Posted on 03/14/2012 6:41:33 AM PDT by Help!
The case centers on Apple's move to change the way that publishers charged for e-books as it prepared to introduce its first iPad in early 2010. Traditionally, publishers sold books to retailers for roughly half of the recommended cover price. Under that "wholesale model," booksellers were then free to offer those books to customers for less than the cover price if they wished. Most physical books are sold using this model.
To build its early lead in e-books, Amazon Inc. sold many new best sellers at $9.99 to encourage consumers to buy its Kindle electronic readers. But publishers deeply disliked the strategy, fearing consumers would grow accustomed to inexpensive e-books and limit publishers' ability to sell pricier titles.
Publishers also worried that retailers such as Barnes & Noble Inc. would be unable to compete with Amazon's steep discounting, leaving just one big buyer able to dictate prices in the industry. In essence, they feared suffering the same fate as record companies at Apple's hands, when the computer maker's iTunes service became the dominant player by selling songs for 99 cents.
As Apple prepared to introduce its first iPad, the late Steve Jobs, then its chief executive, suggested moving to an "agency model," under which the publishers would set the price of the book and Apple would take a 30% cut. Apple also stipulated that publishers couldn't let rival retailers sell the same book at a lower price.
(Excerpt) Read more at online.wsj.com ...
Amazon tried, really hard, to get a monopoly on ebooks. Had it worked, you’d have seen ebook prices go up. The agency model should allow publishers to be more responsive.
I’m hoping to get published before long and have spent a lot of time looking at the traditional publishing versus epublishing industries. Epublishing is going to win, but traditional publishers will have their place if they can figure it out.
If I pull up the iBooks store on my ipad, there’s thousands of random, self-published SF or fantasy novels there. If I want something I know is good, I go look at the recently published lists for Tor, or Pyr, or Baen, or whoever. Doesn’t mean the book will be good but it’s a better bet than just randomly downloading stuff.
Why should an e-book cost any more than $10. There is no more cost to “print” 1 million of them than there is to “print” 1.
I can understand real books costing more as there is a whole supply chain to support. E-books don’t have that problem.
Couple bucks for the author, couple bucks for the publisher, couple bucks for the retailer and the buyer gets a good book for a good price.
The cost to the buyer is that (if I understand correctly) he can’t resell the book or loan it out to friends like he would a real book. Kind of hard to ask him to pay the same as a real book but take away some of the advantages of real books.
I quit buying from Amazon when their delivery price was almost equal to what I was buying. A $15 NOOK cover cost $8 to ship. Last time!
This quote seems to support Amazon's model:
"Traditionally, publishers sold books to retailers for roughly half of the recommended cover price. Under that "wholesale model," booksellers were then free to offer those books to customers for less than the cover price if they wished. Most physical books are sold using this model."
The Justice Department believes that Apple and the publishers acted in concert to raise prices across the industry, and is prepared to sue them for violating federal antitrust laws, the people familiar with the matter said.
Amazon was (and is) aggressive in its pricing. It sells eBooks for less than its competitors, but since when did we demonize a company for charging low prices?
The move by Apple and the book companies was an attempt to force Amazon to raise prices on the eBooks it sells. That (imho) makes them the bad guys in this, not Amazon.
Yes, Apple (and the book publishers) are the ones being sued here, not Amazon.
Yes, Apple is the one pushing for higher e-book prices.
The first couple of comments on this thread seem to contradict everything found in the actual article. Amazon is no the bad guy in the article, and there is nothing (zero, nada) in the article about Amazon price fixing.
Why should e-books cost more than $10?
There’s the same office overhead, editorial work, copyediting and proofreading, design costs for both the interior and the cover art. Not to mention money for the author’s intellectual and artistic work. But the big cost for a publishing house is in advertising and promotion, which needs to be done regardless of the delivery system, or else no one knows that book is available.
BTW, it was Amazon that did the price-fixing on e-books. They insisted that the publishers sell e-books on their site for $9.99 or they would not let them sell any of their books (e-books or otherwise) on the Amazon site. Basically it was the Amazon way or the highway. They publishers were NOT allowed to set their own prices for the e-books if they wanted to do any business on Amazon.
