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 ...
Ah, the ad homimen attacks. The last refuge of the man with no viable argument. Always found from anti-Apple trolls.
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.
More proof of how infantile libertarianism is. I’ll eat my hat if she’s not a libertarian
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.
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.
You're kidding, right? You're telling me that I--an e-book consumer--benefit from a price-fixing scheme that raises prices?
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.
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!
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!
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.
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.
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.
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!!
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!
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.
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.
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.
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