Epson Stops E-Tailers From Selling Off-Brand Ink Cartridges

from the competition-would-be-bad dept

Mon, May 1st 2006 11:51am — Mike Masnick

It's quite well known that the business model for ink jet printer makers is to sell the printers for next to nothing, and then make it up by charging ridiculously high prices for the ink cartridges. Of course, since this is the model they use, the vendors get mighty upset when they find out that other companies are selling replacement cartridges that work in their printers. In the US, that resulted in a series of lawsuits with Lexmark misinterpreting the DMCA to try to turn selling competing printer supplies into a copyright issue. Though it took many years, lots of wasted dollars, and probably frightened off many competitive sellers, eventually Lexmark was slapped down and told that it was misusing the DMCA. Meanwhile, other manufacturers are trying different intellectual property routes to stop real competition in the market. Just a few months ago, we noted that Epson was using patents as an excuse to sue a bunch of retailers. It appears that the strategy is working. Four online retailers based in Germany have all agreed to stop selling off-brand ink cartridges. To celebrate, I've just gone out and bought a bunch of off-brand ink cartridges for my Epson printer. This has absolutely nothing to do with "protecting" intellectual property -- and everything to do with shutting down a competitive marketplace.

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Laughing, 1 May 2006 @ 1:09pm

Yet another reason not to buy Epson...
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Mikester, 1 May 2006 @ 1:22pm

Go Laserjet
And that's just one of the many reasons I bought a cheap HP Laserjet (B&W) for home to replace our Lexmark inkjet.
Sure I can't print colour, but we usually get our pictures printed at Costco anyway.
With the laserjet, my ink will never dry out (always happened on the Lexmark) and printing is super fast.
Plus I no longer cringe having to go back and pay $40-$50 every few months for another cartridge and pray I don't have to replace both the colour and the B&W cartridges at the same time. With our relatively low volume of printing, I'm guessing the toner will last me at least a couple years.
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Dietrich Murphy, 1 May 2006 @ 1:47pm

An easy solution
Do not buy Epson products. There are many other printers on the market. Boycott Epson. I donated all of my Epson printers and bought other brands.
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Cary, 1 May 2006 @ 1:58pm

Re: An easy solution
So who isn't screwing the consumer? If Epson is bad (and I know that Lexmark is the worst), who is helping the consumer? HP does some similar consumer screwing, as does Canon. I'll never buy Brother. So who's really left?
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David T, 1 May 2006 @ 1:59pm

For balance, the other side
Let me just present the counter-argument for the sake of balance. I'm not saying I agree, but it's helpful to understand both sides...

The other side of this is the "one monopoly rent" argument. Basically, it doesn't matter if Epson gets you up-front with the printer or on the back-end with cartridges... either way you're willing to pay a certain total amount (total cost of ownership) for a printer and will consider the cost of ink and the machine when making that decision. The printer marketplace is competitive and if the total cost of one printer exceeds that of another (holding the quality constant) you'll choose the cheaper.

As the article points out, printer manufacturers sell their printers at a loss in order to get later sales on ink. If there is a completely competitive market in ink then manufacturers won't be willing to sell the printers below cost anymore. The result would be that the price of the original printer goes way up, and the price of ink comes down.

There is actually an argument (again, not saying that I agree) that consumers BENEFIT from this type of pricing. It allows somebody who uses their printer infrequently (and thus buys fewer cartridges) to have a lower total cost than if they had to pay full-price for the machine and still bought few cartridges. The consumers who use more cartridges cover the overhead (R&D, SG&A, etc) of Epson.

A lot of these arguments were hashed out in old patent "tieing" cases -- for example, the International Salt decision (332 US 392 -- http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=us&vol=332&invol=392 )
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shashinka, 1 May 2006 @ 2:04pm

non-oem inks suck
I have tried saving money with my Epson printer by refilling the ink myself (messing and time consuming) or using other inks (even staples brand) but it seems I have to clean my heads more or end up returning the cartridge because of crappy print outs. I also tried on HP. I don't print much anyway so I use the OEM (maybe they cost more but I find the cheapest prices online) with a lot less trouble!
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That Guy, 1 May 2006 @ 2:05pm

A different business model
I understand the "outrages" that you think are occuring, but did you not RTA? Epson if FIRST selling the printers for next to nothing...do you think they just want to give them away? No, they are just deferring the costs till later in the game. Other markets (cell-phones come to mind) do this with contracts. They subsidize the printers in exchange for recurring revenue downstream. If they are giving the printers away, then if someone wants to take their only source of profits away you better bet that they are going to come after them.

