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The DOJ's Mugging Of Apple Reminds Us That Antitrust Is Theft
Forbes on Line ^ | April 19, 2012 | Wendy Milling

Posted on 04/19/2012 7:30:51 PM PDT by Publius6961

The DOJ's Mugging Of Apple Reminds Us That Antitrust Is Theft

The government should not interfere in any pricing or offering, even if a company outright colludes with competitors to set a price. Market participants have a right to offer their goods and services at whatever price they wish, and they should be free to determine that price however they wish. Some sort of twisted resentment at companies for deliberately trying to get the most money from a deal is not a valid basis for outlawing their activity. No one is forcing anyone to buy their products. Those who do not like how a company operates are free to walk away from its products....
It is time to formally reject the concept of antitrust and to put the repeal of the Sherman Antitrust Act of 1890 on the legislative agenda.

(Excerpt) Read more at forbes.com ...


TOPICS: Business/Economy; Culture/Society; US: California
KEYWORDS: apple; california; collusion; ebooks
When I first found this, I couldn't believe my eyes. I had to read it twice to be sure it wasn't semi-satire, the Onion or what.
Arrogance, anyone? This person is the poster child for why there is a 122-year-old law.

Thoughts?

(reserving further comments for later)

1 posted on 04/19/2012 7:30:58 PM PDT by Publius6961
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To: Publius6961

One of the purposes of Anti-Trust Laws is to prevent companies from becoming “Too Big to Fail”.


2 posted on 04/19/2012 7:33:35 PM PDT by dfwgator (Don't wake up in a roadside ditch. Get rid of Romney.)
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To: Publius6961
So if you a private utility...say a water company...and you're the ONLY water company serving 10,000 people, you can raise the price to any level you choose? $50,000/gallon?

Or, should you be able to just shut the water off and close for a month?

This is the classic argument.

However, private utilities most often have been granted exclusive franchise and all the obligations that come with that.

Now, a real-life scenario: Gasoline.

Should it be legal for oil companies to collude on the price of a gallon of gas...and raise that to $10/gal overnight...nationwide...and without notice?

I answer: YES!

3 posted on 04/19/2012 7:47:53 PM PDT by Mariner (War Criminal #18)
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To: Publius6961
Arrogance, anyone? This person is the poster child for why there is a 122-year-old law.

I am always amazed by those who attempt to defend monopolistic practices, not understanding that a private company with monopolistic power is just as great a threat to individual liberty as a government is. The economic argument for regulating monopolies started with the first exponent of free market economics, Adam Smith, because once you understand market forces and pricing, the economic debility caused by monopolistic power it too easily understood. Those who don't understand it, simply never passed economics 1.

4 posted on 04/19/2012 8:13:14 PM PDT by AndyJackson
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To: Publius6961
Antitrust is the legal codification of the mediocrity’s envy of the genius.

Nothing about anyone's local utility immediately invokes the notion of genius. Rather it is monopoly power enabling voracious incompetence at the expense of everyone who can do nothing about the slow sapping of our economic life by those who have a stranglehold on the lever's of production.

5 posted on 04/19/2012 8:18:29 PM PDT by AndyJackson
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To: AndyJackson

Not that I totally agree with the original post, but if a private company had a monopoly in a free market economy economic forces would make that monopoly very short lived. Competitors would spring up like weeds!


6 posted on 04/19/2012 8:21:03 PM PDT by jdsteel (Give me freedom, not more government.)
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To: Mariner

The problem with what Apple and the publishers did is that they did away with the long standing idea of wholesale pricing.

Amazon was paying a wholesale price for e-books and charging what they wanted to charge. i.e. They were paying a set price for the books and charging whatever price they wished. In some cases, it was below the wholesale price and they were losing money in an attempt to gain market share.

Apple worked with the publishers to make sure that there was a model where they all made money and consumers couldn’t get the product at a discount. Instead of the traditional practice of selling at a wholesale price and allowing retailers (Apple, Amazon, etc.) to set the retail price, the publishers set the retail price and gave retailers a set percentage of the cover.

They were colluding to shut out a lower-cost competitor at the expense of consumers.

You can make the argument that Amazon was trying to build a monopoly by driving out others in the e-book market.

The argument should be about whether publishers have a right to set a price and refuse to allow retailers to discount their products.

