Apple Falling, Amazon Rising

http://www.telegraph.co.uk/technology/apple/9198024/Apple-sued-over-ebook-pricing.html
http://news.sky.com/home/business/article/16206752

Basically the US Department of Justice has sued Apple and a few other groups for colluding to fix prices on e-books above the market standard (as defined by Amazon, apparently). A number of commentators are noting that it has the potential to give Amazon tremendous power in the e-book market.

I'm not sure exactly what I think of this. Price fixing is a bad thing but this response feels uncomfortably like price fixing from the government end of things.

If Apple got sued for everything they manufactured and sold that was above comparable product market prices then they'd be getting sued for everything they produce.

Originally posted by jaden101
If Apple got sued for everything they manufactured and sold that was above comparable product market prices then they'd be getting sued for everything they produce.

What they're being accused of specifically is conspiracy. Its not just they made the prices high, the DOJ says they were trying to control prices across the board.

Originally posted by Symmetric Chaos
What they're being accused of specifically is conspiracy. Its not just they made the prices high, the DOJ says they were trying to control prices across the board.

Good point.

The thing with Amazon, and why they have a "decent" case is their prices come from multiple third parties. The third parties sell their products through Amazon. They are like the Wal-mart of online retail stores.

This is why they can claim "price fixing". Apple sells it directly where as Amazon is more like a retailer. Hard to explain...

Here's a way to put it:

Go to buy a book from Amazon and you can have dozens of different prices from different suppliers. Buy it from Apple: same price, no matter what. Only one supplier/vendor: Apple.

I do not understand how that is Apple price fixing when you can buy the books from Amazon, Barnes, etc. bla bla bla

Summary: I did not read the entire case against Apple and I am confused along with lots of other people.

if Amazon is being used as a basis for comparison, doesn't that, by definition, mean there is no price setting? Like, who cares if Apple wants to jack up their prices so long as there is competition... The whole existence of Amazon in this scenario seems to suggest there is no fixing... what don't I understand?

looks like Apple employees.....are about to lose their Jobs

YEAHHHHHHHHH

Originally posted by inimalist
if Amazon is being used as a basis for comparison, doesn't that, by definition, mean there is no price setting? Like, who cares if Apple wants to jack up their prices so long as there is competition... The whole existence of Amazon in this scenario seems to suggest there is no fixing... what don't I understand?

Did some more reading...

Apparently, Apple was in "cahoots" with the publishing houses to guarantee a 30% cut if they raised the prices.

Because the iPad is in tens of millinos of hands, this makes it easier to price fix IF they are in special deals with the publishers.

This does not allow the retailers, like Amazon, to set their own prices. It caused Amazon to lose 30% of its business in 2 years or some shit.

I do not know what what legal grounds they can stand on because all this is is a business agreement between two companies. The only thing Amazon can get Apple on is the Sherman Anti-Trust law.

what? not one isaac newton gag?

Originally posted by dadudemon
Did some more reading...

Apparently, Apple was in "cahoots" with the publishing houses to guarantee a 30% cut if they raised the prices.

Because the iPad is in tens of millinos of hands, this makes it easier to price fix IF they are in special deals with the publishers.

This does not allow the retailers, like Amazon, to set their own prices. It caused Amazon to lose 30% of its business in 2 years or some shit.

I do not know what what legal grounds they can stand on because all this is is a business agreement between two companies. The only thing Amazon can get Apple on is the Sherman Anti-Trust law.

wouldn't that mean it is the publishing houses that are price fixing then? Like, apple is an obvious beneficiary/co-conspiritor, but it seems like the guilty party is the one fixing their prices...

Originally posted by inimalist
wouldn't that mean it is the publishing houses that are price fixing then? Like, apple is an obvious beneficiary/co-conspiritor, but it seems like the guilty party is the one fixing their prices...

I have no idea.

This entire thing seems very gray.

It's like Microsoft putting on their own web-browser in windows, forcing every Windows user to have to use one browser unless they knew how to install another one (lol?).

That case was gray as well: who the **** cares if Microsoft is giving people a free web browser with their copy of Windows? I do not know how Netscape (now Mozilla) argued that case but it held up.

But, Apple can be seen as being the big bad in this since they have such a large hold on the market. They may have almost 100 million iTouch's, iPhones, Macbooks, iMacs, etc. in people's hands and homes. This makes the distribution of books into American homes quite easy for Apple. To prove Apple was price-fixing, the other publishing houses would have to prove that Apple was the one that made the suggestion and offer of 30% cut, across the board.

That's just my opinion and reflects no sort of legitimate legal insight. I know I should not have to make that disclaimer at the end of my posts but it seems it is needed these days.

