With iBooks tied up by courts, Amazon runs roughshod over publishers

With iBooks crippled by courts, Amazon runs roughshod over publishers

When the U.S. government sued Apple over its entry into the ebooks market there was a fear that the action would result in Amazon, who already enjoyed a dominant market position, increasing their power to potentially abusive levels. So, was that fear justified? According to the New York Times:

Amazon's power over the publishing and bookselling industries is unrivaled in the modern era. Now it has started wielding its might in a more brazen way than ever before.

Seeking ever-higher payments from publishers to bolster its anemic bottom line, Amazon is holding books and authors hostage on two continents by delaying shipments and raising prices. The literary community is fearful and outraged — and practically begging for government intervention.

Sure, Apple went about establishing the agency model in the wrong way, but as a result of iBooks — of competition — some level of protection was afforded authors and publishers . More importantly, we — customers — got much better ebooks much faster. Amazon's Kindle service was dreadful before iBooks. It was bad scans at best. iBooks brought color and interaction and forced Amazon to evolve the Kindle format. That was good for everyone.

In hindsight, going after Apple while leaving Amazon unchecked might be looked back upon as one of the bigger bozo moves of the ebook era.

Rene Ritchie

Editor-in-Chief of iMore, co-host of Iterate, Debug, Review, The TV Show, Vector, ZEN & TECH, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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There are 67 comments. Add yours.

Carioca32 says:

The difference here is what Amazon is doing is legal, what Apple tried to do wasn't, so a really "bozo move" would be rewarding the criminal. I still rather have Amazon running roughshod on publishers, than having Apple running roughshod over us and raising ebook prices all around.

Rene Ritchie says:

What's the difference between "raising prices" and "dumping"?

What if Amazon threatened to destroy you if you didn't pay them prices that weren't sustainable for your business? You can still choose not to do business with Walmart. It's getting impossible to choose not to do business with Amazon.

"Give the people lower prices!" is like let them eat cake. And we fall for it over and over again.

Carioca32 says:

Rene, that's capitalism and the free market at work. Just like in the music industry, the publishing industry has grown too much fat, too much money has to go into marketing and too little money go to the authors, so we have way too many bad choices, and precious too little time to read. This is a train wreck that has been happening in slow motion for a couple of decades now, and Amazon is just the agent of change. It was bound to happen sooner or later. You're upset because Apple was caught breaking the law while Amazon, which you perceive as the vilain here, was not punished, I understand that, but I don't think that's really the main story here.

Rene Ritchie says:

No, I'm upset because I work as a writer and have had books published and have dealt with Amazon for years and not really enjoyed the experience. (I've yet to work with iBooks in that capacity.)

The free market only works with responsible government oversight.

Solamar says:

I completely agree Rene. I don't think it will get any better though.. They (DoJ/Govt) are quick to act if they see a 'political' reason / gain.. but just as quick to stall, and point fingers to avoid blame of a misstep.

DoJ goes out of it's way to block and maintain 4 national carriers.. then out of the other hand goes out of it's way to crush the only viable competition in a 2 horse race? Somethings wrong what that... Make Apple do anti-trust training, stop the current behavior.. but BLOCK them from the market? Thats normally only reserved for the most grievous repeat offenders.. how does that make any.. any sense?

Dev from tipb says:

Wow.

"as a result of iBooks, some level of protection was afforded" - assertion without evidence

"got much better books, much faster" - assertion without evidence

"In hindsight, going after Apple while leaving Amazon unchecked might be seen as one of the bigger bozo moves" - jaw dropping misunderstanding and misapplication of the law.

Do you seriously want a world where the law enforcement chooses whom to prosecute? The simple fact of the matter is that Apple violated two of the core pieces of anti-competition law - AND THEN PUBLICLY PUT IT IN WRITING. You act as if the DoJ had a choice to ignore that behavior, and should have ignored it, in case they were to find some provable allegations against Amazon 18 months later. That is not how the law works, and no right thinking person would even obliquely hint that is how the law should work.

Apple got caught first, and was punished first. Now allegations against Amazon have come to light, and, should they be proven, Amazon will be punished too.

Sent from the iMore App

Rene Ritchie says:

How is "better, faster" an assertion without evidence? You'd have to be totally ignorant of the Kindle format prior to and after iBooks to even begin to want to construct that thought, much less post it in a comment :)

And I'm not arguing the Apple prosecution here — though I'll continue to argue the court has become so broiled in controversy that it should probably be swapped out for one that appears more judicial — I'm arguing leaving Amazon unchecked is as if not more damaging to the industry.

