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Distinguished Bibliophile
keriflur
Posts: 6,552
Registered: ‎01-05-2010
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Re: 2013 trial date for Apple e-book lawsuit


Doug_Pardee wrote:

bklvr896 wrote:

 

is the agency model pricing the issue and why would that pricing model be inherently illegal.  Afterall, it's simply the publisher being the seller and setting the price, using the retailer's as agents to sell the product, rather than selling the book to retailer and the retailer then selling it for whatever price they decide.  What if the pubisher decided to open its own bookstore and not sell to any retailers?  How is that much different and how would that be illegal.  It's the alleged collusion that is at issue, did Apple and other collude on the agreement and prices?   


No, the complaint specifically says that the agency model is not a problem. In fact, the proposed settlements expect that the settling publishers will continue to use agency model. The settling publishers will, however, be enjoined for two years from controlling the selling prices aside from a general restriction that over the course of a year, the total discounts given by a reseller on the publisher's titles cannot exceed that reseller's total commissions from those sales. In other words, Amazon can sell best-sellers at a loss if they make up the losses on non-best-sellers from the same publisher. Also, the Most Favored Nation clauses will be cancelled, permitting each reseller to negotiate separate terms with the publisher.

 

The complaint makes some very eyebrow-raising claims about blatant collusion. It says who discussed what with whom, where and when. If the complaint is at all accurate, the publishers (and Apple) were stupid beyond imagination.

 


Which, from what I've read, basically means, "The agency model is fine, but we see that it benefits you, and we want to punish you, so you can't really use it for two years."

Frequent Contributor
Irishelf
Posts: 242
Registered: ‎07-20-2011

Re: 2013 trial date for Apple e-book lawsuit

I really don't get how the agency model is even legal.  If Hershey can't tell retailers what price they can sell their candy bars for, how come publishers can tell retailers how much to sell an e book for (especially if retailers pay the publishers before they sell the book).  I don't understand what makes DTBs so different from ebooks that publishers can set the selling price for ebooks but not DTBs!

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patgolfneb
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Re: 2013 trial date for Apple e-book lawsuit

Irishelf, think of agency model as the equivalent of a consignment store. Hershey wants their money up front and for the retail outlet to take the risk of unsold or perishable merchandise. Under the agency model more risk accrues to the producer and cash flow is more difficult to predict. The upside is as stated more control over pricing and product placement.
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bklvr896
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Re: 2013 trial date for Apple e-book lawsuit


Irishelf wrote:

I really don't get how the agency model is even legal.  If Hershey can't tell retailers what price they can sell their candy bars for, how come publishers can tell retailers how much to sell an e book for (especially if retailers pay the publishers before they sell the book).  I don't understand what makes DTBs so different from ebooks that publishers can set the selling price for ebooks but not DTBs!


Because under the agency model, the retailers don't pay the publisher upfront for the book.  The retailers get paid a commission for each book they sell.  The pp's example is a good one, it's somewhat like a consignment shop, you give them an item to sell and when they sell it, you get your money and the store gets a commission.  Same idea.  B&N is simply an agent for the seller, the publisher is using B&N's already established retail selling system to sell the books through them, rather than setting up their own store.  

 

As far as DTBs are concerned, they are sold using a wholesale model, where the retailer buys the book up front then sells it.  Under that model, the publishers have no say in selling price, only what they sell it to the retailer for.  

 

There's nothing illegal with a publisher or a producer of goods deciding to be the seller of the product and using retailers as agents.

Nallia
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Re: 2013 trial date for Apple e-book lawsuit

[ Edited ]
Apple tells retailers what to sell iPhones, iPods, iPads, etc. for. B&N tells retailers what to sell the NOOK for. Amazon tells retailers what to sell Kindles for. There's no difference.
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patgolfneb
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Re: 2013 trial date for Apple e-book lawsuit

Apple and others enforce prices with the carrot not the stick. Being an authorized Apple retailer comes with access to coop ad money, first dibs on new products and other benefits which vary a bit by retailer. For example some money towards creating the special in store Apple stores. I do not know that Apple has done this specifically but it is not an uncommon practice.
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Sun_Cat
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Registered: ‎12-03-2011
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Re: 2013 trial date for Apple e-book lawsuit


Nallia wrote:
Apple tells retailers what to sell iPhones, iPods, iPads, etc. for. B&N tells retailers what to sell the NOOK for. Amazon tells retailers what to sell Kindles for.

Are you sure? I thought this was illegal in the U.S. I thought it was settled back in the 60s when discount retailers went to court and won the right to set their own prices under the wholesale model. That's why we see tags that say "manufacturer's suggested retail price."

 

I believe this is why the agency model just feels wrong to many of us. It has basically the same effect on consumers as if the publishers were empowered to set a strict retail price under the wholesale model.

 

Because the contracts are structured differently, apparently the agency model is legal.  But because the effect on consumers is similar to illegal price fixing, it feels as if it shouldn't be legal.

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Doug_Pardee
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Registered: ‎03-09-2010

Re: 2013 trial date for Apple e-book lawsuit


Sun_Cat wrote:

 

I thought this was illegal in the U.S.


The Supreme Court ruled it to be generally legal in June 2007 in Leegin Creative Leather Products v. PSKS, Inc. Individual instances might be anti-competitive, but those would have to be brought to a court to decide.

 

Nallia
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Re: 2013 trial date for Apple e-book lawsuit

Patgolfneb, I understand that. I am not arguing over the hows or the whys. My only point is that ebooks are not the only products subject to an agency model. If you walk into Sam's Club and ask them why the iPad is the same price there as it is in the Apple store, they will tell you they are nt allowed to discount it because it is actually sold by Apple and not Sam's. The same if you walk into the Verizon store and ask them why there is no discount on the iPhone. As with ebooks, these retailers aren't the actual sellers of these products. They are agents who receive a commission and sometimes other perks. It's the same in Target, Walmart, etc. The NOOK costs the same at Target as it does in B&N, just as the Kindle costs the same there as it does on Amazon. Prices don't drop unless Apple, B&N, or Amazon drops them. These retailers can choose to offer some incentives, like a store gift card, but they cannot discount the prices on their own. In that, they are similar to the ebook agency model.
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patgolfneb
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Re: 2013 trial date for Apple e-book lawsuit

To add a bit to what I posted before. The courts have given sellers considerable latitude to set non price conditions of sale, justified as necessary to protect your brand. An example would be automakers ability to require dealers to have repair and display areas of high quality and minimum size. Dealers who don't meet those requirements don't get the highest levels of dealer rebates and may have their right to sell the product terminated. If a dealer sells over sticker manufacturers have withheld coop money or other benefits as well. This only works on unique or high ticket items which are hard to find equivalents for.