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Connecticut AG To Grill Amazon, Apple Over E-Book Price Fixing 107

Posted by Soulskill
from the jig-is-up dept.
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.'"
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Connecticut AG To Grill Amazon, Apple Over E-Book Price Fixing

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  • Zero cost copying (Score:5, Interesting)

    by FriendlyLurker (50431) on Tuesday August 03, 2010 @11:45AM (#33124476)
    Of course ebook prices are fixed (amoungst other digital "goods") - how the hell do you price something that can be copied infinitely at next to zero cost? And therein lies the problem...
    • by FooAtWFU (699187) on Tuesday August 03, 2010 @11:48AM (#33124564) Homepage
      It's one thing to say "This book will cost $14.99 from our store." It's quite another to say "All the books we sell will be $14.99, and if you let us sell your book you're not allowed to sell this book anywhere else for cheaper."
      • Re:Zero cost copying (Score:5, Informative)

        by AHuxley (892839) on Tuesday August 03, 2010 @11:55AM (#33124664) Homepage Journal
        http://en.wikipedia.org/wiki/Lysine_price-fixing_conspiracy [wikipedia.org] should give some insight into the cartel issue and why it needs to be fixed.
      • Re: (Score:3, Interesting)

        by MBGMorden (803437)

        I don't see where this would help though. Apple and Amazon - being the giants of this particular industry, would logically be able to negotiate the lowest prices anyways. I don't see how this will affect much. Now if "Joe's Online Bookshop" had managed to negotiate this type of thing, it might be a different story. As it is, its about like complaining that Wal-mart made an arrangement with Rubbermaid so that they had to have the lowest cost on their stuff. IE - just a contractually enforced status quo.

        • Re: (Score:3, Interesting)

          by evilbessie (873633)
          But that is a monopoly, why would anyone look anywhere else if they know the best deals are always at Amazon? Small online retailers can't offer special discounts or offers if they are not allowed to sell below the Amazon/Apple floor, you don't get effective competition hence why it needs to be looked into.
        • by cgenman (325138)

          Collusion. Apple, Amazon, (and presumably the Nook) normally have to compete with each other, trying to out-price one another. If Apple negotiates a special "vampire sale" with a publisher to co-incide with the next Twilight movie release, suddenly everyone gets books at that rate. That kills any competitive edge Apple might gain from the lowered costs, and therefore the price floor is prevented from drifting downwards. Everyone maintains the same prices at the same levels.

          Basically, this is an indirect

        • by camperslo (704715)

          I don't see where this would help though. Apple and Amazon - being the giants of this particular industry, would logically be able to negotiate the lowest prices anyways

          Perhaps we're looking at the wrong model for profit.
          If their cut is a percentage, it is bigger when the retail price is higher.

          Of course the authors could be well paid even with prices well below paperback since there's no printing, shipping, and fewer in the middle. A huge factor that's not mentioned much is the lower risks for the publish

          • by MBGMorden (803437)

            Perhaps we're looking at the wrong model for profit.
            If their cut is a percentage, it is bigger when the retail price is higher.

            Higher price typically tends to drive customers elsewhere though. Big retailers like Amazon, Wal-mart, etc typically have very low prices because they make it up in volume. A huge retailer or online shop doing a million dollars per day in revenue can survive easily on a 2-3% profit margin. A small store doing only a few thousand dollars per day? They're going to need a 10-15% profit margin to survive (and even then with higher prices, they're still making far less total profit).

            It's a weird chicken and

      • Re: (Score:3, Insightful)

        by homer_s (799572)
        The govt. already does this (see the lawsuit against Oracle); so do plenty of companies.

        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).
        • by Cytotoxic (245301)

          The govt. already does this (see the lawsuit against Oracle); so do plenty of companies.

          This was my first thought as well. This article following right on the heels of the announcement of the Oracle suite shows the completely schizophrenic nature of our government and the law. Oracle is being prosecuted for not doing exactly the same thing that Amazon/Apple are (potentially) being prosecuted for doing. Really bizarre stuff.

        • by T Murphy (1054674)
          The issue is price fixing, from a selling standpoint. The government is buying stuff to use, and makes no profit from the purchases. Amazon and Apple, on the other hand, want lowest prices in order to maximize profits when they turn around and sell the product. IANAL, but I assume if Amazon signed a MFN agreement with Dell when purchasing computers for internal use (not sale), it would be legal.

