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To: Swordmaker

Assume here they are talking about identical titles carried by different e-book platforms. How do price copycats get stopped anyhow? One fellow raises his price, the others view that as an opportunity to get more as well, and no “collusion” needed.


3 posted on 10/30/2015 12:39:28 AM PDT by HiTech RedNeck (Embrace the Lion of Judah and He will roar for you and teach you to roar too. See my page.)
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To: HiTech RedNeck
Assume here they are talking about identical titles carried by different e-book platforms. How do price copycats get stopped anyhow? One fellow raises his price, the others view that as an opportunity to get more as well, and no “collusion” needed.

They aren't. During the period in question, the price of books in general actually went down overall, the only difference was that Apple entered the market that Amazon had been the monopoly share holder with a whopping 90% share, and offered a different model of sales than the current wholesaler to retailer model in which Amazon was selling ALL Best Sellers and A list titles of the publishers for 30% below wholesale price of $9.99, freezing any competitors out of the market by making the 80% bread-and-butter profitable book sales of any book seller completely unprofitable! It was how Amazon maintained their monopoly position in the book market. They claimed it was a "loss leader" so they could sell their Kindle Readers at cost. However, even the publishers themselves could not compete against the monopoly using predatory pricing that were below their wholesale cost to them and every other competitor, and no competitor could possibly stay in business without meeting Amazon's negative and profit less pricing on the 80% of the books most people buy!

When Apple looked to enter the e-book market with the introduction of their iPad in 2010, they independently approached the big publisher separately to offer them the same contract they use for app sales. The publishers would use the soon to be announced Apple Book Store, selling their titles for what they wanted with three tiers of pricing, with-in per-volume price CAPS, Apple would charge them their normal selling agent fee for service of 30%, which includes providing access to Apple's customer's who'd use the store, Apple's online payment, creditcard database with over 600 million buying customers, and Apple's online delivery systems. In other words, Apple proposed replacing the ill fitting wholesale model—in which the publishers sold X number of licenses for the book to a vender who'd then proceed to sell those e-book licenses for whatever price the vendor chooses from inventory until they were depleted and then order more—with an agency model in which the publisher retains ownership of the licenses to the e-books and sells directly through Apple's Book store themselves at a retail price the publisher selects, paying an agency fee, or commission, to Apple for access to Apple's services and store. Apple also required that the publisher not permit any competitor to sell the same title at a lower price than they offered the title to Apple's customers.

None of what Apple did was at all illegal. In fact, it was perfectly legal. the DOJ claims however that the results of Apple's perfectly legal acts was somehow illegal because some prices went up, even though the overwhelming evidence is that the only reason those prices were artificially low in the first place was because of arguably market damaging anti-competitive actions by the monopolist market leader keeping them low which had the effect, regardless of the stated reason, of preventing entry of any viable competition. (Amazingly, Judge Côte accepted the DOJ's claim that couldn't possibly be true because Apple had indeed entered the market. . . ignoring the inconvenient facts that 1) Apple, unlike your average startup e-book seller had almost a hundred billion dollars in cash backing such a venture, 2) they were now in the process of slapping Apple down for daring to make the market profitable for competition, 3) the publishers had capitulated under threat of prosecution because they did not have deep enough pockets to defend themselves, and were unable themselves to compete in their own market with a product THEY produced and still make a profit (!), and 4) other e-book marketers who'd tried it were not able to compete except in niche markets which refused to allow Amazon to sell their e-books. So they used the fact that Apple had "successfully entered the e-book market as proof that Amazon was not using predatory pricing to keep competition out, as they were prosecuting Apple for offering a way to fascilitate those price changes that allowed Apple to actually successfully enter the market, which they claim were not keeping competitors out in a case instigated by the company which had been using its artificially low pricing, fighting to maintain its control of the market and keep competition out. Right, logical. )

There was no collusion, no "secret meetings" of Apple and all of the publishers as Judge Côte created in her own mind to convict Apple of being a "ring leader" in a "price setting conspiracy." The only monopolist involved was Amazon, with its predatory pricing on the only e-books that really mattered, the best sellers and the A list books. . . and it was Amazon that filed the complaint claiming Apple and the publisher committed illegal price fixing, despite evidence that overall e-book prices went DOWN and that competition was increased after Apple entered the market!

11 posted on 10/30/2015 9:30:00 AM PDT by Swordmaker ( This tag line is a Microsoft insult free zone... but if the insults to Mac users continue...)
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