Apple doesn't have a large hold on the market. Their ebooks sales are insignificant compared to Amazon (which has an app on every device that matters and by far the largest market share in e-ink devices). While the iPad is the major player in the tablet market, the tablet market is not yet the major player in ebook sales (and even if it were, iBooks is not winning this).

As far as I understand it, the issue is with agency pricing (which is Apple's standard pricing for their stores, the famous 30/70 split) vs. list pricing, which is how books were sold before (how the shift for Amazon worked I don't really understand, I am not sure what pressure the publishers had available, or whether they were just able to ask a different price).

The worry with the ruling now is that Amazon can (as it has done in the past) sell titles at a loss for them to win market share. And thanks to books you buy on the Kindle only feasible working on the Kindle the customer is locked into their eco-system. (I personally am somewhat of a case of that, while I do gain many of my ebooks in the open epub format, I have a Kindle and the Kindle apps on every device I own and have invested quite a bit into their eco-system. For me the Kindle is the de-facto ebook app on everything, even on Apple devices)

Perhaps that will lead to the good thing of DRM dying and the possibility of buying books directly, without restrictions, since it seems like the best way to prevent Amazon from completely locking in the customer base.

Anyways, the example of Apple as Microsoft with Internet Explorer is definitely not accurate. If anything Amazon is Microsoft, selling the ebooks at a far discounted price that someone that needs to make a living with their product (Netscape) can't match.

Some interesting reads on the issue:

http://www.antipope.org/charlie/blog-static/2012/04/understanding-amazons-strategy.html
http://www.nytimes.com/2012/04/16/business/media/amazon-low-prices-disguise-a-high-cost.html?_r=1&ref=technology
http://www.theatlantic.com/business/archive/2012/04/the-justice-department-just-made-jeff-bezos-dictator-for-life/255811/
http://blogs.wsj.com/digits/2012/04/11/what-is-agency-pricing/?mod=google_news_blog
http://www.businessweek.com/articles/2012-04-16/why-apple-s-e-book-pricing-model-might-not-be-unfair

If all this is true, its deplorable. But I think Amazon purposefully drives pricing down to get the most sales.

Originally posted by Bardock42
Apple doesn't have a large hold on the market. Their ebooks sales are insignificant compared to Amazon (which has an app on every device that matters and by far the largest market share in e-ink devices). While the iPad is the major player in the tablet market, the tablet market is not yet the major player in ebook sales (and even if it were, iBooks is not winning this).

As far as I understand it, the issue is with agency pricing (which is Apple's standard pricing for their stores, the famous 30/70 split) vs. list pricing, which is how books were sold before (how the shift for Amazon worked I don't really understand, I am not sure what pressure the publishers had available, or whether they were just able to ask a different price).

The worry with the ruling now is that Amazon can (as it has done in the past) sell titles at a loss for them to win market share. And thanks to books you buy on the Kindle only feasible working on the Kindle the customer is locked into their eco-system. (I personally am somewhat of a case of that, while I do gain many of my ebooks in the open epub format, I have a Kindle and the Kindle apps on every device I own and have invested quite a bit into their eco-system. For me the Kindle is the de-facto ebook app on everything, even on Apple devices)

Perhaps that will lead to the good thing of DRM dying and the possibility of buying books directly, without restrictions, since it seems like the best way to prevent Amazon from completely locking in the customer base.

Anyways, the example of Apple as Microsoft with Internet Explorer is definitely not accurate. If anything Amazon is Microsoft, selling the ebooks at a far discounted price that someone that needs to make a living with their product (Netscape) can't match.

Some interesting reads on the issue:

http://www.antipope.org/charlie/blog-static/2012/04/understanding-amazons-strategy.html
http://www.nytimes.com/2012/04/16/business/media/amazon-low-prices-disguise-a-high-cost.html?_r=1&ref=technology
http://www.theatlantic.com/business/archive/2012/04/the-justice-department-just-made-jeff-bezos-dictator-for-life/255811/
http://blogs.wsj.com/digits/2012/04/11/what-is-agency-pricing/?mod=google_news_blog
http://www.businessweek.com/articles/2012-04-16/why-apple-s-e-book-pricing-model-might-not-be-unfair

Amazon claims to have lost 30% of it's business directly because of Apple's "price gouging". That's a fairly definitive case for Apple doing quite well with its venture. Also, consider whether or not it makes sense: why would Amazon care if Apple didn't do jack with it's sales? Simple: it did do jack. Apple has Amazon worried.

😐

I never bought any books to read on my iPhone, and I just bought the new I pad, and I still don't plan to buy any.

I still love my kindle fire for reading.

