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Originally Posted by curtw
That is absolutely false. Apple did not sell digital music at a loss, hoping to "outlast" the competition. They offered music at a fair price, with a published profit margin. What the market decided was that this was a fair price and a superior user experience, and people flocked to it.
Amazon's $9.99 price was *only* designed to eliminate the competition, no matter how much you feel it benefited you, the customer. In the long run, if Amazon had been able to establish a monopoly in e-books, how much do you think books would cost?
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You don't know Amazon's intent any better then I do. I don't believe they were selling at a loss to eliminate competition. They haven't demonstrated this behaviour with any other media. Why does everyone think they have it out just for the book publishers? Why haven't they done this with music or movies? Surely there is more money to be made by establishing a monopoly on movie sales.
I happen to believe they were selling best sellers at $9.99 because they knew what they were paying for the equivalent hard cover and were knocking off a couple of bucks. Real cost savings from not having to deal with delivering paper. Once they demonstrated to the publishers it was the correct price they should have been able to renegotiate their contract. The publishers just refused to pass on the savings. I don't believe for a minute that this was life or death for the publishers. It was about maximizing profit.
If Amazon develops a monopoly I expect the price to be the market price. Jeff Bezos understands customer loyalty. Watch the Charlier Rose interview from when the Kindle was launched. He said that customers are loyal until someone else offers them a better price or better service. Any company with a large e-commerce site can sell ebooks and would be happy to jump on an opportunity of Amazon trying to drive up the price.
I've never bought a book from Amazon so I don't believe they'll ever get a true monopoly. If they maintain market dominance they will be able to demand favourable terms from the suppliers but if the authors sign exclusive deals with Amazon they'll get what they deserve.
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Originally Posted by leebase
Not at all. Apple worked WITH the music publishers. The publishers may have wanted higher prices...but Apple didn't sell a thing without getting the publishers to agree. Apple did NOT just sell the top 100 songs all the time at a loss.
The publishers were NOT happy with what Amazon was doing. Amazon was threatening the publishers business.
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If you think that the music publishers were happy with Apple's pricing you must have been living under a rock. The difference was that the music publishers didn't band together to all back out of iTunes at once. Apple could negotiate favourable terms with each of them independently. You know, the way negotiations are supposed to work.
The music industry was only selling complete albums rather then individual songs. Their $20 album was the equivalent of the book publishers hard cover price. Apple allowing customers to pay 99 cents for a single song was viewed as the death of their industry too but it was the only strategy that was working for digital music.