Now, the question of better products available, that is an entirely different story, but this is an established business model, stop whining.

In some regards, this is a more fair pricing scheme. Everyone pays little to nothing for the ability to print, then pays for how much the actually use the product.

I love playing the Devil's Advocate...
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Mike (profile), 1 May 2006 @ 2:11pm

Re: A different business model
I understand the "outrages" that you think are occuring, but did you not RTA? Epson if FIRST selling the printers for next to nothing...do you think they just want to give them away? No, they are just deferring the costs till later in the game. Other markets (cell-phones come to mind) do this with contracts. They subsidize the printers in exchange for recurring revenue downstream. If they are giving the printers away, then if someone wants to take their only source of profits away you better bet that they are going to come after them.

You're confusing two issues. First, it's perfectly fine to try to set up a business model like this. However, trying to stop competition is illegal. Just because you want your business model to work doesn't mean your competitors have to live by it.
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Getting Warmer, 1 May 2006 @ 2:14pm

Re: An easy solution
Donated them? Gee, thanks for the favour. You should have taken them out to the driveway and given them a high G tolerance test.
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David T, 1 May 2006 @ 2:20pm

However, trying to stop competition is illegal. Just because you want your business model to work doesn't mean your competitors have to live by it.

I think you missed the point. According to his model, EPSON does have competitors. They are H-P, Canon, Lexmark, and other printer manufacturers. Nothing is forcing H-P, Canon, Lexmark, and others to follow the same business model. The point is that if ESPON has to open up their ink cartiridge market then they will have to raise prices signficantly on the original printer.
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Chief Elf (profile), 1 May 2006 @ 2:29pm

Happy Epson'er
Bought an Epson Action Laser 1500 back in 1993. Shortly after getting it, I tried to print and got an awful smell. Turns out my toddler had inserted a 5.25 inch floppy disk in the paper slot, and the printer fed it through until it got to the hot part, and the diskette melted.

I disassembled as much as I could, I pried, I clawed, I whined, and I was sure the printer was garbage.

New cartridges cost me about $200, but last for 1,500 to 2,000 pages, and I've been a happy camper for about thirteen years. It still works great!
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John, 1 May 2006 @ 2:35pm

Do what I do, if I have to replace both the color and black inks at the same time I just buy a new printer.

You can buy them for $ 90.00 (Canadian) and Lexmark sells the cartridges for about $ 55.00 each (again Canadian).

Oh, and I never buy extended warranty. :)
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Anonymous Coward, 1 May 2006 @ 2:49pm

Re:
No printer manufacturer should be able to make me buy their ink. They made a business decision to sell their printers at cost or below cost. And they figure to recoup that from ink sales. Fine. But don't try to stop others from offering a competing product just because it interferes with their business plan.

What would happen if Sony tried to stop Memorex from making CD's that play on Sony's CD players? People would go nuts.

Or what about my Volkswagon...? Shouldn't I be able to buy gas from Amoco, or Citgo? Because if these printer makers had their way, I'd only be able to buy gas from VW.

I should have the right to buy ink from whomever offers me the best price/value. If that's from Epson, fine. If it's from someone else, that should be fine too.
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Dam, 1 May 2006 @ 2:58pm

Re: An easy solution
Do not buy Epson products. There are many other printers on the market. Boycott Epson. I donated all of my Epson printers and bought other brands.

Donated them? You mean you foisted them upon some unsuspecting non-profit? What a big hearted soul you are!
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BC, 1 May 2006 @ 3:04pm

Why are people suddenly surprised by the Gillette model of product marketing? It's over a century old.