Originally posted by dadudemon
Amazon claims to have lost 30% of it's business directly because of Apple's "price gouging". That's a fairly definitive case for Apple doing quite well with its venture. Also, consider whether or not it makes sense: why would Amazon care if Apple didn't do jack with it's sales? Simple: it did do jack. Apple has Amazon worried.

😐

They may have lost it because of Apple, but they didn't lose it to Apple.

Barnes and Noble has been gaining a lot of market share because of the Apple caused agency pricing.

We are talking about the US market of course, things are different around the world.

Originally posted by Bardock42
They may have lost it because of Apple, but they didn't lose it to Apple.

That's not what their numbers are stating. They have a case or else the circuit judge would have thrown the case out, already. They have enough "evidence" to prove that Apple has taken it. At least enough to convince a federal judge to hear the case.

Originally posted by Bardock42
Barnes and Noble has been gaining a lot of market share because of the Apple caused agency pricing.

Oh, okay, I see what you're saying. However, Nook was already a think before Kindle. B and N had a headstart on the e-book thing. At least the Nook was more matured before the Kindle, imo. I have used both since their inceptions. I think the Nook beat the Kindle to the market in a non-beta form by about a year. B and N improving has also a bit to do with them almost or actually declaring chapter 11 and closing down dozens or even over a hundred brick and mortar locations. They are focusing more on their web-based and digital base business, now. They are not obtaining more market share, technically: they are getting back their share from about 4-5 years ago.

Originally posted by Bardock42
We are talking about the US market of course, things are different around the world.

I agree. Amazon does have a significant international business presence in regards to their overall revenue.

After reading more about this case, Amazon was selling e-books with BARELY a profit margin. They set their price at $9.99. What Apple did was negotiate a much more profitable model for the publishing houses with a guarantee of a 30% cut. This is very attractive to publishing houses because they get a much larger profit margin with their guarantee of 30%. They then gave/give Apple exclusive deals which directly drives up the prices because customers now have no choice but to go through Apple to get that book they want on their "e-reader" (iPad, iPhone, iPod, Macbook, etc.)

So, in this case, Amazon is trying to set a low-low price that is fair and barely gives Amazon a profit margin. Apple is trying to get a much higher profit AND sweeten the deal for the publishing houses so that they both get a "cronyistic" scheme/scam going.

When a business deal is struck that forces people to have to go to one particular business for a widely used service AND it drives up prices, it will always set off the Sherman Antitrust Act "alarm."

Obviously, Apple is just being a shrewd business dealer. But is it really fair? Can exclusive agreements be made with Apple? SURE! But the exclusive deals should not be as sweeping as they are currently. Apple had like...the top 6 publishing houses signed on for their scheme. And, yes, it was a scheme. Whether or not it was illegal, the federal courts will determine. Does it fall under the SAA? Maybe. Seems like it to me. You know, if Apple had made it to where there were no exclusives, Apple would have still gotten plenty of business due to convenience. I had an iPad, I would be willing to pay the extra $2 for the convenience of purchasing a book and using it now.

Didn't Apple prevent Amazon's Kindle app from not being on their product or something? Let me know if I have missed some details.

I think you are messing up the 30%. 30% is what Apple gets (as in their standard split on everything, from apps, to music, to newspapers). What Apple "gave" the publishers is the right to set their own prices of the books. That is valuable to them (even though they take a smaller cut) because it does not dilute the worth of a book, as Amazon's aggressively cheap pricing did.

And Apple prevent the Kindle from having it's own store within the app, I believe, it rejected Sony's ebook app on these grounds. The Kindle app is, and has been for a while, on iOS.

Anyways, I guess we'll see where this is going.

Originally posted by Bardock42
I think you are messing up the 30%. 30% is what Apple gets (as in their standard split on everything, from apps, to music, to newspapers). What Apple "gave" the publishers is the right to set their own prices of the books. That is valuable to them (even though they take a smaller cut) because it does not dilute the worth of a book, as Amazon's aggressively cheap pricing did.

And Apple prevent the Kindle from having it's own store within the app, I believe, it rejected Sony's ebook app on these grounds. The Kindle app is, and has been for a while, on iOS.

Anyways, I guess we'll see where this is going.

No, I am not messing up the 30%. That's just a coincidence that those numbers match. There's two different 30% numbers flying around: Apple's cut of the sales and the loss of business Amazon experienced under Apple's hard-business practices.

Its not just they made the prices high, the DOJ says they were trying to control prices across the board.

Originally posted by Ardell91
Its not just they made the prices high, the DOJ says they were trying to control prices across the board.

See, you made a decent post. You may have been worth keeping around.

But now you're spamming up the place for advertisements (link doesn't work, man...can't use it until you have 10 posts to spam your advertisements).