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Settlement in Price-Fixing Lawsuit

For discussion about electronic reading devices and related issues (pricing, formatting, accessories, comparisons, etc.)
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traveldog
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Settlement in Price-Fixing Lawsuit

Post by traveldog » Wed April 11th, 2012, 10:08 pm

Hope this pasting works:



http://idealab.talkingpointsmemo.com/20 ... fpnewsfeed


Amazon Ready To Lower E-Book Prices In Wake of Publisher Settlement
Amazon's Kindle Fire displaying digital magazine issues.Amazon's Kindle Fire displaying digital magazine issues.


Carl Franzen
April 11, 2012, 2:45 PM16085


Amazon on Wednesday said it was ready to lower e-book prices, following a settlement between the Justice Department and three e-book publishing companies named in an antitrust lawsuit alongside Apple.


“This is a big win for Kindle owners, and we look forward to being allowed to lower prices on more Kindle books,” said an Amazon spokesperson, referring to a settlement the Justice Department reached with Hachette, HarperCollins and Simon & Schuster.


The Justice Department said it was still pursuing its lawsuit against Apple, and two of its e-book publishing partners, Macmillan and Penguin, over alleged price-fixing of e-books. Apple and its five publisher partners agreed to sell e-books under an “agency model,” or set minimum price of $12.99 for popular new releases, while Amazon previously pursued a “wholesale model,” in which it bought books at different prices from publishers then discounted them to consumers at $9.99-or-less.


Eventually, though, according to the lawsuit, Amazon was forced into adopting the higher prices in order to keep books of the five publishers available in its Kindle e-bookstore.


The settlement with Hachette, HarperCollins and Simon & Schuster, which still has to be approved in court, would have the three publishers tear up their existing agreements with Apple on e-book prices and block them from entering into new, similar agreements for the next two years.


Additionally, the Justice Department’s settlement would block the companies from sharing business information with competitors, or from offering a price-matching program to keep e-book prices lowest on one platform (currently Apple’s iBookstore), for the next five years.

Furthermore, the companies will have to participate in what the Justice Department calls “a strong antitrust compliance program,” which forces the companies to disclose to the DOJ “any e-book ventures they plan to undertake jointly with other publishers” and “any communications they have with other publishers.”


“If approved by the court, this settlement would resolve the Department’s antitrust concerns with these companies, and would require them to grant retailers - such as Amazon and Barnes & Noble - the freedom to reduce the prices of their e-book titles,” said Attorney General Eric Holder in a statement on Wednesday.


Amazon features prominently as an aggrieved partner in the Justice Department’s epic antitrust lawsuit against Apple and five publishing companies over alleged e-book price collusion.

The DOJ’s lawsuit essentially credits Amazon with launching the American e-book industry as we know it with the debut of the Kindle in 2007. It further credits Amazon’s $9.99-or-less ebook price as beneficial for all consumers, saying “As a result of that competition [from Amazon], consumers benefitted from Amazon’s $9.99-or-less e-book prices even if they purchased e-books from competing e-book retailers.”


But the lawsuit also reveals that Apple was at one point poised to offer Amazon a deal to collude to carve up the digital content space into two realms: Apple would control video and audio, while Amazon would control ebooks. Apple abandoned this idea in favor of alleged price-fixing agreements with five publishers.

annis
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Post by annis » Fri April 13th, 2012, 5:30 am

Personally I think it bizarre that the DoJ is using anti-trust laws to in effect heavy publishers into letting Amazon take another step closer to a monoply situation. I'm not in favour of ebook sales being in the gift of Amazon, which is a closed loop as far as the use of reading devices/e-book sales go. I think we all have a lot to lose.
Last edited by annis on Fri April 13th, 2012, 5:37 am, edited 1 time in total.

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MLE (Emily Cotton)
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Post by MLE (Emily Cotton) » Fri April 13th, 2012, 6:55 pm

Annis, I don't think this gives Amazon any more control than they ever had. It won't affect their market share one way or the other. But I agree with the DoJ that for sellers of an item to agree together to keep prices high is against American antitrust laws, which actually are designed to PREVENT major players from squeezing out the little players by using their clout to 'game the market'.

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Mythica
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Post by Mythica » Fri April 13th, 2012, 7:17 pm

[quote=""annis""]Personally I think it bizarre that the DoJ is using anti-trust laws to in effect heavy publishers into letting Amazon take another step closer to a monoply situation. I'm not in favour of ebook sales being in the gift of Amazon, which is a closed loop as far as the use of reading devices/e-book sales go. I think we all have a lot to lose.[/quote]

My understanding is that the settlement is also going to prevent Amazon from selling books at such a loss that it would wipe out their competition, which is what they were previously trying to do and what instigated publishers and Apple to conspire together to raise ebook prices (which IS in violation of anti-trust laws regardless of what Amazon was doing). I've read that Amazon's overall ebooks sales have to at least break even for each publisher. So hopefully, this settlement will prevent Amazon from trying to drive out their competition while at the same time prevent publishers from charging $20 for an ebook. Surely, that's a positive thing for the industry and the customers?

annis
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Post by annis » Fri April 13th, 2012, 8:52 pm

