Tor delays new-release sales to library ebook supplier Overdrive

[pwalker8]

Originally Posted by darryl

@pwalker8

You said:



Fizzy Water asked:



I would genuinely like to understand your reasoning. It just doesn't seem rational. You assume that had the case been dismissed we would now have several ebook stores. And that these ebook stores would be not just competing but furiously competing. How? Certainly not on the thing that is of major concern to the vast majority of customers, price. Certainly not on the quality of the books. There is simply no scope for meaningful competition amongst retailers let alone "furious" competition.

Please stop your evasions and answer the question asked. I'd really like to know!

You know when you start with the "are you still beating your wife" type phrasing, you make me think you are less interested in an actual answer and more interested in scoring points.

Yes, I assume that if the case had been dismissed then Apple would not have simply thrown their hands up and said "this isn't worth it" and put up a minimal ebook store. It seems a fairly safe assumption since they were putting quite a bit of effort into it before the case.

You make some rather silly assumptions there. You seem to think that the only way to compete is via price. Apple has never competed on price. Back when B&N was doing well, they never competed with the discount book stores on price, they competed on a combination of price and experience. The whole point of the open market is that different companies compete in different ways. Some compete purely on price, others on convenience, others on customer experience.

My assumption is that Apple would have competed on customer experience. iTunes was never the cheapest way to buy music, it was the most convenient way to buy music. Amazon could never get past the music convenience issue with their music store, even though they had DRM free music cheaper than Apple for a while.

What the market would have looked like now if the case had been dismissed or had never come up, no one knows. Maybe Apple would have made the same mistakes that B&N did. I rather doubt it, but you never know. I will note that when B&N and then Apple entered the market, Amazon's market share fell 20 percent. There was opportunity there. So, yes, I do think there would have been more competition. Why do you think there wouldn't be?

[darryl]

@pwalker8. So your answer is that you presume Apple would have "competed" on "customer experience". In a market dominated by one-click purchasing and downloading books straight to ereaders. Once again I must quote Fizzy Water:

Fictionwise had a crappy interface, but their prices made it worth the hassle.

ADDENDUM:

To answer your question re more competition? The Appeals court actually affirmed that the conspiracy constituted an unreasonable restraint of trade per se. It also applied the rule of reason and reached the same conclusion. In the course of the latter it looked at Apple's various arguments along similar lines to yours and found them unconvincing. Black is not white. Anti-competitive contracts do not tend to increase competition.

[DiapDealer]

I fail to see why--if there are so many things other than price to compete on--the very first step publishers and Apple took to "spur ebook competition" was to level the price-playing-field. That dog won't hunt. "There's things other than price to compete on" is not a buyer's viewpoint. It's a seller's. And they're the only ones who think it sounds remotely reasonable.

As other's have pointed out: good deals can make crappy interfaces worth the hassle. And if Apple already had the leg-up on everyone else in the customer-experience/loyalty department, then surely they would have been able to compete at any price-point, no? They were better than everyone else at those other competitive things.

It's all fine and dandy to say that there's plenty of things to compete on other than price--and there IS! It's just that all of those things take a back (back, back, back) seat to price. We're talking about the internet, here. It's not like people have to drive across town to save a few bucks. They're "shopping" from their armchairs.

The things other than price are only relevant AFTER everyone's ability compete on prices have been stripped from them. And that only ever favors the big boys. That's not competition. That's restrictor-plate racing.

[pwalker8]

Originally Posted by DiapDealer

I fail to see why--if there are so many things other than price to compete on--the very first step publishers and Apple took to "spur ebook competition" was to level the price-playing-field. That dog won't hunt. "There's things other than price to compete on" is not a buyer's viewpoint. It's a seller's. And they're the only ones who think it sounds remotely reasonable.

As other's have pointed out: good deals can make crappy interfaces worth the hassle. And if Apple already had the leg-up on everyone else in the customer-experience/loyalty department, then surely they would have been able to compete at any price-point, no? They were better than everyone else at those other competitive things.

It's all fine and dandy to say that there's plenty of things to compete on other than price--and there IS! It's just that all of those things take a back (back, back, back) seat to price. We're talking about the internet, here. It's not like people have to drive across town to save a few bucks. They're "shopping" from their armchairs.

The things other than price are only relevant AFTER everyone's ability compete on prices have been stripped from them. And that only ever favors the big boys. That's not competition. That's restrictor-plate racing.

It might take a back seat to price for you and others, but it's not an absolute. I couldn't begin to tell you want the prices of my normal groceries are at Publix verses Krogers. I can tell you that I much prefer the friendly atmosphere at Publix, so that is where I shop.

