, sent from storage to bookstore then to shelf for customer.

ebook publishing literally costs upwards of 3 dollars less per book than the print book- if the print book COSTS the bookstore ~half the price (so an 8 dollar book COSTS the book tore 4 dollars to buy from the publisher, the publisher is making money(profit) charging 4 dollars a book to the bookstore....yet sells the e-book for 8 dollars. i can see both side of the issue. i personally believe they should charge enough to make the same profit per ebook that they make per published book, yet they are making significantly more than that.

8 dollar ebook, the "store" gets 30% (per agency model setup apple and the publishers setup), which means the publiser "charges" the ebook store $5.60 per e-book, yet that SAME BOOK- provided that ~50% figure is right costs the bookstore in print form....4 dollars. so the publisher is making about an extra $1.60 per e-book sold.
this is assuming that the post final draft part of production costs are the SAME. if it costs LESS to get the ebook into final form than printing/shipping than they make even more.

again this is using the 30% cut to the store agency model apple wanted to all store, and the general half the cost of the book being the charge to bookstores figure given in the article.







1 MILLION ebooks can be stored on a server for around 50 dollars a month.
it will also cost about 50 dollars a month for the website.
 
LordCalin said:
The problem comparing the two, is you can trade / lend ebooks on the majority of platforms, killing multiple sales (I buy a book, lend it to my mother, sister, multiple friends) you can't do that with steam games... so the price is justified, so long as it's the same or less then buying the actual physical copy.
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You are thinking way to much about the "lending function", I can and have lent my Steam ID to someone. Within the e-book community lending is still very limited with last I check only about 20% of books on B&N being lendable and they pretty much pioneered that move.

What Steam excels at is driving up activity of stale titles by offering a tremendous deal. Lets say Civ V goes on sale for $5, I buy it and boom $5 goes to steam/publisher, that wouldn't have made if it stayed at $50. Not only that but after it goes back up regular pricing there is an opportunity if I like the game, that I show it to a friend and try to convince him to buy it. Now they have made $55 that they normally wouldn't have made. Since its all digital its free money, because they already collected 90-95% of the money they ever where going to for the game. If the publisher isn't seeing any activity on a title, getting 10k more sales at 5 bucks a shot is worth it. Like I said free money.

Books on the other hand is probably one of the worst managed business models. They release a book at a high cost. Then re-release it for the reduced cost, and outside a rare sale on the book it stays static. For big releases unsold copies are sucked up by the publishers and recycled. Then 2-3 copies of the book stay in the location, till it hits eol then those are the few that actually see a deal 2-3 years after people stopped buying them. In the end a kindle deal like ebook sale would actually be better, but there is some trappings mentally in their model that make them think its Ebooks should because of convenience be treated like a book on tape, and sold as premium at least to the softcover. Not only that but books that are well received end up needing multiple prints, which keep the cost of printing high because they have to redo the lines yet again each time they want to do a run.

So no he is right. More books would be sold and for books that have been out for years would see activity they never imagined, if they offered deals on popular books that sales have disappeared on. Imagen people with a kindle with 200 books to read because Amazon offered some great weekend and holiday sales with good books costing $1-$3. If publishers where smart they would offer all their books on all of the distributors, price it more in line with a paperback, and let them do crazy deals after a certain period (6 months).
 
It's not the only anti-trust that should be hitting Apple right now. They've only flown under the radar because MS was the preferred evil whipping boy for the EU and US the last 10 years.
 
DarkStryke said:
It's not the only anti-trust that should be hitting Apple right now. They've only flown under the radar because MS was the preferred evil whipping boy for the EU and US the last 10 years.
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It makes me laugh to remember that the whole basis of the MS Antitrust was a frickin' web browser and that it was included with the OS.

Per Wiki: "The issue central to the case was whether Microsoft was allowed to bundle its flagship Internet Explorer (IE) web browser software with its Microsoft Windows operating system."

Now. Look at what Apple's done since...
 
Monkey God said:
Not long ago e-books were very cheap. Now, they are just barely cheaper than paper. In general, I stopped buying them unless I find really good deals.
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Im treating it like I did music. I will pirate until such a time that the market offers a product at a price i deem fair.
 
FrEaKy said:
Alot of these companies listed here are School companies, Pearson for one is a major book source for colleges (especially MATH). According to what I see here, they are charging alot more for the digital book than the physical book, which is ridiculous.
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This is the biggest problem. The cost of schooling is already too high, and the book publishers have gone out of thier way to increase thier profits even more.

First it was the "new editions" they bring out every couple years, usually all the did was rearrange a few pages, or make just enough minor changes, that the schools couldn't use the new book at the same time as the older book. This kills the used book market, and forces schools to buy new books.

Now it is the full-priced digital books. You pay as much (or even more) than the paper book, yet you can't resell it when done, or buy it used. This is the real problem with replacing books with e-readers or tablets.

The schools need to use thier clout to force the prices down or create thier own public domain e-books. I doubt this will happen, since there are too many people in the school systems that are in bed (i.e. making money) with the publishers.
 
It is a pretty cut and dry case. Apple colluded with book publishers to set (fix) a prices, the publishers then forced Apples competitors to take the price Apple basically set.

It collusion, price fixing, unfair market practices all rolled in a neat buddle and now Apple is going to pay through the nose.

Apple would and have actually tried to do the same thing with music and video.
 
Andrmgic said:
The publishers WANTED the agency model.. amazon was the only big game in town with their millions of kindles sold and had refused their bid to raise the prices.

Apple comes along and says "Sure, we'll play ball with you. Give us our 30% cut and don't sell via amazon for less than us and we've got a deal"

That doesn't strike me as price fixing.. just the publishers don't want to sell their books for lower prices..

The only reason Apple made this deal was to attempt to undermine Amazon's veritable monopoly on the ebook market with the Kindle by enticing publishers to join them by allowing them to set the pricing for their own books instead of selling wholesale to amazon and amazon selling them at a loss to build their marketshare.

At any rate, it should be interesting to see how this pans out.
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The problem is, that's not how free markets work. Markets work by coming to an agreement between the customer and the producer about what something is worth. It's not the producer dictating what something will be sold for, because those producers have to compete with other producers for the customer's dollar. When all those producers get together and charge what they want to charge, instead of competing? That's pretty much the textbook definition of collusion and price fixing. Apple simply enabled it.
 
The sad part of what Apple does is that it forbids editors to sell elsewhere for less than on their Store.
I wouldn't care if it only impacted Apple customers (there is no hope for them).
 
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