We already see it with other Apple products — try to get an iPad at a discount...


7 posted on 04/19/2012 8:30:38 PM PDT by MediaMole
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To: Publius6961; LucyT; SatinDoll; blondee123; KansasGirl

If this is true: “ - - - - The government should not interfere in any pricing or offering, - - - “, then what the HELL is “The Government” doing by coming up with Obama”care.”

________

On Holders bite of the Apple: Obama did invite Steve Jobs’ widow to the 2012 State of the Union speech.

Obama made it clear to her in his speech that he (Obama) would be “going after” US companies who had employees overseas.

BTW, since Obama is a Marxist, I’m sure that invitation/attack on grieving Mrs. Jobs made perfect sense to him - - - . The end justifies the means, or just mean, bad manners.

Does Obama REALLY hate women that much?


8 posted on 04/19/2012 8:36:31 PM PDT by Graewoulf ((Dictator Baby-Doc Barack's obama"care" violates Sherman Anti-Trust Law, AND U.S. Constitution.))
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To: Publius6961

Personally, I say “bravo”.


9 posted on 04/19/2012 8:38:11 PM PDT by the OlLine Rebel (Common sense is an uncommon virtue./Technological progress cannot be legislated.)
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To: Publius6961
Clearly some regulation of markets for essential goods and services is required but do we really need the Feds to police the market for super premium ice cream (Nestlé/Dreyer's) or cruises (Carnival/Royal Caribbean)?

Rhetorical question - of course not.

Antitrust enforcement has devolved into nothing more than a shake-down machine. The nadir was reached under Clinton (who else) with Pitofsky and Klein at the FTC and DoJ routinely extracting a Beltway tax on all major mergers.

Recall that Microsoft were spending less than $1m a year on lobbyists until Larry Ellison paid for an antitrust hit on them.

FTC, DoJ, FCC, EPA, FDA,..., smash them all and start over.

10 posted on 04/19/2012 8:44:21 PM PDT by Vide
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To: Publius6961

Disagreeing with the author.

Congress has the constitutional authority to grant limited monopolies to innovators in the form of intellectual property rights such as patents and copyright protection. These rights are further secured through treaties for international trade. These legal monopolies reward innovation. Other legal monopolies can exist through protecting competitive innovations as trade secrets and also by just generally being the best.

Large corporations sometimes circumvent laws in this area in order to gain a monopolistic advantage because their leaders think they can get away with it.


11 posted on 04/19/2012 9:08:13 PM PDT by unlearner (You will never come to know that which you do not know until you first know that you do not know it.)
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To: Publius6961; ~Kim4VRWC's~; 1234; Abundy; Action-America; acoulterfan; AFreeBird; Airwinger; ...
The Justice Department's attack on Apple and the publishers at Amazon's behest... is it right?—PING!


Apple Anti-Trust publishing suit Ping!

Please, No Flame Wars!
Discuss technical issues, software, and hardware.
Don't attack people!
Don't respond to the Anti-Apple Thread Trolls!
PLEASE IGNORE THEM!!!

If you want on or off the Mac Ping List, Freepmail me.

12 posted on 04/19/2012 10:29:26 PM PDT by Swordmaker
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To: Swordmaker
You never answered.
Are you a shill for Apple? or a publisher?
13 posted on 04/19/2012 10:48:14 PM PDT by Publius6961 ("It's easy to make promises you can't keep" - B.H.Obama Feb 23, 2012)
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To: Publius6961
When I first found this, I couldn't believe my eyes. I had to read it twice to be sure it wasn't semi-satire, the Onion or what.
Arrogance, anyone? This person is the poster child for why there is a 122-year-old law.
Thoughts?

(reserving further comments for later)

Publius? In what way were five publishing companies out of over 2000 and a retailer with less than 4% of the retail ebook market a monopoly?

Amazon, with 90% of the eBook sales was DICTATING to all the eBook publishers what the wholesale price of eBooks was going to be, and what the retail price would be—regardless of size, graphics (and royalties for said included graphics), word/page count, editing costs, publicity costs, or any other costs associated with the production of that eBook—digital copies of best-sellers would be sold on Amazon for $9.99 regardless of the selling price of their hardback bound and paper bound versions!

Amazon's was the TRUE price fixing monopoly!

