Judge rules that mediation needed in etailers vs the "Price-fixers."

[pwalker8]

Originally Posted by fjtorres

Removing price competition from a market favors big players who have the resources to compete on other terms. Like selling reader hardware at near cost. Or by developing an indie publishing platform.

It is no accident that the biggest player pre-agency remained the biggest player under it and lost no share after agency kicked in fully. Apple's share gain came from the epub camp, not Kindle.

The big players who have the resources always have the advantage. Where smaller players have the advantage is either by filling a narrow niche (think SF&F ebook store), or by providing a superior experience. They are never able to compete long term with regards to price or discounting.

[Purple Lady]

Originally Posted by pwalker8

Does agency take away store credits? Perhaps I'm not understanding what you are saying, but if a store said "you buy this book and we will give you back the price in store credits" then I don't think that would violate the agency contract. You still have to pay the price for the book, you just get store credits to spend on another book. I'm sure it depends on how exactly the contract is written, but on it's face, I don't see it being an issue.

It doesn't take away store credits, but you weren't allowed to use store credits on agency books and you weren't allowed to be granted them by buying an agency book. That was treated the same as discounting which wasn't allowed. They weren't exactly store credits though and that's why you couldn't use them.

I also remember the small stores lost their contracts with agency publishers so agency books couldn't be sold there for a few months or so. It's very difficult to stay in business if you can't sell popular books.

[fjtorres]

Originally Posted by Purple Lady

I also remember the small stores lost their contracts with agency publishers so agency books couldn't be sold there for a few months or so. It's very difficult to stay in business if you can't sell popular books.

You remember correctly.
Apple had a prenegotiated contract the day Agency was announced.
Amazon was strong-armed into signing within a couple of months.
But the smaller players weren't high on the BPHs priorities list and spent up to 6 months without access to their titles. Afterwards, they had no unique way to promote the titles to their customers and ex-customers. The Agency straitjacket left no room for creative marketting.

[Purple Lady]

Originally Posted by fjtorres

You remember correctly.
Apple had a prenegotiated contract the day Agency was announced.
Amazon was strong-armed into signing within a couple of months.
But the smaller players weren't high on the BPHs priorities list and spent up to 6 months without access to their titles. Afterwards, they had no unique way to promote the titles to their customers and ex-customers. The Agency straitjacket left no room for creative marketting.

I have no idea how Apple and the publishers thought that this was going to hurt Amazon. I never used to buy at Amazon, but when agency first went away Amazon was the first to discount again so I bought from them. Were the non agency contracts slow to get to other sellers too?

[DuckieTigger]

Originally Posted by Purple Lady

I have no idea how Apple and the publishers thought that this was going to hurt Amazon. I never used to buy at Amazon, but when agency first went away Amazon was the first to discount again so I bought from them. Were the non agency contracts slow to get to other sellers too?

It was about market share. Apple had no interest to discount at all. Without discounting they would have had a real hard time getting any ebook business. It was Amazon's discounting of the best sellers that the publishers didn't like. Apple just plain and simply did not like any discounting from anybody. Amazon had a market share of around 90% and that was a lot of discounting to attack. Except the other stores had a chance to survive by doing their discounting less aggressivly money wise, but differently. More like a reward system or coupons or bundles. I don't think Apple thought it all the way through what it would mean for the smaller stores and how they were able to distinguish themselves from Amazon. And really, they probably didn't care.

[AnemicOak]

Originally Posted by pwalker8

I think it's will be pretty difficult to prove that the smaller eBook stores went out of business because of agency pricing. For that matter, I think that agency pricing actually would help the smaller ebook stores. With agency pricing, Amazon could no longer be able to undercut the smaller stores.

The smaller stores often undercut Amazon.

The big problem for the smaller stores is that they didn't get books back from Agency publishers for many months and in that time of not having access to those titles they lost a large portion of their customer base. Some like Diesel never did end up getting titles from all publishers back. Now it can be argued that this isn't Agencies fault per se, but it was a direct result of the reworkings that all stores had to do in order to accommodate being able to sell Agency books (such as sales tax systems to collect for the thousands of different tax venues in the US [state, county, city]). The stores Agency really helped were Kobo and B&N.