          The voluntary part of the agreement has nothing to do with it- cartels are often voluntary, and although indire
      • Re: (Score:2, Insightful)

        by Anonymous Coward

        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

      • by commodore64_love (1445365) on Tuesday August 03, 2010 @12:18PM (#33125036) Journal

        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).

        • Re: (Score:3, Informative)

          by bloobloo (957543)

          Most Favoured Customer clauses are well known in economics to be a sign of a cartel.

          Most-Favored-Customer Pricing and Tacit Collusion
          Thomas E. Cooper
          The RAND Journal of Economics, Vol. 17, No. 3 (Autumn, 1986), pp. 377-388

          Abstract:

          This article examines the role of the most-favored-customer pricing policy as a practice facilitating coordination in a dynamic model of price-setting duopoly. This policy is a promise by a firm that if it later lowers price, it will rebate to current customers the difference betw

        • by Garwulf (708651)

          The problem is that the scenario would be a bit closer to this:

          Amazon: We want you to give us the lowest price on your e-book.

          You: Okay, I can do that.

          Amazon: Oh, and by the way, if you don't sign an agreement saying that we will always get the lowest price, we're not going to carry your e-book.

          You: Um...

          Amazon: And if you ever give somebody a lower discount than we're getting anytime in the future, you had better give us that discount too, or we'll de-list your e-book and nail you for breach of contract.

          Yo

    • The original production cost is however definitely non-zero and there may very well be a minimum per copy royalty split between the publisher and author which applies to each transaction.

      Copies sold to "book clubs" and such are often contracted at lower royalty rates, however, I highly doubt that Amazon or Apple should count as anything other than retail.

      • by Coren22 (1625475)

        Unfortunately, from what I have read, authors receive the effective royalty of 1 book from all the ebook sales. This is crazy, but as there is one original copy, this is how the publishers feel it should be handled.

        • Unfortunately, from what I have read, authors receive the effective royalty of 1 book from all the ebook sales. This is crazy, but as there is one original copy, this is how the publishers feel it should be handled.

          You are mistaken.

          Authors receive a royalty check based on number of eBooks sold every so often from the publishers that cover eBook sales. I'm not sure what "average" is for such royalty checks, but the two or three I've seen mentioned in various places were in the hundreds of dollars (and this

    • by poetmatt (793785)

      that's not a problem, it's called reality. The cost the ebook itself is zero.

      The issue is that price and value are separate entities, and while the price might be zero, finding ways to increase the value of the ebook might make the price more acceptable. Have publishers done this for 99.9% of the books that are out there? Hell no.

      • by cgenman (325138)

        The iterative price is near zero. The initial unit price may be a million dollars.

      • The cost the ebook itself is zero.

        The marginal cost to produce an individual copy may be zero; the cost of the ebook is, however, not just the marginal cost to produce a copy, its the fixed costs of producing the title divided by the number of copies sold plus the marginal cost of the copy.

    • by DrXym (126579)
      Of course ebook prices are fixed (amoungst other digital "goods") - how the hell do you price something that can be copied infinitely at next to zero cost? And therein lies the problem...

      With DRM which ebook providers virtually all already use. The only reason price fixing happens (as it more less is now) is because content providers and stores are allowed to get away with it. It's a cartel in all but name through a series of interdependent contracts that mean that Amazon, Apple can never be undercut whic

      • No. In the short term, there must be MORE DRM systems for ebooks. Every tom dick and harry setting up an ebook store must have their own separate DRM system that works with some hardware, not with others, and may or may not have an app for MacOS X, Windows and/or Linux.

        That way, consumers wind up getting frustrated with DRM'ed ebooks, and start looking for and demanding DRM-free ebooks.

        The movie industry kind of learned to avoid this by their online experimentation [ie, Walmart's clusterfuck, the multitud

    • That's hardly the problem since the authoring of the book to begin iwth has a cost. I imagine a lot of authors don't exactly do this for free. Add to that the royalties (if any) the author gets for copies sold, and the fact that the publisher also has employees to pay all sorts of overhead and a motivation to make a profit then yes while making copies might be next to zero there still is all sorts of other costs to take care of.

