Breaking: U.S. Sues Apple, Publishers Over eBook Price-Fixing
from the fresh-news dept
Ever since the Justice Department announced that they were investigating Apple and several publishers over allegations that Apple's agency model for ebook pricing violates antitrust law, we've been waiting for the other shoe to drop. Last night, Reuters reported that a lawsuit was imminent, and now Bloomberg has the news that the government has filed a lawsuit against Apple, Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster in New York district court.Details are still scarce, but sources say Apple and Macmillan refused to participate in settlement talks while some of the other publishers are still hoping to avoid a drawn out legal battle, and may settle soon. Update: Bloomberg is now reporting that S&S, HarperCollins and Hachette have settled. It will be interesting to see what kind of defense Apple brings, because the evidence of collusion doesn't look good for them at all. Despite Authors Guild president Scott Turow's self-serving claim that this will somehow hurt culture, this is good news for readers: busting Apple's and the publishers' iron grip on ebook prices will likely reduce them across the board.
Here is this the government's complete filing (pdf and embedded below).
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: agency, antitrust, collusion, ebook, publishing
Companies: apple, hachette, harpercollins, macmillan, penguin, simon & schuster
Reader Comments
Subscribe: RSS
View by: Time | Thread
[ link to this | view in chronology ]
Re:
It also means "this story is in the process of coming to light as we speak" - which it is.
[ link to this | view in chronology ]
Re:
http://dictionary.reference.com/browse/Breaking_news
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re:
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re:
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Apparently the reality distortion field is still operational at Apple.
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
Re: things
[ link to this | view in chronology ]
Do you hope to break the iron grip of publishers on their own titles?
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re: Re:
Apple managed to collude with the publishers to stop discounted prices as they felt they had a larger part of the market and did not want competition from Amazon or to let book prices fall for there customers.
This was a way to artificially create a price for books that hopefully will drop and stop a lot of the book piracy that is very popular at the moment. To be honest a book is worth much less now than what it was worth 100 years ago as printing presses became cheaper to run and the population grew. Now with ebooks costing less than a penny to distribute the price really should be related to the value people put on them. I read a post the other day stating that people are reading many more books since they got ebook readers something like double the amount and many more people are reading because of the ease of carrying an ebook reader. So if the customer base has been quadrupled since the creation of the ebook reader and printing prices have all but gone away and distribution costs have fallen to almost 0. Publishers should be looking at reducing there prices by at least 80% and still generating a decent profit.
The problem though is that greed has caused higher prices. Ebook prices being higher than paperbacks just does not make sense in any way and people have realised this and have tuned there backs on the publishers by pirating, hopefully if Amazon can get the prices down to a reasonable price people will buy again but even then people have become used to free so the publishers have screwed themselves with there greed as many will never pay for a book again.
[ link to this | view in chronology ]
Moore's Law Suits ...
So sue me.
[ link to this | view in chronology ]
I Said "Look! Superman!"
You @$$! kids never listen. It's time for a recall.
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
It just puts pricing back on the retailers, where it belongs. Publishing houses will continue to set a wholesale price, and retailers are then allowed to compete on price.
Physical books aren't the same price in every store (compare a bestseller at B&N to WalMart), why should ebooks?
[ link to this | view in chronology ]
[ link to this | view in chronology ]
ebooks are too expensive
Oh wait, you can do those things by simply breaking the DRM. I have just recently gotten started reading ebooks with the Hunger Games trilogy. My wife and I both read them but of course only paid for one copy. Now that we are done with them, I have given the DRM'less copies to my sister-in-law.
Do I feel like a pirate? Not in the least. I only did with the digital book what I could freely do with a physical book. In reality, the digital world does not have any of the limitations of the physical world, yet we allow the government and content creators to put more restrictions on it than the physical world has. What up with that?
[ link to this | view in chronology ]
Re: ebooks are too expensive
With a physical book, when you give it to someone else, you no longer have it.
[ link to this | view in chronology ]
Re: Re: ebooks are too expensive
Once I have read it, who cares if I keep a copy? I am certainly not going to buy two copies so no money lost.
[ link to this | view in chronology ]
Re: Re: ebooks are too expensive
Not to debate you personally, but your comment illustrates perhaps the core assumption of the entire entertainment industry: transferring a digital file = copying = 2 (or more) copies.
[ link to this | view in chronology ]
Re: Re: Re: ebooks are too expensive
[ link to this | view in chronology ]
Re: Re: ebooks are too expensive
[ link to this | view in chronology ]
Re: ebooks are too expensive
Jens Krustensen, fourth generation bit-binder, weighed in on this touchy subject, saying:
"People don't realize how difficult bit-binding is, or how essential it is that we get paid fairly for our work. Sure, anyone can sew a zero to another zero, but it takes 4 years of training, plus another seven of apprenticeship, before you can sew those ones to each other. That kind of training takes a lot of money. These newfangled mechanized bit-binders are shiny, but what happens when you're halfway through Moby Dick and all the ones start to fall out? Our culture is too important to entrust it to these foolish 'advances', if you can even call them that."
Please continue to pay inflated prices for DRM-hobbled ebooks. If we don't, the bit-binder could become as rare a sight as a tallow-chandler, and the world will weep.
[ link to this | view in chronology ]
The ONLY defense that might work for Apple.
[ link to this | view in chronology ]
-Cable rentals at $4.99 for 24 hours
-Songs at $0.99 each
-DVD and Bluray prices
-Apps requiring a subscription on top of a subscription (Yes, this includes you, Microsoft 360 Division)
Hell, let's just summarize the list as: the entire entertainment industry.
I'll leave out the government bribery charges, for now.
[ link to this | view in chronology ]
Re:
The "market" has decided that a DVD should be about $20, but that doesn't mean WalMart isn't free to sell that same DVD for $5.