History and technology being what they are, printers will clearly eventually be disposable commodities, they'll probably even include a fixed supply of paper as part of the package.
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David T, 1 May 2006 @ 3:34pm

Re: Re:
No printer manufacturer should be able to make me buy their ink. They made a business decision to sell their printers at cost or below cost. And they figure to recoup that from ink sales. Fine. But don't try to stop others from offering a competing product just because it interferes with their business plan. Again, just presenting the counter-argument here --- Why not? It's an assertion without support other than "I want my cake (cheap printers) and to eat it too (cheap ink)" that doesn't hold up. If they can't lock you into the business model then they will no longer sell the printers below cost. Under your theory you should be able to switch cell phone service providers the day after Cingular gives you a $200 phone for free. Of cousre, what would happen is that Cingular just wouldn't give out free phones anymore. It's not a question of "interfering with" the business model -- it's a question of the existance of a model (cheap hardware, expensive disposables) at all. Like somebody else said, should Gillette razors have to accept Schick blades? The result is that the price of the razor would go up just as much as the price of blades came down.
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David T, 1 May 2006 @ 3:36pm

Reformatted, ignore #16

No printer manufacturer should be able to make me buy their ink. They made a business decision to sell their printers at cost or below cost. And they figure to recoup that from ink sales. Fine. But don't try to stop others from offering a competing product just because it interferes with their business plan.

Again, just presenting the counter-argument here --- Why not? It's an assertion without support other than "I want my cake (cheap printers) and to eat it too (cheap ink)" that doesn't hold up.

If they can't lock you into the business model then they will no longer sell the printers below cost. Under your theory you should be able to switch cell phone service providers the day after Cingular gives you a $200 phone for free. Of cousre, what would happen is that Cingular just wouldn't give out free phones anymore.

It's not a question of "interfering with" the business model -- it's a question of the existance of a model (cheap hardware, expensive disposables) at all.

Like somebody else said, should Gillette razors have to accept Schick blades? The result is that the price of the razor would go up just as much as the price of blades came down.
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Mike (profile), 1 May 2006 @ 3:46pm

Re:
Again, just presenting the counter-argument here --- Why not? It's an assertion without support other than "I want my cake (cheap printers) and to eat it too (cheap ink)" that doesn't hold up.

No, you're missing the point. Yes, Epson has the right to set the business model however they want. And, yes, Epson would probably raise prices on their printers if they couldn't do this business models, but that still doesn't give them the right to block out others from filling the market for parts. They have no legal right to do so.

I understand how the business model works. I'm just saying they should understand that this is one of the risks of such a business model.

So, yes, the answer to your other question is that, if Schick makes blades that fit into Gillette razors, then they need to deal with that. It's called free market competition. What's wrong with it?
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David T, 1 May 2006 @ 4:14pm

but that still doesn't give them the right to block out others from filling the market for parts. They have no legal right to do so.

We're arguing on different levels.

The question in the courts right now is whether they have such a legal right or not. It'd be really easy to pass a law giving them the legal right (or taking the legal right away) to force consumers to buy company brand ink.

I'm presenting an argument as to why branded ink could be seen to benefit consumers by looking at the competition at the point of sale of the printer, not the point of sale of ink. "Free market" competition doesn't have to mean absolute freedom -- some business models (eg, being able to get a free phone from Cingular in exchange for a contract) depend on consumers being able to contract into a relationship with a supplier.

Just a thought.
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David T, 1 May 2006 @ 4:20pm

In other words -- the question is whether the law should serve the same function as a contract with Cingular when I get a free phone from them.

It's not a question of "a risk of doing business" -- that's punitive. It's a question of "what will the market for printers look like next year?" The legal rights we assign today will shape how printers are sold next year. There is enough competition in the printer market that there is reason to believe that consumers are protected that way -- nobody is making a monopoly profit. After all, if there were a monopoly then printers would be expensive AND ink would be expensive...
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Dave, 1 May 2006 @ 4:55pm

I don't buy ink cartridges. When the ink runs out, I buy a new printer. I forget the brand, but Walmart just had a brand name ink jet for $29.98 on sale and it included the ink.
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Mike (profile), 1 May 2006 @ 5:16pm

Re:
In other words -- the question is whether the law should serve the same function as a contract with Cingular when I get a free phone from them.

The situation with Cingular is quite different, because the user is signing a contract. If Epson had a contract that required you to buy Epson ink cartridges (or pay for a service that would regularly deliver ink cartridges) that's one thing. But that's not what's going on.

