Connecticut AG To Grill Amazon, Apple Over E-Book Price Fixing 107
suraj.sun tips news that Connecticut's Attorney General has demanded a meeting with Apple and Amazon to discuss anti-competitive pricing methods in the e-book market. From Ars:
"Richard Blumenthal says that he wants representatives from both on-line giants in his office ASAP to discuss what Blumenthal calls their 'most favored nation' arrangements with big book companies like Macmillan and Simon & Schuster. The crux of the MFN concept is that a given product maker must offer a given distributor the lowest price it's offering anyone. If a competing distributor gets a price break, they get it too. 'The net effect is fairly obvious,' Blumenthal warned in his letter to Amazon (PDF), 'in that MFNs will reduce the publisher's incentive to offer a discount to Amazon if it would have to offer the same discount to Apple, leading to the establishment of a price floor for e-books offered by the publisher.'"
Re:Zero cost copying (Score:5, Insightful)
Amazon? (Score:4, Insightful)
Didn't Amazon just hand over its right to price many new releases to the publishers? I seem to remember Amazon wanting to charge $10 for a new (only in hardcover) release, but the publishers forcing them to increase the price or not carry the books. Of course, that doesn't say anything about cheaper books that are out in paperback...
AUGH (Score:5, Insightful)
Fucking e-books. Why does it cost more to buy an e-book than it does to buy a dead-tree paperback? wtf?
I absolutely adore my nook, but it's filled with public works and books that have been gifted to me...I refuse to pay $10 for a digital copy of a book.
Re:Zero cost copying (Score:3, Insightful)
Think of Amazon and Apple acting as agents for the consumer - they collect all the buying power of the individual consumers and use that to get the publishers/manufacturers to get their pricing down.
I fail to see what the problem is - it is two entities voluntarily agreeing to certain terms (and please don't tell me it is not voluntary - unless someone holds a gun to your head, it is voluntary).
I don't get it. (Score:4, Insightful)
Aren't e-books selling at levels competitive with physical books?
Aren't they luxury items in the first place?
If the previous two points are true as I believe, it seems kind of silly that the best use of the Connecticut AG's time is making sure people aren't overpaying a few bucks for items they're obviously already comfortable purchasing at that price.
I would rather see a legal investigation into Amazon's and Apple's patent tactics and such. Their portfolios and legal strategies likely cause many more customers of many other companies to overpay many more total dollars for zero value.
But who the fuck am I?
Grandstanding (Score:4, Insightful)
This is just grandstanding by a politician running for office. Neither Amazon nor Apple are headquartered in Connecticut, which makes the appropriate action for this state AG to make a filing to the FTC.
Except, of course, filing with the FTC just doesn't sound as exciting to voters.
Re:Zero cost copying (Score:2, Insightful)
That's not an accurate description... These MFN clauses actually say "We, the retailer, will pay you, the publisher, $4.99 per book, and if you make an arrangement with a different retailer where they pay you less than $4.99 per book, then we want that price as well."
I don't see how this is the determining factor for 'price fixing' since any retailer is still free to sell at a lose. Also, without this the publishers would probably intentionally favor new retailers to fragment the retail market, and probably to open the way to go into direct sales themselves, which would be beneficial to them, but not necessarily to consumers.
Re:Zero cost copying (Score:4, Insightful)
This makes no sense to me.
If I want to sell my books to amazon for $5 while charging $6 to everyone else, why does it matter? Why is the Government's General Attorney interfering with these transaction that only involves two people (me and the amazon rep)? This looks to me like some guy who has too much time on his hands, or is possible looking for an issue to hang his reelection campaign upon.
Note that this is different from the price-fixing that CD companies were doing - forcing stores like Kmart and Walmart to raise prices from $9 to $12 minimum. That could be argued to be Damaging the consumer, and was found to be an illegal cartel (record companies acting as one unit).
That doesn't hold (Score:5, Insightful)
it seems kind of silly that the best use of the Connecticut AG's time is making sure people aren't overpaying a few bucks for items they're obviously already comfortable purchasing at that price.
By that logic, there's never been a damaging monopoly at all - after all, by definition, all the customers are comfortable paying the price charged or they wouldn't be customers, right?
How companies set "high" prices... (Score:2, Insightful)
Traditional books cost about $25+ for new hardback and about $8+ for paperbacks. This price includes the cost of materials which were claimed for many years to be a large chunk of the cost. But companies don't use "cost plus" to price things, where "plus" is some arbitrary profit to make over the cost. Companies, now, figure out the MAX people are willing to pay over cost. If it cost $1.00 to produce an ebook, but you're willing to pay $14, you are WILLINGLY paying 1400% markup; that's 1300% profit.
Companies aren't as interested in making a valuable product as they're interested in taking the MAX amount of money from you. This also means, power is in the hands of consumers. If you want the price to come down on "over priced," inexpensive to produce goods with relatively high profit margins, don't buy them unless they are at a price you feel they're worth. Yes, some instant gratification will have to put aside.
More on point, if consumers send the message to Apple, Amazon, Random House et. al. that they won't pay "high" prices for ebooks, then prices will drop across the board regardless of what distributors are charged.
Since when has they ability to more more product and therefore demand a lower price from a supplier been illegal?
Re:AUGH (Score:3, Insightful)
People tend to forget that with capitalism end user sale price has ABSOLUTELY NOTHING to do with manufacturing cost--it is exclusively related to what people will pay for a product, nothing else (Except, in a few cases, government control).
If someone figured out how to make a home for $45.76 using nanotech or something they will still be able to sell it for $400,000 or $4M as long as someone will pay for it.
This is what makes monopolies so dangerous and government oversight so important.