Linked by Thom Holwerda on Fri 2nd Aug 2013 15:30 UTC
Apple Inc deserves a five-year ban from entering anti-competitive e-book distribution contracts and should end its business arrangements with five major publishers with which it conspired to raise e-book prices, federal and state regulators said on Friday.

The U.S. Department of Justice and 33 U.S. states and territories proposed those changes after U.S. District Judge Denise Cote in Manhattan last month found in a civil antitrust case that Apple played a "central role" in a conspiracy with the publishers to raise e-book prices.

The DoJ also requires that competitors such as Amazon and Barnes & Noble be allowed to include links to their own stores in their iOS applications, which Apple had prohibited.

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RE[3]: Everyone is wrong
by TM99 on Sun 4th Aug 2013 09:08 UTC in reply to "RE[2]: Everyone is wrong"
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Bluff? Because you do not understand what is happening hardly means it is a bluff. I provided a link that might explain it to you. Obviously, you do not understand it.

If you do not, then you need more education on the subject. The remainder of your reply is therefore going to be rather blustery bullshit, I suspect if you do not understand the actual facts of the situation with regards to publishing and distribution of printed and digital media.

Again, you need to re-read what was linked and understand it before you can draw conclusions. Your original post is about a legal case, and now you are attempting to move the goal posts so that it is an ethical case of right versus wrong. Sorry, no.

Currently, the customer is best served by the wholesale model and Amazon negotiating with publishers via the Robinson-Patman rules to lower prices on eBooks which cost far less to produce than what they are charged to the customer. Apple and the agency model were forcing eBooks up to $14.99 and above from the regular $9.99 and below prices via Amazon and other sites.

If Amazon negotiates with a publisher, let's say O'Reilly, for a particular price wholesale and for selling rights at retail, then O'Reilly themselves and any other third party distributor of O'Reilly titles must honor that price. That is very good for the consumer. Using the same example of O'Reilly under the Apple agency model deal, Apple would set the price, the publishers would have to raise it high enough to cover Apple's 30% off the top charge, and Amazon and other sites would have to charge the customer the same price as the Apple store - a higher price. With favored nation status, Apple could and would negotiate so that if you want that O'Reilly book, only the Apple iTunes store may be the only distributor of it digitally. Not only would it then not be available at Amazon or B&N, but it would also be higher priced to cover Apple's fees. Not only is this illegal colluding and the equivalent of a 'shake down', I would like you to explain to me how this model is better for customers. I know that it isn't and so does the DOJ and other industry experts, but no really, I would like to see you try and rationalize this.

No, no, and yet again no. You simply do not understand this correctly. Selling the Kindle that they produce at a loss has no direct legal relevance to the concept of dumping with regards to eBook prices that Amazon provides customers. They do not publish the eBooks. They sell them retail after negotiating wholesale pricing with the actual publishers.

It is like you didn't even read your own linked article. They even mention that this is similar to a gaming console. Microsoft sold the original Xbox at a loss on the hardware side. There revenues from that division came in from the games and added content via the Xbox Live program. As it was perfectly legal for Microsoft to do that with the Xbox, it is perfectly legal for Amazon to do that with the Kindle. They realize their profit on the Kindle division not from the hardware, but from the software, i.e. the digital eBooks. They can afford to take a loss on the hardware and lower the retail price of the book because they still realize a HUGE profit from the sale of all of their media from hard copy books to games to other digital downloads.

This is not dumping. This is not illegal. As my statement said, if and only if Amazon turns around and grossly raises prices plus if and only if Amazon is deemed a monopoly (the only source for eBooks which is laughable), then and only then could they begin to be investigated for violations of the anti-trust act. They have showed no such intention to do so. It is highly profitable for them to provide eBooks to customers at the $9.99 price point. So much so that they are unconcerned if the same co-op deal is provided to the Apple iTunes store, B&N, KOBO, the GooglePlay Store, or anywhere else. Apple and the publishers were not thinking about the customer. They wanted exclusivity as well as the ability to set 50% higher prices across the board for eBooks.

I suggested in the last post that you bone up on economic theory and anti-trust law. Obviously you did not. My linked articles provided facts when coupled with that to understand why this was a very 'good' ruling and that only Apple & the publishers involved were 'wrong'. I have now provided you even more facts. It seems apparent to me again from this last paragraph and your attempts to change the legal definition of 'conspired' to some other definition to fit your thesis, that you are not thinking about this case, you are reacting to it emotionally. Amazon did not use the DoJ. Period. Amazon was never involved with this case. That is simply factual wrong. The DoJ investigated Apple when they blantly admitted to what they were doing during the intial run up to a civil class action lawsuit brought by consumers against Apple.

And once more you are wrong. The DoJ completed this lawsuit because Apple and the publishers broke the damned law. For you to claim that the real price of an eBook is $14.99 to $20.99 versus $9.99 is ludicrous. Once a book is published in hard copy, the price for production to digital is negligible. Publishers then are already making one profit source on the print copy. Publishers typically pay between 5% and 8% of book sales to the authors. I know, because I have been published. On a $9.99 sale of a digital copy, the author makes $.50 to $.80 and the remaining $9.00 goes to the publisher on top of the print sale revenue. Apple & Publishers who wish to inflate eBook prices further will not change this at all really for the author. Let's say the eBook is now $20.00. The revenue to the author is still 5% to 8% so now he or she is making $1.00 to $1.60 and the remaining $18.00 is going back to the publisher. That is a win/win for Apple (who would have gotten their little fee) and the publishers involved (who would realize double the revenue on their digital sales). It is a lose/lose for the author who still gets an incredibly small percentage of the overall sale, and the consumer, who is expected to pay twice as much.

Right now there is a stable system that involves competition. With Apple's agency deal, we would have an iron-walled system that costs us as creators and consumers of the digital content but still nets Apple and select publishers high profits. Amazon would not have been hurt really due to their other sources of revenue in this scenario. They still would have sold eBooks and in fact, if you paid attention during this case, Amazon was forced to raise prices on eBooks from $9.99 to $14.99 and higher. Look up the annual revenues to see that they weren't hurting. No, the DoJ did its job and we the consumers have a stable system with better prices.

I suspect you work as a programmer and will retort that digital is somehow more expensive and should be specially exempt from how the rest of the world has and will continue to treat 'objects' of sale. But I am sorry the real price of digital if it was to be the absolutely best for the consumer and still realize a hell of a profit for the publishers and wholesalers is in the $2.00 to $3.00 range. Do the math. I have.

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