DOJ suing Apple over ebooks.

[whitearrow]

Just something to keep in mind. A complaint is not evidence. It may contain excerpts from documents that will eventually be evidence, but it's not evidence itself. It's also worth keeping in mind that this is civil antitrust, not criminal, which therefore has a lower standard of proof.

Also, in the federal system, the requirements for pleading are very lenient - only minimal facts are required to be pled. Don't be surprised if you see more form than substance in the complaint.

[=X=]

Finally I'm glad the DOJ has taken action against the publisher.

=X=

[JoHunt]

The complaint is a great read! The publishers hated that Amazon sold ebooks for $9.99 and Apple believed that it could not compete against Amazon. A perfect confluence of greed to the detriment of consumers, which was even acknowledged by Apple.

Apple saw a way to turn the agency scheme into a highly profitable model for itself. Apple determined to give the Publisher Defendants what they wanted while shielding itself from retail price competition and realizing margins far in excess of what e-book retailers then averaged on each newly released or bestselling e-book sold. Apple realized that, as a result of the scheme, "the customer" would "pay a little more."

The facts brought out in the complaint makes me support Amazon even more than I have in the past.

[ScotiaBurrell]

Originally Posted by ProfCrash

(giggles)

I wonder what the Publishers who did not settle think is going to happen?

delay courts advancements until other political party take over so they can get weaker settlement than first three did and declare victory.

[fjtorres]

From the Settlement analysis:

In particular, the proposed settlement states: “These provisions do not dictate a particular business model, such as agency or wholesale, but prohibit Settling Defendants from forbidding a retailer from competing on price and using some of its commission to offer consumers a better value, either through a promotion or a discount.” Discounts, promotions, and some control over retail pricing must all be at least partially under the retailers’ control, even if the agreement is technically an agency-commission model, rather than a wholesale one.

This doesn’t kill the agency model outright, but does modify it well beyond what’s widely recognized today. Suppose a publisher prices a book at $10 list price, and a retailer agrees to a 30 percent commission, or $3 on a full list sale. Under these conditions, those retailers would be permitted to sell the book below list price, presumably taking the discount out of their own $3 commission. The publisher would still net $7, but lose its ability to maintain prices.

The DOJ’s proposed terms expressly permit publishers to set a soft floor on discounts, but not a hard floor. Publishers can enter into one-year agency agreements that stipulate that the retailer can sell individual titles at a loss, but must show a profit overall for all the books it sells from that publisher’s catalogue.

Note the italic clause: The Fictionwise model is back in play. Yay!
Note the bold clause: Amazon's basket-pricing model is sanctified.

Teeth-gnashers, queue up on the left, please.

[stonetools]

Settlement analysis link:

http://www.wired.com/epicenter/2012/...tlement-ebook/

[Kali Yuga]

Originally Posted by howyoudoin

Co-relation does not imply causation. There is no reason to believe that agency-pricing was the cause of the decline in Amazon's market share, or that it's removal will result in a reversal.

I'd say to exclude it as a causal factor is a bit naïve.

Apple entered the market without Amazon driving them right back out with a price war. B&N also gained market share at least in part because Amazon could no longer beat them on pricing and availability.

[ScotiaBurrell]

saw this

Amazon on Wednesday said it was ready to lower e-book prices, following a settlement between the Justice Department and three e-book publishing companies named in an antitrust lawsuit alongside Apple.

“This is a big win for Kindle owners, and we look forward to being allowed to lower prices on more Kindle books,” an Amazon spokesperson, referring to a settlement the Justice Department reached with Hachette, HarperCollins and Simon & Schuster.

The DOJ’s lawsuit essentially credits Amazon with launching the American e-book industry as we know it with the debut of the Kindle in 2007. It further credits Amazon’s $9.99-or-less ebook price as beneficial for all consumers, saying “As a result of that competition [from Amazon], consumers benefitted from Amazon’s $9.99-or-less e-book prices even if they purchased e-books from competing e-book retailers.”

http://idealab.talkingpointsmemo.com...p?ref=skyboxes

[ProfCrash]

Three Publishers agreed to the settlement. That can be approved by the court well before Apple and the other two go through a trial. Those terms kick in as soon as the court accepts the settlement. I have a feeling that will happen faster then 2 years from now.