Also, prosecution is sadly always selective. There are politics, personal feelings, and there are even legal monopolies. Sometimes it's even selective non-prosecution.

As a consumer, I want a vibrant ebook market.

Oletros says:

"You'd have to be totally ignorant of the Kindle format prior to and after iBooks"

The one that is totally ignorant here is you, the Kindle format prior to iBooks was exactly the same format after iBooks. Amazon bought Mobipocket in 2005 and the mobi format never was a scan.

"And I'm not arguing the Apple prosecution here"

Really? You have been doing this since when the trial started

Carioca32 says:

"Kindle format prior to iBooks was exactly the same format after iBooks" - That's exactly what I remembered, but Rene argued against it so eloquently that I thought I was remembering wrong.

Rene Ritchie says:

Kindle format after iBooks significantly improved. Before that, yes, many were bad scans.

KF8: http://en.wikipedia.org/wiki/Comparison_of_e-book_formats#KF8_.28Amazon_Kindle.29

Oletros says:

"Before that, yes, many were bad scans."

Are you aware that your link shows that you're wrong? Amazon has been using mobi format since 2005 and, in fact, it is still used because some Kindle readers don't support KF8 and no, they are not scans.

Rene Ritchie says:

You're misreading (or I'm miss-communicating).

Prior to iBooks, Kindle was black and white and not great. After iBooks they had to compete so KF8 added a ton of features.

Oletros says:

"Amazon's Kindle service was dreadful before iBooks. It was bad scans at best"

Trying to grasp how this can be misinterpreted, and no, prior to iBooks Kindle wasn't "bad scans at best"

Dev from tipb says:

Your post argues that pursuing Apple and not Amazon was a "Bozo move" - as if the DoJ could pick and choose, though at the time there was clear evidence of Apple's wrongdoing and none against Amazon. If you want bad behavior prosecuted, there was literally no choice but to go after Apple at that time. If I misinterpret your words, I apologize, but your article (and Tweets) do not reflect somebody who thinks selective prosecution is "sad" so much as somebody upset law enforcement chose not to engage in sad behavior that would suit your tastes.

Rene Ritchie says:

I think the proper remedy would have been to remove the most favored nation clause from Apple and forced them to compete on price or experience. That would have kept and effective counter-balance to Amazon and served public interest.

At the same time, an investigation into Amazon's practices could have turned up enough heat to take the edge of their behavior.

(I wasn't a fan of the browser ballot forced on Microsoft either — I'm an equal opportunity minimum government interventionist most of the time :) )

Dev from tipb says:

I too think the penalty phase on Apple was misguided - I would have preferred less direct oversight in return for allowing purchase links inside non-Apple apps like Kindle or Nook.

As for turning up the heat on Amazon, there typically needs to be a complainant, and perhaps the fact that there is not one yet is telling, but without it the DoJ is unlikely to do anything formally. With articles like Charlie Stross' http://www.antipope.org/charlie/blog-static/2014/05/amazon-malignant-mon... appearing weekly, that day may not be far off .

Oletros says:

"Amazon's Kindle service was dreadful before iBooks. It was bad scans at best."

You really don't believe that clear lie, do you?

richard451 says:

Yeah, that's a head scratcher. I'm kind of surprised Rene made that mistake.

Rene Ritchie says:

KF8 came out in 2011, 1 year after iBooks:

http://en.wikipedia.org/wiki/Comparison_of_e-book_formats#KF8_.28Amazon_Kindle.29

richard451 says:

Oh gosh, you are talking about the kf8 format? That's primarily used by childrens books and comics (I've never seen it on any of the books I bought, but anecdotal and all..). Do you use that format when you publish your own books or the older azw format?

Anyhoo,wasn't ibooks pre-2012 was just ePub? I think once iBooks Author came out in 2012, along with iBooks 2 (1 year after KF8), did iBooks get all interactive stuff.

Rene Ritchie says:

Nope. Winnie the Pooh shipped with the first iPad.

KF8 is what took Kindle into the future (or should take it — progress be slow)

Oletros says:

Winnie the Poo was not interactive, it was a simple epub book with color illustrations like a lot of other epubs, mobi or other formats.

richard451 says:

Just one more data point. This time from Rob McDonald, head of the US iBookstore under sworn testimony (i.e. no marketing speak);

“Q. And in fact, even after Apple launched its iPad, isn’t it true, sir, that Amazon
offered eBooks with embedded audio and video before Apple did?
A. That s correct ’s correct”

“Q. And, in fact, Amazon’s Kindle app for the iPad, the first Kindle app for the
iPad that came out the day that the iPad launched, the day that the iPad actually
went to market, allowed for choice in customization of fonts; did it not?
A. Correct.”

