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Kindle News: US Dept. of Justice and Apple/Big5 may settle soon. The issues.

Minggu, 01 April 2012

Friday I saw a WSJ article about the strong rumors that the Department of Justice and the "Agency" grouping of Apple and Big 5 publishers back in Jan. 2010 are likely to settle soon, before the U.S. Dept of Justice goes ahead with the lawsuit they've mentioned strongly.

Reuters writes it could happen "in the next few weeks" and they have two sources "close to the negotiations" though no one's said which side of the issue the two sources are.  It doesn't seem likely to me (but who knows?) that Apple/Big5-associated would leak a rumor that they are working toward a settlement in which they'd need to give up some of their control over retailer prices.
' While negotiations are still fluid, the settlement is expected to eliminate Apple's so-called "most favored nation" status, which had prevented the publishers from selling lower-priced e-books through rival retailers such as Amazon.com Inc (AMZN.O) or Barnes & Noble Inc (BKS.N), the people said. '

Most news writers agree that both Amazon and customers would benefit from a move back to something like the "wholesale model" that had been in effect for decades before February 2010.  In fact, under the wholesale arrangement all these years, the publisher set the retail price and Amazon paid 50% of that, period.  50% of the publisher's suggested selling price.

  No matter what you read about how the publisher should have the right to set the price, the publisher had always set the suggested retail price upon which the 50% they received from retailers (Amazon, B&N, etc.) was based (an average $26 at the time), and then it was up to the retailer to sell those books at whatever price worked for them, since the publisher's share was already allocated.  Sometimes there were loss leaders in the most popular books (New York Times Bestsellers) and sometimes prices were higher for books that were sold in fewer quantities.

  There is a LOT more in that Reuters article, upon which most news articles were based this weekend.

NPR Panel - a good point made
A transcript of a panel discussing the DOJ vs Apple/Big5 dynamics

  David Young, the CEO of Hachette, gets only one sentence in that transcript:
' There was no future, as I saw it, at 9.99 other than ruin. '
  Dr. James McQuivey, VP and principal analyst at Forrester Research had this to say:
  [LYNN} NEARY: If publishers price the e-book right, says McQuivey, there's a good chance they'll attract more customers.

  MCQUIVEY: And the economics of getting 10 times as many people to pay 5.99 are actually favorable. But the publishers don't want that because then it would make you think, well, wait a minute, why is the paper copy 24.99?  I'm never going to buy one of those again.  And they're just not ready for that hard switchover yet, even though they know it's coming. '

  Since publishers have been very open about their concern that Amazon's lower pricing on e-books would devalue their printed books, that seems a good point.

  On an e-book with publisher's suggested retail price of $26, for which Amazon or B&N then used to pay 50% to the publisher, the publisher and author income (if enough of the revenue was passed down to the author) would be more than they're currently getting.  The issue has been control and keeping the value of hardcover and paperback books higher.  The issue hasn't been publisher or author revenue on e-books.


Related article
  TIMELINE:  Ebook Pricing Wars - what DOJ would have seen - March 12, 2012



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SECOND Class Action Suit Against Apple, this time w/ the Big6. Apple accused of altering 2nd photo in Samsung suit.

Selasa, 23 Agustus 2011
"Finkelstein Thompson Files Class Action Suit Against Apple
Teleread's Chris Meadows points to the ebooknewser story today on the new lawsuit that, in this 2nd case, also includes Random House.

Finkelstein Thompson, a consumer rights and antitrust law firm, filed the new class action complaint in New York against Apple and the Big6 book publishers, alleging a conspiracy to fix eBook prices.  Details at the link.  Here's the press release


Earlier articles on the Class Action lawsuit:
. Class action lawsuit against Apple and Big 5 publishers re price fixing of ebooks.  History and sourcing provided.
. Reactions to Price-Fixing Lawsuit


"Apple Accused of Altering Second Photo in Samsung Suit"
Apple had been successful in halting Samsung Galaxy Tab 10.1 sales in Europe and elsewhere, on the basis that Samsung had copied the Apple design, a large factor being the rounded corners of the device (!)