      • Here's a very informed look at the costs of digital publication and distribution [bookbrunch.co.uk].

        Basically, there's a lot of costs that go into publishing a book that have nothing to do with paper or warehouses (both of which are a lot less expensive than we think they are).

        Also, the value of an e-book simply must be placed higher than the value of a digital song, based solely on the compensation needs of the artist: how many books can an author be reasonably expected to produce in a year, versus how many songs can a sing

        • by Omestes (471991)

          Higher than a dollar yes, lower than $14.99 though. And with digital publishing the cost should diminish over time, since the constant costs are pretty much non-existent.

          My main problem with the publishers (I almost mistakenly typed "punishers") is the fact that most of the price goes to them, and not the only person that really matters; the author. This is an issue I have with pretty much all of digital media, be it books or music, it seems to be nothing more than an excuse to hurt authors/musicians more

          • How much do you think an author should be paid, net profit, for each of his books acquired and/or read by a consumer?

            • Re: (Score:3, Interesting)

              by Omestes (471991)

              No clue. But, actual productions costs willing, I'd say at least 50% of the profits, with the rest divided between the various other parties (publisher, retailer, and whoever latches on). The author should get more than anyone else, since without them the rest would languish and die.

              I really have no clue though, since I'm not involved in the industry, and don't know the full break down of the costs of publishing various versions of media.

              In short: more.

              I do find it odd that digital copies cost less to pro

              • The author should get more than anyone else, since without them the rest would languish and die.
                 
                Primary producers seem to get the short end a lot. The most common example being farmers -- where would middlemen like Cargill be without farmers? But who's making the big bucks on grain shipments? (Hint: Not the farmers.)

    • Of course ebook prices are fixed (amoungst other digital "goods") - how the hell do you price something that can be copied infinitely at next to zero cost?

      Regardless of the cost of copying (either to yourself or to others), you price it at the point that your market estimates say that the expected sales times the sale price will maximize (price * total sales) minus (fixed costs plus (per-unit costs times total sales)).

      Low cost of illegal copying probably makes expected sales fall off more sharply with pric

    • by mcgrew (92797) *

      That's not what "price fixing" means. Price Fixing is when you have three gas stations in town, and the owners agree to keep the same prices and not compete on price. They can all charge ripoff prices, just the same ripoff price each. This is illegal, and is wrong as well.

    • Re: (Score:3, Informative)

      by SailorSpork (1080153)

      What you are talking about not "fixed prices," but "fixed costs." The cost of any good sold has a fixed cost and a variable cost, and technically an eBook has very low variable costs (in this case, mostly distribution) but similar fixed costs to deadwood (editing time, design/typography, etc).

      Price fixing [wikipedia.org], on the other hand, is two companies joining forces to set prices in a market to maximize sales dollars or price out competition unfairly. The wikipedia link is a great reference on that.

  • Amazon? (Score:4, Insightful)

    by MozeeToby (1163751) on Tuesday August 03, 2010 @11:56AM (#33124684)

    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...

    • Re: (Score:2, Informative)

      Yes. And the reason the publishers forced the increase in prices was because of their contracts with apple. The mfn plays into it, but amazon was also forced to go to the agency model because apple said the other vendors couldn't sell to anyone else unless it was through the agency model if they wanted to do business with apple.

  • AUGH (Score:5, Insightful)

    by Pojut (1027544) on Tuesday August 03, 2010 @11:58AM (#33124726) Homepage

    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.

    • by MaWeiTao (908546)

      I agree with you in principle. It's one of the reasons I haven't gotten an e-reader despite having considering getting one.

      That said, the printing costs are almost certain marginal at best, for paperbacks in particular. It's single color requiring a bare minimum of print management; they just have to ensure the content is pretty much centered on the page. It's also printed on the cheapest paper stock available; it's probably a step above newsprint. A good portion of the printing expense probably goes to the

    • Re: (Score:3, Insightful)

      by bill_kress (99356)

      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.

    • by radish (98371)

      Can you give examples? I have a Kindle and while I don't buy a lot of books for it (to be honest I just don't read as much as some people) I don't recall them being overly expensive. I just checked on Amazon, and picking 5 books entirely at random none were more expensive that Amazon's paperback price (note that third party sellers may have it for less but then charge shipping). Now this is obviously fairly new mass market books - maybe it's different for older or more niche titles?

