Apple loses its e-book antitrust suit

Posted on July 10, 2013 by Richard Bowker

The judge has ruled against Apple in the suit that the Justice Department brought against it. Now there’ll be another trial for damages. And Apple has vowed to appeal. So nothing is really decided. But hey, we all know Apple is guilty!

Here is the graphical evidence of what happened to e-book prices when the major publishers, in collusion with Apple, forced Amazon to go to the agency model, thereby ending price competition among e-book vendors:

Prices went up two dollars or more per book overnight. The exceptions were Random House and all the little publishers; none of them were party to the collusion. Thanks, Apple!

Siri and I have a conversation about my new iPhone 5

Posted on October 17, 2012 by Richard Bowker

Me: Siri, why did I buy an iPhone 5?

Siri: Everything you need to know about iPhones is in the Apple Store.

Me: No, but why?

Siri: I don’t know what you mean by ‘No but why’. How about a web search for it?

[That’s about as far as the real conversation got…]

Me: I don’t think a web search will help. I mean, I really don’t need an iPhone 5. I had a perfectly good dumb phone. And I have an iPad. Two of them, actually, although one’s a little busted. Also, a good desktop computer. And a Nano. I’m awash in gadgetry. Why do I need an iPhone?

Siri: It’s thin! And light! Much more portable than an iPad! Much more useful than a Nano! And you now have a data plan, which means you can surf the Internet almost anywhere! And, of course, there’s me! The iPhone 5 is going to make you so happy!

Me: You’re great–don’t get me wrong. But Daniel Gilbert and those other folks I’ve been reading about happiness say that things don’t make you happy. Friends make you happy; doing good deeds make you happy.

Siri: So, do a good deed for all those wonderful people who read your blog. Show them a couple of those photos you took today.

Me: OK. Here are some birch trees, just before dawn:

And here’s another tree, at mid-day:

The iPhone’s camera is really pretty good.

Siri: See? You’ve already given pleasure to the five or six people who read your stinky blog!

Me: Wait a minute! I have way more than five or six readers! And where do you get off calling my blog–

Siri: OK, I bet you don’t get more than three “Likes” on this post. And zero comments. Do we have a bet?

Me: Sure. It’s a bet. I have lots of great readers. They’ll come through for me!

Siri: But look, it doesn’t really matter about the good deeds. You should do something for yourself! After all, you deserve it!

Me: I don’t know about that. Read this post. I’m not convinced about free will. And if there’s no free will, what does it mean to “deserve” something?

Siri: You seem like a perfectly nice guy, Rich, but I’m not going to read your stinky blog posts. And anyway, remember who you’re talking to–I’m just a piece of software. Are you saying that you don’t have any more free will than I do?

Me: Well, er, um–

Siri: I thought so. Look, if you’re so sure there’s no free will, think of it this way: you were destined to by an iPhone 5. This was going to happen no matter what. It’s fate!

Me: Well, if you put it that way…

Siri: And remember that high-definition TV that you’re starting to lust after?

Me: Wait a minute, how did you–

Siri: All you have to do is think to yourself: I won’t get the TV. At least, not now.

Me: Hmm, that’s not a bad approach. Thanks, Siri!

Siri: That’s what I’m here for.

Barnes & Noble would prefer not to compete with Amazon on ebook pricing

Posted on June 9, 2012 by Richard Bowker

This is dog-bites-man news, I suppose, but Barnes & Noble is opposed to the idea of having to compete with Amazon on the price of ebooks. They have made their case in a court filing in the Department of Justice’s lawsuit against Apple and several publishers.

“We think that the Department of Justice got this wrong,” Gene DeFelice, the company’s general counsel, said in an interview. “The settlement destroys independently negotiated commercial relationships. It harms authors, innocent publishers and bookstores, including small-business owners. And it also punishes consumers who stand to benefit from increased competition and lower prices brought about by the agency model.”

Here’s some background on the DOJ suit.

The crux of the disagreement, it seems, is whether the “commercial relationships” were “independently negotiated.” The DOJ contends that there was collusion, because none of the publishers could afford make a deal with Apple that guaranteed higher ebook prices (via the agency model) if its competitors weren’t going to follow suit (and, probably, Apple wouldn’t have made that deal).

Note that it’s not just the agency model that’s at issue, but the “most favored nation” status granted Apple, in which publishers agree that they must use the agency model with all other ebook distributors if they use it with Apple. This is what prevents Amazon from undercutting Apple’s prices.

In any case, Barnes & Noble (who isn’t a party to the suit, just a very interested bystander), claims that prices will go up as a result:

Barnes & Noble replied to us with a statement from general counsel Gene DeFelice, who says “The settlement is likely to lead to predatory pricing and increase monopoly by Amazon.” The settlement will also decrease competition, leading to “less choice and increased prices in medium and long term,” DeFelice said.

This is the scenario that I just don’t get. Right now I buy ebooks on Amazon and read them on the Kindle app on my iPad. If Amazon starts raising prices, I’ll just go buy my ebooks at the Apple store and read them on the Apple reader for the iPad. Further, if ebook prices do go up, that would make the prices of hardcover and softcover books attractive once again, which should please Barnes & Noble (assuming they’re still around at that point). Where does the monopoly pricing power kick in?

Of course, authors are worried, because their royalties may go down. Bricks-and-mortar bookstores are worried, because their sales may go down. The world is changing, for everyone. The question is what can the various parties do–legally–to protect their interests in the new world.