Publishers Claim Apple Order Illegally Hobbles Return to Agency Model

[fjtorres]

Sony prices have traditionally been high but they have always discounted pretty heavily.
In my time I've bought Sony CD changers, tape player, BD player, Vaio ultraportables at work, and they were always nicely discounted off their (very high) list prices.
In recent years, they (and Samsung, and LG) have tried to cap discounts on HDTVs and most retailers have gone along. The problem they've run into in 2012 and 13 is their pipeline gets clogged up in the summer and they are forced to relent by the fall because there is a worldwide glut of large screen LCD manufacturing capacity and no shortage of comparable product that is available at better prices.

Which is the same thing that happened with books: faced with "take it or leave it" pricing, enough readers walked away from the $12.99 BPH titles to make indie publishing socially acceptable.

Price fixing works if you have a cartel that controls enough of the market to make "take it or leave it" stick and that is no longer true for the BPH cartel. If it did, the Randy Penguin merger would've been blocked.

[AnemicOak]

Originally Posted by SteveEisenberg

My source is The Everything Store. According to the book, the reason Amazon does not sell most Apple products (except through third party sellers) is that Apple forbids most deep discounting.

I'm sure that's part of it, but they sell other brands that don't get deeply discounted such as Bose. I think it's more a question of why they'd want to sell a lot of Apple products and then potentially see all of that purchases content sales go to Apple instead of Amazon. Amazon's pretty big on selling content after all.

[Sil_liS]

Originally Posted by TimW

That article correctly points out that Apple has been discounting Hachette books since the kerfuffle began. This emphasizes why Amazon would be unwise to sign a no-discount agency deal with Hachette while Apple still has the ability to discount.

Apple has been discounting ebook preorders. Publishers want preorders to be discounted.

[Fbone]

Originally Posted by AnemicOak

I'm sure that's part of it, but they sell other brands that don't get deeply discounted such as Bose. I think it's more a question of why they'd want to sell a lot of Apple products and then potentially see all of that purchases content sales go to Apple instead of Amazon. Amazon's pretty big on selling content after all.

Bose products are sold directly from Bose using Amazon as the transacting agent.

[AnemicOak]

Originally Posted by Fbone

Bose products are sold directly from Bose using Amazon as the transacting agent.

The pages I'm looking at say "Ships from and sold by Amazon.com" as opposed to the ones that name a manufacturer as the seller.

[Fbone]

Originally Posted by AnemicOak

The pages I'm looking at say "Ships from and sold by Amazon.com" as opposed to the ones that name a manufacturer as the seller.

Perhaps, not all items then.

http://smile.amazon.com/Bose-Wave%C2...&keywords=bose

[TimW]

Originally Posted by Sil_liS

Apple has been discounting ebook preorders. Publishers want preorders to be discounted.

Publishers want preorders to be discounted? I wasn't aware of that. Apple's current price of The Silkworm is $8.99, the list is $14.99. Apple's current price of The Matchmaker by Elin Hilderbrand is $9.99, the list is $14.99. I can find others if you like. Apple doesn't seem to have a problem discounting when they want to discount.

[Barcey]

So the publishers feel that they negotiated a 2 year cooling off period when they settled (avoiding trial) and Judge Cote staggered the cooling off periods in her final decision for Apple (expressly so they couldn't collude again). Now the publishers feel they got a raw deal with their settlement because they can't collude and have to wait up to 4 years instead of 2.

Seems simple. Why don't they make the publisher's settlements null and void and proceed to take the publishers to court. Apple was already found guilty of colluding with the publishers so it shouldn't be difficult to prove the publishers were also colluding.

[JSWolf]

The simple solution is to just make the publishers unable to ever go back to agency pricing. That would solve the problem.

[pwalker8]

Originally Posted by Barcey

So the publishers feel that they negotiated a 2 year cooling off period when they settled (avoiding trial) and Judge Cote staggered the cooling off periods in her final decision for Apple (expressly so they couldn't collude again). Now the publishers feel they got a raw deal with their settlement because they can't collude and have to wait up to 4 years instead of 2.

Seems simple. Why don't they make the publisher's settlements null and void and proceed to take the publishers to court. Apple was already found guilty of colluding with the publishers so it shouldn't be difficult to prove the publishers were also colluding.

In this country, we generally have a trial before imposing a sentence. Old fashion, I know, but that's how it's done.

[SteveEisenberg]

Originally Posted by JSWolf

The simple solution is to just make the publishers unable to ever go back to agency pricing. That would solve the problem.

Ever? As in centuries? Wouldn't this be punishing the children for the father's sins?

As for simplicity, I question that. For one thing, it would lead to a long period of litigation concerning to whom it applies after mergers and divestitures.

Another problem is that after a decade or two, the dividing line between a book and a video and a video game will likely blur or change, again leading to legal uncertainty and and a drawn out process of developing case law.

Yet another difficulty is determination of what sorts of retail price maintenance rise to the level of agency. Personally, I think that retail price maintenance and agency are essentially the same, but most people seem to disagree.

The beauty of making the restrictions temporary is that almost all the above problems don't have time to crop up.

To me, it's unfair to single out one industry for permanent retail price maintenance prohibition. And if the prohibition is going to apply to all products, the cost of enforcement would be substantial.

However, I have a more modest proposal that I think could achieve some of what you want while being cheaper to enforce. Pass a law stating that all commercial agreements between retailers and suppliers be put on the retailer's web site. Putting out there, on the web, written minimum price agreements would be embarrassing, so there would be fewer such agreements.

[Barcey]

Originally Posted by pwalker8

In this country, we generally have a trial before imposing a sentence. Old fashion, I know, but that's how it's done.

There was actually a trial and you might not agree with the decision but it was pretty clear.

CONCLUSION
Based on the trial record, and for the reasons stated
herein, this Court finds by a preponderance of the evidence that
Apple conspired to restrain trade in violation of Section 1 of
the Sherman Act and relevant state statutes to the extent those
laws are congruent with Section 1. A scheduling order will
follow regarding the Plaintiffs’ request for injunctive relief
and damages.

They didn't conspire with themselves, I don't believe that's possible.

[rcentros]

Originally Posted by AnemicOak

http://www.publishersweekly.com/pw/b...ncy-model.html

Looks to me like the problem comes down to this ... The five publishers "plea bargained" and started "serving their time" two years ago. Apple went to court and just lost recently -- so the punishment phase is just starting (or is Apple supposed to get off scott-free for price fixing?). Had Apple agreed to "plea bargain" with the Big 5, this would have been over. So, it sounds like Apple created their own problem -- and their problem has repercussions for their partners in crime. Oh well. Cry me a river.

[rcentros]

Originally Posted by pwalker8

This pretty much shows what happens when a judge who knows nothing about business attempts to micromanage a business. There are all sorts of unexpected consequences for third parties.

The "third parties" were all Apple's "partners in crime." Had Apple plea bargained at the same time they did, this could be all over now. Oh well. I guess maybe crime doesn't always pay after all. I'm sobbing for the poor publishers ... can you hear me sobbing?

[rcentros]

Originally Posted by pwalker8

In this country, we generally have a trial before imposing a sentence. Old fashion, I know, but that's how it's done.

So what are you whining about? The publishers plea bargained and served their "sentence." Apple just got their sentence -- they still have to serve it. If that's inconvenient for their Big 5 cohorts, oh well, so be it. Tough. Maybe they shouldn't have colluded in the first place, eh?