  • I don't get it. (Score:4, Insightful)

    by Spazntwich (208070) on Tuesday August 03, 2010 @12:11PM (#33124948)

    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?

    • by cgenman (325138)

      It's probably best to nip anticompetitive, anti-market practices in the butt before entrenching bad practices and killing the possibility of a genuine marketplace. And e-book sales have the potential for a lot of anti-market practices.

      The Connecticut AG is specifically asking them to come in and talk about it, and convince him / her that it is an OK practice. He's not pressing charges or forcing a breakup or anything. This seems reasonable.

      • by mcgrew (92797) *

        It's probably best to nip anticompetitive, anti-market practices in the butt

        Thank you for that; it was amusing. If it wasn't on purpose, the phrase is "nip it in the bud; prune a branch when it is still a bud before it grows into a branch.

        If there's collusion between Apple and Amazon, then both need to be slapped hard (or have their butts nipped).

    • That doesn't hold (Score:5, Insightful)

      by Mr. Underbridge (666784) on Tuesday August 03, 2010 @12:35PM (#33125322)

      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?

      • by TheSync (5291)

        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?

        Exactly, the concept of a "damaging monopoly" is BS, and the truth is that if you examine most successful anti-trust operations (Standard Oil, ALCOA, etc.) , they have been against companies that have dramatically reduced costs for consumers or provided them incredible value, but made their competition angry because they were

        • the truth is that if you examine most successful anti-trust operations (Standard Oil, ALCOA, etc.) , they have been against companies that have dramatically reduced costs for consumers or provided them incredible value, but made their competition angry because they were beating them.

          I'd love to see analysis of that. The rules are that you can't use a monopoly in one area to undercut your competition in another area. That's damaging simply on face. If those guys hadn't been doing that, they wouldn't hav

          • by TheSync (5291)

            The rules are that you can't use a monopoly in one area to undercut your competition in another area. That's damaging simply on face.

            How is it "damaging to the consumer" if it is lowering the cost to consumers (which is what "undercutting" is)? If so, hurt me more, please!

            It may be damaging to other businesses, but that's competition.

    • Aren't e-books selling at levels competitive with physical books?

      No a single vendor, Amazon.com -- who sells exclusively by internet -- is selling as many ebooks as they are selling hardbacks (not physical books in total.)

      That is very far from ebooks selling as well as physical books overall in the market.

      • Ah that makes sense.

        I'm still kind of surprised by those sales numbers from what I've seen of pricing. I would have figured prices at or greater than paperback + cost of a reader would keep their sales figures laughably low. But then I suppose we've already established my lack of future prospects in the e-books market.

        • I would have figured prices at or greater than paperback + cost of a reader would keep their sales figures laughably low.

          Not all books for which electronic versions are available -- particularly new releases -- even have a paperback version, so often the relevant cost comparison is to the cost of hardbacks, where the cost of ebooks is favorable, and the cost of the ereader device compares fairly favorably to the cost of bookshelves (especially if you consider the value of the space in the home, etc., in w

          • by slyrat (1143997)

            I would have figured prices at or greater than paperback + cost of a reader would keep their sales figures laughably low.

            Not all books for which electronic versions are available -- particularly new releases -- even have a paperback version, so often the relevant cost comparison is to the cost of hardbacks

            True, but there are a lot of non-hardback books out there. And having tried to shop around for ebooks it is very difficult to do so. Part of the problem with the price fixing by amazon, or any ebook seller, is that ebook stores are very exclusive. Many stores are the only place you can buy certain ebooks. This makes the price for such a book much higher. If the stores were more open and had a bigger variety of authors and didn't ever have exclusives then prices would most likely be a lot more competitive. I

    • But who the fuck am I?

      http://slashdot.org/~Spazntwich [slashdot.org]

    • Aren't they luxury items in the first place?

      How do you figure? You could make the case that a Nook or Kindle is actually a money-saving device because you can get all of Google Books or Project Gutenberg for free after paying one time for the hardware. Why does putting the content on an inexpensive electronic device convert them to luxury items? If i buy an eNewspaper, is that a luxury item too?

      • Where did I say regular books aren't also largely luxury items?

