Apple e-book appeal: Higher new release prices boosted competition

Antitrust laws aren't supposed to "keep prices down at any cost," Apple says.

Read the whole story

 

[Vampyre]

More bullshit from a company that has made innovation about lawsuits rather than better products.

Apple's idea of innovation in the e-book industry was to facilitate price collusion and an increase in prices at the expense of other competitors and especially at the expense of consumers.

Fuck Apple.

 

[Oletros]

The court "condemned Apple for proposing a business model that it knew would likely raise some prices above what the court called 'the $9.99 industry norm,' and equated a departure from that 'norm' with 'eliminat[ing] retail price competition,

What the court condemned is price fixing, not raising the prices

 

[nehinks]

Wait, so "we don't deserve a monitor because we're such a valuable and special snowflake"? That last quote seems a wee bit arrogant (although I can see their point about the actual book companies getting off lighter).

I'm curious about that decrease in average ebook prices, as I suspect there are tons of factors besides Apple's dealings at work. Just the fact that the ebook market was still majorly expanding and introducing very cheap and even free self published books would probably skew that data.

 

[kliu0x52]

So price-fixing and and a scheme to protect oneself from price competition is now pro-competitive? How delightfully Orwellian. It's amusing how that famous ad from three decades ago becomes more ironic with each passing year.

 

[theJonTech]

Agree with some points disagree with others

However I do know Amazon has vastly improved their offerings since Apple entered the market

And I am much more likely to buy another Kindle then I was pre ibooks

 

[Z1ggy]

"The publishers’ consent decrees did not include a monitor, and the monitorship here smacks as a punishment against Apple for going to trial and appealing, and thus being 'unrepentant.'"

um isnt that what normally happens when someone loses at trial versus pleading out. The person who pleaded gets the better deal.

 

[Vycia]

This an "ends justify the means" argument. Doesn't matter if collusion actually had a beneficial effect, it's still illegal. If Apple felt Amazon was violating antitrust laws, they should have gone to the courts.

 

[daneren2005]

theJonTech[/url]":1nc3mmz9]Agree with some points disagree with others

However I do know Amazon has vastly improved their offerings since Apple entered the market

And I am much more likely to buy another Kindle then I was pre ibooks

Well, that has also has a lot to do with a maturing of the market itself and all of the technology behind it. I would argue that Kindle was improving before iBooks, and continued to improve at what seemed like a similar rate to me after.

 

[kliu0x52]

Mouldy Squid[/url]":3gvdu2uc]Happy to see Apple is appealing. The ruling clearly showed that the court was interested only in protecting the monopoly Amazon has on ebooks.

Amazon's market position wasn't the result of them conspiring with book publishers. And it certainly was not the result of illegal activity.

 

[salamanderjuice]

nehinks[/url]":1aqus4r4]Wait, so "we don't deserve a monitor because we're such a valuable and special snowflake"? That last quote seems a wee bit arrogant (although I can see their point about the actual book companies getting off lighter).

I'm curious about that decrease in average ebook prices, as I suspect there are tons of factors besides Apple's dealings at work. Just the fact that the ebook market was still majorly expanding and introducing very cheap and even free self published books would probably skew that data.

That's exactly what I was thinking. Just when did all those .99 erotic stories start showing up? And when did even traditional publishers start selling individual short stories in eBook form which they never would have published ordinarily?

I want to see comparisons between books that were published on paper and in eBook form by the big publishers only.

 

[Doomguy]

Huh? The court is saying you can't fix prices (high, low, free, fortune etc) and Apple is arguing about the direction of price movement? Bizarre!

 

[Zegu]

nehinks[/url]":2jb9wawj]Wait, so "we don't deserve a monitor because we're such a valuable and special snowflake"? That last quote seems a wee bit arrogant (although I can see their point about the actual book companies getting off lighter).

I'm curious about that decrease in average ebook prices, as I suspect there are tons of factors besides Apple's dealings at work. Just the fact that the ebook market was still majorly expanding and introducing very cheap and even free self published books would probably skew that data.

When you settle, you get off lighter than if you take it to trial and lose. That's the way it has been forever. The other companies settled, Apple did not. Apple lost, so they should have a larger punishment.
They should be happy that they didn't get hit harder.

 

[daveli0331]

If my sense of humor were a bit more morbid I would almost be entertained that Apple's argument is "We didn't collude to fix prices, we just made a unilateral agreement with the publishers to artificially raise the prices of e-books. You know, for competition."

 

[H2O Rip]

I'm a bit confused at their initial premise that you can't compete in the e-book market at $10, but once you hit $15 it's fine. There's no variable cost per copy, and they aren't selling dedicated kindle type devices, so I would primarily argue that apple's entire basis for argument is moot.

