DOJ suing Apple over ebooks.

[rhadin]

Originally Posted by Fbone

Interesting. How would a retailer implement this, if the publishers approves. For every book sold $5 below cost the retailer has to sell one $5.01 above cost or five books $1.01 above wholesale price or something in between. Sell too many at a loss (bestseller, perhaps?) and the retailer may not show a profit for the publisher's entire catalog.

More interesting is how will they get secretive Amazon to open its books to prove it made an aggregate profit selling BPH ebooks.

[murraypaul]

Originally Posted by rhadin

More interesting is how will they get secretive Amazon to open its books to prove it made an aggregate profit selling BPH ebooks.

As I understand it, the restriction is not that they must make a profit, just that they must (on aggregate) sell at or above wholesale price.
That can be proved by Amazon telling the publishers what price it has sold each copy at. It doesn't require any knowledge of Amazon's costs.

[DiapDealer]

Originally Posted by rhadin

More interesting is how will they get secretive Amazon ebook retailer to open its books to prove it made an aggregate profit selling BPH ebooks.

More interesting is how will they get secretive Amazon ebook retailer(s) to open its their books to prove it they made an aggregate profit selling BPH ebooks.

[RareBird]

Another question in all this is how soon can we expect to see lower prices on ebooks? An even better one will be how long it will last. As it's been mentioned before, the pricing itself wasn't illegal per se just the collusion that led to it (if I understand the reporting correctly). So if the BPH can get back to these prices through legal means, how long will it take them?

[tubemonkey]

Originally Posted by RareBird

Another question in all this is how soon can we expect to see lower prices on ebooks? An even better one will be how long it will last. As it's been mentioned before, the pricing itself wasn't illegal per se just the collusion that led to it (if I understand the reporting correctly). So if the BPH can get back to these prices through legal means, how long will it take them?

All they have to do is raise wholesale prices and don't put any restrictions on retail prices.

[fjtorres]

Originally Posted by Fbone

This requires constant monitoring and frequent price changes. This could annoy customers when they suddenly have to pay $5 more than they would have yesterday. Or didn't save $5 by waiting a day.

Monitoring yes; price changes no.
Really, it's no big deal.

Amazon (like the supermarkets) know how many customers they have, what they buy, and how much a given product will sell at a given price. *That* is their competitive advantage and the reason they don't brag about their user base or how many ebooks they sell. So when they put an ebook on sale (which they are doing even as we speak) they have a very good idea of how it is going to sell.

As for annoying customers, well; the current "100 books..." section of the Kindle store hasn't annoyed anybody.
http://www.amazon.com/gp/feature.htm...d_i=1286228011
Neither has Amazon's Daily Deal promotions in the Kindle and Android Apps stores; what they *do* achieve is getting customers used to checking out the deals every day. Truly evil, huh?

Modern consumers are used to the concept of weekly sales and even one-day sales (Amazon owns Woot!, remember). Amazon customers are familliar with their Gold Box *hourly* deals.

Honest, consumers understand the idea of promotional deals: there are literally dozens of "Daily deal" sites devoted to passing on word of worthy deals. They get that it's a lottery; that regular visits to the website will bring worthy deals. And in the process, they are exposed to *other* not-so-heavily discounted books to buy.

It is called drawing traffic.

These are *old* ideas and marketting tricks that go back to the last century; *everybody* uses them... except old school booksellers. Only in the publishing business do you find such fierce resistance to tried and true (and profitable) techniques. Only in bookselling do you find traditionalists who pretend books aren't *products* and who still follow the old 19th century merchant model of eternal list price with the retailer making the *same* flat rate markup on *every* item. That is why they like the Agency model; even without the conspiracy, it guarantees the same margin on every item sold so it allows them to just unbox, stock, sell, and count the profits. Just like in the good old days.
Simple.
Simplistic.
Lemonade stand thinking applied to big business; what you might expect from the lazy and unimaginative.

Modern retailers are perforce operating under more sophisticated rules than a lemonade stand and they are used to playing games with prices to maximize their profit by maximizing volume instead of trying to bleed each customer til they squawk. Maximizing volume allows them to distribute their fixed costs over a larger number of transactions, which allows for lower pricing, which produces larger volumes. A virtuous cycle.

There are limits to how much product a single customer can take, but the other benefit of lower pricing is that it draws in new customers from competitors or brings in new customers to the market. Which is the game Amazon has been playing that so offends their enemies; they are looking to expand the pool of ebook buyers beyond the techie/hobbyist niche that existed pre-Kindle. And more ebook buyers will mean more ebook sales now and in the future. The bigger the buyer pool gets--the faster the pool gets big--the better for *everybody*. It's not a zero-sum game; there is room for many winners.

What the traditionalists seem to (conveniently) ignore is that Amazon's game can be played by anybody. Just ask Kobo. Or B&N.

All it takes is the desire to play to win instead of whining and pining for an age long gone.

[fjtorres]

Originally Posted by murraypaul

As I understand it, the restriction is not that they must make a profit, just that they must (on aggregate) sell at or above wholesale price.
That can be proved by Amazon telling the publishers what price it has sold each copy at. It doesn't require any knowledge of Amazon's costs.