[ link to this | view in chronology ]
Re: Re:
There is no "market" when you have a monopoly. Those holding the monopoly will charge as much as they can, aware that if they charge too much people and/or governments will revolt.
Unfortunately, the people have had enough of $20 DVDs, and are revolting. Good luck trying to stop them.
[ link to this | view in chronology ]
Apple's agency model
[ link to this | view in chronology ]
Why Apple?
I can see where publishers getting together, fixing prices, and refusing to sell to some retailers (Amazon) would violate the law; but why Apple?
[ link to this | view in chronology ]
Re: Why Apple?
Imagine if Walmart, through agreements with Pepsi and Coke, forced the price of soda to rise at Target/Costco/wherever.
Low-overhead stores suddenly aren't allowed to 'pass the savings on to you' because their competition says they can't. How does that make sense?
[ link to this | view in chronology ]
Re: Re: Why Apple?
The problem with your metaphor is that if Walmart tried something like that, Pepsi would tell them to f*** off. But then Pepsi and Coke are actually interested in selling their product to as many people as possible, while most publishers would prefer to outlaw ebooks entirely.
[ link to this | view in chronology ]
Re: Re: Re: Why Apple?
[ link to this | view in chronology ]
Re: Why Apple?
[ link to this | view in chronology ]
Re: Why Apple? Because it was a knowing conspirator.
You really need to read the full DOJ pdf. It explains Apple's involvement clearly. But the gist of it is that Amazon bought ebooks for wholesale prices and set its retail ebook prices at no greater than $9.99, no matter what they paid for it, even if they had to take a loss. They did this to give themselves a competitive edge in the ebook market. The low prices freaked out the big publishers who thought that consumers would come to expect cheap ebooks, and, shudder, cheaper books in general. The big publisers couldn't have that and so conspired amongst themselves to stop Amazon from selling ebooks for low prices. Enter Apple, who's goals gave the publishers a way to all sign a collusary deal to raise prices, but make it look like it was a deal with Apple rather than a conspiracy amongst themselves.
Apple wanted a straight 30% cut, and didn't want to compete on price--ever. Apple deal got apple a huge, guaranteed profit margin, higher than existing ebook profit margins, and the big five publishers agreed not to let anyone else sell their ebooks for less.
So, Apple, coming strong into the ebook market should have **lowered** ebook prices to compete. Instead the conspired with publishers to *raise* ebook prices. That is the opposite of competition. Apple, according to the DOJ, knew what they were doing, and kept all the publishers apprised so they all knew they were signing on the same terms to kill Amazon's pricing.
Or so I under stand it.
[ link to this | view in chronology ]
Re: Re: Why Apple? Because it was a knowing conspirator.
Digital distribution does not work that way. They do not need to order new ebooks every time someone buys one from them.
[ link to this | view in chronology ]
Read the PDF
[ link to this | view in chronology ]
Re: Re: Re: Why Apple? Because it was a knowing conspirator.
[ link to this | view in chronology ]
Re: Re: Why Apple? Because it was a knowing conspirator.
[ link to this | view in chronology ]
Infinity
Which is why the publishers are a bunch of whiners.
Such things have actually happened with physical goods. The maker of the kid's toy "Vampire Blood" and other goodies found his product in the bargain bin at one retailer, selling for below his manufacturing cost. So he bought up that retailers retail stock, and re-sold it at his regular wholesale price to other retailers.
But, just because publisher collusion to raise prices is illegal and evil doesn't mean that Amazon's plans to crush all competition through aggressive pricing (prices which would likely go up once Amazon succeeded in crushing all other e-book sellers and e-book reading platforms) wasn't evil. The difference is that one is illegal and raised prices and the other is legal and lowered prices.
[ link to this | view in chronology ]
Macmillan Responds
BS imo but ymmv. ;)
[ link to this | view in chronology ]
I've always thought it was wrong for the publishers to be able to set the retail price for ebooks. It should be the same as for paper books (and incidentally most other physical goods): A wholesale price and an MSRP. If the retailer (Amazon, Apple, B&N) want to sell those goods at a lower margin, or a loss, that's the retailer's choice.
Somehow the publishers don't mind wholesaling millions of books to price clubs and letting them be sold for 50% the MSRP... why should they care about a similar pricing structure for ebooks?
Apple making the deal letting the publishers do whatever they want severely hurt other ebook retailers, and that's not right. They did it purely to strongarm their way into the ebook market when they were behind.
I hope this lawsuit will bring sanity back to the ebook business.
[ link to this | view in chronology ]
Always happy to see Apple sued
Apple will eventually settle - after all, what's a few million bucks? - and the book publishers will learn what it's like to live and work in the 21st century.
[ link to this | view in chronology ]
Re: Always happy to see Apple sued
I dunno. Not having to compete on price because of MFN clauses and getting a straight 30% net profit is pretty sweet. I think Apple may fight this hard. Just as the publishers feared that consumers would come to expect low book prices if Amazon kept selling e-books for $9.99, Apple may fear a cascade from app sellers, music, tv and movie publishers if Apple has to drop the 30% MFN agency model in book sales.
[ link to this | view in chronology ]
All that is necessary for Apple to triumph
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Oh right, the bribes keep flowing and the DoJ is on their side, so its business as usual....
[ link to this | view in chronology ]
Noteworthy in itself
Damn that uppity Amazon, trying to compete with us! Us, with our secret-meetings-in-upscale-restaurants business strategies and our leave-no-paper-trail mentality! The nerve.
[ link to this | view in chronology ]
Re: Noteworthy in itself
[ link to this | view in chronology ]
Re: Noteworthy in itself
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
More accurately, it sounds a form of monopsony, or at least attempted monopsony.
[ link to this | view in chronology ]