What about the publishers?
tokyogai
3/13/2012 9:14:44 AM
OK, so maybe Apple overstepped a bit here, but what about the publishers? Why are they charging more for eBooks? They are MUCH cheaper to produce and the margins have to be sky high- no inventory to deal with, no returns, very low production costs, etc. How have they all managed to push prices up when costs are much lower? It is not just one of them, but all of them-- looks like maybe there is something for justice to look at here as well.
Re: What about the publishers?
Phoenix
3/13/2012 9:33:18 AM
I agree tokyogai. There is something really fishy going on. We are paying for the convenience but the profit margin must be really high when compared to the printed books. I hope the DOJ looks into it.
Really? Big companies conspire to set prices? Shocking, isn't it?
Re: What about the publishers?
Value Hiker
3/13/2012 12:08:07 PM
Apple's deal with publishers (not one of them, but the association of publishers) is a typical case of price fixing. It is not only unethnical, but also illegal. I am glad that DOJ finally decided to do something right.
It is common sense that ebook shall cost much less comparing to phsical books, just like digital music costs much less than CD. But it does not happen. The reason is the same why diamond costs so much while we all know it is just a piece of stone.
De Beers once controlled the world's 90% raw diamonds supply through price-fixing with smaller manufacturers and vendors. During WWII, De Beers tried to cut a deal with US government. It promised to provide the industrial diamond cheaply in return for immunity from anti-trust prosecution after the war. DOJ rejected the deal and suited the De Beers, but De Beers got away because it has no presence on US soil.
Apple did the right thing to force the media company selling music at right price. But Steve Jobs decided to entice the e-book pulishers joining the Apple camp by providing the price-fixing. The deal not only hurt the Amazon, but also the consumers in general.
Re: What about the publishers?
TelecomFreq
3/13/2012 3:42:13 PM
Though I agree this is a big problem and I am also glad the DOJ is doing something about it, I can not see Apple getting any more then a slap on the wrist, Thats how these deals always shake down.
Re: What about the publishers?
cat tail
3/13/2012 3:57:55 PM
You're right, TelecomFreq. There's never any major penalties--just some nomimal fine.
Re: What about the publishers?
TelecomFreq
3/13/2012 4:06:19 PM
When a company has as much in the bank as Apple, it will take more than a little fine to change the way they do business.
TelecomFreq,
Agreed. They will settle, write a check, change things a bit but not enough to change the fact that they print money.
Re: What about the publishers?
TelecomFreq
3/14/2012 11:45:28 AM
They prob dont even need to write a check, they could just pay out of pocket cash. If it were a smaller company something like this could crush them, but to Apple they wont even notice it, the punishment should be scalled so its felt.
Re: What about the publishers?
AskAsa
3/18/2012 12:52:53 AM
And that's why they do it, right? It's a calculated gamble. Maybe they'll get caught. Maybe they won't. But even if they do get caught, they can easily take the hit. No pain, no gain.
Re: What about the publishers?
cat tail
3/19/2012 12:16:07 AM
Maybe the reason publishing houses want to deal with these pricing issues is because they all saw what happened to the music industry when digital distribution essentially robbed the record labels of their power and control.
Re: What about the publishers?
Dex
3/13/2012 3:42:38 PM
I agree, @Value Hiker. Apple thinks a lot less differently than it wants us to believe.
Re: What about the publishers?
chapAnjou
3/19/2012 12:35:27 PM
@Dex & @Value Hiker, I agree with both of you. The reason I am such an opponent of Apple is because they behave as a cutthroat corporate entity but have this public persona of "giving you things that make you enjoy the beauty of life".
I'm not naive enough to think that Apple is the only company that does anything along these lines, but that doesn't make it any less disgusting to witness.
chapAnjou,
Apple gets consumers excited about products. Isn't that what they're supposed to do?
Re: What about the publishers?
chapAnjou
3/20/2012 9:20:13 AM
Scott,
Yes, that's what they're supposed to do (and boy are they good at that), but that's not what my problem with them is. My problem is that they've positioned themselves as a company that offer these sleek, "life altering" products but, as a company, they run themselves like any other sleazy corporation. Remember the whole iPhone4 debacle when they denied there were any issues with the phones? And then (while still denying there was an issue), telling people that they're holding their phones wrong? haha
I say WHY NOT... The government seems to 'look into' all companies that get this size for one reason or another. They might as well follow suit and make it someone other than Google so it does not seem to get too lopsided.
Cost
AskAsa
3/13/2012 10:56:32 PM
I'm sure Apple and many of the others view these penalties and legal costs as part of the price of doing business.
I think its kind of upsetting when penalties do not change behavior they are just part of business. Why have laws and policy in place if they dont mean anything...
Re: Cost
driven
3/14/2012 11:20:19 AM
Make the penalty fit the crime: if Apple is found guilty of something, make several senior execs work at Foxconn for a month, just like the other employees, no special perks. That would be justice.
Lots of things Apple does smell like monopoly, what's interesting is that they never really got called out for trashing the music industry.
Price fixing or not, people love these tablets. Tablet shipments grew so strongly in the fourth quarter for both the iPad and the Kindle Fire that research firm IDC has upped its 2012 sales estimates, predicting 18 million more unit sales than it had earlier projected. Globally, fourth-quarter shipments soared more than 50% from the previous period. Apple held a 55% share of the market, compared with 16.8% for Amazon. (Source: CNET/Nanotech blog)
Repercussions? So what?
chapAnjou
3/19/2012 12:29:50 PM
"Apple and the five publishing firms have reportedly entered talks with the DOJ to avoid a threatened antitrust lawsuit. Should the agency model be deemed a trust, e-book prices are expected to decline as retailers and publishers are forced to restructure deals."
Great article as usual, Joey.
I pulled the above quote because it got me thinking about actions and consequences as they pertain to businesses. Let's say the agency model is deemed a trust and apple has to make some kind of reparations...I don't think that would affect Apple in the slightest. They still positioned themselves in the eyes of the public as "the place to go for cheap eBooks". This foothold on an emerging industry isn't something the DOJ can just wave a wand and watch disappear.
In a letter to the Senate Committee on Antitrust, Competition Policy and Consumer Protection the Consumer Federation of America charged that the e-book price-fixing arrangement, entered into by five major book publishers and Apple, is an anticompetitive practice that violates antitrust laws and will cost consumers over $200 million this year. It called on the Committee to look into the issue and support vigorous steps by the Department of Justice to eliminate the practice.
The letter rejects the claims by publishers and celebrity authors that new books and unknown authors can only be discovered by browsing the shelves of book stores and that setting high prices for e-books, to subsidize physical book distribution, is the only way to ensure there will be enough physical space shelves. The letter points out that in the digital age there is a much more efficient way for browsers to examine many more books and authors. They can use Internet browsers to search in cyberspace, where they can find not only all the works available from publishers, but hundreds of thousands of authors who have chosen to cut out the publishers as middlemen and sell directly to the public.
The blogs and comments posted on Investor Uprising do not reflect the views of Investor Uprising, PRNewswire, or its sponsors. Investor Uprising, PRNewswire, and its sponsors do not assume responsibility for any comments, claims, or opinions made by authors and bloggers. They are no substitute for your own research and should not be relied upon for trading or any other purpose.
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