US sues Apple and publishers over e-book prices

shakirmoledina

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Technology giant Apple and major publishers are being sued by the US Department of Justice over pricing of e-books.

The US accuses Apple and book publishers Hachette, HarperCollins, Macmillan and Penguin of colluding on prices of books on the iPad.
This lawsuit is over the agency model where publishers set the prices of e-books, rather than sellers.

For most physical books publishers set a wholesale price, often about half the cover price, and then let a retailer decide how much they actually want to charge for the title.
This model was initially adopted for e-books but has since been changed for what is known as an agency model.
Under this scheme, publishers set the price of a book and the agent selling it gets a 30% cut. This model was adopted by publishers largely at the prompting of the late Steve Jobs.

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I can see this as a somewhat valid claim - an E-Book is free of all sorts of costs.

You don't have to print, it, you don't have to cut the pages, you don't have to attach a cover and bind the pages, finally you don't have to distribute the title physically - you just upload it to a server. Basically the only costs an E-Book release requires are costs of proof-reading of the title, page management, "cover design" and server costs - the first three would be present in physical book release costs anyways, so I don't see why E-Book should be priced anything other than an incredibly small fraction of the price of a printed book.

That said... I find E-Books somewhat... soulless. For some reason I just don't feel like I'm reading a book if I'm not... well... holding an actual book. I guess I'm old-fashioned like that.
 
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Hadrian

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Its pretty much like this for nearly all digital content. You can mostly buy an physical album for less than digital and same for most retail games. Microsoft & Sony really do rip people off on their own titles by releasing a year and a half game on their services at the same price as it was originally released for.
 
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I can see this as a somewhat valid claim - an E-Book is free of all sorts of costs.

You don't have to print, it, you don't have to cut the pages, you don't have to attach a cover and bind the pages, finally you don't have to distribute the title physically - you just upload it to a server. Basically the only costs an E-Book release requires are costs of proof-reading of the title, page management, "cover design" and server costs - the first three would be present in physical book release costs anyways, so I don't see why E-Book should be priced anything other than an incredibly small fraction of the price of a printed book.

That said... I find E-Books somewhat... soulless. For some reason I just don't feel like I'm reading a book if I'm not... well... holding an actual book. I guess I'm old-fashioned like that.
I fully agree with everything you said.
 

Gahars

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Hopefully this will encourage publishers to rethink how they price e-books; I haven't quite warmed up to e-books yet, but if the prices reflected the actual production costs? You better believe I'd hitch a ride on the electronic reading rainbow.
 

ZAFDeltaForce

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That said... I find E-Books somewhat... soulless. For some reason I just don't feel like I'm reading a book if I'm not... well... holding an actual book. I guess I'm old-fashioned like that.
I hear you on that. I love the sweet aroma of freshly printed books when you flip the pages and take a good whiff, something eBooks will never have.
Also, staring at a backlit display for hours and hours to read is awkward and straining to the eyes. Unless it has an E-Ink display :creep:

In any case, there's a limit to how cheap eBooks can be. If eBooks really were a mere fraction of the price of a regular book, the author would hardly get any royalties. There has to be an optimum price that benefits consumers, publishers and the authors
 
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ferofax

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but then ebooks should never be the main source of income for authors, but hard copies. ebook versions are made available just for the sake of availability on electronic devices. the resellers are getting pure profit from every ebook sold after a certain threshold which is way, way lower than the threshold or break-even for physical copies.
 

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Hmmm.......

This NYTimes article gives some good counterpoint against the anti-trust lawsuit.
http://www.nytimes.com/2012/04/12/business/media/amazon-to-cut-e-book-prices-shaking-rivals.html?pagewanted=1

Some of the views expressed in that article:
Lawsuit Victory
=> Amazon setting lower prices for e-books
=> Greater cost difference between books and e-books
=> Fewer books sold
=> Fewer bookstores
=> Monopoly for Amazon

Amazon is awesome at undercutting their competition's prices. Just look at how quickly they price-match their Android apps when the apps go on sale on Google Play.

Because Amazon can undercut Apple in the e-book market, they will dominate that mobile section. Will this hurt Apple and the iPad? It depends on whether or not iPad users use their device to read books (using the iPad Kindle app) or if those users prefer a more dedicated e-book solution.
 

freaksloan

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I honestly don't know how anybody could read a book on an Ipad or for that matter any tablet. I love my Kindle and Sony E-Readers, but I couldn't even read one chapter of a book on my Acer Iconia A500.
 

Rockym

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Hmmm.......

