Consumer Group: E-book Price Fixing Costs Big Bucks

[deesy58]

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Ya_Ya wrote:

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deesy58 wrote:

THE SKY IS FALLING, THE SKY IS FALLING!! 

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I don't think that's what I said.    I said, paraprhasing, that this will probably put everyone who isn't Amazon (or Google) out of the ebook business".

Show me the financials that say B&N can afford to lose $3 per ebook sold amounting to hundreds of millions dollars per year for multiple years.  Show me the same financials that say Kobo and Sony can also afford it and maybe my opinion will change.  From what I've seen of B&N's financials, they can't even afford to make money on ebooks; their digital division has lost money year after year, including the years when they didn't have to take losses on every ebook sold.  

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So your argument is based on assumptions that can probably not be verified (B&N, Kobo and Sony will lose $3 per book sold).  Unless you are a forensic accountant with access to the portions of a corporation's books that are, typically, not made public, you have no more idea of what the future of e-books will be like than my pet parakeet (I don't have a pet parakeet). 

Prophecy does not, IMO, have a particularly good track record for successful predictions in the business world. 

[Ya_Ya]

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deesy58 wrote:

So your argument is based on assumptions that can probably not be verified (B&N, Kobo and Sony will lose $3 per book sold).  Unless you are a forensic accountant with access to the portions of a corporation's books that are, typically, not made public, you have no more idea of what the future of e-books will be like than my pet parakeet .

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Huh?  Amazon has shown that it is willing to lose $3, $4, $5 per ebook sold by doing it.  The numbers are already public record showing that they did it.  B&N, Sony and Kobo matched most of those prices and also took those losses, but B&N definitely couldn't have sustained such losses.  

Are you suggesting that Amazon will not return to setting their own prices?  Will not return to taking a loss?  Will not do with ebooks what they have been fighting to do with ebooks since the Agency Model took effect?  Are you suggesting that if/when Amazon returns to these practices B&N, Sony and Kobo won't have to match their prices and take the same losses in order to sell ebooks?  And that B&N's books don't suggest that rather than take such losses it would be prudent to quit selling ebooks altogether?

[deesy58]

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Ya_Ya wrote:

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deesy58 wrote:

So your argument is based on assumptions that can probably not be verified (B&N, Kobo and Sony will lose $3 per book sold).  Unless you are a forensic accountant with access to the portions of a corporation's books that are, typically, not made public, you have no more idea of what the future of e-books will be like than my pet parakeet .

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Huh?  Amazon has shown that it is willing to lose $3, $4, $5 per ebook sold by doing it.  The numbers are already public record showing that they did it.  B&N, Sony and Kobo matched most of those prices and also took those losses, but B&N definitely couldn't have sustained such losses.  

Are you suggesting that Amazon will not return to setting their own prices?  Will not return to taking a loss?  Will not do with ebooks what they have been fighting to do with ebooks since the Agency Model took effect?  Are you suggesting that if/when Amazon returns to these practices B&N, Sony and Kobo won't have to match their prices and take the same losses in order to sell ebooks?  And that B&N's books don't suggest that rather than take such losses it would be prudent to quit selling ebooks altogether?

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Predatory pricing is difficult to prove, but is illegal in the United States.  The US Supreme Court has set high hurdles for establishing that such a practice is a fact, but "... the Court established that for prices to be predatory, they must be below the seller's cost."  http://en.wikipedia.org/wiki/Predatory_pricing

If you do not believe that predatory pricing is illegal, read a couple of articles about previous cases to be found at:

http://www.nytimes.com/1993/08/24/business/wal-mart-on-trial-on-predatory-pricing-charges.html

http://econ.ucsb.edu/papers/wp05-08.pdf

http://www.oecd.org/dataoecd/7/54/2375661.pdf

The latter source includes the words:

"In the United States, challenges to predatory pricing rest primarily on two federal statutes. First,
Section 2 of the Sherman Act makes monopolization or attempts to monopolize any part of interstate
commerce or commerce with foreign nations a felony, punishable by fines up to US$ 1 million for
corporations, or US$ 100,000 for other persons. In addition, persons who violate the Sherman Act may be imprisoned for up to three years.

Second, Section 2(a) of the Clayton Act, as amended by the Robinson-Patman Act, proscribes
price discrimination that may substantially lessen competition, or tend to create a monopoly, or “injure,
destroy or prevent competition” with persons (or their customers) who grant or receive discriminatory
prices. In particular, primary line discrimination, that is, price discrimination that a firm employs to
injure its rivals, may sometimes be considered a form of predation.

Private parties with standing to sue may seek enforcement under either the Sherman or Clayton
Acts. If successful, plaintiffs can obtain injunctions, treble damages, court costs, and attorneys’ fees.

A private plaintiff must make two allegations to establish its standing to sue under the antitrust laws: first, that it will suffer actual or threatened injury as a result of the violation, Allen v. Wright, 468 U.S. 737
(1984), and second, that the injury would be antitrust injury, i.e., “injury of the type the antitrust laws
were intended to prevent and that flows from that which makes defendants’ acts unlawful.” Brunswick
Corp. v. Pueblo Bowl-O-Mat, Inc. 429 U. S. 477, 489 (1977)."

B&N, or anybody else, who could prove that Amazon was engaged in predatory pricing would be able to stop the occurrence, and collect damages. 

