Seeking Alpha

District Judge Denise Cote yesterday approved an antitrust settlement in which major publishers...

District Judge Denise Cote yesterday approved an antitrust settlement in which major publishers - Lagardere's Hachette, CBS's (CBS) Simon & Schuster and News Corp.'s (NWS) HarperCollins - agreed to end alleged price-fixing e-book deals with Apple (AAPL). It's a major win for Amazon (AMZN), while Pearson's (PSO) Penguin, Macmillan and Apple are going to take their chances in a trial.
Comments (5)
  • reid3844
    , contributor
    Comments (41) | Send Message
     
    I am not sure I like the business model where Apple sets the price for other people's work. Soon, book readers and iPads will be indistinguishable, and Apple will have no claim to the market. There are only so many innovations one needs to read although I am surprised Apple has not tried to patent the rectangular page.
    7 Sep 2012, 10:09 AM Reply Like
  • losbronces
    , contributor
    Comments (617) | Send Message
     
    This is good news. No reason that I should pay the same for an e-book as for a hard-bound book.

     

    7 Sep 2012, 10:38 AM Reply Like
  • robertcschwab
    , contributor
    Comments (4) | Send Message
     
    To me this was very upsetting and I understand that AMZN may have had a monopoly position but that was honorable for consumers. It didn't serve APPL well to be behind a scheme to screw consumers. I was long on AAPL and I am a not so proud owner of a Macbook pro 17" that can't support Mountain Lion and a G5 Mac Pro that won't support Snow Leopard and a Lion Mac Mini Server! I might not get the Macbook Pro 15" retina and solid state for $3700.
    10 Sep 2012, 02:22 AM Reply Like
  • TrevorJ
    , contributor
    Comment (1) | Send Message
     
    To reid3844:
    >the business model where Apple sets the price for other people's work

     

    Apple NEVER did. Apple's contract places no price restrictions on me. It's Amazon that is doing this, but by subterfuge.

     

    As a publisher, I greatly prefer Apple's model. Its foundation is that it allows ME, the publisher, to set the suggested retail price, and have discounts when I want. All that is happening for publishers is that electronic distribution both cuts out the costs of printing and the costs of physical wholesaling and distribution. Apple simply acts as a delivery service for me, taking a much smaller cut of the retail price than does physical distribution process. Yes, the result is that I do sell my ebooks for less than physical copies (Apple recommends about half of the hardback price), but the prices to which Amazon wants to bring the market mean that, as a non-fiction publisher, I'd lose my shirt using Amazon's model. From my point of view, it's as though Amazon wants to force retail prices down as a loss-leader to gain market share; this coming at the price of killing even a meagre profit for the publisher.

     

    Amazon has done a great job of persuading the public that it's on the side of the reader, but it's just sleight of hand.

     

    Amazon allows me to use the same payment model as Apple's, but they do so at the cost to me of a HUGE chunk of my cut of the price. Amazon makes that so expensive to me in percentage terms and gross price that it's really just a way for Amazon to make me choose their other type of contract and for them set the price of books. A similar situation exists with Kobo, which limits the retail price of books to $12.99.

     

    If one has written a non-fiction work, for example, recouping one's costs is almost impossible, that way.

     

    The end result is that Amazon both captures a huge share of the market, but, more importantly in the long run, Amazon creates a distorted expectation of low prices in the minds of consumers. Anyone who has to do months to years of research to write a book will NEVER break even under those circumstances. Eventually, the entire publishing industry will break, because nobody will be able to write non-fiction. Amazon will have taken most of the market and profits, while dumbing-down the available library. This is not a sustainable situation.

     

    It's truly distressing to see Amazon's strategy at work; and how well it has been working. It is working to the point that you wrote, incorrectly, that "Apple sets the price for other people's work." I suppose the old aphorism applies: Don't believe everything you read....

     

    :-/
    19 Sep 2012, 07:23 AM Reply Like
  • reid3844
    , contributor
    Comments (41) | Send Message
     
    Trevor,
    Thank you for your comments. I recently finished reading “A Splendid Exchange” by Bernstein, a book I cannot recommend enough, about the history of trade. It must have taken him years to finish it. The idea of it being priced out of existence makes me shudder. I hope to have the time someday to write my own non-fiction books – if there is any reward left for doing so. Good luck.
    4 Oct 2012, 09:38 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|