Amazon vs Hachette

[pwalker8]

Originally Posted by rhadin

Yes, that is correct, Harry, in textbooks but not in the view of the Department of Justice generally. The real-world take on monopoly is that monopoly is bad. A good example is the breakup of AT&T when it provided nearly all of the telephone service in the United States. Everyone agreed that the service was good, and pricing was set by government agencies. The compelled breakup occurred because there was a shift in thinking regarding monopolization: it went from a good monopoly is OK to monopoly is inherently bad.

Actually, that's not quite true. It is true that some people equate monopoly as bad and that there have been times when those people run the DOJ, but it's true that all people think this, or that the DOJ has been monolithic in going after monopolies. I think that prior to the current DOJ, the last time the DOJ had a major anti-trust suit was when they went after Microsoft on behalf of Netscape during the browser wars.

[pwalker8]

Here is an interesting editorial by the WSJ on how the DOJ's selective use of anti-trust prosecution has made it easier for Amazon to play hard ball with the publishers.

Harry Potter and the Prisoner of Amazon -

http://online.wsj.com/articles/harry...zon-1401318787

Here is one quote -
" ...The dispute centers on the structure for selling e-books. Under the so-called agency model, Amazon takes a 30% commission of a listed price, but any consumer discounts come out of Amazon's cut. Amazon prefers a formula to share the cost of markdowns, and publishers are balking. The last rough fight over pricing led to the DoJ charges, and the negotiations with Hachette are Amazon's first with a major publisher since that settlement dictated terms for two years.
..."

Wait, you mean that Amazon now wants to push the cost of all those discounts they offer customers on best sellers down to the publishers rather than eat them? Hum, that doesn't match the narrative that was being pushed by those decrying the evil publishers a few months ago. This is how government intervention tends to distort the market in rather predictable ways.

[DiapDealer]

Which portion of the current anti-trust laws do you feel Amazon is violating?

Whether or not you believe that the publishers were colluding, there are clear regulations against collusion. It doesn't take any stretch of the imagination to see how those regulations could've been percieved as being applicable to what happened with the publishers--and thus warranting an investigation.

So which portion of current anti-trust legislation would be most applicable to a company squeezing one of its suppliers for a better deal? What specific charges could the DOJ bring that might be applicable?

[HarryT]

Originally Posted by DiapDealer

So which portion of current anti-trust legislation would be most applicable to a company squeezing one of its suppliers for a better deal? What specific charges could the DOJ bring that might be applicable?

It could conceivably be regarded as abuse of a monopoly position, but that's very dubious, given that Amazon are really not a monopoly.

[tubemonkey]

Originally Posted by pwalker8

Wait, you mean that Amazon now wants to push the cost of all those discounts they offer customers on best sellers down to the publishers rather than eat them? Hum, that doesn't match the narrative that was being pushed by those decrying the evil publishers a few months ago. This is how government intervention tends to distort the market in rather predictable ways.

The operative word is share. Amazon wants the publishers to share the costs of the markdowns. If that's objectionable to the publishers, then all they have to do is say no. It's called negotiating.

[DiapDealer]

Originally Posted by HarryT

It could conceivably be regarded as abuse of a monopoly position, but that's very dubious, given that Amazon are really not a monopoly.

Possible, I guess. But as you say; very dubious. Certainly not the red-flag-waved-at-a-bull type action that five publishers arranging for all retailers to have to raise their ebook prices across the board was. Not to mention that there's basically zero impact on consumers in this instance. They can go to any number of other retailers to preorder Hachette titles--at discounted prices even. And they'll even be able to buy the same titles at Amazon once they've been released.

[pwalker8]

Monopoly in a legal sense doesn't actually refer to a literal monopoly but rather a company that is in a dominate position in the market. A company in a dominate market position what uses that position to undercut competition is what the Sherman Anti-trust law was written to go after. A company that is in a dominate market position can be in trouble when it does things that might normally be considered perfectly all right. For example, it's normally fine for a company to try to squeeze it's suppliers, however when a company has a dominate market position, such as Amazon has in the book industry, then the same practice can be undue restraint of trade.