It is certainly legal to engage in price competition, and there was a time when consumers benefited greatly from it.  Does anybody remember gas wars?  I remember seeing a gas war near Tulsa Oklahoma that had advertised prices as low as 11 cents a gallon.  Now we have an oligopoly in the oil industry, and companies like Exxon-Mobil no longer need to engage in such practices. 

Vote for politicians who will enforce the laws that have already been enacted, instead of those who wish to undo 100 years of legislative progress.  As long as laws are not enforced, consumers will lose.  It is not a solution to simply replace one type of anticompetitive behavior with another. 

[Ya_Ya]

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deesy58 wrote:

Predatory pricing is difficult to prove, but is illegal in the United States.  The US Supreme Court has set high hurdles for establishing that such a practice is a fact, but "... the Court established that for prices to be predatory, they must be below the seller's cost."  http://en.wikipedia.org/wiki/Predatory_pricing

[SNIP a bunch of things that didn't actually apply to anything that was actually said]. 

B&N, or anybody else, who could prove that Amazon was engaged in predatory pricing would be able to stop the occurrence, and collect damages. 

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I don't think anybody in this thread suggested that predatory pricing wasn't illegal.  It's difficult to prove and succesful suits haven't been all that common. 

I doubt B&N et al... could prove it - even if they could show that Amazon was selling all of its bestsellers at a 30% loss.  They also have to hang on - and sell ebooks at a loss or risk losing all of their marketshare - long enough for their case(s) to be heard, if they even have the evidence to win a suit.  

[keriflur]

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deesy58 wrote:

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keriflur wrote:

It is possible to make money ethically.  I see companies do it all the time.

FWIW (and it's only partially on-topic) Amazon has gotten slammed recently by Seattle papers for not giving back to the community as much as other Seattle companies do.  Being ethically conscious is a bit of a big thing here in Amazon's home town.

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And so, being present in the Board Room while all the important strategic business decisions were being made, you know that they were all ethical.  Riiight! 

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Wow, dude, did you eat hyperbole fuel for breakfast?

I don't need to be in the boardroom of a company to know if it's behaving ethically any more than I need to be in my dog's head to know if he peed on the rug.  The evidence of their actions are plain to see.

Also, there is a lot of grey space between a perfectly ethical company and a completely unethical company.  It's up to the consumer to decide what they consider ethical and what they're willing to support/tolerate.  You may consider a company ethical that I do not, and vice versa.

[keriflur]

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Ya_Ya wrote:

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deesy58 wrote:

Predatory pricing is difficult to prove, but is illegal in the United States.  The US Supreme Court has set high hurdles for establishing that such a practice is a fact, but "... the Court established that for prices to be predatory, they must be below the seller's cost."  http://en.wikipedia.org/wiki/Predatory_pricing

[SNIP a bunch of things that didn't actually apply to anything that was actually said]. 

B&N, or anybody else, who could prove that Amazon was engaged in predatory pricing would be able to stop the occurrence, and collect damages. 

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I don't think anybody in this thread suggested that predatory pricing wasn't illegal.  It's difficult to prove and succesful suits haven't been all that common. 

I doubt B&N et al... could prove it - even if they could show that Amazon was selling all of its bestsellers at a 30% loss.  They also have to hang on - and sell ebooks at a loss or risk losing all of their marketshare - long enough for their case(s) to be heard, if they even have the evidence to win a suit.  

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If Amazon does return to predatory pricing (I say if because it looks like the settlement terms may help the publishers to prevent that), then the other retailers will have the pubs as allies.  I expect the pubs will be the ones to cry foul if Amazon misbehaves.  I also expect the DoJ will be paying attention.

[flyingtoastr Scribe]

http://news.cnet.com/8301-1023_3-57412587-93/why-e-books-cost-so-much/

Good article on CNET about the ebook pricing kerfuffle.

[gb18]

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flyingtoastr wrote:

http://news.cnet.com/8301-1023_3-57412587-93/why-e-books-cost-so-much/

Good article on CNET about the ebook pricing kerfuffle.

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Here is the heart of the matter, from the article:  "...all of the costs associated with print, from the printing to the shipping to the distribution to the warehousing to returns, amount to a mere few dollars per copy....."

How many (much?) is a few?  And who is getting to keep them?  NOT the ebook buyer (renter, lessee, whatever).  Let alone that sometimes the ebook is more than the paper copy.  Ebooks are cheaper to produce and distribute.  Period.

[flyingtoastr Scribe]

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gb18 wrote:

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flyingtoastr wrote:

http://news.cnet.com/8301-1023_3-57412587-93/why-e-books-cost-so-much/

Good article on CNET about the ebook pricing kerfuffle.

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Here is the heart of the matter, from the article:  "...all of the costs associated with print, from the printing to the shipping to the distribution to the warehousing to returns, amount to a mere few dollars per copy....."

How many (much?) is a few?  And who is getting to keep them?  NOT the ebook buyer (renter, lessee, whatever).  Let alone that sometimes the ebook is more than the paper copy.  Ebooks are cheaper to produce and distribute.  Period.

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Last time I checked the vast majority of ebooks are still cheaper than their printed cousins.

[patgolfneb]

I don't feel the article is inaccurate but by limiting its comparison to hardcover books and best sellers it fails to identify the books where the greatest savings occur. Older titles in paperback receive little promotion and development costs are mostly recovered. It is this category of books I feel are overpriced as e books. I have found many books priced at 9.99 for the e book even though the paperback is priced for less. I am not referring to books being discounted from the cover price either. Given the acknowledged $1.00 to $2.00 cost advantage, the lack of fair use or resale rights this is pretty hard to justify.