“Q. So isn’t it a fact, sir, that Apple’s sepia feature in iBooks wasn’t an innovation at
all?
A. We didn’t come out with it first, correct."

"Q. In fact, Apple just copied it from Amazon, correct?
A. I can’t speak to the nature of how we implemented it."

"Q. But that s what the document indicates, sir; does it not? ’s what the document indicates, sir; does it not?
A. That’s what this document indicates, correct."

"Q. And so would you agree with me, sir, that at the very least, the part of your
declaration that talks about changing the color of book pages from white to sepia can’t as being an innovation of the iBooks app isn’t entirely accurate?
A.Yes.”

Rene Ritchie says:

I agree changing fonts and colors wasn't "innovative", but the move to illustrated and interactive books was. And was all built using WebKit.

richard451 says:

makes sense. Odd that Apple didn't introduce any of those points in the trial.

Wyatt says:

Unfortunately, during a trial you don't always get to introduce all your points especially when you are being asked questions vs caking them. Lawyers are good at keeping relavent points to the contrary silent.

applejosh says:

My feeling is if there was a standard, non-DRM format that was used by all, it would help avoid these situations. With DRM, users become locked into an ecosystem. I am pretty much locked into Amazon's ecosystem. I have an e-ink Kindle (better at night and in the sun), but I can only put ebooks that come from Amazon on it (without going through the hassle of converting, etc.). If I had a Nook, I'd be equally locked in to their system because of the DRM. If the publishers would just drop DRM, I could theoretically move my ebook collection to different readers (with some conversion hassle), platforms, etc., and therefore have the flexibility to purchase books on multiple platforms and read them on whatever hardware I happen to have at the moment. When DRM is used, the users get locked in and are dependent on one vendor. For 62% of the ebook market, that's Amazon. For a while, they've had good hardware and prices, and a large selection to lure us in. Now that we're all locked in, they can start squeezing the publishers. If we had had DRM free books in a standard format, we could just go to another vendor to get the book and continue using our current hardware with little resistance. The vendor ceases to be the one controlling everything and must compete with others on merit and not because of lock-in. The vendors may not like that, but this benefits both the users (can purchase from anywhere and read anywhere) and the authors/publishers (if one vendor decides to play hardball, the users can still purchase elsewhere and use on their current hardware/software). As long as prices remain reasonable, most people will purchase rather than download pirated versions. Apple dropped DRM from their music, and the recording industry didn't dry up and die because of pirating. Make it easy for the users, and most will buy because it's easier that way and because it's the right thing to do.

Rene Ritchie says:

DMR-free is the ultimate solution for everyone.

At least most of the time. I still buy from iTunes because Amazon, despite word they'd bring Amazon MP3 to Canada in 2008, still isn't here.

(I buy a ton of comics and books from Kindle though. Including the entire James Bond series and, last week, a bunch of old Green Arrows: http://instagram.com/p/oPa1M7GM5u/ )

arbourable says:

Oh dear, Rene, you appear to have stirred-up a hornets nest of Amazon apologists! I didn't read the piece you linked to, but from what I can gather, Amazon are abusing their power in the ebook market. It's a great shame that the DoJ decided to interfere in the first place, they appear to have made a right mess of it.
Apple's entry into the ebook market brought some much needed competition and their "Made for iBooks" programme bought innovation to the space too. Most favoured pricing prevented Amazon from dumping product at below cost (a clear violation of anti-trust laws as I understand it) and a good solution to everyone concerned.
I hope Apple bring iBooks (and iTunes Music, Movies and TV Shows too) to Android (and WP) soon, so that everyone has a choice as to where they buy their media.

Carioca32 says:

"a good solution to everyone concerned" - Well, if you exclude the general public and Amazon, yes, it was a good solution for everyone.

arbourable says:

I don't believe that book prices increased after Apple opened the iBook store, except for the titles Amazon was dumping to destroy/prevent competition. No one wants the public to be overcharged for ebooks, but to squeeze profits out of the market altogether is a foolish and bankrupt policy and helps nobody.

Rene Ritchie says:

I'm only on one side: Mine.

Apple often (but not always) aligns their business in the best interests of customers. Dumping sounds like it's the best interests of customers, but only in the most short-sighted sense of the word.

richard451 says:

books prices certainly did go up (and profits declines along with author revenue). That's why everyone has been receiving $$ from the fallout of the DoJ (I got $42.56).

The Jimmy James says:

I hope Apple brings their software to Windows Phone and skips android. That would be hilarious, would legitamize Windows Phone, and it would make El Goog so angry they'd have no choice but to make a bold - and probably stupid - move.