It's not a question of "a risk of doing business" -- that's punitive. It's a question of "what will the market for printers look like next year?" The legal rights we assign today will shape how printers are sold next year. There is enough competition in the printer market that there is reason to believe that consumers are protected that way -- nobody is making a monopoly profit. After all, if there were a monopoly then printers would be expensive AND ink would be expensive...

Not quite. Part of the problem is that many buyers aren't aware that they're locked into a single seller of ink once they buy the printers. Once they have the printer, it absolutely is a monopoly situation -- and the prices absolutely do reflect that. When the amount of ink to fill a swimming pool is worth about $5 billion, to say there's no monopoly profit is laughable.
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buckykat, 1 May 2006 @ 5:25pm

ink is expensive, printers are cheap.
all epson printers come with one cartridge color & one black.
sometimes you can find printers for free (full rebate). just keep getting cheap printers and take the ink. BONUS: it helps screw epson & others over. just an idea.
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Count Porkula, 1 May 2006 @ 6:15pm

I have boughten probably 8-10 Epson printers over the years. But I will NEVER buy anything made by this company again.

Way to treat your loyal customers, Epson.

If someone has a good email address for Epson, please post it. I'd love to share my sentiments with them - and include a link to this thread.
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jqp123, 1 May 2006 @ 7:15pm

Re: For balance, the other side
It allows somebody who uses their printer infrequently (and thus buys fewer cartridges) to have a lower total cost than if they had to pay full-price for the machine and still bought few cartridges.

The manufacturers covered this angle by making sure that the infrequent user is also forced to buy lots of cartridges. The ink dries out over time and becomes unusable.
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Xanthir, 2 May 2006 @ 8:52am

Re: Re: Re:
Of cousre, what would happen is that Cingular just wouldn't give out free phones anymore.
EXACTLY. If such a thing were possible, then the particular business plan that they are currently embracing wouldn't work. They'd change.

On the other hand, Epson (and the other printer manufacturers) are saying that they don't want to change, and fuck you if you don't like it. And they're trying their absolute hardest to make sure the law supports them.

We're not demanding that Epson give us cheap printers, so that we can go out and buy cheap cartridges from someone else. We're saying that we like cheap ink, and if Epson doesn't like it, suck it up and charge more for printers. Until they do, we benefit on both sides. ^_^
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Chick'n, 2 May 2006 @ 10:29am

court case vs. Epson
I own an Epson printer and recently recieved information about a court case against Epson. To summarize, Epson is offering a $40 online coupon if you choose not to argue the fact that their ink cartridges signal they are low/empty before they actually are. How's that for stealing from your customers?
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Todd Henkel, 2 May 2006 @ 11:04am

My Operating Model...
Let the printer companies keep their business model...

I used to buy the best printer I could - good color, photo quality, etc.

But I switched my consumer model to what several others here have stated. When a cartridge runs out, I buy a new printer. And for printing photos, nothing is better and more cost effective than walking a block down to the 24 hour Walgreens.

I am happier now with the state of printers and consumables than I was 10 or 15 years ago!
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Sparkle, 3 May 2006 @ 9:45pm

Buy a cratridge or ink
My colleague bought his printer on special. He bought 2 more for the ink cartridges as it was cheaper than just the cartridges and he gets spare parts to boot. Not that you ever actually get to use them but if one printer breaks he tosses it and uses the next one. Dispisable printer and cartridge.
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Jeremy McGhee, 10 May 2006 @ 1:33pm

Ink is the biggest rip off. adn Epson's next scam
The best thing I ever did was to put continuous ink supplies in all of my printers. Now I print more than ever.