Even after the introduction of the Agency model of eBook sales, Amazon has a whopping 60% of the eBook market... yet THEY filed the complaint that resulted in the anti-trust action against Apple and five publishers who participate in Agency pricing, which Amazon benefits from! It is just that Amazon no longer has a 90% monopoly of eBooks... and a whopping profit margin on eBooks, dictated by their overwhelming market force!

A digital product does NOT lend itself well to the wholesale model of sale, like a hard copy of a book. There IS NO INVENTORY to sell... no hard product to ship, store, sell, and send to a retail customer. No product for a jobber or retailer to purchase, stock, shelve, display, and resell to an end user. A digital product is an intangible... and is more suitable to be sold in an Agency model.

There is obviously room in the market for BOTH models... but that did not suit Amazon. They were pissed that their monopoly was broken! So they complained to the FEDS... They want their model back... the one that was breaking the backs of the publishers and the authors and allowing one big player to dictate the price of all best selling eBooks.

14 posted on 04/19/2012 10:51:55 PM PDT by Swordmaker
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To: AndyJackson
Those who don't understand it, simply never passed economics 1.

Presumably, the author of this gem of understanding, Wendy Milling,did pass Econ 101; else she wouldn't have the chutzpah to write such a criminally in-your-face screed.

15 posted on 04/19/2012 10:54:45 PM PDT by Publius6961 ("It's easy to make promises you can't keep" - B.H.Obama Feb 23, 2012)
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To: Publius6961
You never answered.
Are you a shill for Apple? or a publisher?

I've been a publisher. As for your arrogant and RUDE first question, I have answered it TOO MANY TIMES to repeat the answer again! Every one of the 540 members of the Apple/Mac/iPhone/iOS Ping list already knows the answer. GIVE IT A REST!

16 posted on 04/19/2012 11:14:28 PM PDT by Swordmaker
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To: Swordmaker
Publius? In what way were five publishing companies out of over 2000 and a retailer with less than 4% of the retail ebook market a monopoly?

Swordmaker, I will not answer your silly questions until you stop throwing out incomplete "facts" pulled out of some intestinal outlet, and start documenting them with neutral source references. That is, e.g. what five publishers? What is their market share of fiction? non fiction?
Why are some paper books several dollars higher than the ebook editions?

The present market share of the co-conspirator (and mastermind) of the scam is irrelevant, if Apple devises a circumvention to prevent all other present and future retailers, regardless of size, and obligates those five publishers to not negotiate contracts, ever, that might put Apple at a disadvantage. That walks like a duck, quacks like a duck, etc. Collusion and price-fixing by any other names.

If your "facts" are actually complete and true, why hasn't Amazon been sued by anyone? If Steve Jobs thought Amazon was violating any law, why the subterfuge and games to attempt to control not only Amazon, but also future competition by illegal means?

Try some new arguments. Those are getting stale, and make no sense at all.

Oh yes. Are you a shill for Apple? Forbes? Cnet? a publisher? A fanatic Applebot? What?

17 posted on 04/19/2012 11:19:02 PM PDT by Publius6961 ("It's easy to make promises you can't keep" - B.H.Obama Feb 23, 2012)
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To: Mariner
What a mishmash!
A classic example of why I never respond to the logically challenged who begin a response with the words, "So if..."
18 posted on 04/19/2012 11:29:21 PM PDT by Publius6961 ("It's easy to make promises you can't keep" - B.H.Obama Feb 23, 2012)
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To: Swordmaker
I've been a publisher. As for your arrogant and RUDE first question, I have answered it TOO MANY TIMES to repeat the answer again! Every one of the 540 members of the Apple/Mac/iPhone/iOS Ping list already knows the answer. GIVE IT A REST!

Since I don't visit gay sites, and had never seen a direct response to me before, I appreciate the direct response.
But sorry, no, I won't give it a rest.
Suck it up.

19 posted on 04/19/2012 11:32:36 PM PDT by Publius6961 ("It's easy to make promises you can't keep" - B.H.Obama Feb 23, 2012)
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To: Publius6961
Presumably, the author of this gem of understanding, Wendy Milling,did pass Econ 101; else she wouldn't have the chutzpah to write such a criminally in-your-face screed.