But even assuming that piece is true, it still doesn't mean they get to go price collude to raise prices. If they believed Amazon was violating antitrust laws, they they have to go the same route as anyone else and file suit against it. Given my initial premonition above.... I suspect they knew they didn't have legs to stand on there anyway.

 

[Blue Adept]

It wasn't Apple's responsibility to take up the mantle of dealing with Amazon's ebook monopoly.

Also, it's extremely easy to publish these days, so busting a monopoly shouldn't be necessary. A monopoly would indicate a stranglehold on a marketplace (see the broadband providers). No options.

I could probably become a book publisher by the end of the week by making an app and publishing epub books through a website.

 

[Chemical Tribe]

astie[/url]":3jyf5pka]It strikes me as strange that introducing competition against a monopolist can be deemed illegal in the USA. Amazon had 90% of the market before Apple started selling e-books, and I believe 85% is the threshold for the legal definition of a monopoly.

Overall, the price of e-books went down, although the price of new releases increased which the judge considered the crux of the matter.

I still don't understand the judge's reasoning that Apple's conduct was illegal. The only thing that Apple did was to make available an alternative channel for selling e-books, and taking 30% of the selling price for their services. The publishers chose to use this channel to counter the power of Amazon.

Nobody has suggested Apple were involved in setting prices. That was done by the publishers who illegally conspired together to set prices, but that has nothing to do with Apple.

Either you are woefully ignorant of what has been discussed ad nauseam for months or you are just astroturing to flat out trolling.

 

[Nijyo]

theJonTech[/url]":3ijxfyuf]Agree with some points disagree with others

However I do know Amazon has vastly improved their offerings since Apple entered the market

And I am much more likely to buy another Kindle then I was pre ibooks

I agree.

While I'm probably not smart enough to tell exactly what's going on in this appeal, the fact that within a year or two the eBook market went from almost solely centered around Amazon to being distributed between Amazon, B&N and Apple, suggests to me that Apple's tactics in this were, in the end, unintuitively pro-competition instead of anti-competitive.

 

[H2O Rip]

astie[/url]":ctfpir91]

Nobody has suggested Apple were involved in setting prices. That was done by the publishers who illegally conspired together to set prices, but that has nothing to do with Apple.

Uh... it's been a little while since the trial, but if memory serves that was exactly what they were suggesting - apple was involved in the price collusion with the other publishers to encourage them to set prices.

 

[Rabbiddog]

Mouldy Squid[/url]":1li0fbkk]Happy to see Apple is appealing. The ruling clearly showed that the court was interested only in protecting the monopoly Amazon has on ebooks.

So by your logic. When Apple came out with iTunes and there was (practically) no one else in the digital music market, They maintained a monopoly?

 

[jmshub]

They should just be quiet about this thing and people will forget about. They were convicted and they were served a fine, which is mostly just a slap on the wrist.

 

[skicow]

"Apple’s entry brought enhanced competition with Amazon via catalogue expansion, free e-book offerings, and improved e-reader software," Apple wrote. "Before Apple’s entry Amazon was setting 90% of prices for all brands; afterward, while Amazon continued to use the wholesale model for the bulk of its business, there were tens of thousands of new price-setters in the market. The result was that although some prices increased, others decreased, and, across the relevant market, prices on average decreased."

While this is true -- the marketplace became better when Apple joined -- it wasn't because of Apple colluding with the major publishers to raise prices. It was because Apple brought more customers into the market and increased competition by adding another platform for e-books to be consumed on. For Apple to try to correlate market growth with the raising of prices is disingenuous.

 

[Deleted member 174040]

I truly doubt that the attorneys who submitted that brief really believe in it.

I just find this whole thing bizarre. They should have settled and moved on.

 

[Wheels Of Confusion]

astie[/url]":31cx2b0v]It strikes me as strange that introducing competition against a monopolist can be deemed illegal in the USA. Amazon had 90% of the market before Apple started selling e-books, and I believe 85% is the threshold for the legal definition of a monopoly.

Amazon didn't fix prices, though. All the publishers were free to offer their books elsewhere for a different price. Because Amazon acted a wholesaler, they essentially bought the right to sell publishers' e-books and set their (Amazon's) own prices for e-books, but that didn't stop the publishers from selling their own books at a different outlet or at a different price.

I still don't understand the judge's reasoning that Apple's conduct was illegal. The only thing that Apple did was to make available an alternative channel for selling e-books, and taking 30% of the selling price for their services.

No, that's not all they did. They also conspired to fix industry-wide prices for e-books at a higher rate than their competition's outlet could match.

If you seriously don't understand the terms being used, please look them up.

Nobody has suggested Apple were involved in setting prices.

Yes they did.