[tubemonkey]

Originally Posted by pwalker8

A company in a dominate market position what uses that position to undercut competition is what the Sherman Anti-trust law was written to go after.

So no discounts lower than your competitors?

A company that is in a dominate market position can be in trouble when it does things that might normally be considered perfectly all right. For example, it's normally fine for a company to try to squeeze it's suppliers, however when a company has a dominate market position, such as Amazon has in the book industry, then the same practice can be undue restraint of trade.

In other words, no negotiating for terms more favorable than your competitors?

Let's see, there's a term for this practice...

...agency pricing

[HarryT]

Originally Posted by DiapDealer

Certainly not the red-flag-waved-at-a-bull type action that five publishers arranging for all retailers to have to raise their ebook prices across the board was.

In an aside, I would note that bulls, like pretty much all mammals with the exception of primates, have "dichromatic" colour vision with only two different types of colour receptor, compared with our three. This means that they can distinguish different shades of blue, green, and yellow, but they can't see reds or oranges. If you want to actually attract a bull's attention, your flag should be blue or yellow, rather than red .

[DiapDealer]

Originally Posted by HarryT

In an aside, I would note that bulls, like pretty much all mammals with the exception of primates, have "dichromatic" colour vision with only two different types of colour receptor, compared with our three. This means that they can distinguish different shades of blue, green, and yellow, but they can't see reds or oranges. If you want to actually attract a bull's attention, your flag should be blue or yellow, rather than red .

You may not believe this, but I was thinking about exactly that when I typed it—wondering if anyone was going to call me on it or not.

[tubemonkey]

Originally Posted by HarryT

In an aside, I would note that bulls, like pretty much all mammals with the exception of primates, have "dichromatic" colour vision with only two different types of colour receptor, compared with our three. This means that they can distinguish different shades of blue, green, and yellow, but they can't see reds or oranges. If you want to actually attract a bull's attention, your flag should be blue or yellow, rather than red .

Baby bison are born orange and graze in green grass. They stick out like a sore thumb to us primates; but are quite invisible to those hungry wolves lurking about.

[pwalker8]

Originally Posted by tubemonkey

So no discounts lower than your competitors?



In other words, no negotiating for terms more favorable than your competitors?

Let's see, there's a term for this practice...

...agency pricing

There is a term for a post like this. Straw man. Rather obviously, this is not what is being said.

What actions are and are not permitted to a dominate market player is not really all that clear, especially as various prosecutors and judges re-interpret laws to get the results that they desire. It's an unfortunate situation. For the most part, anti-trust prosecutions are much more politically based than legal based.

[tubemonkey]

Originally Posted by pwalker8

There is a term for a post like this. Straw man. Rather obviously, this is not what is being said.

What actions are and are not permitted to a dominate market player is not really all that clear, especially as various prosecutors and judges re-interpret laws to get the results that they desire. It's an unfortunate situation. For the most part, anti-trust prosecutions are much more politically based than legal based.

End result.

In the meantime, Amazon and Hachette are negotiating and consumers still have access to Hachette titles. Life goes on.

[fjtorres]

Originally Posted by tubemonkey

In the meantime, Amazon and Hachette are negotiating and consumers still have access to Hachette titles. Life goes on.

And that is the likely status quo that will remain indefinitely.
(But I don't think there is any real negotiating going on.)

Amazon said they aren't hopeful of agreement so unless Hachette wants to pull their titles... (They do have a right to do that. They don't have to sell through Amazon just as Amazon doesn't have to sell their books. Or promote them or warehouse them or discount them.)

I expect Amazon will simply wait for the Hachette hyperventilation PR campaign to end so they can get back to negotiations or for Hachette to pull their books.

Me, I hope Hachette pulls them.

[tubemonkey]

Originally Posted by fjtorres

Me, I hope Hachette pulls them.

I don't read Big 5 books unless they're free