I also have a feeling that the three Publishing companies that settled provided emails and other documents to the DOJ that will be used against Apple and the remaining two Publishers.

[ProfCrash]

Originally Posted by Kali Yuga

I'd say to exclude it as a causal factor is a bit naïve.

Apple entered the market without Amazon driving them right back out with a price war. B&N also gained market share at least in part because Amazon could no longer beat them on pricing and availability.

I am sorry, but I don't think that this helped BN all that much. BN would have gained market share without the collusion. Given that BN used discounted pricing and the like in its brick and mortar store, I think BN would have used similar practices with their e-book store. Not to mention, people liked the Nook when it was released. Heck, there were folks who bought the Nook because BN was not Amazon and they wanted nothing to do with Amazon.

Kobo might have benefited because it was/is a smaller chain then BN and Amazon so the price leveling helped it went it came on the market. Apple was hoping that it would help them but it is hard to say that the miniscule piece of the market Apple has is going to be worth the legal problems and costs that this is going to have for them.

A recent article said that Apple would pull out of the e-book market if the Agency model went away because it is not worth it to Apple to try and be a wholesale seller. So if the Agency Model does go away, and at least some elements of it are going to go away for at least three Publishers in the very near future, we can expect that Apple is likely to give up the gains that it made. Whether that means they shut down IBooks or they run it like Sony runs their e-bookstore and it is pretty much a non-entity is to be determined.

[JSWolf]

Originally Posted by teh603

Dollars to donuts, the real plaintiffs are Wal-Mart, B&N, and Target. They're the ones who lost when the agency model came out, because they could no longer discount products lower than an independent retailer.

Either way, the consumer loses.

You have things wrong here. This is about eBooks, not pBooks. Wal-Mart & Target do not sell eBooks and B7n still does also sell pBooks.

[JSWolf]

delete post

[Kali Yuga]

Originally Posted by ProfCrash

I am sorry, but I don't think that this helped BN all that much. BN would have gained market share without the collusion.

How? Magic fairy dust, perhaps?

B&N was already leveraging its in-store presence to push the Nook, and wasn't doing well against Amazon. Most of the hype around the Nook was not by readers who went on to buy lots of ebooks, but by tech geeks who saw a cheap tablet an hacked the device. B&N has trashed its profitability for a few years in a row now just making and marketing the Nook, and before agency pricing they did not (and presumably could not) match Amazon on price.

Originally Posted by ProfCrash

A recent article said that Apple would pull out of the e-book market if the Agency model went away....

I wouldn't put much stock in statements like that. Jobs infamously said "people don't read anymore," and pushed iBooks shortly thereafter. I.e. Apple is infamous for saying one thing and doing the exact opposite.

And again, it doesn't look like the agency model will disappear. The blockade on discounts, "most-favored retailer" status, guarantees of not being outpriced are gone. The publisher can still set the retail price and retailer cut, they just can't dictate all of the final prices.

I'd also be careful what you wish for. If agency pricing is killed, publishers may go back to windowing, e.g. delaying ebook releases by 3-6 months after the hardcover release, in order to protect hardcover margins.

[JoHunt]

MacMillan's CEO's response to the charges can be read here:

http://9to5mac.com/2012/04/11/doj-ex...scussion/embed

How thoughtful of MacMillan to switch to the agency model knowing that it would be bad for their business It was a move to force Amazon to charge higher prices - nothing more, nothing less.

When Macmillan changed to the agency model we did so knowing we would make less money on our e book business. We made the change to support an open and competitive market for the future, and it worked. We still believe in that future and we still believe the agency model is the only way to get there.

[JSWolf]

I'm hoping that once this lawsuit is over that Fictionwise can go back to the model that had before the agency model with all the agency publisher's eBooks back for sale. That was a very successful model that worked well with customers.