It’s not super obvious, but although Amazon’s prices were cheaper, the scheme Apple and the publishers came up with allows more freedom for the publishers to set prices. When Amazon was the only game in town they could say “sell your books for this price”. Now they can’t do that.
Amazon was the one doing the “price fixing”, at an artificially low cost. It’s just like one retailer coming in, undercutting the competition, waiting for them to die, and then raising prices. Except that in this case the “competition” is the producers of the books.
Catbertz, the Amazon model required publishers to sell for any price they wanted, as long as that price was no more than $9.99. The Agency model lets the publisher set a price and the retailer gets a flat percentage. It’s basically the same model Apple uses for its app store and that’s been a wild success.
Unless it is something I need right away or it is on a temporary sale, I'll put the item on my wish list until I hit the $25 for free shipping.
The $8 shipping isn't too unreasonable. I just checked a 1 pound package shipped across town and it was $11 with UPS and still over $5 with the post office. I'm sure that Amazon gets some big discounts for volume contracts, but they don't seem to be screwing you on shipping.
Yes, you are right their is nothing in the article about Amazon price fixing. But I have ties to the publishing industry and I happen to know what Amazon did to publishers who would not cooperate with them.
I’m ticked at Apple because they won’t allow my to read an iBook on my MacBook....that’s crazy.
Amazon didn’t extort anything from anyone. The choice for publishers was to sell their ebook versions at a reasonable price or not. Those who did not want to sell a virtual copy at a lower price would lose out, big time.
Apple and the publishers appear to be colluding to fix the price of the ebooks at a higher amount to rake in more money for a product that is inexpensive to produce.
the higher price is for the fact that ebooks are easy to remove the drm bloat and do what you want with it.
It is a first reader premium.
I think you have a valid point because if an ebook is 99 cents then it is just not worth the effort of to remove bloat and copy and email.
That’s a pain! I love reading ebooks on my ipad though. Heck, I’ve been converting my work in progress into an epub and loading it on my pad so I can read through it.
You’d think there would be an app to let you read ibooks on your macbook.
In case anyone thinks Amazon is the “free market force” here, a couple links from the last two years:
http://www.teleread.com/ebooks/amazon-pulls-5000-kindle-e-books-in-contract-pricing-dispute/
http://www.sfwa.org/2010/02/dispatches-from-the-ebook-wars-macmillan-vs-amazon/ - this site is really, really good and I’ve always found their analysis of the publishing industry insightful.
“Made in China” ping.
I wish you well in your writing endeavour and appreciate your inside perspective. As a consumer, I reject higher prices for the ebook version over the paperback version. I have encountered this recently and see no reason to justify it.
The purpose for Amazon forcing publishers to charge $9.99 for e-books or sell none of their books on Amazon (e-book or hard copy) was to get Amazon a monopoly for the Kindle.
One company cannot "price fix" by itself unless it has a monopoly at some distribution level. If each publisher decided on its own whether to sell or not sell to Amazon based on Amazon's $9.99 maximum pricing model, there would be no problem. If enough of them did that independently and that limited Amazon's supply that would be legal too. The illegality happens when they colluded to lean on Amazon. That hasn't been legal for over a century. The question isn't whether everyone thinks Amazon or Apple has a better pricing model or which is fairer to buyers or even who makes money from it. The collusion was the illegal part.
Apple also stipulated that publishers couldn't let rival retailers sell the same book at a lower price.
Manufacturers setting a minimum retail price walks a very, very fine line based on recent court decisions about whether a manufacturer could limit what price a retailer can sell their product for. A lot of luxury goods manufacturers try to set minimum sale prices to keep the "riff-raff" from selling at a discount. But having one retailer insisting that the manufacturers set a minimum retail price to aim at another retailer's sales method looks pretty illegal to me.
Amazon played tough in the market. Apple and the publishers look like they colluded.
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