Watch out for Epson, now they put programs in their printers to kill them while they are still good. I blew out my Stylus R300 after 6 months (and a couple hundred superhigh quality 8x10) photographs because the page counter that Epson built in to it indicated that my waste pads were full.
Because I don't use cartridges, I don't have the wasted ink that you get when the heads are primed.
When I took the printer apart, the waste pad was still 95% white. what a ripoff
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Tom Dennen, 13 Jun 2006 @ 1:11am

Pay per use model
(This is a piece that appeared in Noseweek March ’04, Weekend Witness, Sept. ’04 - about which nothing has, so far to my knowledge, been done except for that tv commercial about expensive printer ink.) SOMETHING STINKS! by Tom Dennen ONCE you’ve got your business lean and mean and replaced all your people with computers, you have to box clever with profits for your shareholders. Because Zero Population Growth means exactly that - no new people in the First World are buying your products, just the same regulars buying the same amounts every year. Naturally, you bump up your price, that’s just ordinary inflation, but shareholders tend to put pressure. So a lot of industries are geting into the support system and accessory markets to make sure that their same purchasers have to continue to buy in at sometimes seriously inflated prices. Polaroid started it (inadvertently) back in the fifties It’s called Pay Per Use (PPU); it’s a new economic model and, it seems we’re stuck with it for the interim, paying disproportionate prices for aftermarket products and services. The aftermarket business model is the business model for TiVo, cell phones, and even razor blades. In each case, the hardware itself is sold below market value (even below cost sometimes), and the "consumables" (monthly fees, airtime minutes, razors, or, in this case I am examining, toner and ink cartridges) provide the ongoing profits. The computer printer ink aftermarket industry leads the PPU field by high altitude Olympic measures. It unashamedly puts ten milliliters of (admittedly sometimes-designer) ink into a tiny little plastic box with a sponge inside of it and sells that box for up to seven hundred Rand to you. Printer ink cartridges retail in South Africa at a median average of about four hundred Rand, which works out to forty thousand Rands a liter! It costs about eight Rand a liter wholesale from at least one major manufacturer. O K, so the average cost today of a black OEM refill is often under R 300 and the generic is around a hundred, but you get the idea - a lot of businesses are making serious bundles on ink. Very serious bundles. If you’ve ever doubted it, check the math from ink wholesaler sales@vamex.com : $259 for five gallons of the best - WJ-190 black ink. That’s about a hundred rand per liter, R10 per 100 milliliters or one Rand for ten milliliters - the amount of ink in the plastic cartridge you’ve just paid R450 for at Game! And that’s just the wholesale price. The price from the world’s biggest manufacturer of printer ink, BASF in Germany, to wholesalers and major cartridge manufacturers has to be a tad less. A WHILE AGO a whole industry sprang up around the business of refilling 10-ml printer cartridges at just a couple of hundred smackers - what a bargain - a R 199 profit on every Rand’s worth of ink they were selling! Then we discovered that we could refill the cartridges all by ourselves and another industry leaped out of the same woodwork just to sell us the ink! (Retailing at around R1, 000 a liter, we were now into real savings). And don’t forget that we kept the original cartridges. Watching all this with shareholders on their shoulders like monkeys on their backs, the OEM printer industry, not to be left out of a virtual black hole of mega-profits, woke up and quickly put some serious defensive technology into their cartridges, high-tech and low-tech, part of the war against generics. The high-tech trick: A chip on the cartridge that shuts down the printer when the ink runs out: No matter how much ink you put back into the cartridge it tells the computer “I’m empty! Don’t print until I’m replaced!’ The only way to reactivate your printer is to replace the cartridge with an expensive new one from the manufacturer - which has a chip programmed to tell your computer, “I’m full. Print away!” Which sounded the bell for round two: Manufacturers of cheaper, generic aftermarket refills now make them with a chip of their own which reassures your computer that all is well with the cheaper substitute in its printer. The low-tech solution is even nastier but of course, simple: A thin layer of a high-tech sludge is floated on top of the original ink supply in what now becomes a self-destruct cartridge: When the ink runs out the sludge drains through and permanently clogs the inkjets. “So wah! You can’t refill me!” And another couple of tons of toxic waste is headed our way? At epsonrefill.com (or a tree-hugging green site nearby) you can order a cartridge chip ‘re-setter’ for $15 which tells the chip on your empty ink cartridge: “You’re full again!” -So you can, once again (with the resetter) refill the cartridge yourself, circumventing both the “oh, my god, we have to post a bigger profit this year” greedy printer manufacturers and the only slightly less greedy generic refill manufacturers who own the business anyway and don’t have to worry about shareholders. Okay, so what, exactly, is the bottom, bottom line? I addressed the following enquiry, politely I thought, to ink manufacturer BASF’s head office in Germany: “I am researching the profit path from manufacturer to consumer of printer ink cartridge content. Any assistance will be acknowledged.” Their email reply: Dear Mr. Dennen, Thank you for approaching BASF on Ink Jet Inks. Unfortunately we are not in a position to provide you with any data regarding profit path of inks. Best regards. Tough stuff, but as a business model, I don’t like PPU and it seems I’m not alone. Actually, a lot of people don’t like it. For one thing, it distorts the marketplace. Printer manufacturers get people in with a cheap up-front offer and then charge them an arm and a leg once they're hooked. The only place you can learn a trick like that is in the drug trade. Higher, more realistic prices for printers, coupled with a more competitive supplies market, would make for a better deal for you and me. The ‘I-am-empty’ chips have, in the meantime, spawned another creative use of the American Digital Millennium Copyright Act (DMCA), a law that was originally intended to curb the copying of movies and music - don’t go hiding your cd and dvd hoard, now! - But today, the fight’s getting bloody in a scenario not envisaged by the original legislation. In December last year, Lexmark filed a DMCA claim against a company called Static Control, saying that the latter's chips circumvented the measures Lexmark had taken to protect its intellectual property (which as we have seen is very expensive intellectual property). I think Lexmark’s intellectual prices may explain why companies like Static Control - whose main business is making antistatic plastic bags that electronics parts come in - see an opportunity to make a buck selling knock-off replacement cartridges. And there are many other companies (which will be affected by any decisions arrived at in the case) that do the same - collect, refill, and sell used original equipment cartridges, And why not? We’ll see. Meanwhile, If this legal strategy is successful, how long will it be until all sorts of products include small chips just to head off competitors? Imagine a world in which the only parts we can buy for our cars come from the original manufacturers, and are priced accordingly. Get the idea? Meanwhile, the European Union has banned the use of cartridges that have chips that make the cartridges non-reusable. The reason: Thrown away, the cartridges increase toxic landfill and are a threat to the environment - All in the quest for profit. Asked for his comment, Hullet-Packard’s Warren Rother started telling me all about high R & D costs that have to be recovered, transport costs, etc., etc., etc., but he found that he had to admit that they didn’t add up to R30,000 to R40,000 a liter. He did, however, in exchange for his acceptance and understanding that the PPU culture may be a little rip-offish, offered to help out this old journo by pointing me toward a scam you should be aware of - and gave me the names & addresses of the four gangs operating it (This, of course, may be another piece, I have their names! - tom)
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yasemin onur, 23 Oct 2006 @ 8:29am

