DOJ: Apple and B&N can continue to use agency pricing

[murraypaul]

Originally Posted by stonetools

Actually, I was saying that both were acting in their own interests. As I said above, there are no villains here. Sorry for the misunderstanding.

Ok.
.
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[Kali Yuga]

Originally Posted by Barcey

Actually it's about preserving the publisher's distribution channels and removing competition.

It is about preserving distribution channels.

However, it is not about "removing competition." There are no allegations that the publishers illegally coordinated prices, or tried to price smaller publishers out of the market, or tried to shut down Amazon.

If anything, agency pricing actually facilitates competition between retailers. Every retailer gets the same cut, the same availability, at the same time as every other retailer.


More to the point, if the DoJ is saying there is nothing wrong with agency pricing, then restricting agency pricing doesn't seem to be the appropriate punishment for alleged collusion. Fines and industry supervision are much more appropriate, not barring companies from using legally acceptable pricing structures.

[stonetools]

Originally Posted by murraypaul

It is about preserving price.
Lets not kid ourselves about anything else.
The publishers are concerned that without multiple viable retailers, they cannot maintain their pricing levels.
They are concerned about competition only in as much as it is required to maintain pricing.

Its maybe not just about price, but specifically about margins. In the Amazon vs IPG dispute, IPG characterized it thusly:

"Amazon.com is putting pressure on publishers and distributors to change their terms for electronic and print books to be more favorable toward Amazon. Our electronic book agreement recently came up for renewal, and Amazon took the opportunity to propose new terms for electronic and print purchases that would have substantially changed your revenue from the sale of both. It's obvious that publishers can't continue to agree to terms that increasingly reduce already narrow margins. I have spoken directly with many of our clients and every one of them agrees that we need to hold firm with the terms we now offer. I'm not sure what has changed at Amazon over the last few months that they now find it unacceptable to buy from IPG at terms that are acceptable to our other customers." Suchomel reiterated to us that the company's terms of sale for ebooks have not changed.

LINK

I might point out that the interests of authors are also implicated in these disputes, as I indicated above. When the IPG president refers to "clients", he means "authors". Its why the Authors Guild opposes the DOJ action.

[tubemonkey]

Originally Posted by Kali Yuga

More to the point, if the DoJ is saying there is nothing wrong with agency pricing, then restricting agency pricing doesn't seem to be the appropriate punishment for alleged collusion. Fines and industry supervision are much more appropriate, not barring companies from using legally acceptable pricing structures.

It's the correct punishment, because fines are nothing more than a slap on the wrist and don't discourage bad behavior.

[ApK]

Originally Posted by khalleron

Ms. Rand.

I don't think that was exactly Ayn Rand's point (that Objectivism justifies price fixing), but I think it's true that even Mother Teresa did what she did because internally she felt it was the right thing for her to do. It's what sort of stuff feels right to you that determines if you are good or evil.

[Barcey]

Originally Posted by Kali Yuga

It is about preserving distribution channels.

However, it is not about "removing competition." There are no allegations that the publishers illegally coordinated prices, or tried to price smaller publishers out of the market, or tried to shut down Amazon.

If anything, agency pricing actually facilitates competition between retailers. Every retailer gets the same cut, the same availability, at the same time as every other retailer.


More to the point, if the DoJ is saying there is nothing wrong with agency pricing, then restricting agency pricing doesn't seem to be the appropriate punishment for alleged collusion. Fines and industry supervision are much more appropriate, not barring companies from using legally acceptable pricing structures.

Price is the primary form of competition for e-commerce sites so removing retailer price competition is definitely removing competition.

This is a settlement and not a punishment. After all the publishers haven't admitted to doing anything wrong.

The DOJ made their position clear. The publishers would not have been able to impose agency pricing if they didn't collude. An individual publisher would have put themselves at a price disadvantage. It's a perfectly reasonable settlement to reset the clock and have them try again without colluding.

[tompe]

Originally Posted by Barcey

Price is the primary form of competition for e-commerce sites so removing retailer price competition is definitely removing competition.

Really? I would have thought that ease of use, support and delivery time was more important than price. It is for me at least and from what I have heard from other people the consider these factors to be very important.