Incidentally, MY degree is in economics. Wendy Milling is right. It is amazing to me how people who claim to be capitalists, conservatives, and people who espouse Free Markets don't understand the principles of those very concepts. . . and embrace bureaucratic interference in the operation of the Free Market forces that allow them to work! That is what this author is talking about! You guys might as well be centralized power Democrats!

The Anti-trust laws came about because of excesses of Government involvement with business in the first place... the granting of privileges and contracts that should never have been granted.,. because of crony capitalism. The OVER-REACHING of centralized government doing what was never authorized in our Constitution.

20 posted on 04/19/2012 11:38:15 PM PDT by Swordmaker
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To: Publius6961; antiRepublicrat
Since I don't visit gay sites, and had never seen a direct response to me before, I appreciate the direct response.

Ah, the ad homimen attacks. The last refuge of the man with no viable argument. Always found from anti-Apple trolls.

21 posted on 04/19/2012 11:46:03 PM PDT by Swordmaker
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To: Vide
Antitrust enforcement has devolved into nothing more than a shake-down machine. The nadir was reached under Clinton (who else) with Pitofsky and Klein at the FTC and DoJ routinely extracting a Beltway tax on all major mergers. 

You are right about that even though I favor reasonable and fair anti-trust enforcement. A recent example of the shake down is all the concessions to minorities and "the poor" Comcast had to make to buy NBC from GE. Actually it bought 51% I think. Now that idiot Magic Johnson is going to be running a Comcast channel and 7 other black/Hispanic channels are coming soon. Now Comcast is forced to offer $10/internet and cheap computers to the poor who have a child in school that other Comcast customers will be forced to subsidize.

22 posted on 04/20/2012 5:52:15 AM PDT by dennisw
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To: Publius6961

More proof of how infantile libertarianism is. I’ll eat my hat if she’s not a libertarian


23 posted on 04/20/2012 5:53:52 AM PDT by dennisw
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To: MediaMole
They were colluding to shut out a lower-cost competitor at the expense of consumers.

Except until the so-called colluding, and the new agency model went into place, Amazon had over 90% of the ebook market and is killing traditional brick-and-mortar book stores. They had already built their monopoly by manipulation of prices, shutting out competition.

Barnes and Noble's Nook didn't achieve 20% until Amazon's scam of undercharging was disrupted by the agency model. Consumers benefited by suddenly having more outlets and sustainable pricing.

24 posted on 04/20/2012 8:13:00 AM PDT by newzjunkey (Newt says, "A nominee that depresses turnout won't beat Barack Obama.")
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To: Swordmaker
Amazon, with 90% of the eBook sales was DICTATING to all the eBook publishers what the wholesale price of eBooks was going to be, and what the retail price would be

Amazon set its own retail price, which was often below the wholesale price. Amazon's idea was for the e-books to be a loss leader for sales of its Kindle. How is Amazon setting its own price a "price fixing monopoly?"

Amazon, with 90% of the eBook sales[. . . .] Amazon has a whopping 60% of the eBook market... yet THEY filed the complaint that resulted in the anti-trust action against Apple and five publishers who participate in Agency pricing, which Amazon benefits from!

According to you, Amazon lost 30% of its marketshare in e-books. How does Amazon benefit from the agency model? Also, if the publishers were conspiring with themselves and Apple to fix the price of e-books, why shouldn't Amazon have the right to press the government for action?

They want their model back... the one that was breaking the backs of the publishers and the authors and allowing one big player to dictate the price of all best selling eBooks.

Indeed. Their model that allowed e-books to be sold at a lower price.

25 posted on 04/20/2012 8:22:31 AM PDT by Publius Valerius
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To: newzjunkey
Consumers benefited by suddenly having more outlets and sustainable pricing.

You're kidding, right? You're telling me that I--an e-book consumer--benefit from a price-fixing scheme that raises prices?

26 posted on 04/20/2012 8:24:08 AM PDT by Publius Valerius
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To: MediaMole
The argument should be about whether publishers have a right to set a price and refuse to allow retailers to discount their products.

A publisher has the unilateral right to set the retail price of its product. The publisher can't conspire to fix the price of its retail products.

27 posted on 04/20/2012 8:30:45 AM PDT by Publius Valerius
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To: Publius Valerius
Amazon set its own retail price, which was often below the wholesale price. Amazon's idea was for the e-books to be a loss leader for sales of its Kindle. How is Amazon setting its own price a "price fixing monopoly?"