epson ink business model
Hello..
I have just come across this discussion.
I am writting a dissertation on The implications of protecting IP whilst intergating it into your Marketing Strategy. Focusing on Epson.
If anyone would like to help by answering a questionnaire and get your opinions heard.
Please email me.. yasonur@gmail.com
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J Douglas, 26 May 2007 @ 6:38pm

There are other reasons to boycotte Epson
I used to work for Epson America until a French VP brought a Brazilian up to do the work I was hired for. According to the FBI, Epson has some sort of legal permission to do such things.

All I can say is what might have been known as a good company in the past now is also getting rid of employees before retirement age now as well, according to old friends still in S. CA.

If ever there was a company to boycott due to labor practices and tremendously overpriced inkjet cartridges, Epson should be at the top of the list!
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paul doucette, 28 Jul 2007 @ 1:45pm

Re: non-oem inks suck
I gotta say this..OEM ink is great for Epson but the cartridges are expensive..$90.00 for 4 cartridges and they always say empty when their like 1/4 full and the printer shuts down that color prematurely..that sucks too..I laid up my printer for two months after running out of black and when i went to reinstall the black i noticed the three other colored had dropped nearly 1/4 of a cartridge without being used..Not ImpressedI'm considering trying non OEM but am concerned if its no good can i go back to OEM after using Generic brands???
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FrankmCarson, 25 Sep 2007 @ 12:51pm

Re: An easy solution
That wasn't to brite .
I have been using and recommending Epsons for many years just because of the generic ink.
HP and lexmark have stopped generic sales many years ago.
Still available with Canon and Brother.
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