U.S. Justice Dept. to Sue Publishers, Apple, for Price Collusion?

[JSWolf]

Originally Posted by geertm

Unlike Amazon and Apple who do not license their DRM to anyone else, B&N has licensed its DRM to Adobe, and support for B&N's DRM is included in the latest Adobe software. Any software ereader or ereader device using the latest Adobe software can support B&N's DRM.
Several software ereaders do support B&N's DRM (including a pre-release of the new ADE software), but manufacturers like Kobo and Sony have chosen not to enable support for the B&N DRM.

So instead of blaming B&N, blame the ereader manufacturers for not enabling the included B&N DRM support.

I still blame B&N. It's good business sense to not go with the B&N DRM because it means people who own a Sony or Kobo can't shop at B&N for eBooks. If B&N has used standard Adept DRM, then sure, all ePub customers could shop there.

[fjtorres]

Originally Posted by stonetools

Supreme Court said different, recently.

Im certain that the DOJ isnt going to want an Amazon 90% share of the retail market, either.

I'm betting on a modified agency pricing model coming out of this.

Gee, you really are putting a lot of weight one *one* specific decision about *one* company acting alone.

You really don't want to see this as a cartel issue, the way the euros see it, do you? Or a consumer rip-off issue as the feds see it.

It's all about eee-vile amazon?

Never mind!
Give my regards to bearded Spock!

[HansTWN]

Originally Posted by fjtorres

Gee, you really are putting a lot of weight one *one* specific decision about *one* company acting alone.

You really don't want to see this as a cartel issue, the way the euros see it, do you? Or a consumer rip-off issue as the feds see it.

It's all about eee-vile amazon?

Never mind!
Give my regards to bearded Spock!

Why should stonetools, the publishers' spokesperson here, think it is a cartel issue? Sure, they had to do something against Amazon (from their point of view), but having a big family meeting to raise prices wasn't the right path to take. Now they have to try to weasel out, and the strategy is to scare the feds with the "Amazon will be a monopoly" scenario.

[JSWolf]

Originally Posted by fjtorres

Gee, you really are putting a lot of weight one *one* specific decision about *one* company acting alone.

You really don't want to see this as a cartel issue, the way the euros see it, do you? Or a consumer rip-off issue as the feds see it.

It's all about eee-vile amazon?

Never mind!
Give my regards to bearded Spock!

Stonetools is in favor of the agency model. You'll never convince him otherwise.

[sabredog]

Originally Posted by HansTWN

Why should stonetools, the publishers' spokesperson here, think it is a cartel issue? Sure, they had to do something against Amazon (from their point of view), but having a big family meeting to raise prices wasn't the right path to take. Now they have to try to weasel out, and the strategy is to scare the feds with the "Amazon will be a monopoly" scenario.

For sure. They cannot see the evolution failure asteroid with their name on it headed their way, rather focusing on the large scary Bezosaurus Jeff making snarly noises outside their cave entrance.

[HansTWN]

Originally Posted by sabredog

For sure. They cannot see the evolution failure asteroid with their name on it headed their way, rather focusing on the large scary Bezosaurus Jeff making snarly noises outside their cave entrance.

That Bezosaurus Jeff has a larger brain capacity than all of the big 6's management combined, so they should be scared. And he likes munching on Neanderthals.

[Andrew H.]

1. a. If the publishers got together and agreed to use agency pricing as a cover to raise prices, they have reduced competition. Literally: there is no more retailer competition on pricing.

The same is true of Euro price-maintenance rules - they reduce competition because retailers can no longer compete on price.

The effect of both of these activities is to raise prices for the consumer.

1.b. Low prices for the consumer is not necessarily the ultimate good: to use an extreme example, eliminating child labor also raised prices for the consumer. The idea is that sometimes consumer have to pay more because achieving some other outcome is more important. For the price-fixing euro countries, the goal is to enable small neighborhood-type stores to survive, which happens because big stores can't offer lower prices. (Germany, at least, also has store closing laws which mean that larger stores also can't compete by staying open until 11 every night).

Paying more so that neighborhood businesses survive is almost a tax to live in a certain kind of society. One in which neighborhood businesses survive...and consumers get screwed. You pays your money and you takes your chances!

But I think that's also the kind of argument people who say that this was necessary to fight Amazon are making.

---------------------
But there are a lot of unanswered questions about the investigation. It can't be purely about the agency model - that's used in all kinds of areas.

But it could be about the fact that 5 of the publishers joined the agency model all at once, which suggests a concerted action that might be illegal. The MFN clauses have, I think, always been problematic. And maybe there's evidence of some collusion beyond what what know so far - like an agreement to keep the prices above some certain level for certain types of books.