Correct.
Plus, it is a publisher by publisher reporting effort.
It is a trivial effort for Amazon to report the *total* value of each publisher's ebooks and the number of copies sold. They already do the same for pbooks, after all.
As long as the value of the total sales equals or exceeds the wholesale cost of the number of copies sold they'd be within the bounds set by the feds.

All it takes is a simple Excel spreadsheet.
(Or a simple SQL query.)
No magic required, just 60's vintage database tech.

[Kali Yuga]

Originally Posted by BuddyBoy

JWhat the DOJ is doing is not killing real competition in order to save the appearance of competition....

The DoJ does not intend to hinder competition.

However, it's screamingly obvious to everyone in the industry that if Amazon is allowed to freely set prices, then they will undercut everyone and re-establish a monopoly on ebooks.

Kobo and B&N don't have the financial resources to withstand an extended price war with Amazon. Google and Apple have the cash, but not the interest.

Amazon holding a monopoly is not necessarily a bad thing, especially since market dominance like that can change rapidly in the digital age. But if the upshot of this lawsuit is that Amazon goes from holding 60% of the ebook market to 80%, then the DoJ will have killed "real competition in order to save the appearance of competition."

[fjtorres]

Originally Posted by tubemonkey

All they have to do is raise wholesale prices and don't put any restrictions on retail prices.

Well, it's not quite that easy.
Remember: the feds need to sign off on any contract for the next five years.
They want to see consumer prices *drop* first. Preferably to pre-conspiracy levels.

Now, I wouldn't expect to see prices drop soon.
The settlement needs to be approved and it is a given that Scott Turow is going to object before the court. So his brief will have to be shot down first.

Figure six months before some prices come down.

Suggestion: buy no BPH books until they do.
Because, while the AGs' lawsuit will seek reimbursement, there is no telling what strings those coupons will come with.

Now more than ever, Boycotting BPH ebooks makes the most sense.
(Plus, you give'em an extra incentive to drop the prices sooner rather than later.)

[Kali Yuga]

Originally Posted by DiapDealer

More interesting is how will they get secretive Amazon ebook retailer(s) to open its their books to prove it they made an aggregate profit selling BPH ebooks.

It seems to me like the publishers who signed the settlement agreement will need to specify in contracts that the retailer needs to report the number and price of ebooks sold.

But, it could be an issue. The retailers haven't signed any settlement agreements (afaik), but are in theory still bound by them. I can't imagine Amazon will want the DoJ telling them how much they can discount, or how that requirement would actually be enforced.

It could also turn into a game of chicken, where B&N is willing to discount to a 1% margin per publisher, and Amazon is willing to discount to 0.5% or 0.25% per publisher -- and still be able undercut B&N on price.

[ProfCrash]

The retailers don't have to sign an settlement agreement, they were not uner investigation. Amazon might want to flex its muscles in negotiation but if the Publishers have a legal obligation to report X, Y, and Z to the feds you can bet that Amazon, as well as the other retailers, will have to play ball. So if there is language protecting pricing that says that no retailer can take a net loss on the sale of e-books then Amazon is going to have to deal with that.

As for price fluctuation, Amazon allows people to return an e-book in 7 days. If you buy an e-book and the price drops in that time frame, call Kindle Support and I have a funny feeling that they will refund you the difference.

[DiapDealer]

However, it's screamingly obvious to everyone in the industry that if Amazon is allowed to freely set prices, then they will undercut everyone and re-establish a monopoly on ebooks.

Wouldn't they have to have had a monopoly before they can re-establish one? And couldn't the same sort of legal proceedings then be used to reign Amazon in (or break them up) if indeed they ever did gain monopolistic proportions?

I guess I just don't see the point in fretting overly about a company's potential to become something that it's illegal for a company to become. They'll either succeed at gaining too much control and face legal proceedings, or they'll fail, become complacent and be bested by somebody new. Or toe the line and remain a powerhouse in the industry.

Beat them, or bow to them... but fearing what they may evolve into is a rather futile exercise. *shrug*

[tubemonkey]

Originally Posted by fjtorres

Well, it's not quite that easy.
Remember: the feds need to sign off on any contract for the next five years.
They want to see consumer prices *drop* first. Preferably to pre-conspiracy levels.

They could raise wholesale prices and retail prices would still be lower than they are now.

[JoeD]

Originally Posted by DiapDealer

Wouldn't they have to have had a monopoly before they can re-establish one? And couldn't the same sort of legal proceedings then be used to reign Amazon in (or break them up) if indeed they ever did gain monopolistic proportions?

Plus having a monopoly isn't (afaik) illegal as long as a company doesn't abuse that monopoly position to enter other markets.

The DOJ are looking at what has happened not what might happen. If the result of this is that Amazon gains a monopoly _and_ abuses it, then the chances are high they'll find themselves on the end of a law suit.

However if agency pricing is dropped and Amazon gained a monopoly plus either increased prices or squeezed publishers hard, there's also chance another company would see an opportunity to enter or re-enter the market with price competition as one potential avenue.

There's also now the chance that some publishers may compete with other publishers on price grounds by returning to the wholesale model. This isn't only about the lack of competition with amazon but the lack of competition between publishers. Even if a publisher couldn't afford to sell at a loss, by returning to wholesale they could allow retailers to do the work for them.

[JSWolf]

The thing is, if the price fixing 7 (including Apple) had priced eBooks reasonable, I don't see that this would have been an issue. But it is an issue because they significantly raised prices.