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Reuters reports that Apple and several major publishers have agreed to offer concessions in an ongoing European Union antitrust investigation over alleged e-book price fixing. The concessions would significantly unravel the Apple-backed agency model of book pricing in which publishers set the retail prices for their content with distributors such as Apple and Amazon receiving a fixed percentage of the sales price.
Apple and four major publishers have offered to allow retailers such as Amazon to sell e-books at a discount for two years in a bid to end an EU antitrust investigation and stave off possible fines, a person familiar with the matter said on Friday. [...]
The Commission was now sounding out opinions from the industry as to whether the concessions are sufficient, the person familiar with the matter said, before a formal market test which could lead to the investigation being dropped.
News of Apple's willingness to make concessions in Europe comes just two days after a group of publishers agreed to a $69 million settlement in the United States over the same issue. The U.S. Department of Justice sued Apple and five publishers back in April, and while three of the publishers elected to settle the case, Apple and the other two publishers have been fighting the charges.
Regulators have claimed that the shift to the agency model amounted to price collusion facilitated by Apple and the publishers, sparking the antitrust concerns. For its part, Apple has cited that the implementation of the agency model has had the opposite effect, weakening Amazon's previously overwhelming position at the top of the market gained by selling books at deep discounts to entice customers to visit the online store and purchase other products and content.
Top Rated Comments
Yes ... the agency model must be stopped ... because if I am a content owner, I shouldn't be able to set my price for my content.
You've missed the point entirely of this investigation by the EU.This hardly qualifies as worthy of anti-trust ... just some pissed off folks who whine because the latest blockbuster isn't going for $10. Cheap bastards.
With physical books (and eBooks until the Agency model was introduced), Amazon etc would buy books/eBooks in bulk at the wholesale price agreed by the publisher. Amazon could then in turn sell the books for as much or as little as it liked, but the publisher still got paid their wholesale price.
What the agency model did was stop Amazon etc selling books for whatever price they wanted and instead imposed a price on the end-customer, with Amazon/Apple receiving a fee in return for each sale.
It's blatant price-fixing, it has artificially inflated eBook prices and it should be stopped. I hope the EU hits them with everything they've got, because price fixing in every other industry is illegal because it's anti-consumer.
Amazon did that in response to the Apple deal, to avoid adopting the agency model. You've got the arrow of time (and causality) backwards.
It's the second time he's done that this week....
The collusion was necessary. Amazon had a nasty habit of punishing individual publishers who wouldn't play ball in e-books by yanking their paperback and hardback books as well
Amazon did that in response to the Apple deal, to avoid adopting the agency model. You've got the arrow of time (and causality) backwards.
You've missed the point entirely of this investigation by the EU.
With physical books (and eBooks until the Agency model was introduced), Amazon etc would buy books/eBooks in bulk at the wholesale price agreed by the publisher. Amazon could then in turn sell the books for as much or as little as it liked, but the publisher still got paid their wholesale price.
What the agency model did was stop Amazon etc selling books for whatever price they wanted and instead imposed a price on the end-customer, with Amazon/Apple receiving a fee in return for each sale.
It's blatant price-fixing, it has artificially inflated eBook prices and it should be stopped. I hope the EU hits them with everything they've got, because price fixing in every other industry is illegal because it's anti-consumer.
Sums it up beautifully.
Except Amazon was consistently selling for such a deep discount that it was nearly impossible for any competitor that wasn't selling in such volume across such a wide range of products (i.e., any competitor) was unable to compete and thus Amazon had the market to themselves. Which gave Amazon the ability to dictate terms to the publishers and eventually set whatever price they wanted.
The Most Favored Nation clause was needed at the time because without it, Amazon both had the market strength and willingness to use it to regain control of the market ("You want agency pricing? OK, you sell to us for 20% less or your books are no longer for sale by us. Any books. e-Books, hardbacks, paperbacks") Things have changed and it probably should be dumped by now.
I can't imagine the concessions being accepted, particularly the two year limit on discounting. No time limit but "can discount up to 20%" might fly.
Seems some people are OK with Apple having all the cake at the party but other companies are wrong from trying to do the same.
I was under the impression that the iBook publishing terms banned publishers from selling their ebooks at a lower price anywhere else, giving Apple a contractually-obligated price advantage over everyone. Given that the agreement was made with pretty much every major publisher, that's rather more harmful than shifting to the agency model would have been on its own.
Amazon's price scraping is ruining the market. That doesn't mean that the other extreme is acceptable.
Yes, the Apple agreement has a 'most favored nation' clause. That doesn't give them a pricing *advantage*, though. It simply prevents them from having a pricing *disadvantage*.
Allowed:
Apple: $5
Amazon: $5
Joe's Book Shop: $5
Disallowed:
Apple: $6
Amazon: $6
Joe's Book Shop: $5
And, technically, a 'most favored nation' clause doesn't say "You can't sell it anywhere else for less". It says, "If you sell it anywhere else for less, you have to give us that lower price as well."