I'm also very curious why Apple is being investigated - they are not a publisher, so whatever their involvement is, it has to be different from the publishers' involvement. Apple sold music, movies, and apps on the agency model long before iBooks existed, so there doesn't seem to be an issue with them having an agency model at all. (And it's not like iBooks is much of a success, either.) My best guess would be that they may have violated an anti-trust provision of some sort by "furthering" the publishers' fight against Amazon. But I'm not sure about that, and I'll be pretty interesting what comes out.

[Elfwreck]

Originally Posted by Andrew H.

I'm also very curious why Apple is being investigated - they are not a publisher, so whatever their involvement is, it has to be different from the publishers' involvement. Apple sold music, movies, and apps on the agency model long before iBooks existed, so there doesn't seem to be an issue with them having an agency model at all.

They encouraged the publishers to switch to the agency model and supported the switch. They (in the form of Steve Jobs) also told the public that people would shop at the iBookstore because prices would be the same--higher--at all ebook stores.

So they encouraged publishers to conspire to raise prices in order to get a jump into a market arena (ebook sales) that they believed they couldn't otherwise compete in.

[Little.Egret]

Originally Posted by Elfwreck

Interesting. I'd looked and not found any. (Ebooks, that is. Baen pbooks are sold through Amazon.) Looking again, I found some ebooks, but not listed as published by Baen, but by "Amazon Digital Services."

Cryoburn has no ebook edition. Nor do the other Vorkosigan novels. The only Vorkosigan ebooks I found were the novellas: Mountains of Morning (Free at the Baen library), Weatherman (later incorporated into The Vor Game), Labyrinth, Borders of Infinity (Unclear whether the Kindle version is the single story or the collection by the same name), and Winterfair Gifts. They're $3.99 each for the Kindle versions.

I suspect these are either released by the author after reclaiming the rights to the stories, or are bootlegs. (I hope they're from Bujold.) They don't seem to be from Baen.

Correct, there is nothing for which Baen has ebook rights on Amazon.

You missed _The Spirit Ring_ which was published by Baen and put up on Amazon by Lois McMaster Bujold as an experiment.

But what you see on Amazon depends in what region it thinks you reside - use a clean browser or clear cookies and it will let you change your region (top left) to (say) Canada or "Europe" or Australia. Or just look at Amazon.co.uk, Amazon.fr etc.

Lois has put up her own books wherever she has e-rights so Cryoburn and the whole Vorkosigan saga is available on Amazon outside the US as are the four Sharing Knife books and The Hallowed Hunt. The Hallowed Hunt ebook is in fact available both in the Author's edition and from the US publisher except in the US and UK where only one edition is available. The US publishers ebook of The Curse of Chalion and Padadin of Souls is available workwide except for UK where the rights holder hasn't bothered to have a ebook.

[stonetools]

What's misleading about the whole agency pricing debate is that the issue for most posters here is not that the publishers acted illegally, rather it's that they acted to raise prices. It's the price raising, not the price fixing that's the problem.

Lets review. It is legal and appropriate for Apple to suggest that the publishers adopt an agency pricing model for ebooks. After all, this is the model Apple uses in its media stores and no one has a problem with it. Indeed, no one has a problem with the *agency model anywhere else - except ebooks.

It is legal and appropriate for publishers to adopt the agency pricing model if they feel its a better model for them. *There is nothing magical about the wholesale model that makes it a better model for selling digital media- quite the contrary. When posters bang on about how the wholesale model is the " traditional model" for selling books, my irony meter goes off the charts. What happened to " innovation" and *" adapting to digital realities"?

It's legal for publishers to set whatever price they like under the agency model. They can set the price to the same level as the *discounted retail price. They can set it LOWER than the retail discount price. They can set it higher than the *discounted retal price. In each case they are acting legally. They may not be acting sensibly: but they are acting LEGALLY.

Now they have generally set the price higher than the *discounted retail price. In effect, they are setting the prices about where the suggested retail price used to be. Now it's not the suggested retail price: it's just the retail price. Instead of the retailer controlling whether to discount, the publisher does that now.*
Now if the publishers set the prices at the retail discount price or lower, would we be hearing about " cartels" or the "price fix six"? You know we wouldn't . Instead we would be hearing paeans *about the wonders of agency pricing and how farsighted and wise the publishers were in moving to agency pricing. **

There is evidence that the publishers acted together in moving to adopt the agency model. Again, that's legal. The publishers conduct only becomes illegal if they act together to raise prices. *If they raise prices independently, based on what their market research tells them, thats legal.*

Is there any *evidence that these publishers got together and said , " The price for book X will be 14.99 and the price for Book Y will be 13.99?" I haven't heard any such evidence.*
What is the indirect evidence that the publishers acted in collusion - other than the Steve Jobs quote, which doesn't prove that the publishers actually did anything.*

Is there uniform pricing across categories? Nope.

