Apple + Agency Pubs Colluded on Price?

[emellaich]

Originally Posted by kjk

Curious how would that fit in with Apple's .99 pricing of music from all the music publishers back in 2003- that lasted until 2009, when the music publishers traded DRM for variable pricing?

Well, as I said, these are my thoughts, not an informed legal opinion. However, I don't see any problem with Apple negotiating separately with [B]each[/B ] manufacturer to buy product at a price that lets Apple sell at 99 cents. This does not require that every manufacturer establish the same selling price for every song. It may be that the latest, hottest releases had very small margins for Apple. As I see it, the anti-trust problems would come from three scenarios.

1) If all of the music (or book) publishers agreed as a group to sell at 99 cents (as opposed to Apple setting the selling price).

2) If all of the publishers/manufacturers agreed to sell product to Apple for the same price. Note, this is somewhat subtle. If Apple is in a power position they could set a price for participating in their store and only allow admission to those willing to meet that price. This Apple-driven purchase price would be different than if the publishers agreed to a single, common price and then entered negotiations with Apple.

2) If Apple's agreement with book publishers also included an agreement to set prices (manipulate prices) for Amazon and other outlets.

[sadievan]

Originally Posted by FizzyWater

Well, color me embarrassed...

As Rosanne Rosannadana used to say...."Never mind!"

That was Emily Litella that said 'Never mind'

Rosanne Rosannadana used to say 'It's always something'



Carol

[GreenMonkey]

I personally don't believe in models that work around the free market between a customer and a retailer, like MAP (minimum advertised pricing). The agency model is kind of like that, and that's bad enough.

The way they all agreed to do it together seems like clear price-fixing to me.
Glad to see someone file a lawsuit for it. Can I donate to their legal fund?

[JSWolf]

Is it legal to tell a shop that they cannot discount a product that they sell?

[HappyMartin]

Originally Posted by JSWolf

Is it legal to tell a shop that they cannot discount a product that they sell?

It certainly is not legal in South Africa. I always assume the US is ahead of us in these things.

[GreenMonkey]

Originally Posted by JSWolf

Is it legal to tell a shop that they cannot discount a product that they sell?

It's normally referred to as minimum advertised price here.

Technically they can possibly still discount farther, from what I understand, but they cannot advertise the reduced price.

http://en.wikipedia.org/wiki/Resale_price_maintenance

[Fbone]

Originally Posted by JSWolf

Is it legal to tell a shop that they cannot discount a product that they sell?

Apple, Amazon, B&N, etc aren't selling the product. The publishers are. They are using retailers as agents.

[MikeB1972]

I doubt they are going to get anywhere saying there are similar price points across publishers either, books have always cost about the same regardless of the publisher.

Although to be fair with the new Jim Butcher ebook released at £6.99 in the uk at the same time as the hardback I'm starting to kind of like these agency prices.

[leebase]

Originally Posted by JSWolf

Is it legal to tell a shop that they cannot discount a product that they sell?

Yes, it is. Thus the "Agency" name in the "agency" model. The store is merely acting as an agent of the publisher. It is the publisher who's selling the product and the publisher can put it's books on sale if it wishes too. The agent just gets a cut of the sale.

Lee

[rhadin]

One aspect of this that hasn't been focused on (at least to my knowledge) and which strikes me as problematic for the Agency 5 is every retailer has exactly the same deal. This is significant because it demonstrates the lack of negotiation. Under normal market conditions, Amazon might be entitled to a larger fee than say Diesel Books because Amazon will be the conduit for the sale of more books than Diesel. So perhaps the Amazon-Agency 5 split should be 40:60 rather than 30:70 and maybe Diesel's split should be 20:80. The differences in split is similar to the wholesale discount that each vendor could negotiate.

The other question that requires resolution, I think, in the lawsuit is whether each title (book) constitutes a separate transaction that must be looked at individually. The lawsuit as filed assumes a single product category -- ebooks -- without differentiation among ebooks. Publishers can argue that each ebook must be evaluated on its own merit because each is unique, thus there can be no class action because there isn't a single class and on the individual ebook there could be no collusion because an entity cannot collude with itself.

It will be interesting to see how this plays out.

[rhadin]

Originally Posted by JSWolf

Is it legal to tell a shop that they cannot discount a product that they sell?

Yes, since the US Supreme Court changed the rules during the Bush administration. A manufacturer can not only set the price but deny the retailer product should the retailer deviate from the price.

Haven't you wondered why the iPad costs the same no matter the retailer? Or the Nook and Kindle? Or a lot of other electronic equipment? In a world of free competition, Staples could sell the Kindle for $39 if bought with a $199 shredder. But under the SCOTUS decision it can't because Amazon says every Kindle sold has to be sold for the same price as Amazon sells it.

[anamardoll]

Originally Posted by rhadin

Yes, since the US Supreme Court changed the rules during the Bush administration. A manufacturer can not only set the price but deny the retailer product should the retailer deviate from the price.

Haven't you wondered why the iPad costs the same no matter the retailer? Or the Nook and Kindle? Or a lot of other electronic equipment? In a world of free competition, Staples could sell the Kindle for $39 if bought with a $199 shredder. But under the SCOTUS decision it can't because Amazon says every Kindle sold has to be sold for the same price as Amazon sells it.

+1 on the lack of competition in this environment and how damaging/irritating it is. I miss those Staples Kindle + Shredder package deals. (OK, that was a fictional example, but still.)

[pocoreader]

So, Amazon is the good guy?

http://www.guardian.co.uk/books/2011...guin-macmillan

[leebase]

There is no price fixing here. Price fixing would be if two publishers agreed to sell their books for the same price. What folks are demanding is for a publisher to compete against ITSELF. That it should allow one of it's distributors put all the rest of it's distributors out of business by subsidizing the sales of the publisher's product.

The publishers have to compete with each other. They have to compete with all the other publishers and independent authors. They have to compete with the used version of their own products. They have to compete with libraries. They have to compete with all the free out of copyright books. They have to compete with all the free books given out by other publishers.

PLUS -- no one needs to buy a book. This is not milk, bread or gas.

This suit is without merit, but that's not unusual in this litigious society.

Lee

[Suzanna]

Originally Posted by pocoreader

So, Amazon is the good guy?

http://www.guardian.co.uk/books/2011...guin-macmillan

Amazon is hardly the good guy. Under the Agency model, Amazon actually makes money on the sale of each agency priced book, while the publisher makes less money than they used to. It appears that the publishers decided that it was worthwhile to earn less from each sale in exchange for being able to dictate what an ebook should be worth. Before Agency pricing, Amazon was losing money from the sale of each ebook, but they were willing to do so to undercut the competition and drive them out of business.

This post, by former literary agent Nathan Bransford, actually explains the whys of the agency model and the economics behind it. As he states,

Wholesale model e-book:
Publisher: $12.50 (roughly 50% of $24.99 hardcover retail price)
Amazon: - $2.50 (selling at $9.99)

Agency model e-book:
Publisher: $9.09 (70% of $12.99)
E-bookseller: $3.90 (30% of $12.99)

See what's happening there? Publishers left money on the table to have more control over pricing and so more e-booksellers could compete with the elephant in the Amazon.

In the short term, I can see people saying, "Who cares that Amazon loses money as long as I get to pay less!" The question, however, is what will happen in the future if one company gains the bulk of all ebook sales. Will Amazon be content to keep losing money forever? I doubt that.