When there is one large corporation that has 90% of the market, then bringing in two more large corporations means more competition. That's kind of the definition of competition. More companies selling the same goods. From the publishers' point of view, having more companies out there meant that Amazon had less leverage over them. That is why the publishers wanted competition.

In general, all three of the big companies (Amazon, B&N and Apple) had their customers locked into a infrastructure. Of course, all three allowed side loading, but few customers are willing to jump through those hoops. So the real competition is for which infrastructure a customer wants to buy into. None of them ever competed on price, even during the time period when there was no agency.

Most here, especially those of us who use Calibre and who remove DRM are very much outiers in the overall customer base. It's a mistake to simply assume that everyone is hunting for the rock bottom lowest prices and is willing to jump through a lot of hoops to get it. Most customers are purely about convenience as long as the prices are what they consider reasonable.

[cfrizz]

Price will ALWAYS be the most important factor, for many people including myself who immediately switched over to self published authors who used to be published Mid listers with BPH. As evidenced by the ever growing percentage that is reported by Data Guy, and by my finally starting to use the Library for BPH books.

My TBR pile is ever growing so I don't have to rely on BPH for ebooks, nor will I ever go back to getting PB instead of ebooks.

[darryl]

Originally Posted by pwalker8

When there is one large corporation that has 90% of the market, then bringing in two more large corporations means more competition. That's kind of the definition of competition. More companies selling the same goods.

A manifestly ridiculous statement. The Oxford dictionary defines competition as "The activity or condition of striving to gain or win something by defeating or establishing superiority over others." Stores simply selling the same product simply doesn't qualify.

Originally Posted by pwalker8

From the publishers' point of view, having more companies out there meant that Amazon had less leverage over them. That is why the publishers wanted competition.

Actually that's one reason why the Publishers wanted no competition. But they now have it for the first time in many years. From Indies. These competition loving dinosaurs for some reason agreed with Apple, as the Appeals court wrote, "....... to raise consumer‐facing ebook prices by eliminating retail price competition."*

A longer quote from the Appeals Court is in order.

Market dominance may, however, arise “as a consequence of a superior product, business acumen, or historic accident,” and is “not only not unlawful; it is an important element of the free market system.”* Trinko, 540 U.S. at 407 (internal quotation marks omitted).**The ability to provide goods at particularly low prices is one way that a firm can gain such an edge in the marketplace.* Competitors are, of course, entitled to challenge dominant firms by offering, among other things, superior products and lower prices.* * But success is not guaranteed.**A dominant firm charging low prices may have proven itself more efficient than its competitors, such that a potential new entrant’s inability to earn a profit would result not from any artificial “barriers to entry,” but rather from the fact that, in light of the value proposition offered by the dominant firm, consumers would not choose to buy the new entrant’s products at the price it is willing and able to offer.* * See Einer Elhauge, United States Antitrust Law and Economics 2 (2d ed. 2011) (“If a firm makes a better mousetrap, and the world beats a path to its door, it may drive out all rivals and establish a monopoly; but that is a good result, not a bad one.”).

From this perspective, the dissent’s contention that Apple could not have entered the ebook retail market without the price‐fixing conspiracy, because it could not have profited either by charging more than Amazon or by following Amazon’s pricing, is a complete non sequitur.**The posited dilemma is the whole point of competition: if Apple could not turn a profit by selling new releases and bestsellers at $9.99, or if it could not make the iBookstore and iPad so attractive that consumers would pay more than $9.99 to buy and read those ebooks on its platform, then there was no place for its platform in the ebook retail market.

Originally Posted by pwalker8

In general, all three of the big companies (Amazon, B&N and Apple) had their customers locked into a infrastructure. Of course, all three allowed side loading, but few customers are willing to jump through those hoops. So the real competition is for which infrastructure a customer wants to buy into. None of them ever competed on price, even during the time period when there was no agency.

Think about your last sentence. The phrase hoist on your own petard comes to mind. Clearly Amazon was competing on price by discounting the ebooks available in its infrastructure.

I'll finish this post with another relevant quote from the Court.

In actuality, the district court’s fact‐finding illustrates that Apple organized the Publisher Defendants’ price‐fixing conspiracy not because it was a necessary precondition to market entry, but because it was a convenient bargaining chip. Apple was operating under a looming deadline and recognized that, by aligning its interests with those of the Publisher Defendants and offering them a way to raise prices across the ebook market, it could gain quick entry into the market on extremely favorable terms, including the elimination of retail price competition from Amazon.**But the offer to orchestrate a horizontal conspiracy to raise prices is not a legitimate way to sweeten a deal.*

[Alohamora]

Originally Posted by sealbeater

Or not. This won't effect piracy. All this will do is make libraries more irrelevant.