How about bestsellers? Are they all priced the same? No again. Most are in the 12.99-14.99 range but there are some higher and a few lower. About all you can say about bestsellers is they aren't as cheap as they were when Amazon was discounting them below cost. The fact that those books are BESTSELLERS tends to prove that the publishers did not overprice the books. *

All this is to say that the DoJ case for collusion is not the slam dunk that people on this forum think it is. Even if the DoJ wins, it doesn't mean the end of agency pricing or even higher prices for *bestsellers.*

Suppose this case goes to trial and *the court finds that the publishers acted independently and legally to raise prices . Would folks here be happy? You know they wouldn't be. People would be muttering about how the publishers had bought the courts, etc.
If the DoJ wins, then what? Can the DoJ order the publishers to go back to the wholesale model? Probably not. There will be damages and fines but the agency model will continue, maybe with more freedom for the retailers to discount . *If the publishers can justify higher prices on the basis of market research, those higher prices will continue too.

[stonetools]

Originally Posted by JSWolf

Stonetools is in favor of the agency model. You'll never convince him otherwise.

Nope, I'm not in favor of agency pricing. But I understand that it was an imperfect response to a very real problem. Pretending there was no problem or hoping that a unicorn would come to save them wouldn't help the situation.
Of course, you don't see the problem because you are looking at the situation from a pure consumer point of view, but the publishers had to defend themselves from an Amazon monopoly, and agency pricing was their solution . I have not really seen a better solution advanced by anyone here.

[Elfwreck]

Originally Posted by stonetools

What's misleading about the whole agency pricing debate is that the issue for most posters here is not that the publishers acted illegally, rather it's that they acted to raise prices. It's the price raising, not the price fixing that's the problem.

It's the price fixing *for* price raising that's the problem. While it would also be illegal for them to get together and agree to undercut all other publishers for a period of five years to clear out the competition, and that would also get outcry, it'd be of a different type.

Lets review. It is legal and appropriate for Apple to suggest that the publishers adopt an agency pricing model for ebooks. [...]

It is legal and appropriate for publishers to adopt the agency pricing model if they feel its a better model for them.

It is not legal to coordinate their efforts among companies who should be competing with each other, agreeing to set aside their competition in order to raise prices across the industry.

Could they independently adopt the agency model, watch the first company to do so raise prices, and say, "well, if they're getting away with that, I'll set my prices there too?" Sure. BUT THEY DIDN'T. No one company decided to take the risk of a new business model, one with lower payment to publishers (and therefore lower royalties to authors) that involved higher consumer prices... instead, they decided to all do it together, because none of them believed they could be successful at it alone.

There is evidence that the publishers acted together in moving to adopt the agency model. Again, that's legal. The publishers conduct only becomes illegal if they act together to raise prices. *If they raise prices independently, based on what their market research tells them, thats legal.*

Yep. But there's clear *public* evidence that the publishers were unhappy, not with their income, but with *public perception* of ebook prices (the concept that bestsellers "should be" $10), and coordinated efforts to force higher prices on the consumers. That they weren't doing this "because it's a more profitable business model," but because they wanted to punish readers who believed $10 was the most reasonable price for a new ebook.

There are actions companies are allowed to take if they don't like their customers' attitudes toward their products; "conspire with competitors to convince those customers the error of their ways" is not one of them.

And if the publishers were really concerned about Amazon's market dominance, all they had to do was stop selling through Amazon. They could do that all at once, or by specific categories... only sell their SF through B&N, or only sell their YA novels through BooksonBoard, or offer incentives to start-up bookstores who want to compete with Amazon. No law required them to sell to Amazon at all.

[murraypaul]

Originally Posted by stonetools

There is evidence that the publishers acted together in moving to adopt the agency model. Again, that's legal. The publishers conduct only becomes illegal if they act together to raise prices.

No, that is not correct.

[Alfy]

Nobody's talking about what really matters: does it mean I'm gonna get some of my money back???

[DiapDealer]

Originally Posted by stonetools

What's misleading about the whole agency pricing debate is that the issue for most posters here is not that the publishers acted illegally, rather it's that they acted to raise prices. It's the price raising, not the price fixing that's the problem.

That's because nobody ever colludes to make less money.