        When it comes to life, an item is either a necessity or a luxury. How many people's lives would end as a direct consequence of denying them access to e-books?

    • by meerling (1487879)
      "Aren't they luxury items in the first place?"

      IMO, no. They are simply a modern media format of an old form of data. Computers are pretty much ubiquitous in a modern 1st world nation anymore, you can even use them at your school and library. Have you hit the unemployment offices in the past few years? They only let you do the searching and stuff on computers now. (At least in this state.)
      So having your entertainment and knowledge data in a computer compliant format is pretty much expected these days.

      Besi
    • by mcgrew (92797) *

      Aren't e-books selling at levels competitive with physical books?

      No. There is negligible cost associated with e-books; kust throw it on the server. With printed books you have physical media to buy, the media has to be assembled, packaged, and shipped, yet they cost as much as real books. Books made of paper are the luxury items, not e-books.

  • Grandstanding (Score:4, Insightful)

    by unixan (800014) on Tuesday August 03, 2010 @12:11PM (#33124952)

    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: (Score:3, Interesting)

      by KevinIsOwn (618900)

      This is just grandstanding by a politician running for office.

      You can claim grandstanding all you want, but those of us from CT know that Richard Blumenthal goes up against corporations from all around the US all the time. Sometimes they get picked up by the media more than others, but this really ins't anything out of the ordinary for him.

      And you can like him or hate him for that, I'll keep this post apolitical, but this is just not unusual for him.

    • I believe Apple has retail stores located in Connecticut and I think Amazon might have some sort of presence (can't readily find anything but they could have distribution/data center there). Wouldn't the presence of these companies be enough for the AG to launch his own investigation?

      I'm not arguing your point about the grandstanding, I think you're right on target. Investigating two large companies is sure to get some media attention and some "Ooo look! He's doing his job!" from voters.
  • by SuperKendall (25149) on Tuesday August 03, 2010 @12:13PM (#33124980)

    It seems absurd to me to bring in Amazon and Apple over this, when they aren't the ones who set prices (Amazon used to).

    I don't see, at all how Apple and Amazon demanding the lowest price offered sets any kind of "floor" beyond the natural floor of the lowest price the publisher is willing to charge. The only thing it affects is the ability to charge a lower price at one vendor than another, but if that were OK how would that help the consumer? That to me would seem to be used to squeeze out a competitor and generally shrink the book market to one clear leader, who could then more easily collude with publishers to keep a higher average price for books beyond loss leaders...

    • by T Murphy (1054674)
      I don't know what negotiations are like when asking for a lower price from the supplier, but Amazon could, for example, include a guarantee to sell X books (to give the publisher greater profits than at the higher price), or give that publisher more visible placement on the website. This wouldn't be agreeable, though, as Apple would get that price without any other strings attached. In effect, such MFN clauses discourage competition.
  • I'll stop reading slashdot... how credible can a newssite be, which has a headline like THAT?
    This headline is one of the worst cases of so called "journalism" that I've ever seen in my entire life!

    I think it's only beaten by "Super-Virus kills Superman", which was the headline of the BILD Zeitung [www.bild.de] when christopher reeve died (yes, they used the phrase "kill", which is very very colloquial in germany)...
  • by ScaredOfTheMan (1063788) on Tuesday August 03, 2010 @12:40PM (#33125386)
    "Richard Blumenthal (born February 13, 1946) is an American lawyer and politician. A member of the Democratic Party, he has been Attorney General of Connecticut since 1991. He is a candidate in the 2010 U.S. Senate election for the seat currently held by Christopher Dodd.[5]"

    Nuff said.

    http://en.wikipedia.org/wiki/Richard_Blumenthal [wikipedia.org]
  • It's completely ironic that the government would prevent a corporation from requiring that if it a supplied gives a better price to another customer, it has to give the same price to that corporation. Especially since the GSA requires that any government vendor do the same thing or its a violation of the False Claims Act. So seriously, how is it that an act that hurts the consumer is good for the government?

    Politicians continually want it both ways, but this is seriously a waste of tax payers money.

    • by rickb928 (945187)

      The only difference is, the Government makes the rules any way they want to.

      And that's the only difference that matters.

  • "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.'"