[tubemonkey]

Originally Posted by DuckieTigger

It was about market share. Apple had no interest to discount at all. Without discounting they would have had a real hard time getting any ebook business. It was Amazon's discounting of the best sellers that the publishers didn't like. Apple just plain and simply did not like any discounting from anybody. Amazon had a market share of around 90% and that was a lot of discounting to attack. Except the other stores had a chance to survive by doing their discounting less aggressivly money wise, but differently. More like a reward system or coupons or bundles. I don't think Apple thought it all the way through what it would mean for the smaller stores and how they were able to distinguish themselves from Amazon. And really, they probably didn't care.

It's all about Apple. They hate discounting and the only way to move into ebooks was to get everyone forced into selling ebooks at prices Apple could live with.

[pwalker8]

Originally Posted by tubemonkey

It's all about Apple. They hate discounting and the only way to move into ebooks was to get everyone forced into selling ebooks at prices Apple could live with.

Not everything is about Apple. Apple seems to prefer specific price points and is all about profit margin. Agency is about publishers trying to maintain the perceived value of their product. Amazon is all about market share.

[tubemonkey]

Originally Posted by pwalker8

Not everything is about Apple. Apple seems to prefer specific price points and is all about profit margin. Agency is about publishers trying to maintain the perceived value of their product. Amazon is all about market share.

Agency was Apple's plan to achieve price parity at a level it could live with. Perceived value is BS on the part of the publishers to justify Apple's Agency plan.

[rhadin]

Originally Posted by JSWolf

I used to shop at BooksOnBoard and Fictionwise before the agency pricing as I liked their business models. They worked. They worked to get me to buy eBooks from them and to save money doing so.

I shopped at Fictionwise because they sold books that were not available at B&N. Once Smashwords became a more powerful distributor and the books found their way to B&N, I found no reason to shop at Fictionwise.

Also, I think Fictionwise's demise was to be expected. Once they sold to B&N, it was only a matter of time until B&N closed it down.

Having only once bought something at BonB and never thinking much of the experience, I can't say whether it would have survived or not.

[rhadin]

Originally Posted by eschwartz

With Agency pricing, it is the smaller stores that couldn't undercut the competition.

The smaller stores never really undercut Amazon. They offered other types of gimmicks but I think those only worked as long as they sold books that the major bookstores didn't. Once indie ebooks became distributed to every bookstore, many buyers returned to their preferred bookstore; there was no need to buy from the small online bookstore.

Before agency pricing, Amazon was able to undercut everyone, including the small online bookstores. Agency pricing gave the small store some price protection and let them compete in other ways.

[pwalker8]

Originally Posted by tubemonkey

Agency was Apple's plan to achieve price parity at a level it could live with. Perceived value is BS on the part of the publishers to justify Apple's Agency plan.

Read some of the links I posted in the past couple of days. Agency was being pushed by the publishers well before Apple decided to get into the ebook market, in one or two cases years before Apple considered ebooks.

The various actors points of view with regards to ebook pricing is quite rational from each of their PPV and doesn't require some vast conspiracy theory to understand.

Amazon uses the WallMart model of business, so they want to drive down prices as much as they can based on the theory that the cheaper they make things, the more people will buy and more importantly, the more likely customers are going to go to Amazon first. From their point of view, parts is parts and one ebook is no different than another. They make their money by squeezing the suppliers.

The publishers don't want the public's perception of the value of ebooks to be set too low. Their sells and subsequent profits is driven by top selling authors as well as well performing mid tier authors. They will go out of business if ebooks becomes a race to the bottom with regards to price.

Apple's preference is specific price points, a la the iTunes store, but they are willing to let the publishers set the price as long as the ebooks are not sold for less elsewhere. Apple is about high margins rather than market share.

[fjtorres]

Originally Posted by DuckieTigger

It was about market share. Apple had no interest to discount at all. Without discounting they would have had a real hard time getting any ebook business. It was Amazon's discounting of the best sellers that the publishers didn't like. Apple just plain and simply did not like any discounting from anybody. Amazon had a market share of around 90% and that was a lot of discounting to attack. Except the other stores had a chance to survive by doing their discounting less aggressivly money wise, but differently. More like a reward system or coupons or bundles. I don't think Apple thought it all the way through what it would mean for the smaller stores and how they were able to distinguish themselves from Amazon. And really, they probably didn't care.