Later, the Injunction was lifted across Europe but the injunction still applied to Germany, for jurisdictional reasons.  August 25 is the court date set "for Apple and Samsung to plead their respective cases."

  On August 17, Tomsguide.com reported that "Researchers accused Apple of doctoring an image of the Galaxy Tab 10.1 in an effort to make it look more like the iPad in terms of size. Some felt it could have been accidental.

  Today's news is about a second picture that was submitted as part of the IP suit, this one showing the iPhone and Galaxy S "looking almost exactly the same size," although the accompanying illustration shows it to be quite a bit larger.  It has those "rounded corners" though! :-)

  Tomsguide has a tough crowd commenting.  An amusing thought:
' "I'm going to have to take a second look at these Samsung products.  They must be pretty good for Apple to risk so much. '
  Another one pointed out that if you open both phones, they "have a lot of the same components" so therefore Samsung is copying Apple, he says.  He adds a PS that the components they have in common are made by Samsung.


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Check often: Temporarily-free late-listed non-classics or recently published ones
  Guide to finding Free Kindle books and Sources.  Top 100 free bestsellers.  Liked-books under $1
UK-Only: recently published non-classics, bestsellers, or £5 Max ones
    Also, UK customers should see the UK store's Top 100 free bestsellers.


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Kindle News Roundup: Reactions to Kindle Cloud Reader and Price-Fixing Lawsuit

Selasa, 16 Agustus 2011
FIRST, two reports by Joel in the Comments area of the Kindle Cloud Reader announcement story, who has found that:
  1. he can run "multiple" instances of the Cloud Reader (reading one book while another is open for reference) and
  2. the Cloud Reader counts as one 'single' device.  He has the Kindle Cloud Reader app running on 3 PCs and one Linux box so far.

  I noted that my Kindle App for PC is shown on my ManageYourKindle as a total of 3 Kindle-compatible devices, one each for my desktop, a laptop and a netbook.  Cloud Reader acts as a true Web device then, as there's no installation and you can access the Web and your spaces on it from any Net-connected devices, so it's similar.

"Time to Rethink Every Website in the World"
TechCrunch's Cyan Banister, in his story titled, "Time to rethink every website in the world," writes (after opening with an assessment of "holy sh__") that another news analyst had written about the new reader but:
' ... he didn’t point out what an amazing technical advancement this is for all of us.  To me, it hardly matters that it looks great on my iPad. The coolest part is that it works beautifully OFFLINE.

Gmail and a few other sites have creaky offline modes, but they aren’t nearly as cool as what Amazon has done.  (For instance, Gmail doesn’t even have an offline Outbox.)  What Amazon has built is a sneak peek at our Internet future and this will change everything. '

ITWorld
ITWorld's Brian Proffitt points out that while it's not a true iOS [Apple] app, you can set the shortcut as an iPad, say, home screen icon, so it does have a direct way to the Kindle Store, in effect.

  [Tangential note by Andrys/Kindleworld:]
  100% of rival vendors' profit (net revenue), not 30% of that.
Almost all the news-sites have reported this new Web-app capability as a way to evade giving Apple 30% of Amazon and Barnes & Noble profits -- but, actually, since Apple itself created the 'Agency' model, which had Big5 publishers alloting online bookstores 30% of an ebook sale and taking 70% for themselves, Apple would actually have been trying to take 100% of Amazon's or BN's book-sale profits from sales on the iPad app.  We can see one reason why Apple does so well, profit-wise.

  That 100% of profit grab is a huge reality in it that many don't understand that it wasn't 30% of profit but 30% of a book sale.

 It's not similar to taking a fee for a lemonade stand in a mall.  It's telling the lemonade stand vendors, 'Sure, sell, here, but we want 100% of your profits if we let people try your wares here.'  There was no way the bookstore vendors would go for that.