[ApK]

Originally Posted by tompe

Really? I would have thought that ease of use, support and delivery time was more important than price. It is for me at least and from what I have heard from other people the consider these factors to be very important.

They are important.
For some, they are important enough to pay more for.
For most, though, well, Walmart did not get to be the behemoth it is because of great support.

I guess the claim behind agency pricing is that it forces eBook retailers to compete on those other things instead of on price.
Personally, I'm happy when an Amazon comes along and offers ease of use, great support, fast delivery time and a lower price.

[Graham]

Originally Posted by Kali Yuga

More to the point, if the DoJ is saying there is nothing wrong with agency pricing, then restricting agency pricing doesn't seem to be the appropriate punishment for alleged collusion. Fines and industry supervision are much more appropriate, not barring companies from using legally acceptable pricing structures.

As noted in the case, the Sherman Act states that the playing field should be returned to the state it was in before the conspiracy (my emphasis):

The function of a decree in a Sherman Act case “includes undoing what the conspiracy achieved.” United States v. Paramount Pictures, 334 U.S. 131, 171 (1948). Here, defendants achieved higher retail e-book prices in large part by collectively agreeing to wrest control of pricing and other terms from retailers. As explained more fully in the Complaint and CIS, the anticompetitive results of the conspiracy ultimately were ensured by Publisher Defendants’ near simultaneous execution of the Apple Agency Agreements, which included common price schedules and MFN clauses, and which proscribed retail discounting. Accordingly, the proposed Final Judgment requires that Settling Defendants terminate the Apple Agency Agreements.

As noted elsewhere in the document, the 2 year ban prevents the parties simply signing new contracts immediately on the Agency terms and thus restoring the benefits achieved by the collusion.

Graham

[stonetools]

The DOJ made their position clear. The publishers would not have been able to impose agency pricing if they didn't collude. An individual publisher would have put themselves at a price disadvantage. It's a perfectly reasonable settlement to reset the clock and have them try again without colluding.

Its important to realize that while there is substantial evidence in favor of collusion, there is also substantial evidence AGAINST collusion. That's why we will have a trial.
The business argument in favor of the publishers imposing agency pricing has never been refuted in this forum , and is likely to be viable two years from now. I'm betting that each of the Settling 3 are going to be joining Random House and the the two defendant publishers into going for full on agency pricing after 2 years, particularly if Amazon is even more dominant then. Its a matter not of short term price disadvantage , but of long term survival.

[Graham]

Originally Posted by stonetools

Its important to realize that while there is substantial evidence in favor of collusion, there is also substantial evidence AGAINST collusion.

Where? I've been Googling, and even browsing Shatzkin's site, for the last 15 minutes and can't find it. This is the best source I've found so far, which includes the link to Apple's rebuttal of the case:

http://tech.fortune.cnn.com/2012/05/...o-doj-bite-me/

I've mainly seen denials, not evidence that phone calls were not made, meetings were not held, timings were accidental rather than planned.

The argument from the three refusing to settle seems to be that the DOJ's evidence for collusion is circumstantial, not that they have substantial evidence showing that collusion did not occur.

Graham

[Phogg]

Originally Posted by stonetools

Amazon could easily get back to 80 per cent of digital sales.

i doubt it.

To even have a ghost of a chance, they would have to sell Epub as well as .mobi and.azw.

Unles Bezos dies, that doesn't appear likely. The Epub base is too large to just switch over, even with Calibre.

[Graham]

Originally Posted by Phogg

i doubt it.

To even have a ghost of a chance, they would have to sell Epub as well as .mobi and.azw.

Unles Bezos dies, that doesn't appear likely. The Epub base is too large to just switch over, even with Calibre.

What's more, I can see Google Play gaining traction, further bolstering Epub. I was dismissive of Google Books in the past, but recently I've started browsing and buying books through both the desktop site and the apps. The experience has improved and they make it very easy to part with your cash...

Graham

[murraypaul]

Originally Posted by Phogg

Unles Bezos dies, that doesn't appear likely. The Epub base is too large to just switch over, even with Calibre.

You think?
With all those Kindles, plus every LCD tablet, how many devices are there that they actually can't reach? How many non-Kindle eInk devices have actually been sold?

[tubemonkey]

Does anyone know the percentage breakdown of ebook sales by format - Kindle vs EPUB?