Sometimes there's no better way to hurt an enemy than to help your own, mutual enemy. Sure, in the short term, you may be diminished, but when the cards get counted, you'll be the one with the stronger hand, as well as a partner willing to slip an ace under the table.

thepian says:

The e-books business is terrible until you are a recognised Author of traditional literature. Anything outside that specific profile is highly risky, and unlikely to pay off. After publishing 4 unique books, we are getting the heck out of there.

The value of information and text based entertainment is going to zero, and all you can do is focus on other areas.

dalyapp says:

Good point. Regardless of the who's right or wrong here, you have to wonder if there will be a disruption in the ebook business that will make it easier for people to publish and make some profit. I see the whole Amazon/Apple battle as the last gasp for traditional publishers to hold on to an older business model. I'm hoping for some change that will bring real benefit to consumers.

Sent from the iMore App

arbourable says:

Sure, try Kickstarter or self-publish. If you don't think publishers offer value, then go it alone.

escapedrift says:

amazon is corrupt and pays bribes. america government takes them as usual.

richard451 says:

I find it a bit humorous that the same companies who were found guilty of conspiring with Apple to screw over the consumer are now pleading for help for getting screwed over. Karma is a bitch.

arbourable says:

I must have missed that trial, can you provide a link?

arbourable says:

Nope, can't see where the publishers were found guilty of anything. I think you should correct your original comment to reflect reality.

richard451 says:

The publishers all settled out of court and agreed to work with the DoJ to stick it to Apple. It's true they did not enter guilty pleas but why did they work with the DoJ?

Rene Ritchie says:

How did they screw over consumers? They were afraid Amazon was devaluing books and their prices would never recover.

I want to pay a fair price for books, apps, etc. so I get more great books, apps, etc. That's in my best interests as a consumer.

The "market" wasn't pushing the prices down. Amazon selling below cost was pushing the market down. That's artificial and likely not sustainable.

arbourable says:

We'll said Rene. It's clear that Amazon wanted to establish a price and then squeeze the publishers on cost. Thanks to the DoJ, they may be successful.

richard451 says:

Book prices went up and revenue to authors went down. Book sellers were not allowed to set the prices for products they sold. It's pretty simple. There is a reason why all the publishers settled and turned evidence toward Apple (the internal emails show just how unscrupulous Apple can be). It's not fair when one company control the prices for products they don't make. Thankfully this was addressed in a court of law.

arbourable says:

Is there a link I can follow to check your assertion?

AdamChew says:

The $9.99 is a loss leader price used by Amazon to attract customers and not the normal price for all ebooks.

If you are interested the prices of ebooks did not increase as a result of Apple entering the market - http://www.salon.com/2014/01/12/amazons_bogus_anti_apple_crusade/

One more thing provide a link to the diminishing returns to the authors. Otherwise it is just a lie.

Dev from tipb says:

Incorrect - the price of ebooks overall did not increase, but the prices of ebooks PUBLISHED BY THE FIVE HOUSES APPLE INDUCED TO COLLUDE did increase.

http://www.the-digital-reader.com/2014/01/12/salon-coms-new-revisionist-...

Look at the graph in the middle of the article. If anything, the data is more damning - in the face of an overall downward trend in prices, titles involved in the Apple case still rose.

Rene Ritchie says:

I don't think that's quite right. Under agency book sellers absolutely could set their price, take 70%, and leave Apple with the other 30%.

The problem was the most favored nation clause that meant they had to offer the same price everywhere.

I was and am all for removing that, so publishers could set a higher price under agency.

But, it's BS revenue to authors went down. I've sold books on Amazon under the old model and it was terrible. I got 10% of retail and that was considered high. The publisher got 45% and Amazon kept 55%.

Under agency the publisher and I would split 75%, which is better.

richard451 says:

Here is a good summary of why the Agency model was bad for authors.

http://jakonrath.blogspot.com/2012/04/agency-model-sucks.html

With the agency model, authors made less money per unit, and sold fewer units (both statements supported by Apple and DoJ documents).

arbourable says:

Wow, what a pile of BS. Now that Amazon has been bolstered by the DoJ, what's happening now is bad for authors. Given its powerful position to set the price, Amazon is trying to force the price of an ebook down to $9.99. In other words, the publishers and authors will get $6.99 after Amazons 30% not $14.99

$14.99 results in $3.74 for the author (assuming authors get 25% as the link suggests)
$ 6.99 is $1.74 which is less. Much less.

Tell me, how does the reality of the situation align with the absolute BS spouted by the article you linked to?