  Taking a cut from sales from applications on a computer operating system
  Besides, others have made the point that Microsoft's computers do not insist on a 30% profit from products sold by websites using their "devices."
[End of side note]

  Chrome and Safari were chosen first, Proffitt opined, because it was the only way to get the new Web-based app onto an Apple device at a time when that became very useful.  Chrome and Safari browsers share a basic source in Webkit, and what works in one browser will tend to work in the other.
  As has happened in the past, more features will be added as it goes, and more browsers will be included, since at the moment neither Firefox nor Internet Explorer work with the Kindle Cloud Reader.

  Proffitt predicts browser wars, with each offering features the others don't have, and developers will have to keep making adjustments to their web applications, probably with browsers that have larger market share getting first attention.  Not in the initial case though!


Web apps galore
Bloomberg Businessweek's Om Malik focuses on the many Web-apps coming out of the cloud-space.

  We've already had Google's web app for books mentioned here in early December, at the same time that the competitive Amazon announced their Kindle for Web, which was meant to include full books eventually and now does, as Cloud Reader.  Amazon has finally changed that product page to show former Kindle for Web as Kindle Cloud Reader now.

  Malik also mentions Pandora's relaunching of its website for tablets in July.

  Twitter just launched an HTML5-based Web client that he feels is "as fantastic as the dedicated app itself."

  WalMart launched an HTML5 version of its VUDU video-streaming Web app, which streams not only to web browsers but also to TVs, Blu-ray players and game consoles.  However, as with normal websites, VUDU streaming is available only in standard definition.


Walmart's iPad-Optimized Movie Streaming
Mashable's Sarah Kessler shows how VUDU's Web app works and also mentions that the Financial Times released a web-based app in June and avoided the Apple app store, while ebook/ereader seller Kobo has announced it's also building an HTML5 ereader app.

The Globe and Mail's Associated Press story by Peter Svensson reports that
  "The site already works with PC browsers, but the Flash technology used doesn't work on the iPad. Instead, Vudu is using “Live Streaming” tools from Apple to reach the tablet.

  "Vudu.com's business model is similar to Apple's own iTunes. It rents out movies for $1 to $6 for a 24-hour or 48-hour viewing period.  It also sells them for $5 and up, which allows viewing any time. Its claim to fame is that it has many movies on the same day they're released on DVD."

Well, that particular new Web app was of interest to me because it is competition for Netflix, which has been steadily increasing its rates and of course it's also competition for Amazon's video-streaming.

  Svensson ends by saying that while the VUDU site will also work with iPhones and iPod Touches, navigation would be difficult as the Web app is designed for tablets.  The movies even stream over 3G, "but the image quality will suffer" and would also eat a lot of the monthly data allowance of any iPad plan.


What does it mean for Apple?
CBSNEWS techtalk references The Atlantic's Rebecca Greenfield whose harshly worded report (titled, The Beginning of the End for the Apple App Store) is surprising.

 First, I've not read The Atlantic for some time but to see the words "lame" and "stinks" is quite a change from the magazine I've read earlier.  I don't entirely agree with her headlined' take since I know Apple's app store will be affected negatively but not to the extent she predicts, but it's an entertaining, eyebrow-lifting read

If nothing else, what we've seen does look like the strong beginnings of a fairly huge media-vendor rebellion against Apple's policies.


THE LAWSUIT against Apple and the Big5 Publishers
IT Government's Grant Gross (delivered by Compuworld) writes that:
" One consumer advocate said the lawsuit makes sense. 'I have long been concerned about the apparent monopoly power Apple has been able to exercise through its Apps Store,' said John Simpson, consumer advocate at Consumer Watchdog. 'I believe the plaintiffs in this class-action suit have a very strong case and [I] am pleased they brought the action. '

  "Apple didn't want to enter the e-book market at the prices Amazon.com offered, Berman said.  Instead of competing with Amazon, 'they decided to choke off competition through this anti-consumer scheme, he said.

  "The European Commission and several U.S. state attorneys general are also investigating e-book price fixing. "

  The question of "collusion"
InformationWeek's Thomas Claburn points out some factors in the accusations of "collusion":
' The complaint goes on to allege that the publishers were able to force Amazon to switch from the wholesale model to the agency model because each knew other publishers had also agreed to adopt the agency model to work with Apple.