    This sounds exactly like how GSA contracts work. More double standards at work here.

    http://news.slashdot.org/story/10/07/30/2051249/Justice-Department-Joins-Fraud-Lawsuit-Against-Oracle [slashdot.org]

    "Under the contract, Oracle was required to inform th

    • by T Murphy (1054674)
      As I point out in an above post, the government does not profit from the Oracle contract, they are simply using the systems (as opposed to selling them). If you can tell me who the government should be competing with, and how competition is being stifled with their Oracle contract, maybe you have a point. Until then your post is just apples to oranges.
      • Maybe I misunderstood the issue then. I thought the issue was the risk of damage to the economy and consumer as in "...leading to the establishment of a price floor for (insert product here)"
        • by T Murphy (1054674)
          You have two companies competing to sell ebooks. If they have contracts saying they get the same price on the ebooks, you get a price floor. I could see an argument for MFN clauses being allowable for products that aren't resold, as it doesn't create a price floor for consumers, but I'll leave that to the lawyers and economists to figure out.

          As for the government, it is best for the consumer (tax payer) for the government to minimize expenses. Paying for excess profits doesn't do that, so the simplest wa
          • So it still looks the same to me. Lets let buyers Apple = Government and Amazon = larger corp client, and let a book = Oracle and another book = MS SQLsever.

            The only difference is that Apple and Amazon resell what they buy, but that doesn't change the equation here with regards to the purchasing and the MFN contract causing a price floor.

            I can't get a better price from Oracle because they would then have to extend that benefit to any MFN contract holders.

            Looks to me like the government wants it both

          • BTW. What's an excess profit? Who gets to decide?
            • by T Murphy (1054674)
              Because excess profit is hard to define, MFN defines it for us. Think eminent domain (I doubt it applies, but similar logic is in play)- the government says it acts in the interest of the people, so it will pay a fair price and no more. The government isn't in a position to tell Oracle the price, so they trust Oracle to do that for them.

              Unless you want the government to waste more time and money bargaining for the best price on everything, it is a lot more simple for everyone if they just use MFN.

              The
              • So you've made my argument. If I can't buy Oracle for a better price to compete with (large company X that has a MFN tied to the GSA contract) thereby limiting competition (from little old me) then the damage is done. Being a reseller of a database or a book is not the issue, MFN talks about the buy price and my observation was that the government is smacking Oracle while the Connecticut AG is smacking Amazon/Apple for the opposite.

                I'll agree that the government having an MFN contract is more efficient an

  • by ceoyoyo (59147)

    How does offering the same price to two of your distributors discourage you from lowering prices? The publisher will lower prices for a variety of reasons, such as to increase sales or generate publicity, but none of those reasons would seem to be contingent on lowering prices with one distributor and not others.

  • 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.

    Comp

    • by ZOP (240653) *

      Keep in mind it's not Amazon holding the prices higher, it's the publishing houses. With Amazon's self publishing the publisher sets teh list price, it is required to be a "MFN" meaning they get the lowest price, and can compete/sell at that price in any market you have the rights to distribute your content in.

      Amazon takes 0.15/mb, and passes 70% of the rest to the publisher (or author if they're self publishing) int he US market. 35% in other markets (no distribution charges per mb).

      This is probably bett

  • Okay, you stupid corporate pigs.

    ya, you.

    I'm not fucking paying over $5 for a ebook. ever. If you can't grasp that simple concept, don't bitch when your books get pirated.
    I'll pay $15 for a hardback book. I'll pay $8 for a softback book. But an ebook? $5, max.

    You see, I can pirate what I want for free. Do you grasp this simple concept? I can get what I want for free. But I'm not an asshole (well, I am, but that's another post), I'm letting you know that I would be willing to pay $5 per ebook, in

    • by ErikZ (55491) *

      What about self published authors who have to raise the price since their sales are so low?

      They're new, no one has heard of them, but they still need to eat and have a roof over their heads.

  • MacMillan, etc, have *no* incentive to lower prices, in fact, MacMillan and Amazon just went head to head and Amazon lost. MacMillan *RAISED* prices, significantly. And they want to do it across the board, and raise them even MORE. They don't want competition from eBooks with brick and mortar distributors, nor do brick and mortar distributors. They want to be protected from thenew scary digital world. They argue "its for our authors" when what they mean is "its for *our* bottom lines because we're scar

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