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Maybe 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 selle

Maybe 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 ago
I believe publishers were accused of committing an offense as well -- they all settled.
deleted 13y ago
[deleted]
smackfu 13y ago
Well, 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...
dragonwriter 13y ago
> It can't be that the agency model is only illegal for books. The agency model wasn't the illegal thing, it was just the one part of the mechanism of the used for the illegal price fixing conspiracy. > 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. The publishers were, indeed, charged with conspiring in the price fixing scheme. All of the charged publishers settled with the DoJ rather than going to trial. Apple wasn't singled out, it just seemed that way because they were the only defendant left when the trial started. > How is Apple implicated? Apple is implicated as a member of the publishers' horizontal price-fixing conspiracy who sought to advance, encourage, and profit from that conspiracy.

jmduke 13y ago

I believe publishers were accused of committing an offense as well -- they all settled.

deleted 13y ago

[deleted]

smackfu 13y ago

Well, 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...

dragonwriter 13y ago

> It can't be that the agency model is only illegal for books. The agency model wasn't the illegal thing, it was just the one part of the mechanism of the used for the illegal price fixing conspiracy. > 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. The publishers were, indeed, charged with conspiring in the price fixing scheme. All of the charged publishers settled with the DoJ rather than going to trial. Apple wasn't singled out, it just seemed that way because they were the only defendant left when the trial started. > How is Apple implicated? Apple is implicated as a member of the publishers' horizontal price-fixing conspiracy who sought to advance, encourage, and profit from that conspiracy.