This NYTimes article gives some good counterpoint against the anti-trust lawsuit.
http://www.nytimes.c...ml?pagewanted=1

Some of the views expressed in that article:
Lawsuit Victory
=> Amazon setting lower prices for e-books
=> Greater cost difference between books and e-books
=> Fewer books sold
=> Fewer bookstores
=> Monopoly for Amazon

Amazon is awesome at undercutting their competition's prices. Just look at how quickly they price-match their Android apps when the apps go on sale on Google Play.

Because Amazon can undercut Apple in the e-book market, they will dominate that mobile section. Will this hurt Apple and the iPad? It depends on whether or not iPad users use their device to read books (using the iPad Kindle app) or if those users prefer a more dedicated e-book solution.

That sounds wrong to me. How can Amazon be a monopoly for ebooks when theres a lot of other ebook sellers. B&N and Sony for one. Seems to me that a Lawsuit Victory would now enable me to shop around and buy an ebook from whichever is selling it cheaper. As is it is now, its the same price, whether its Amazon, B&N or Sony I shop with. All the ebook sellers can now compete with each other on price.
 

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So...I read this but I'm still a bit confused, what exactly is the suit about? Apple's DRM thing? Are they suing that iBooks is the only place to get eBooks that properly work on the device? What EXACTLY are they suing about?
 

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From what i'm reading, this isn't so much of a price issue as it is an anti-trust issue.

Correct. Publishers were apparently collaborating with each other and Apple to agree to keep the cost of books artifically high. Amazon had stolen a march with the Kindle and was using its large volume rates to keep prices down - which is good for their business, good for consumers and good for competition. When Apple started moving more into e-books, publishers saw an opportunity to jump in bed with them and try and get the device manufacturer onside to fix prices. The way the market is supposed to work is that there is competition between businesses, which encourages efficiency and innovation. If a business fidns a way to cut costs and give the product to consumers cheaper, they can move more units and expand etc. What breaks the system is when all the main players get around the table and do a deal to say "Even though we're all making a profit of 200% and any one of us could cut that margin to 150% and become the most popular, then someone else could cut their profit to 100% and so on, let's all agree that none of us will do that and we'll all keep prices as they are." If no smaller companies have the buying power and infrastructure to challenge the big boys, you basically get a monopoly in the hands of this cabal that has been secretly set up, and that's very bad for the ideals of capitalism.
 
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From what i'm reading, this isn't so much of a price issue as it is an anti-trust issue.

Correct. Publishers were apparently collaborating with each other and Apple to agree to keep the cost of books artifically high. Amazon had stolen a march with the Kindle and was using its large volume rates to keep prices down - which is good for their business, good for consumers and good for competition. When Apple started moving more into e-books, publishers saw an opportunity to jump in bed with them and try and get the device manufacturer onside to fix prices. The way the market is supposed to work is that there is competition between businesses, which encourages efficiency and innovation. If a business fidns a way to cut costs and give the product to consumers cheaper, they can move more units and expand etc. What breaks the system is when all the main players get around the table and do a deal to say "Even though we're all making a profit of 200% and any one of us could cut that margin to 150% and become the most popular, then someone else could cut their profit to 100% and so on, let's all agree that none of us will do that and we'll all keep prices as they are." If no smaller companies have the buying power and infrastructure to challenge the big boys, you basically get a monopoly in the hands of this cabal that has been secretly set up, and that's very bad for the ideals of capitalism.

Couldn't have said it better myself.
 

IBNobody

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That sounds wrong to me. How can Amazon be a monopoly for ebooks when theres a lot of other ebook sellers. B&N and Sony for one.

Until I read your post, I had totally forgotten that Sony sold ebooks. They must not have much marketshare. :P If you don't mind, I'd like to focus on B&N and Amazon.

Amazon has about 50-60% of the eReader marketplace right now (down from 90% back before the publishers forced the Agency model). Amazon also has some deep pockets. They can afford to sell new releases as loss-leaders to get people to adopt their platform. B&N may not be able to compete, because it is burdened with retail stores. If Amazon starts undercutting physical book prices with ebook prices, it could cause B&N to lose marketshare and force them to close down their retail stores.

Remember Borders? It made some serious screw-ups in the ebook sales department and went belly-up.

Seems to me that a Lawsuit Victory would now enable me to shop around and buy an ebook from whichever is selling it cheaper. As is it is now, its the same price, whether its Amazon, B&N or Sony I shop with. All the ebook sellers can now compete with each other on price.

Sadly, this isn't true. E-readers have their formats locked down pretty tight. You and I are smart enough to convert ePubs to Mobi, but the average user isn't. The average user will buy their ebook from a store that supports that e-reader to ensure compatibility.

If every e-Reader supported every major format (ePub, Mobi, Kindle, PDF, HTML, CHM, etc), it would be heaven. As of right now, though, the only devices that do everything are PC's, tablets, and smartphones.
 

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