 

[knbgnu]

astie[/url]":12av3lge]It strikes me as strange that introducing competition against a monopolist can be deemed illegal in the USA. Amazon had 90% of the market before Apple started selling e-books, and I believe 85% is the threshold for the legal definition of a monopoly.

Overall, the price of e-books went down, although the price of new releases increased which the judge considered the crux of the matter.

I still don't understand the judge's reasoning that Apple's conduct was illegal. The only thing that Apple did was to make available an alternative channel for selling e-books, and taking 30% of the selling price for their services. The publishers chose to use this channel to counter the power of Amazon.

The problems was that they had the agency model, most favored nation clause, and conspired with all of the major publishers. If Apple had merely wanted to sell overpriced ebooks, they would have been fine.

 

[NoxAeternum]

RockDaMan[/url]":1kil0p0r]I truly doubt that the attorneys who submitted that brief really believe in it.

I just find this whole thing bizarre. They should have settled and moved on.

They couldn't, because they used the agency model to cripple e-reader competition on iOS (do you really think it was coincidence that the 70-30 agency split dovetailed perfectly with Apple's 30% IAP cut?) This is also why the judge issued restrictions on the App Store as part of her penalty decree.

 

[SamStrongTalks]

knbgnu[/url]":1iioxfiq]

astie[/url]":1iioxfiq]It strikes me as strange that introducing competition against a monopolist can be deemed illegal in the USA. Amazon had 90% of the market before Apple started selling e-books, and I believe 85% is the threshold for the legal definition of a monopoly.

Overall, the price of e-books went down, although the price of new releases increased which the judge considered the crux of the matter.

I still don't understand the judge's reasoning that Apple's conduct was illegal. The only thing that Apple did was to make available an alternative channel for selling e-books, and taking 30% of the selling price for their services. The publishers chose to use this channel to counter the power of Amazon.

The problems was that they had the agency model, most favored nation clause, and conspired with all of the major publishers. If Apple had merely wanted to sell overpriced ebooks, they would have been fine.

The only part that is illegal is the conspiring part. Agency and MFN are very common in business contracts, and are completely legal. And they are appealing the conspiracy conviction.

 

[jackstrop]

daneren2005[/url]"7r45j0i]

theJonTech[/url]"7r45j0i]Agree with some points disagree with others

However I do know Amazon has vastly improved their offerings since Apple entered the market

And I am much more likely to buy another Kindle then I was pre ibooks

Well, that has also has a lot to do with a maturing of the market itself and all of the technology behind it. I would argue that Kindle was improving before iBooks, and continued to improve at what seemed like a similar rate to me after.

It's something of a Rorschach test. Two events happened independently of each other (development of portable media consumption devices, commonly referred to as tablets in most places) and the group that wants it to be one way sees the development of two separate things as linked and everyone impartial recognizes they aren't at all linked.

You won't convince people who religiously believe in something that they're wrong. They were already indoctrinated before you got to them that anyone trying to tell them differently than they believe is in league with satan and you'll only be safe if you redouble your belief in response to challenge.

 

[omnicronx]

skicow[/url]":3btw6bc0]

"Apple’s entry brought enhanced competition with Amazon via catalogue expansion, free e-book offerings, and improved e-reader software," Apple wrote. "Before Apple’s entry Amazon was setting 90% of prices for all brands; afterward, while Amazon continued to use the wholesale model for the bulk of its business, there were tens of thousands of new price-setters in the market. The result was that although some prices increased, others decreased, and, across the relevant market, prices on average decreased."

While this is true -- the marketplace became better when Apple joined -- it wasn't because of Apple colluding with the major publishers to raise prices. It was because Apple brought more customers into the market and increased competition by adding another platform for e-books to be consumed on. For Apple to try to correlate market growth with the raising of prices is disingenuous.

Great analysis, I could not agree more.

Lets also remember that the general expansion of the ebook market could have very well lead to most of what Apple was claiming 'was due to their model'. More tablets and e-reader devices meant that more people were going to be buying more books in the first place.

Not to mention, one could easily argue that the exact same result may have occurred had Apple entered the market using the same business model as Amazon. Without a 30% cut, we can only be left to imagine what kind of competition could have transpired between Apple and Amazon.

I also find it laughable at best that Apple has claimed that e-books would not have been a viable market without the a new business model. All that it meant is it would not fit into their 30% profit margin model that has been amazingly successful in their appstore ecosystem. But that is hardly any kind of valid justification for what was essentially price fixing.

 

[skicow]

Nijyo[/url]":1pt5f3zk]

theJonTech[/url]":1pt5f3zk]Agree with some points disagree with others

However I do know Amazon has vastly improved their offerings since Apple entered the market

And I am much more likely to buy another Kindle then I was pre ibooks

I agree.

