Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report

America's many thirty-somethings

Jun 20, 2019

Latest Episodes

Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Corner Office from Marketplace
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Tech
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Make Me Smart with Kai and Molly

Is Apple playing fair with e-book prices?

Molly Wood Aug 11, 2011
Share Now on:
HTML EMBED:
COPY

The suit, filed by Seattle based law firm Hagens Berman, says that Apple and the publishers secretly agreed to sell books using what’s called an agency model. That’s where the publisher decides what the book will cost the consumer and then the retailer (Amazon, Apple, Barnes & Noble) collects a set commission. This model contrasts with the wholesale model where a retailer buys the book and charges whatever it wants to the consumer.

That wholesale system had been what Amazon was using ever since it launched the Kindle back in 2007. At the time, Amazon was charging $9.99 for books even though it was paying the publisher more than that. Counter-intuitive? You’d think so, but Amazon was trying to make a massive land grab of the e-books market and was willing to lose some money in the short-term for more market dominance down the road.

Around the time Apple got into the e-books market in a more serious way with 2010’s iPad, the model shifted to agency, which meant that Apple wouldn’t have to incur the same losses that Amazon had. Steve Berman of the law firm Hagens Berman, which filed the suit, says “Apple and five of the largest publishers got together and agreed to fix the price or the floor at which e-books could be sold at any e-book distributor like Apple or Amazon.”

As far as evidence, Berman points to the timing of the shift and says, “Second, we know that in the Apple agreement with the publishers, there are actual restrictions that say you can’t allow any other retailer to sell at a lower price than Apple. So that is in effect a written agreement to fix prices. Third, we know when Apple came out with iPad, (Steve) Jobs was asked how are you going to compete since Amazon has a lower price? He said there will no longer be a lower price in the market. So he knew that the publishers were going to force Amazon to raise prices.”

Mike Shatzkin is founder and CEO of the publishing consulting firm Idea Logical. He believes the shift to the the agency model came about honestly and that it is fairer to retailers. “This creates consistent price across all retailers and eliminates the ability of one deep pocketed retailer to drive everybody else out of the market.”

Also on this program, a new technology to make you vibrate more when you watch movies or play video games. Because maybe you’d enjoy vibrating more.

If you’re a member of your local public radio station, we thank you — because your support helps those stations keep programs like Marketplace on the air.  But for Marketplace to continue to grow, we need additional investment from those who care most about what we do: superfans like you.

Your donation — as little as $5 — helps us create more content that matters to you and your community, and to reach more people where they are – whether that’s radio, podcasts or online.

When you contribute directly to Marketplace, you become a partner in that mission: someone who understands that when we all get smarter, everybody wins.

Make a good investment!

Looking for a great deal?
Get ALL THREE of our new thank-you gifts when you donate $120.

This is a limited time offer – so act soon!