More Irrelevant? Who says they're irrelevant?

[pwalker8]

Originally Posted by darryl

A manifestly ridiculous statement. The Oxford dictionary defines competition as "The activity or condition of striving to gain or win something by defeating or establishing superiority over others." Stores simply selling the same product simply doesn't qualify.




Actually that's one reason why the Publishers wanted no competition. But they now have it for the first time in many years. From Indies. These competition loving dinosaurs for some reason agreed with Apple, as the Appeals court wrote, "....... to raise consumer‐facing ebook prices by eliminating retail price competition."*

A longer quote from the Appeals Court is in order.





Think about your last sentence. The phrase hoist on your own petard comes to mind. Clearly Amazon was competing on price by discounting the ebooks available in its infrastructure.

I'll finish this post with another relevant quote from the Court.

It's kind of amazing how many fixate on a narrative without actually remembering the facts. Amazon only sold a small group of ebooks at a specific discounted price point. The vast majority of the ebooks were not discounted, but where at the basic price. That's true even now with hard back books. For example, the hard back price for Indianapolis at Amazon is $16.80 (Kindle price is $14.99). The same hard back at the B&N store is $16.80.

The reason for that makes perfect sense if you stop and think of how businesses work rather than let your emotions get in the way. In general, the publishers sell the same book to each of the book stores at the same basic price. So price difference comes down to how much more an individual book store wants to charge for that specific book. Most businesses will match prices of their major competitors. This is true in quite a few different businesses.

Thus prices tend to drift down to the lowest sustainable price point when there is competition, though this tends to play out when a new competitor comes into a market and makes a push trying to get market share. You see it in quite a few businesses such as books, electronics, even air travel. Of course, businesses have sales of select items, but in general, they keep a very close eye on what their competitors charge for things.

This is what I mean by companies not competing on price. For the most part, over time competitors tend to charge the same price for the same piece of merchandise. It's just different pieces of merchandise are at different price points.

[j.p.s]

Originally Posted by pwalker8

It's kind of amazing how many fixate on a narrative without actually remembering the facts. Amazon only sold a small group of ebooks at a specific discounted price point. The vast majority of the ebooks were not discounted, but where at the basic price. That's true even now with hard back books. For example, the hard back price for Indianapolis at Amazon is $16.80 (Kindle price is $14.99). The same hard back at the B&N store is $16.80.

The hard back list price is $28.00; how is $16.80 not a discount?

[sealbeater]

Originally Posted by Alohamora

More Irrelevant? Who says they're irrelevant?

I was speaking solely for my own personal circumstance. I understand and appreciate (perhaps more so now) the relevance of them to others but in that context I was speaking for myself only.

[darryl]

@pwalker8. The existence of the price competition which you seem to claim didn't exist seems to me to be amply demonstrated by what happened when it was in fact removed by the price-fixing conspirators. Here is another passage from that inconvenient Court of Appeal decision:

Based on data from February 2010 — just before the Publisher Defendants switched Amazon to agency pricing — to February 2011, an expert retained by the Justice Department observed that the weighted average price of the Publisher Defendants’ new releases increased by 24.2%, while bestsellers increased by 40.4%, and other ebooks increased by 27.5%, for a total weighted average ebook price increase of 23.9%.**Indeed, even Apple’s expert agreed, noting that, over a two‐year period, the Publisher Defendants increased their average prices for hardcovers, new releases, and other ebooks.

[pwalker8]

Originally Posted by darryl

@pwalker8. The existence of the price competition which you seem to claim didn't exist seems to me to be amply demonstrated by what happened when it was in fact removed by the price-fixing conspirators. Here is another passage from that inconvenient Court of Appeal decision:

Nice straw man you are whacking. What I am said is that the prices for most specific titles didn't vary much between the various book sellers. Many people have pointed out that the prosecutor's "expert" cherry picked titles to make it seem that prices varied a lot more than they did. Please do a little bit of research and try reading both sides of the argument, not just the side that you support. If you want to talk about the inconvenient Court of Appeal decision, at least try reading Jacobs dissent opinion as well, it was a 2-1 decision.

It's real obvious when someone forms an opinion and then goes and looks for evidence to support that opinion, rather than study a situation and read arguments from both sides.

