Next Threat To Amazon's $9.99 Books? Rupert Murdoch

http://news.yahoo.com/ ^ | February 3, 2010 | Paul Thomasch

[Biggirl]

NEW YORK (Reuters) – Enjoy $9.99 electronic books while you can -- for they soon may be a thing of the past. News Corp Chief Rupert Murdoch, who oversees a media empire than includes HarperCollins books, home to authors like Michael Crichton and Janet Evanovich, made clear on Tuesday his displeasure with the low price Amazon.com Inc has set for electronic books.

[RayChuang88]

I’d like to see everyone agree on a single standard for e-book pricing for new “hardcover” books: US$13 for the first four months, then afterward US$10. That’s still cheaper than the US$17 to US$19 charged by Amazon.com and BN.com for new-release hardcover books.

[Recon Dad]

I like Rupert Murdoch, I like capitalists that build a huge companies like he has, but his statement;

made clear on Tuesday his displeasure with the low price Amazon.com Inc has set for electronic books.

From every meeting I've attended on “Price Fixing”, you could not tell someone what to sell your product for once you sold it to them.

Mr. Murdoch should just raise his price to Amazon.

[Recon Dad]

I’d like to see everyone agree on a single standard for e-book pricing

This is illegal and if they decide to do it I will be the first one at their door with my law suit. Competitors cannot get together and decide to sell at one price.

[vollmond]

The Gutenberg Project has more free books than a person can read in a lifetime. I’m just saying. Even $9.99 is too high for a book that’s been out for a while.

[RayChuang88]

I’d agree if we’re talking about a “dead tree” book, which has wildly different costs of printing large numbers of books between different companies. But since in e-book distribution there’s one common cost—the cost of encoding the text into the e-book format—singular pricing makes a lot more sense.

[CARTOUCHE]

I received a Sony reader for Christmas and had no idea how much it costs to download a book. I have yet to do so. I have many used paperbacks from Amazon already. If Murdoch thinks I’ll be inclined to download at 24.95 he’s dreaming.

[Recon Dad]

If I sell a product to one of my distributors for $10 and tell him he has to sell it for $20 I could go to jail or at best I'll get fired if caught.
Too many meetings with corporate attorneys trying to keep you out of jail...

[Publius Valerius]

If I sell a product to one of my distributors for $10 and tell him he has to sell it for $20 I could go to jail or at best I'll get fired if caught.

What you described is perfectly legal. In antitrust law, we call this the "Colgate doctrine."

[Publius Valerius]

By the way, this one problem with Amazon making and selling its own Kindle—it can get pushed around by the book manufacturers like this because it has so much invested in the Kindle.

If Amazon didn’t have the Kindle, they would tell Murdoch to stick it. Without the Kindle, the book companies need Amazon too much; the Kindle shifted that balance of power.

[Biggirl]

Plus Murdoch and company got their BP’s raised when Steve Jobs last week came out with the iPad, an enlarged version of the iPod.

[Recon Dad]

A customer could ask me what to sell a product for, but every anti trust attorney from my days with Philip Morris to 30 years later with SCA said if I told a customer what he should sell if for my ass would end up out the door.

I would love to have told my distributors they had to sell the product I sold them for a specific price, it would have made my life much easier. But in the paper industry just try it.

[Recon Dad]

I googled the Colgate Doctrine and now understand your reference.

On the ground in the paper industry they quit even publishing “suggested selling” prices at least 15 to 20 years ago.

If I were not retired I’d get with the particular attorney we had as our anti trust guy, who came from the justice Dept and get you our policy.

Since I made it out of a 35 year career in sales without going to jail I’ll just leave it there and let sleeping dogs....

[Publius Valerius]

The Colgate Doctrine has to be implemented on a company-wide basis and must be adhered to strictly. The problem in implementing it is that it must be absolute: in your example, it must be “sell it for $20 or else you are terminated.” If you have a distributor selling for less than $20 and it isn’t terminated, the company can, in fact, run into serious price fixing problems. Lots of companies find it is easier to not bother with it than risk a rogue sales agent going along with a price-cutting distributor, exposing the company to significant antitrust risk.

Incidentally, the Colgate Doctrine may now be a thing of the past with the Supreme Court’s decision a few years ago that makes resale price maintenance subject to the rule of reason. If you’re interested, google “Leegin Creative Leather Products.”

And avoiding jail is always a good thing. :)

[Recon Dad]

“sell it for $20 or else you are terminated.”

In the paper industry getting rid of a customers was not easy. I honestly never saw a customer terminated for not selling a product at a particular price. I know P&G controlled their away from home customers, but they just restricted who could sell it better than most.

The paper industry was one of the justice departments favorite targets.