U.S. Warns Apple, Publishers on E-Book Pricing | Hacker News Reader

U.S. Warns Apple, Publishers on E-Book Pricing

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41 pointstechiediy22 comments

Publishers are right to fear Amazon, but a much better solution for mitigating it seems obvious to me: Sell DRM-free books. Amazon is getting an unassailable lockin on avid readers because they can never again use a device that amazon doesn't approve. If the books are DRM-free, then the distributor is the one who gets commoditized, rather than the publisher.

That said, I'm not entirely confident that DRM is as unnecessary for books as it is for music. Starting to read a book is much more of an investment, and also much more likely to be based on a recommendation from a friend who certainly has the book (and there's a long social history of legal lending.) So I guess it comes down to which they are more scared of, being disintermediated by Amazon, or disintermediated by their customers.

I don't represent the normal user, but I want to provide a datapoint.

I pirate music and movies a lot. I also go to the movies and buy the CDs of my favorite bands, but I only do so for content which is worth it. The biggest problem with movies is that you can't tell much about their quality from a trailer. And I also find the music industry to be disgusting lately, so I'm grateful to a couple of bands that kept their genre and that aren't subject to the latest trends.

For books I have a different behavior. The thing with my Kindle is that I can always download a couple of chapters to see if I actually like the author's style and if it's what I really want. Also I don't read more than 2-3 books per month, so I don't go on buying sprees, this reading habit of mine being actually cheap.

Therefore I only pirated one or two books for my Kindle at first, before I discovered the convenience of buying them straight from Amazon. It takes less time and reading the reviews of other people makes it valuable to visit the store first, then from there downloading a sample or buying it is just one click away.

So I do not believe that DRM-free books will be bad for authors. It's in fact quite the opposite for me, because when reading a book I end up being really grateful in case I like it, so I have this extreme urge to reward the author. And this happens for every book I read, because the selection process is extremely efficient, as I said, which makes paying for books a no-brainer.

I'm having a hard time understanding exactly what actions are under suspicion. The actual price of the books isn't being established by either the agency or the wholesale model.

A little googling at the DOJ indicates that the Sherman act prohibits adoption of "a standard formula for computing prices". In the case of the agency model it would seem like a standard formula is being established for the distribution services (but not the actual book prices). Is this the problem?

Any anti-trust lawyers out there?

IANAL, but the problem is when Apple says that publishers must prevent Apple's rivals from selling the books for less. Without that, the agency model is fine, but when Apple and the publishers conspire to prevent undercutting, that's tantamount to conspiring to raise prices.

Amazon does the same thing.

http://bits.blogs.nytimes.com/2010/02/26/when-it-comes-to-co...

Interesting. Maybe the problem is with the fact that the books tend to cost more on Apple's setup combined with the MFN clause? I don't think that the government could sue Amazon for conspiring to raise prices since it has a public and prolific history of trying to reduce them. It's also telling that Amazon tried to force publishers to do things they don't want to do, which is not like a conspiracy, whereas Apple is giving them what they want, which is.

But in the end, IANAL so I can't give you a definitive answer. I'm just speculating, same as everyone else on this thread. ;)

I understand that industry collusion in necessity goods (food/gas/medicine) is bad for the consumer but why can't book publishers and wholesalers act together to raise the price of books 100x if they so wish? Let the market decide if that is a good decision or not. In fact, if they raise prices on certain category of books (e.g. educational books), it will only hurt them because it will encourage students to buy used older versions from secondary market, regardless of what version is supposed to be used in class.

Also, why are e-books any different from paper books? Let them price them however they want. If Hollywood and theaters want to sell movie tickets at $50/person, why shouldn't they be allowed to?

Necessity vs. non-essential is quite a slippery slope as there is a gradient of need. How would one draw the line?

As Enron and countless other examples show, a purely free market does not always result in an optimum outcome, even for something as perfectly fungible.

Enron wasn't operating in a perfectly free market. The electric power business in California is heavily regulated, in particular, the utilities were forced by law to pay whatever Enron demanded, and also by law were unable to pass those costs along to the ratepayers.

Generally Enron is described as an example of deregulation gone wrong as Enron was able to control supply. That has nothing to do with passing off costs to ratepayers.

Even if that's not a perfect example, do we really disagree that a pure free market doesn't always lead to the optimum outcome?

Also, I don't think its civil to downvote simply b/c you disagree.

The problem is that that's not actually how it works. For things like textbooks, people don't really have a choice on whether or not to buy it - when everyone colludes to price it very high, the people who need them have no recourse other than to buy them.

You nonchalantly say that students can just buy older versions, but that is often impossible. Homework problems are regularly taken from the textbook, and those problems are regularly changed from version to version. Additionally, when publishing companies are coming out with a new version every couple years, there's not a lot of availability for used books either.

Nowhere is price gouging so clear as in the case of textbooks. You have almost perfectly inelastic demand, and a single supplier. You don't need to be an economist to figure out how that one's going to work out.

This semester, my econometrics professor had a professional publisher 'compile' his seminar notes into a 'reader'. This basically meant printing out the pdfs and putting them in cheap binding, the kind that you might get at Staples for a negligible sum. He was shocked when they ended up costing almost $100 per copy for the student, since there was no copyright/licensing in question - they were his own class notes.

If a college student told me that they spent over $1000 per semester in textbooks, I would have no trouble believing it at all. Used books are not always available or viable. Workbooks are less common, but now publisher have 'access keys' that they are using to force students to buy the new books. My professors have always been understanding when I refuse to do the online exercises that require the access keys (unless they send me unlocked copies), but I can imagine not all students are so lucky.

I'm also fortunate that my classes (CS, statistics, economics) tend to have one textbook per course, and they usually aren't so dependent on the in-book homework problems. For CS in particular, you can often use online books/tutorials in case of the text, depending on the class.

But for my friends in humanities-based classes, with perhaps ten overpriced books for a course? I pity the fools - or rather, I pity their empty wallets!

The whole point is that the market can't decide if there is an effective monopoly of colluders.

What's sad is that ebooks should have been revolutionary way to get books into people's hand for very little money, while allowing publishers and authors to still make the same amount of money, but publisher greed has fucked that away.

Given the wide availability of pirate books, publishers may be shooting themselves in the foot by making their titles overly expensive.

First paragraph: "... according to people familiar with the matter"

Good thing they didn't report what people unfamiliar with the matter said.

It's the standard euphemism for anonymous sources. It seems fine to me. What is your problem with it?

http://www.cliffsnotes.com/study_guide/Euphemisms.topicArtic...

http://clear-writing-with-mr-clarity.blogspot.com/2011/05/ge...

I didn't realize that. I assumed it was a signal that the sources weren't reliable/knowledgeable. I learned something new today, thanks.

I have mixed feelings about this. Apple certainly brought competition to the market. Amazon was reputedly leveraging it's other profits to sell books at a loss in an attempt to corner the market. Seems pretty anti-competitive to me.

However Apple's "most favored nation" clause is something I find extremely distasteful. That seems to me to be a hinderance to the whole concept of free markets.

"Apple warns US on poor financial management"

How exactly does the US government have the moral authority to warn anyone of anything, considering it is bankrupt?

It can't be bankrupt - all it has to do is print more money. As Dick Cheney said, deficits don't matter.

Of course, the resulting inflation might drive YOU into bankruptcy (if you're a US citizen). But at least Dick Cheney will be ok.

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