As as side project I helped a friend publish a small book on Amazon for the Kindle. At the time we looked into doing the iBooks Store, but it was not yet open to self publishing.
Apple's requirements for pricing were as follows:
1. You could set whatever price you wanted. (e.g.: Apple doesn't fix the price at anything specific)
2. If you sell the book electronically elsewhere, you cannot sell it on iBooks Store for more than the price you sell elsewhere.
3. Apple gives you %70 of the sales.
I don't see how this is price fixing, nor is it trying to keep the prices higher. You can sell on the kindle for the same amount as the iBooks Store.
Amazon's terms:
1. You can set the price as you like.
2. You get a variable cut of the sales (sometimes it is %30 to you, %70 to amazon.)
3. Amazon can change the price if they want and sell your book for less, and pay you less.
So, yes, it is true that Amazon can run specials where they sell your book for $0.99 to drive traffic to the store, and when they do it, they do it at your expense.
I believe the facts don't support an allegation of price fixing.
As to the idea that Apple was "trying to run the kindle out of business", that's an allegation that is true of every instance of competition. If someone prices an android tablet that is competitive with the iPad feature-wise at half the iPad's price, that's "trying to run the iPad out of business" as well. It is what you're doing when you compete for sales, you want all of them to go to you and none to your competitor.
The allegations stem from the agency model that was forced on Amazon by the big six publishers when the iPad launched. Previous to that model, Amazon treated eBooks like they did everything else -- they'd buy them at a wholesale price and then sell them at whatever price they wanted. That included, to my understanding, selling them at a loss so they could sell more Kindle hardware.
Under the agency model, the publisher sets the retail price instead of the wholesale price. So Amazon now has to sell it at that price. This is probably different than the deal you got with Amazon since you don't have the leverage that the big six have.
The agency model also includes other stipulations to protect the traditional publishing model. One example is that many eBooks don't launch for several weeks after the hard cover books. My understanding from listening to Robb Wolf and Tim Ferris talk about their recent book launches is this helps the NY Times Best Seller rating in some way.
As a consumer, I use Amazon for their discounted prices. Recently when I wanted a book, I could pay $49.99 at the local B&N or $32.95 at Amazon plus $3.99 for one-day shipping. However, had I wanted to get the same book in digital format, my options were $39.99 at Amazon or $39.99 at Barnes & Noble.
How was the agency model forced on Amazon? Apple offered a better deal, and if I recall correctly, even before the iBooks Store had launched, Amazon changed their terms to offer the same deal. Amazon offered this same deal to everyone, including us. I'm not under a misunderstanding of what the deals are... I think you believed what you read in this press release and took it at face value.
A "model" cannot include "other stipulations". It is simply a broad description of an arrangement. There are many books that are not available for the Kindle or on iBooks, and it has been many years since they were published.
In short, the linked to article is FUD, Amazon chose to meet Apple's terms because they rightly recognized they were more competitive.
I agree, it is stupid that you can buy the physical book for less than the ebook. However, no matter how stupid it is, it isn't price fixing.
Amazon chose to meet the publishers' terms because publishers began to withdraw books from Amazon:
> Macmillan CEO John Sargent had been meeting with Amazon to discuss getting full control over e-book prices, but Amazon refused to budge and all Macmillan's books were temporarily removed from Amazon—including the print versions. Amazon eventually relented and is allowing the books back on site, and is going along with Macmillan's demands for higher e-book prices.
> At issue is Amazon's practice of setting nearly all new e-book releases at $9.99 no matter what it's paying the publisher. This means Amazon may be paying the publisher $14 per title, for example, but is intentionally taking a loss on sales in order to push cheap e-books to Kindle users.
Amazon was paying the publishers the full price they demanded -- the issue was not about publisher profit. Instead, Amazon intentionally took losses to promote ebooks as loss leaders. Publishers threatened to remove their books unless Amazon only sold their books at pre-specified minimum prices.
Yes, Amazon protested Macmillan's eBook policy changes by the temporary Macmillan boycott. But don't forget what Amazon was protesting: Macmillan was refusing to sell eBooks to Amazon at the higher pre-Apple wholesale price that permitted Amazon to set its own price downstream.
Let me say that again. Macmillan demanded that Amazon pay them less money per eBook so that Macmillan could control the price Amazon charged the end consumer. That sounds obviously anti-competitive to me.
Indeed; I think the lawsuit intends to prove that Apple collaborated in the publishers on forcing the new prices, but that's an allegation I've never seen evidence for.
The linked article has nothing to do with self-publishing and everything to do with books from large publishers:
> The complaint claims that the five publishing houses forced Amazon to abandon its discount pricing and adhere to a new agency model, in which publishers set prices and extinguished competition so that retailers such as Amazon could no longer offer lower prices for e-books.
Amazon's discount specials also are not relevant to the price-fixing claim.
Self publishing is irrelevant to my point. The terms I mentioned are the terms both companies offered to everybody. Apple offered better terms, and specifically included in those terms that publishers couldn't jack up the prices compared to the price elsewhere.