What's more, the complaint says, if the publishers had not conspired to set prices, consumers would have voted with their wallets and bought books elsewhere. And that's apparently what happened: Random House, the only large U.S. publisher that didn't switch to the agency pricing model last year, saw its ebook sales surge 250% in the U.S. in 2010 and 800% in the U.K.

But in March 2011, Random House switched to the agency model because, the complaint states, Apple refused to carry its titles in its iBookstore.

Apple, the complaint asserts, conspired with its publishing partners to "cut into Amazon's substantial share of the market for ebooks and to prevent Amazon from emerging as a serious competitor to its mobile platforms for distribution, storage, and access of digital media." '


Getting back to the Kindle, specifically
Sys.con Media's Udayan Banerjee (CTO of NIIT Technologies, with 30 years' experience, focusing on emerging technologies) writes today about why he bought a Kindle and why not iPad or Galaxy, or any device with color, touch, easier browsing etc.  He writes from India and often is in the U.S.  It's a straightforward report of a more personal nature, and he ends it with "I just wish that I had a magic wand which I could use to transfer all my physical books into the Kindle."

 That would be true of any good e-Ink e-reader, but most of us who already have e-readers will recognize the wish, not that I don't still get paper-bound books as a B&N member who still values going to the brick and mortar within a mile of my home and hope it stays around.



Kindle 3's   (UK: Kindle 3's)   K3 Special ($114)   K3-3G Special ($139)   DX Graphite

Check often: Temporarily-free late-listed non-classics or recently published ones
  Guide to finding Free Kindle books and Sources.  Top 100 free bestsellers.  Liked-books under $1
UK-Only: recently published non-classics, bestsellers, or £5 Max ones
    Also, UK customers should see the UK store's Top 100 free bestsellers.


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Class action lawsuit against Apple and Big5 publishers re price fixing of ebooks. History and sourcing provided.

Selasa, 09 Agustus 2011


Per a story run by paidContent.org, Seattle-based law firm Hagens Berman filed a class action lawsuit tonight against Apple and five of the “big 6” publishers (known as the Big5 when Random House declined to join the other five large publishers in fixed-pricing moves during the first year, explaining that bookstores probably understood pricing and customers more than RH did -- and as a result, Apple iBook Store did not allow the Random House eBooks in their store during that time).  Random House did join when the 2nd year started.

  The law firm claimed "that they illegally fixed e-book prices (through the agency model, in which case book publishers set their own e-book prices) in order to 'boost profits and force e-book rival Amazon to abandon its pro-consumer discount pricing."

Defendents named: Apple, Hachette, Simon & Schuster (NYSE: CBS), Macmillan, HarperCollins and Penguin.

Plaintiffs: Anthony Petru of Oakland, California and Marcus Mathis of Natchez, Mississippi.  Backgrounds on all can be read at Laura Hazard Owen's story at paidContent's website.  It's of interest that the law firm is based in Seattle (and Berkeley, California).

Here's more on "What's in it."

The complaint: Owens writes that the complaint begins by saying that Amazon's Kindle
' had "the potential to massively reduce distribution costs historically associated with brick-and-mortar publishing.  But publishers quickly realized that if market forces were allowed to prevail too quickly, these efficiency enhancing characteristics would rapidly lead to lower consumer prices, improved consumer welfare, and threaten the current business model and available surplus (profit margins).

  So, faced with disruptive eBook technology that threatened their inefficient and antiquated business model, several major book publishers, working with Apple Inc. (‘Apple’), decided free market competition should not be allowed to work -- together they coordinated their activities to fight back in an effort to restrain trade and retard innovation.  The largest book publishers and Apple were successful.” '   [Bolding was by Owen.]

This was of course considered more than potentially disruptive to the publishers' long-established way of doing things.

I've provided a history of stories and sources from that time, at the bottom of this blog article.