If you look around here at deal threads from 2008-2009 around you'll find that Amazon prices were *NOT* always the lowest. On some books they were, sometimes, but not always and not on everything. Through micropayment rebates, coupons, loyalty programs, or just short-term sales, it was often possible to get ebooks cheaper than at Amazon. There were entire websites dedicated to tracking promotions so readers could find the best prices.

The reality was that there was a healthy, competitive market where *in aggregate* if you *only* bought from one ebookstore, Amazon was cheapest. But if you shopped around and bought from whomever had the lowest price on a given day, you would save more than just going with Amazon.

It was also a reality that Amazon's mythical 90% share (from early 2009, after the Oprah endorsement coup) was already gone by the time Agency went into full effect in may 2010 since the entry of Nook expanded the market dramatically over the first three months of the year. There was a Teleread report from april 2010 that Nook might even be outselling Kindle (during march 2010) and Nook bragged of 25% market share in their quarterly report featuring the last pre-agency data. Kobo wasn't much of a player yet but Sony was and so were the indie stores. Amazon's market share on the eve of agency was really in the 56-60% range by some published estimates.

The Agency conspiracy killed creative marketting of BPH titles. And at that time BPH titles were around half the books at Amazon and 75-90% at the indie stores. Smashwords was ramping up but the main sources for indie titles were Amazon and Fictionwise. Everybody else, Sony and Nook included, were heavy on BPH.

The Agency conspiracy raised baseline prices by 50% overnight, creating a price shock among readers that sent hordes to buying indie titles just as Amazon spurred an explosion of indie titles at KDP by switching to a 30% distribution fee on most titles.

The Agency conspiracy inspired Nook to move to near-cost ereader pricing which moved the ebook market from one where interoperable epub was relevant to one dominated by walled gardens where interoperability was meaningless and where generic Adept ebookstores had nothing distinctive to offer.

The conspiracy derailed a competitive market where Amazon had two large competitors and many small ones, all relying on interoperable epub to one extent or another and created one where walled gardens and epub mutants rule. And in a market like that there is no room for generics. Even Google barely registers these days.

Amazon is holding steady at 60-66% (they have actually *grown* their share thanks to their exclusive indie titles) of a much bigger market than in early 2010, Nook has lost half their peak share but seems to be hanging on to 12-15% and Apple has picked up Nook and the small players' lost share and also have 12-15%.
Kobo peaked at 8% or so and are probably under 5%.
Add it up and 4 players control 90-96% of the market.

That is what the *unnecessary* conspiracy achieved.
Amazon was facing strong competition in an rapidly growing market and the conspiracy crippled them all to facilitate Apple's entry.

Edit:

http://www.teleread.com/ebooks/more-...dles-in-march/

http://www.dailyfinance.com/2010/04/...your-hopes-up/

Back in the heyday of UNIX workstations, number two player HP bought out number three Apollo to become top dog on paper. Scott MacNeally, CEO of SUN MICROSYSTEMS reacted to the merger with glee. "Before, I had to worry about what HP might be doing and what Apollo might be doing. Now I only have HP to worry about. And for the next year HP is going to be tied up in the merger."
A year later, SUN was on top and perfectly positioned to exploit the internet boom of the 90's.

Sometimes it is better to have inept enemies than competent friends.
That worked out beautifully for intel, Microsoft, and Google among others.
Amazon seems to be on the same track.

[tubemonkey]

Originally Posted by pwalker8

Read some of the links I posted in the past couple of days. Agency was being pushed by the publishers well before Apple decided to get into the ebook market, in one or two cases years before Apple considered ebooks.

It was going nowhere until Apple became the ringleader.

[fjtorres]

Originally Posted by tubemonkey

It was going nowhere until Apple became the ringleader.

B&N suggested it in 2009 and got rebuffed.
It was in B&N's testimony, trying to help the publishers' case.
It only ended up proving that without Apple there wouldn't have been price-fixing.