Publishers still missing the point on e-book prices

[elcreative]

Originally Posted by CyGuy

I am certain that they will be found guilty of price fixing and will not be allowed to get away with this for much longer, at least I hope not.

It's not so certain as most people seem to think... they have not organised to sell the same things for the same price, each book title is an individual thing and publishers don't usually publish the same titles so it may be more in the air than people think...

[CyGuy]

Originally Posted by elcreative

It's not so certain as most people seem to think... they have not organised to sell the same things for the same price, each book title is an individual thing and publishers don't usually publish the same titles so it may be more in the air than people think...

Several HDTV manufacturers were found to be guilty of price fixing yet they were not selling the same things for the same price. Each HDTV is an individual thing and the manufacturers don't usually sell same exact same product.
To me, a 50" TV is a 50" TV and if the manufacturers got together and agreed to fix the price in order to increase their profits they are guilty of price fixing. A book is a book and if the publishers got together and agreed to fix prices in order to increase profits they are guilty of price fixing.

[stonetools]

Originally Posted by CyGuy

I am certain that they will be found guilty of price fixing and will not be allowed to get away with this for much longer, at least I hope not.

No certainties here, but government regulators are going to look at more than the question of whether prices are higher. Governments want to prevent monopolies developing and they just might decide that on public policy grounds that the agency pricing model is the right solution to the problem of preventing Amazon from developing a monopoly in the ebook retail market.

[Andrew H.]

Originally Posted by stonetools

Well, Amazon was engaging in predatory pricing of ebooks so as to establish a monopoly in the eBook retail market. That's a bit different from just being a more efficient retailer.
That's what the publishers were pushing back against. Now of course, most folk here would like to just skip over Amazon's behavior and pretend that wasn't happening, but this is the publishers' stated reason for moving to the agency model.

In the US, it is not at all clear that what Amazon did was actually "predatory pricing." In fact, it's fairly clear that it wasn't. Amazon didn't price its e-books below its costs; it only priced a handful (20-30) of its 500,000 - 700,000 e-books (at the time) below its costs. Second, to show predatory pricing (in the US), you also have to show that the result of the below-cost pricing was likely to be the monopolization of the market *followed by* the ability of the seller to raise prices high enough *above* the market rate to make supracompetitive prices sufficent to recoup the amount lost due to the below cost pricing.

And of course it's probably relevant in some context that Amazon's pricing was largely done to create a real e-book market in the first place. It's not like Amazon, B&N, and Kobo all had similar pricing and then Amazon dropped its bestseller prices to $10; Amazon's bestsellers were at $10 before the Nook or Kobo existed.

There may be countries were merely selling any item below cost is illegal predatory pricing. But that's not the case in the US, where the supreme court said (in the lead predatory pricing case):

"Without it [monopolization and recoupment], predatory pricing produces lower aggregate prices in the market, and consumer welfare is enhanced. Although unsuccessful predatory pricing may encourage some inefficient substitution toward the product being sold at less than its cost, unsuccessful predation is in general a boon to consumers."

[murraypaul]

Originally Posted by elcreative

It's not so certain as most people seem to think... they have not organised to sell the same things for the same price, each book title is an individual thing and publishers don't usually publish the same titles so it may be more in the air than people think...

If the publishers got together and collectively agreed to implement agency pricing, rather than doing so individually, and if that can be proved, then they are in for very heavy fines from the EU. It is simply illegal.

[HarryT]

Originally Posted by murraypaul

If the publishers got together and collectively agreed to implement agency pricing, rather than doing so individually, and if that can be proved, then they are in for very heavy fines from the EU. It is simply illegal.

And, of course, they may simply choose to pay the fine and carry right on doing it. The EU has no power to force them to stop it; all it can do is fine them to a point where it becomes uneconomic to do so.

[murraypaul]

Originally Posted by HarryT

And, of course, they may simply choose to pay the fine and carry right on doing it. The EU has no power to force them to stop it; all it can do is fine them to a point where it becomes uneconomic to do so.

Well the maximum fine is 10% of global revenue, so I don't think just ignoring it and carrying on would be an option.

[elcreative]

Originally Posted by CyGuy

Several HDTV manufacturers were found to be guilty of price fixing yet they were not selling the same things for the same price. Each HDTV is an individual thing and the manufacturers don't usually sell same exact same product.
To me, a 50" TV is a 50" TV and if the manufacturers got together and agreed to fix the price in order to increase their profits they are guilty of price fixing. A book is a book and if the publishers got together and agreed to fix prices in order to increase profits they are guilty of price fixing.

So why bother reading then if a book is a book... pure rubbish... A James Patterson thriller equals Khaled Hosseini's Thousand Suns equals the Bible equals The Gruffalo equals someone who doesn't need to read or understand books and is obviously wasting time on a site concerned with books and the mechanics of reading...