The only reason Amazon offered "lower prices" in the past is because they ran discount specials. Amazon also allowed publishers to set the price on the books, except when Amazon would run a lower price.
Further, the complaint is to price fixing, and the reality is, both before and after the iBook Store came into being, neither company engaged in price fixing.
Self publishing isn't irrelevant to your point. I seriously doubt those terms you quoted from Amazon are the same terms the big six negotiated with them.
As wild speculation, I imagine the terms Amazon and Apple have with the big six are identical and that's where the charge of price collusion comes from: there's only six publishers than really count and no one can sell their eBooks at a lower rate now.
The "%30 royalty" is Amazon's old model, the "%70 Royalty" is the Apple "Agency model".
When Apple announced the model, Amazon moved to offer the same model, and they offered it to everybody.
That we're self publishing is relevant only in the fact that we've actually published a book on Amazon and are relating the current situation, rather than making an argument based on "doubts". The purpose of this press release, by the way, is to sow such fear, uncertainty and doubt, and as you'll notice it has many assertions and little in the way of facts.
I don't follow. The price-fixing claim stems from publishers forcing Amazon to raise their prices by threatening to cut off Amazon's access to their books; it doesn't have to do with competition from the iBook Store. However, it alleges that Apple was complicit in forcing Amazon to raise prices, not through competition, but through threats.
Apple offered a better deal. That may be a competitive threat, but that is competition, not a threat of... violence? criminality? What are you implying?
Amazon was not forced to do anything, they chose to offer the same deal Apple does because they wanted to keep the business.
If Amazon only capitulated to this deal in order to keep the big six on board, why do they offer it to everybody, including small publishers?
That "%70 royalty" option is comparable to Apple's deal.
Also, why am I arguing with people who are not in a better grasp of the facts than I am, but who are instead repeating un-substantiated speculation and assertion?
I think you owe me some factual citations- namely, how Amazon was "forced" to do anything. Remember, choosing not to do business with someone is simply an expression of freedom of association. This is a recognized right in the USA. My ford dealership might want to sell toyotas, but toyota has the right not to sell me cars, "forcing" me to get them on the secondary market. So, when you say "force" you must mean a legal, or physical, rather than competitive threat, right? Because if it was simply the pressure from a competing deal that was better, well, Amazon voluntarily took that deal, they were not "forced" into it.
Please also show how apple did anything other than offer a better deal.
If you're going to make the allegation, shouldn't you have some evidence to cite?
> The complaint claims that the five publishing houses forced Amazon to abandon its discount pricing and adhere to a new agency model, in which publishers set prices and extinguished competition so that retailers such as Amazon could no longer offer lower prices for e-books.
> If Amazon attempted to sell e-books below the publisher-set levels, the publishers would simply deny Amazon access to the title, the complaint claims.
> Recently, you may have heard that a small group of UK publishers will require booksellers to adopt an “agency model” for selling e-books. Under this model, publishers set the consumer price for each e-book and require any bookseller to sell at that price. This is unlike the traditional wholesale model that’s been in place for decades, where booksellers set consumer prices.
This is the price-fixing Amazon is complaining about: "you can't sell our books unless you sell them at our prices." As far as I know, their complaint has nothing to do with royalty percentages or competition with Apple's iBook prices.
"Apple offered a better deal." As was extensively documented at the time, unless you include anti-competitive factors, Apple did not offer the better deal. Amazon paid more money per eBook (and sold the eBooks downstream for less money) before the agency model than after it.
The incentive that Apple offered was helping publishers control downstream prices, which is exactly the price-fixing this case is about.
I'm not convinced that "If you sell the book electronically elsewhere, you cannot sell it on iBooks Store for more than the price you sell elsewhere." isn't classified as price fixing. There have certainly been cases in the past where preventing a retailer from discounting a product below a certain point has been classed as price fixing.
Apple's requirements for pricing were as follows:
1. You could set whatever price you wanted. (e.g.: Apple doesn't fix the price at anything specific) 2. If you sell the book electronically elsewhere, you cannot sell it on iBooks Store for more than the price you sell elsewhere. 3. Apple gives you %70 of the sales.
I don't see how this is price fixing, nor is it trying to keep the prices higher. You can sell on the kindle for the same amount as the iBooks Store.
Amazon's terms: 1. You can set the price as you like. 2. You get a variable cut of the sales (sometimes it is %30 to you, %70 to amazon.) 3. Amazon can change the price if they want and sell your book for less, and pay you less.
So, yes, it is true that Amazon can run specials where they sell your book for $0.99 to drive traffic to the store, and when they do it, they do it at your expense.
I believe the facts don't support an allegation of price fixing.
As to the idea that Apple was "trying to run the kindle out of business", that's an allegation that is true of every instance of competition. If someone prices an android tablet that is competitive with the iPad feature-wise at half the iPad's price, that's "trying to run the iPad out of business" as well. It is what you're doing when you compete for sales, you want all of them to go to you and none to your competitor.