You are failing to understand... Amazon was ALSO setting the WHOLESALE price it would pay... 50% of the RETAIL price it was setting! It was the big kid on the block. With 90% of the eBook market, there essentially was no other market for eBookswhen this was going on except for direct to consumer selling—which the publishers were NOT set up to handle!—and a few minor ereaders which had their own book stores, with captive purchasers, like the Nook and Sony Reader.

According to you, Amazon lost 30% of its marketshare in e-books. How does Amazon benefit from the agency model? Also, if the publishers were conspiring with themselves and Apple to fix the price of e-books, why shouldn't Amazon have the right to press the government for action?

They also adopted the pricing structure with it's 30% agency fee. The producers of the books price the books at what they WANT to sell them at, the agency, whether Amazon, the Apple iBook Store, Barnes & Noble Nook Book Store, or what ever, sells them FOR the publisher WHO RETAINS OWNERSHIP until the license for the book is sold, and then takes a 30% commission for that sale. THE seller NEVER HAS TITLE to what it sells! The agency never owns it! There is the difference. It merely acts as an AGENT for the actual seller of the item WHO HAS SET HIS OWN PRICE for his product. That is NOT PRICE FIXING! An owner of a product is free to set the price of his product he sells at whatever he chooses. There are SEVERAL price points at which eBooks are being sold. The Publishers choose whichever one one of these they feel is best for the book being sold. That is it.

Indeed. Their model that allowed e-books to be sold at a lower price.

And, indeed, there are MANY eBooks being sold at lower prices... after the initial publication costs, such as initial publicity, have been amortized and paid for. You can buy last year's or older best sellers for as low as $7.99 to $2.99 or even 99¢! This is the way publishing works, and has for many years. . . but if you want quality books to still be written, edited, produced and sold, you HAVE to allow room for all the people involved to make money. Discounting best sellers from day one WILL NOT DO THAT!

28 posted on 04/20/2012 9:51:08 AM PDT by Swordmaker
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To: Publius Valerius
You're kidding, right? You're telling me that I--an e-book consumer--benefit from a price-fixing scheme that raises prices?

Yes, you do... and you don't see it because you think only as a consumer of discounted wares. The prices could NOT sustain the industry of the goods you were consuming. The devil is in the costs of the details... You cannot maintain an industry selling the majority of your goods below cost!

29 posted on 04/20/2012 9:55:13 AM PDT by Swordmaker
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To: Swordmaker
Amazon was ALSO setting the WHOLESALE price it would pay... 50% of the RETAIL price it was setting

No it wasn't. Amazon was selling e-books at a loss. The concern by the publishers was that the low e-book prices would hurt sales of hardcovers.

With 90% of the eBook market, there essentially was no other market for eBookswhen this was going on except for direct to consumer selling—which the publishers were NOT set up to handle!—and a few minor ereaders which had their own book stores, with captive purchasers, like the Nook and Sony Reader.

So what?

An owner of a product is free to set the price of his product he sells at whatever he chooses

Agreed. But here, when the publishers conspired to set the price of the e-books, that was price fixing. I think Apple and the publishers deserve to be treated differently here, and while there is some doubt about whether Apple was engaged in a price fixing scheme, there's pretty much no doubt about the publishers, which is why they are falling all over themselves to settle these cases.

And, indeed, there are MANY eBooks being sold at lower prices... after the initial publication costs, such as initial publicity, have been amortized and paid for.

Sorry, not an excuse for price fixing.

30 posted on 04/20/2012 10:04:37 AM PDT by Publius Valerius
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To: Swordmaker
The prices could NOT sustain the industry of the goods you were consuming.

The publishers were getting paid by Amazon. But even taking your statement at face value, who needs publishing houses anymore? This isn't 1950. If Amazon wants to put the publishing industry out of business, I'm OK with that. There's no rule that says publishing houses need to exist.

You cannot maintain an industry selling the majority of your goods below cost!

Let's leave that to the market to decide. Amazon thinks that it can.

31 posted on 04/20/2012 10:07:52 AM PDT by Publius Valerius
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To: Vide

Don’t forget that at this same time Bill, Hillary, and Algore were making monthly trips to Gate’s house all the while Janet Reno was suing them.