A 50" TV is a 50" TV is vastly different... they're essentially the same at heart and if you think that about books then...

[elcreative]

Originally Posted by murraypaul

If the publishers got together and collectively agreed to implement agency pricing, rather than doing so individually, and if that can be proved, then they are in for very heavy fines from the EU. It is simply illegal.

Again... it is not that clear cut concerning non-identical products... and, as others have said, it may be that the investigation decides that there is actually a public benefit to Agency Pricing but why wait for the results when the "experts" here can decide everything in advance...

[MrsJoseph]

Originally Posted by elcreative

A 50" TV is a 50" TV is vastly different... they're essentially the same at heart and if you think that about books then...

Sooooooo not true! A 50" TV can be vastly different than another 50" TV.

[murraypaul]

Originally Posted by elcreative

Again... it is not that clear cut concerning non-identical products... and, as others have said, it may be that the investigation decides that there is actually a public benefit to Agency Pricing but why wait for the results when the "experts" here can decide everything in advance...

It really is that simple. Competitors cannot get together and agree to pricing rules that they will all follow.

Under EU law cartels are banned by Article 101 TFEU. Art. 101 TFEU makes clear who the targets of competition law are in two stages with the term agreement "undertaking". This is used to describe almost anyone "engaged in an economic activity",[11] but excludes both employees, who are by their "very nature the opposite of the independent exercise of an economic or commercial activity",[12] and public services based on "solidarity" for a "social purpose".[13] Undertakings must then have formed an agreement, developed a "concerted practice", or, within an association, taken a decision. Like US antitrust, this just means all the same thing;[14] any kind of dealing or contact, or a "meeting of the minds" between parties. Covered therefore is a whole range of behaviour from a strong handshaken, written or verbal agreement to a supplier sending invoices with directions not to export to its retailer who gives "tacit acquiescence" to the conduct.[15] In the language of Article 101(1), prohibited are,
"All agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between member states and which have as their object or effect the prevention, restriction or distortion of competition within the common market."

This includes both horizontal (e.g. between retailers) and vertical (e.g. between retailers and suppliers) agreements, effectively outlawing the operation of cartels within the EU.

Article 101 has been construed very widely to include both informal agreements (gentlemen's agreements) and concerted practices where firms tend to raise or lower prices at the same time without having physically agreed to do so. However, a coincidental increase in prices will not in itself prove a concerted practice, there must also be evidence that the parties involved were aware that their behaviour may prejudice the normal operation of the competition within the common market. This latter subjective requirement of knowledge is not, in principle, necessary in respect of agreements. As far as agreements are concerned the mere anticompetitive effect is sufficient to make it illegal even if the parties were unaware of it or did not intend such effect to take place.

If there were any sort of actual agreement made, they are cooked.
If Apple made an offer of an agency agreement, and they all completely independently decided to accept it, then they may well be in the clear.

[stonetools]

Originally Posted by murraypaul

It really is that simple. Competitors cannot get together and agree to pricing rules that they will all follow.

So far there is no evidence that the publishers sat together and said some particular books (or classes of books) should be this or that price. Even if that's so, that might be legal-and even REQUIRED-in certain countries. This has been discussed before We're beginning to repeat ourselves on this thread now.

[murraypaul]

Originally Posted by stonetools

So far there is no evidence that the publishers sat together and said some particular books (or classes of books) should be this or that price. Even if that's so, that might be legal-and even REQUIRED-in certain countries. This has been discussed before

And has nothing whatsoever to do with agency pricing of eBooks, does it?

The issue is not prices increasing, it is acting in concert.
If publisher A went to publisher B and said "We are thinking of signing this agreement (agency pricing), we think will be good for the industry overall, but it will only work if we all do it, will you sign as well?", and publisher B did anything other than immediately report it to the competition authorities, then both have broken EU competition law.
Competitors must compete, they may not collude.

[CyGuy]

Originally Posted by elcreative

So why bother reading then if a book is a book... pure rubbish... A James Patterson thriller equals Khaled Hosseini's Thousand Suns equals the Bible equals The Gruffalo equals someone who doesn't need to read or understand books and is obviously wasting time on a site concerned with books and the mechanics of reading...

A 50" TV is a 50" TV is vastly different... they're essentially the same at heart and if you think that about books then...

Seriously? Then why watch TV if they are all the same? The content is obviously not the same, in TV or book form.
The point I was trying to make is that the publishers did organize to sell the same thing for the same price in the same way that the HDTV manufacturers did.

[Shaggy]

Originally Posted by elcreative

A 50" TV is a 50" TV is vastly different... they're essentially the same at heart and if you think that about books then...

Go to a videophile forum and tell them that all 50" TVs are essentially the same at heart. You'll get the same response from them about TVs that you gave about books.