Again, I hope Apple give the publishers an iBook app on all platforms so they can tell Amazon where to go.

Oletros says:

"The "market" wasn't pushing the prices down. Amazon selling below cost was pushing the market down. That's artificial and likely not sustainable."

People has been told to you a lot of time that that claim is wrong but you insist in repeating it. And the you say that you don't take sides?

Solamar says:

Sure, you can claim he's blind, but then look at what's happening iwht Amazon raising prices and continuing the trend! IT was AMAZON causing that price disruption.. now they are in the market alone basically and can continue said squeeze.. and the consumer pays MORE..

GlennRuss says:

"Amazon is holding books, and authors hostage on two continents by delaying shipments, and raising prices."
Just google,or your browser of choice for the articles. That is not capitalism, it's call extortion. Just search what has been going on with Hachette. All of this makes for good reading.

joshrocker says:

The book industry is going through what the music industry went through. Can Ebooks be sold for $9.99 and still be profitable for everyone? I believe they can. It's going to take some re-thinking and some form of restructuring from the book publishers, but it can be done.

Amazon may be strong arming publishers to keep the prices low, but that's not a whole lot different then what Apple was doing by using their presence to force prices higher. The only differnce was Apple's approach was illegal, Amazon's method is just kind of "jerkish".

On a personal note, $10 or so dollars is my ceiling for Ebooks. Before my Kindle, I very rarely bought books. Hardcovers were so expensive and by the time they hit paperback I had moved on to the next thing. When Amazon was able to offer $10 Ebooks I actually started purchasing books again. During Apples push to raise prices higher I stopped buying books. $15 or more dollars pushed them out of my impulse zone.

SockRolid says:

Today: holding books and authors hostage.
Tomorrow: holding music and video publishers hostage.
The Day After Tomorrow: holding all manufacturers hostage.

SockRolid says:

"In hindsight, going after Apple while leaving Amazon unchecked might be looked back upon as one of the bigger bozo moves of the ebook era."

I've heard from publishing industry insiders that the original Amazon investors have deep influence within the U.S. government. And it certainly seems like they're using that influence.

richard451 says:

What about Kobo and B&N? Do they also have deep influence within the US Government? Those bookstores also got the shaft from Apple and the publishers.

ewelch says:

What about them? They rum their businesses to make a profit. Amazon is not. They are working at almost no profit so they can destroy competition and take over markets. If you din't know that basic fact, then you have not been following the Amazon story well at all. They were selling eBooks at a dollar loss to drive prices down.

Finally since January Wall Street has figured out that their trust in Amazon was not a good idea and they are putting pressure in them to start making a profit of some sort. So n.ow Amazon is squeezing Hatchett for more money because their business model to dat is about to fail. And they are desperate to change things. Hatchett is just the first shot in this new battle.

All the naive worshipers of the idea of a pure free market don't like any kind of regulation that protects markets from predatory companies like Standard Oil in the early 20th Century, or Amazon now. Big surprise.

Rene Ritchie says:

Yup, arguably the best thing that could happen to Kobo and B&N is to go after Amazon for dumping and stop them selling below cost.

richard451 says:

Why? Because Kobo was decimated from Apple due to their illegal activities (Kobo iOS sales dropped by over 75%). There's a reason why Kobo supported the DoJ and not Apple via an Amicus Brief.

arbourable says:

And yet you support Amazon, who's dumping has put many bookshops out of business.

Jonas Slough III says:

I think when it comes to books I'll pay more at my local Mom and Pop bookstores (yeah I'm lucky to have a couple around me) than use Amazon. What they're doing to Hachette is border line extortion (Hey, nice publishing company you have here. Shame if something would happen to it.) Image going to a Ford dealership and they tell you no you can't have that Mustang on the lot until Ford gives us a better price. Fuck that.

Gus2259 says:

I used to be all for the lowest price and I didn't care who provided it. My viewpoint has changed. As Apple was prosecuted I began to really think about it. I'm not defending Apple. If they broke the law then they should be punished accordingly. Yet it didn't take a genius to see that if Amazon is selling below cost that it couldn't continue forever. If you dominate the industry to the scale that Amazon does, it makes it extremely hard for competitors to be successful which leaves you at the mercy of Amazon. If Amazon is raising their profits then who do you think will pay that. It's you the customer. In my opinion Amazon should be subject to the same scrutiny and if found guilty they should be punished according to their misdeeds.
So why did I lead off with "I used to be all for the lowest price?" If authors are not fairly compensated for their work, then what is the incentive for them to continue? Amazons actions to me seem counter to providing that compensation.