Posted by Mythica
My understanding is that the settlement is also going to prevent Amazon from selling books at such a loss that it would wipe out their competition, which is what they were previously trying to do and what instigated publishers and Apple to conspire together to raise ebook prices.
If this is the case, Mythica (and admittedly I'm probably guilty of a knee-jerk reaction without reading the finer detail) then that is a result that I'd be a lot happier about. However, i'm by no means the only person to feel twitchy about the whole way attempts to gain control of the e-book market are going, and there is quite a bit of debate around the subject - though it has to be said that the debate seems to be less based on logic than whether people see Amazon or Apple as the anti-Christ :)
http://www.guardian.co.uk/books/2012/ap ... terrifying
Last edited by annis on Fri April 13th, 2012, 11:27 pm, edited 3 times in total.

SGM
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Post by SGM » Sat April 14th, 2012, 2:13 am

And, of course, it's so much easier to beat the competition on price when you are not paying corporation tax and they are.

Now that's a really useful business model!!!
Currently reading - Emergence of a Nation State by Alan Smith

traveldog
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Post by traveldog » Sun April 15th, 2012, 1:32 am

[quote=""Mythica""]My understanding is that the settlement is also going to prevent Amazon from selling books at such a loss that it would wipe out their competition, which is what they were previously trying to do and what instigated publishers and Apple to conspire together to raise ebook prices (which IS in violation of anti-trust laws regardless of what Amazon was doing). I've read that Amazon's overall ebooks sales have to at least break even for each publisher. So hopefully, this settlement will prevent Amazon from trying to drive out their competition while at the same time prevent publishers from charging $20 for an ebook. Surely, that's a positive thing for the industry and the customers?[/quote]

This is my understanding also. Although I've now heard that Apple is going to fight the suit, while the individual publishers have agreed to this settlement -- and, frankly, I have no idea what that means.

But as someone who has been anxious to complete SKP's series but refusing to pay $19+ for "Devil's Brood" (which it cost for a long time) while the rest of the series was $9.99, I just hope they get some sanity into the situation!

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Post by Mythica » Sun April 15th, 2012, 9:11 am

[quote=""traveldog""]This is my understanding also. Although I've now heard that Apple is going to fight the suit, while the individual publishers have agreed to this settlement -- and, frankly, I have no idea what that means.

But as someone who has been anxious to complete SKP's series but refusing to pay $19+ for "Devil's Brood" (which it cost for a long time) while the rest of the series was $9.99, I just hope they get some sanity into the situation![/quote]

Last I read, Apple and 2 of the publishers are fighting the suit but 3 have settled. Can't remember which ones exactly, though I'm sure one of the ones fighting it is Penguin because they've been the worst of the bunch when it comes to raising prices. They were the ones responsible for most $20 ebooks.

Yep, just found this which says it's Hachette, HarperCollins, and S&S who have settled, which leaves Penguin and Macmillan (along with Apple) who are fighting it (Random House are not being sued at all since they actually tried to hold out on the agency model pricing and so did not conspire to raise prices): http://www.theregister.co.uk/2012/04/12 ... _for_cash/

I am also holding out on Time and Chance and Devil's Brood - although they're $12.99 each now, they're still more than the paperbacks, which are only about $11. I refuse to pay more for a format that is cheaper to produce. That's the crux of it for me, really... not so much the price tag of an ebook itself but the fact that many are higher than the paperback or even the hardcover in some cases.

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EC2
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Post by EC2 » Sun April 15th, 2012, 7:40 pm

Dominique Raccah, CEO of Sourcebooks just posted this interesting url on Twitter. http://www.antipope.org/charlie/blog-st ... ategy.html
Les proz e les vassals
Souvent entre piez de chevals
Kar ja li coard n’I chasront

'The Brave and the valiant
Are always to be found between the hooves of horses
For never will cowards fall down there.'

Histoire de Guillaume le Mareschal

www.elizabethchadwick.com

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MLE (Emily Cotton)
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Interest in HF: started in childhood with the classics, which, IMHO are HF even if they were contemporary when written.
Favourite HF book: Prince of Foxes, by Samuel Shellabarger
Preferred HF: Currently prefer 1600 and earlier, but I'll read anything that keeps me turning the page.
Location: California Bay Area

Post by MLE (Emily Cotton) » Sun April 15th, 2012, 8:06 pm

Now that was an interesting article, EC. Thanks for posting.

I had read about the napster customers buying more in the long run, and of course there's the quote from some well-known writer (Doctorow springs to mind, but I could be wrong) "It's not piracy I'm afraid of, it's obscurity."

And of course I know all about monopolies, which is the Justice Department's concern. Never heard about a monopsony, though. But it puts me in mind of the chair-caning workers in Bangladesh, who had to sell the fruit of their labors to the man who supplied the raw materials--and of course, he never let them earn enough to get out from under his thumb. (For more on this, read Mohammed Yunus' Banker to the Poor: Lending and the battle against world poverty). I agree that breaking the DRM model will fix the problem.
Last edited by MLE (Emily Cotton) on Sun April 15th, 2012, 8:08 pm, edited 1 time in total.

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