32 posted on 04/20/2012 10:10:05 AM PDT by shotgun
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To: Swordmaker
Presumably, the author of this gem of understanding, Wendy Milling,did pass Econ 101; else she wouldn't have the chutzpah to write such a criminally in-your-face screed.
Incidentally, MY degree is in economics. Wendy Milling is right. It is amazing to me how people who claim to be capitalists, conservatives, and people who espouse Free Markets don't understand the principles of those very concepts. . . and embrace bureaucratic interference in the operation of the Free Market forces that allow them to work! That is what this author is talking about! You guys might as well be centralized power Democrats!
Someone recently posted a quote from Ayn Rand sharply critical of antitrust law. And hard to rebut, I thought. However, I do have one particular application of Antitrust which I would love to see in court - the trust implications of the Associated Press. Before the AP, newspapers were fractiously independent. After the AP, all reports are written toward the AP newswire, so reporting in America is homogenized. Long after the telegraph was deployed, the AP newswire served such an unassailable market - the economical transmission of news nationwide/worldwide - that it seemed permanently “too big to fail.” With the advent of laser/fiber optic transmission lines and satellite/microwave transmission, conservation of transmission bandwidth has become a tertiary concern. We don’t need the AP to tell us what happened in Baghdad last night; any ordinary Iraqi can blog about it. The trouble we face in America is that “the media” aren’t “objective.” Well, that’s not it - of course they wouldn’t be objective, nobody is objective. The actual trouble we face is that so very many Americans don’t know that journalists are as biased as anyone else. Especially when they say they are objective!!

33 posted on 04/20/2012 10:56:30 AM PDT by conservatism_IS_compassion (The idea around which “liberalism" coheres is that NOTHING actually matters except PR.)
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To: Publius Valerius
Let's leave that to the market to decide. Amazon thinks that it can.

Then WHY IN HELL ARE YOU IN FAVOR OF THE GOVERNMENT GETTING INVOLVED??? The market WAS deciding! Willing sellers: the publishers setting their willing selling price to willing buyers... the public, selling through willing agents, both Apple AND Amazon. Why is the government getting involved??? Because AMAZON, wanted to keep the lion's share to itself and dictate the prices itself, that's why! Use your brain: this is centralized control... anathema to conservatives!

34 posted on 04/20/2012 11:02:00 AM PDT by Swordmaker
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To: Publius6961
Why are some paper books several dollars higher than the ebook editions?

WHY? Simple... there are COSTS attached to printing (paper and ink, layout, typesetting, labor), shipping, stocking, handling. These do not exist (except for perhaps layout, but a lot of eBooks are just loaded into a template!) for eBooks. Pure and simple.

35 posted on 04/20/2012 11:13:38 AM PDT by Swordmaker
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To: jdsteel
if a private company had a monopoly in a free market economy economic forces would make that monopoly very short lived. Competitors would spring up like weeds

Some things are what the economists call "natural monopolies." One of the fundamental requiremnts for a free market economy is "decreasing returns," i.e. increased production increases per unit costs because say you have longer distances to transport materials and finished product, or you have already hired the most productive people, or some such. When you have increasing returns then the system is unstable and a monopoly is inevitable.

Some things are also natural monopolies because things that are locked in lock out competetion, i.e. power or water utilities - once the power lines or water lines are provided to a neighborhood, the utility owning those can add the next house at a marginal cost, whereas a new competitor needs to lay new lines.

If you made all the music players (think iPod), thereby controlling distribution software, you control music distribution to the market. I as a happy iPod owner don't mid - I am happy with my .99 disagregated song. The artist, recording studio and distribution companies might not be so happy with the 30% taken off the top.

And so it goes.

36 posted on 04/20/2012 2:45:31 PM PDT by AndyJackson
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To: Publius Valerius
You're telling me that I--an e-book consumer--benefit from a price-fixing scheme that raises prices?

What price fixing? I've read all the stories, and all I can see is Apple being as open as possible in negotiations with the publishers to make sure everybody got the same deal, not showing favoritism, something that could have gotten Apple sued (can't win I guess). If there is any price fixing, it's behind the scenes between the publishers themselves, and I await evidence.

37 posted on 04/20/2012 7:18:10 PM PDT by antiRepublicrat
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