5 ms·
The judge was absolutely correct to rule this way. Some people cry "miscarriage of justice", but you need to look back on what happened when the iPad and iBook
by pico303 13y ago
The judge was absolutely correct to rule this way. Some people cry "miscarriage of justice", but you need to look back on what happened when the iPad and iBooks came out.
Amazon ruled the ereader/ebook marketplace, because it was the first company to offer both a reader and electronic books together, so you could order books right of the reader. A page from Apple's playbook, a la the iPod.
At the time, ebooks were sold like print books, where the retailer set the price. This is how most retail works, and let Amazon drastically discount their ebooks so they weren't taking any profit, just to move Kindles. The publisher had no say over the price of the book, so a Kindle owner could get ebooks cheaper than print (which, if you think about it, makes perfect sense). The publisher didn't make any less, so the only one paying the price was Amazon (and they took a hit on their stock for it, if I recall). The publishers were forced into this model by Amazon because there was no other resource for ebooks, and everybody loved their Kindles so to deny that market meant your competition would kill you if you didn't play along.
Apple came along with the iPad and that gave publishers an out. If you go back to that time and read the articles on this, Apple actively worked with publishers to change the model to one that was better for publishers and Apple, but worse for consumers. They created a new kind of contract that let the publisher set the price of the ebook, which is really unheard of in retail, except for maybe video game sales. At its heart, it's really an anti-competitive practice, though that may seem counterintuitive. Look at it this way: it's a great way to break into a marketplace controlled by a stronger competitor without really competing. You force your competitor to raise their prices and thus reduce the attractiveness of what they offer, and suddenly you have a share in the market without having to compete with better products or prices.
I also don't understand pro-Apple stance on this issue. I'm a huge fan of Apple products, but I was not a fan of this change in the ebook market. My guess is this opposition is coming from people that don't buy a lot of ebooks on either the iBook store or Amazon, or ever experienced the Kindle store prior to this change in the market. It used to be that ebooks on Amazon were priced around or less than the price of a paperback. Now they tend to cost the same or more than the hardbound edition. How is this a good thing for consumers? You now have publishers in control of the ebook market the same way they're in control of the video game market, through price fixing and predatory pricing models, and retailers have no say in the matter.
- skygazer 13y agoMaybe I'm daft, but it doesn't add up to me. Perhaps you can point out the flaw in my thinking? Apple already had a marketplace, the App Store, that let sellers set their own prices — Apple just wanted their hefty 30%, regardless of consumer price. It seems that was and is acceptable to the law and the world at large. In fact, before iBooks, publishers were already selling their books as stand alone apps under this model. When Apple created iBooks, they continued this existing model in their newly created ebook marketplace — that seems entirely natural and unprovocative. It can't be that the agency model is only illegal for books. It seems to me if an offense was committed, it was committed by publishers in renegotiating their Amazon contracts, in unison, towards the agency model. How is Apple implicated?
- jmduke 13y agoI believe publishers were accused of committing an offense as well -- they all settled.
- deleted 13y ago[deleted]
- smackfu 13y agoWell, why did all the publisher renegotiate their contracts in unison? Because they were all working together with Apple. You aren't allowed to fix prices amongst competitors, and you also aren't allowed to help competitors to fix prices as a third-party.
- commandar 13y ago>There was one other important aspect to the agency model that Apple established with the publishers — it included a most-favored-nation (MFN) clause. An MFN provision will frequently appear in contracts between wholesalers and retailers and it ensures that the wholesaler will provide the retailer with the best wholesale price. But Apple adopted it in the agency model to require that the publishers adjust e-book prices in the iBookstore to match the lowest price offered by any other retailer — regardless of whether the publisher controlled the pricing in that retailer. >This meant that the iBookstore would always have the e-book at the cheapest price. It also meant that if a retailer was offering the book for a cheaper price, the publisher would have to lower the retail price to match it. If that meant the price was below what it cost to produce, the publisher would take the loss, not Apple — they would still get their 30% cut. >The traditional purpose of MFNs are used to protect a retailer’s ability to compete, ensuring that they aren’t disadvantaged by the wholesaler giving their competitors a better deal. The DOJ contends that the way this MFN works, it was designed to “protect Apple from having to compete on price at all, while still maintaining Apple’s 30 percent margin.” Those are strong words, but there is certainly a kernel of truth to that. http://www.macstories.net/stories/understanding-the-agency-model-and-the-dojs-allegations-against-apple-and-those-publishers/ http://www.macstories.net/stories/understanding-the-agency-m...