While I'm probably not smart enough to tell exactly what's going on in this appeal, the fact that within a year or two the eBook market went from almost solely centered around Amazon to being distributed between Amazon, B&N and Apple, suggests to me that Apple's tactics in this were, in the end, unintuitively pro-competition instead of anti-competitive.

Don't conflate Apple colluding to raise prices, and Apple entering the market -- it's much more likely that Apple's entry into the e-book market is what caused the market to grow substantially.

 

[SamStrongTalks]

NoxAeternum[/url]":6ycm3m72]

RockDaMan[/url]":6ycm3m72]I truly doubt that the attorneys who submitted that brief really believe in it.

I just find this whole thing bizarre. They should have settled and moved on.

They couldn't, because they used the agency model to cripple e-reader competition on iOS (do you really think it was coincidence that the 70-30 agency split dovetailed perfectly with Apple's 30% IAP cut?) This is also why the judge issued restrictions on the App Store as part of her penalty decree.

Nothing wrong with using an agency model. And the 30% is what Apple expects to get from anyone making money going through their payment system. Now I don't agree with their restriction on not allowing apps to have alternate payment methods, but they can charge anything they want for the use of their payment system.

 

[NoxAeternum]

zchrykng[/url]":18h2qfii]

knbgnu[/url]":18h2qfii]

astie[/url]":18h2qfii]It strikes me as strange that introducing competition against a monopolist can be deemed illegal in the USA. Amazon had 90% of the market before Apple started selling e-books, and I believe 85% is the threshold for the legal definition of a monopoly.

Overall, the price of e-books went down, although the price of new releases increased which the judge considered the crux of the matter.

I still don't understand the judge's reasoning that Apple's conduct was illegal. The only thing that Apple did was to make available an alternative channel for selling e-books, and taking 30% of the selling price for their services. The publishers chose to use this channel to counter the power of Amazon.

The problems was that they had the agency model, most favored nation clause, and conspired with all of the major publishers. If Apple had merely wanted to sell overpriced ebooks, they would have been fine.

The only part that is illegal is the conspiring part. Agency and MFN are very common in business contracts, and are completely legal. And they are appealing the conspiracy conviction.

What Apple did is not an MFN clause. What an MFN clause says is "I always get the best price." So if you then go to another storefront and they negotiate a better price, then our contract says that you now have to honor that price with me. In contrast, Apple's agreements said "You are not allowed to negotiate below this agreed upon price with any other partner."

 

[knbgnu]

zchrykng[/url]":watu54mq]

knbgnu[/url]":watu54mq]

astie[/url]":watu54mq]It strikes me as strange that introducing competition against a monopolist can be deemed illegal in the USA. Amazon had 90% of the market before Apple started selling e-books, and I believe 85% is the threshold for the legal definition of a monopoly.

Overall, the price of e-books went down, although the price of new releases increased which the judge considered the crux of the matter.

I still don't understand the judge's reasoning that Apple's conduct was illegal. The only thing that Apple did was to make available an alternative channel for selling e-books, and taking 30% of the selling price for their services. The publishers chose to use this channel to counter the power of Amazon.

The problems was that they had the agency model, most favored nation clause, and conspired with all of the major publishers. If Apple had merely wanted to sell overpriced ebooks, they would have been fine.

The only part that is illegal is the conspiring part. Agency and MFN are very common in business contracts, and are completely legal. And they are appealing the conspiracy conviction.

I didn't say they were illegal by themselves. As is often the case, it's the COMBINATION of different, otherwise legal actions, that has put Apple legitimately under anti-trust scrutiny. Had they not had the MFN clause, there would probably be no case against Apple.

 

[shuntsu]

Pointless. Ultimately the market will pressure prices down - sales were already down on ebooks as soon as this 'conspiracy' began to make prices rise, and prices are lower on the iBookstore now than they were (though not by a whole lot).

As the various publishers would have to wrangle with finding a sweet spot for e-publishing prices, it is clear that a price point of $15 on average would have been too high. The market wasn't accepting prices at that point, at least for a large number of consumers. The vendor eventually has to get the prices down to something closer to what consumers are willing to pay.

This 'prcie tension' dynamic exists in all things - this is why Blu-Rays don't cost $100 per title, for example.

Yes a cartel can (likely only temporarily) hold the line against price competition from other vendors, but it can't force the consumers to consume at the prices they demand. Clearly many consumers put their money elsewhere for a while.

And also, no publisher will stay in the cartel if they think they can snake out better sales with lower price points somewhere down the line. The instant it seems more profitable to reduce their ebook prices than to try to shore up hardcover items with this 'niche' business, which is likely coming at some point, At least one of the publishers would have exited the cartel unilaterally and tried to reap the profits from doing so.