[darryl]

I did read the dissent. I do wonder if you have read the majority, which by the way represents the actual decision of the Court. The majority comprehensively addresses and debunks the dissent.

What you attempted to imply is essentially that because not all titles are discounted and competitors tend to match prices that there is no competition on price or at least that it is not important. What happened to prices after agency is a good indication of the actual effect price competition was having.

Are you claiming that agency did not in fact lead to increased prices?

[pwalker8]

Originally Posted by darryl

I did read the dissent. I do wonder if you have read the majority, which by the way represents the actual decision of the Court. The majority comprehensively addresses and debunks the dissent.

What you attempted to imply is essentially that because not all titles are discounted and competitors tend to match prices that there is no competition on price or at least that it is not important. What happened to prices after agency is a good indication of the actual effect price competition was having.

Are you claiming that agency did not in fact lead to increased prices?

Apparently you didn't read it carefully since the difference between the majority opinion and the dissent are a classic example of the two schools of thought on anti-trust in the US. As far as debunks, well you can arm wave all you want, but when one company has 90% of the market and another company enters the market, then that increases competition.

If 5 percent of the titles are discounted by Amazon and 95 percent are not, then it's hard to claim there is real price competition, unless you cherry pick the 5 percent and ignore the rest (which is what Amazon's expert did).

Yep, I do indeed claim that agency did not lead to increased prices for the vast majority of books. Prices of specific books have drifted towards what people are willing to pay, which is how a market works.

I picked up some Jeff Shaara books a few weeks ago. The prices ranged from $5 (suggested paperback price $18.00) up to $10 (suggested paperback price $18.00). Pre agency, the so called sweet spot price that Amazon was charging was $10 with the vast majority of books costing about the same as the current paper price (either hardback or paper). In general, right now, the ebook price is at a slight discount to the current paper price (example Jim Butcher's most recent book which came out in June is $14.99 for the ebook and $20 for the hardback (list price $28.00)). Butcher's first book, Storm Front, is $2.99 for the ebook and $7.99 for the mass market paperback.

Those are just the examples that I first thought of simply because I bought those books recently. Do you have an actual survey that examines ebook prices that shows that ebook prices have gone up, or is this simply a "everyone knows that agency drove prices up so no need to validate the assertion" thing?
I mean a real one, not the flawed one put out by the prosecutor in the Apple case.

I have been buying a large number of ebooks each year since 1999 when Baen's ebook bundles started and also started buying ebooks from the Sony store in 2006 a year before the Kindle came about and been buying from the Kindle store since 2007. I have a pretty good idea what I've paid for the various books. Even in the pre-agency days, most of the ebooks that I bought tended not to be discounted. I know this because when the brouhaha about agency was at it's high point back in 2012, I went back and charted what I had paid for the various books. I even posted a summary of it at the time.

[JSWolf]

Originally Posted by pwalker8

You still have to figure out some way around the fact that Fictionwise was sold to B&N 10 months before Apple ever started talking to the publishers. After that point Fictionwise was B&N. Why do you think Fictionwise was sold to B&N for a mere $15.7 M, which is basically pocket change to the big boys, 10 months prior to the agency rearing it's evil head? I doubt it was because they were making money hand over fist. My guess is that the Pendergrast brothers saw the writing on the wall and were cashing out.

March 2010 was exactly one year from the date that B&N bought Fictionwise and was 4 months after the Nook was released (Nov 30th, 2009). That strikes me as a lot more relevant.

The other issue is that the overall market share figures don't match the agency killed the book stores narrative. Prior to B&N and Apple entering the market in late Nov 2009 and March 31st, 2010 respectively, Amazon controlled 90% of the market. That doesn't exactly argue healthy independent ebook stores given that the Sony ebook store was in operation then as well.

So you are a independent ebook seller with Amazon having 90% of the market and with B&N and Apple, both with presumed deep pockets just starting to jump into the market. That decision to sell out a year prior is starting to look pretty good.

By 2011, it was roughly 60% Amazon, 27% B&N and 5% Apple. Amazon has slowly been rebuilding it's market share and it's back up to around 83% now.

There have been many examples of smaller front runners falling by the wayside when companies with deep pockets jump into the market. Anyone remember what mp3 player they were using before the iPod hit the market? It doesn't require some convoluted conspiracy theory to explain it.

B&N bought Fictionwise for the eReader style DRM. But B&N did not close down Fictionwise until it became unsustainable. Fictionwise's business model was successful, but once Agency hit, that was not possible. The timeline shows this all to be true.