  The main complaint voiced by publishers was that the lower cost of Amazon's e-books (especially those on the NY Times bestseller lists) were "devaluing" their paper-bound books, especially the hardcover editions.  They openly wanted higher pricing on e-books and found not only an ally in Steve Jobs but an encourager (sourcing is in list of articles below).

  The complaint goes on to say that the publishers and Apple coordinated between themselves" to "force Amazon to abandon its proconsumer pricing" and that Apple "facilitated changing the traditional eBook pricing model due to what the plaintiffs describe as the Kindle's "competitive threat to Apple's business model."

  In my own eyes, Apple wanted to now join the e-book march finally, once Steve Jobs realized people DO still read after all (will insert source later), but the idea was to join or enter the field as its leader and the publishers were more than willing, as Apple's bookstore gave them leverage over Amazon.  For me, that would be normal business -- if they hadn't set fixed pricing for all stores, and with no online store allowed to sell below Apple's pricing, a condition which the publishers accepted -- and when Amazon said that the publishers should not then allow another store to offer lower pricing than Amazon, some raged at Amazon's daring to set this return-condition.

  paidContent goes on to add that the complaint points out that
the publisher-defendents "almost simultaneously announced that they were switching from a wholesale pricing model to an Agency model for eBook sales" in January 2010 and “the announcements to shift to the Agency model coincided with the release by Apple of the iPad tablet computer.

"In fact, when Apple announced the launch of the iPad on January 27, 2010, the Publisher Defendants agreed to allow Apple to use their trademarks in connection therewith.

  The same day Apple announced launching the iPad, it was also announced that Apple already struck deals with Hachette, HarperCollins, Macmillian, Penguin, and Simon & Schuster to switch to the Agency model for Apple’s iBookstore -- the application on Apple’s iPad that functions as an eBook reader (thus competing directly with the Amazon Kindle).”

Re the 5 publishers switching to the agency model, the complaint says:
  “As a direct result of this anticompetitive conduct as intended by the conspiracy, the price of eBooks has soared.  The price of new bestselling eBooks increased to an average of $12 - $15 -- an increase of 33 to 50 percent.  The price of an eBook in many cases now approaches -- or even exceeds -- the price of the same book in paper even though there are almost no incremental costs to produce each additional eBook unit.   The price of the Publisher Defendants’ eBooks sold on the iBookstore, facing no pricing competition from Amazon or other e-distributors for the exact same eBook titles, has remained at supra-competitive levels."

paidContent notes what appears to be an assumption on the part of the plaintiffs that the $9.99 pricing (or less) for NYTimes bestsellers Amazon used was the "correct" price for an e-book.

  They also note something generally known now by long-time Kindle users but not so much by those new to e-readers, who blame high pricing on Amazon and other online stores who must follow the same publisher policies:

  "The agency model requires publishers to price their e-books the same at all e-bookstores.  Publishers can also put their e-books on sale and extend sale prices across all e-bookstores."

I've left out portions of the article of course. Go to Owen's article to read the rest of it.  She'll have "More to come after I have interviewed the parties involved and done some more research on this."

You can download the full complaint in PDF format.


HISTORY OF THE PRICING WARS IN ARTICLES, WITH SOURCING
Background
For those new to the situation and interested in the background of the e-book pricing wars, earlier stories posted here include the following articles, which I'll later put on a separate page, with a bit more info.

  . Amazon removes Macmillan books - Jan. 30, 2010
  . Amazon surrenders to Macmillan and Steve Jobs - Jan. 31, 2010
  . Steve Jobs pulls his puppet strings but says too much (a key one) - Jan. 31, 2010
  . Amazon plays hardball to keep lower pricing option - Mar. 18, 2010
  . Amazon and Hachette e-books (and missing buy buttons) - Apr. 2, 2010
  . WashPost: State AG probes Apple, Amazon over e-Book prices. What? - Aug. 3, 2010
  . Why are some e-book prices higher than hardcover ones? - Oct. 6, 2010
  . Newspapers headline Amazon UK forum rebellion against Agency pricing - Nov. 3, 2010


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