I’m a fan of their products, but not their methods. That includes both Apple and Amazon. I’m also a business partner.
I’m not thrilled with Apple’s methods on many, many levels. Being on the receiving end of Apple’s processes and rules isn’t fun. And frankly any scalable (insert large) business can’t scale with a 30% cost of good sold for a channel that is nothing more than a delivery or maybe advertising platform. It’s like a trucking company getting 30%. As much as Apple wants to believe they are bringing tremendous value as a channel, they aren’t. They are just using their market power aggressively.
But on to the point. Apple has basically told the DOJ that they firmly disagree with the DOJ’s position that they and 5 partners (publishers) colluded to fix prices. And Apples says they will fight. In this case I agree with Apple…
When these supposed illegal price fixing actions were going down, Amazon not only owned the market for eBooks, but more importantly they were using prices to sell digital crack. Let me explain
As anyone within the industry knows, Amazon was selling eBooks below cost. Now some articles said that was all ok, because consumers were benefiting. But let’s be clear. This was not act of charity. Amazon was working aggressively to buy consumers digital bookshelf, and to make eBooks a loss leader to their greater retail business. Achieving a monopoly on a consumers digital library creates a phenomenally strong lock-in. Don’t be confused, Amazon was trying to peddle digital crack and working to make it affordable and addicting.
The publisher’s adoption of the well known agency model is a good thing for the industry. Nothing in this model stops competition that will naturally happen in any industry. If consumers don’t like the price, they won’t buy, and other publishers will step in with lower prices and drive industry practice. The agency model also helps focus the industry on great products. What differentiates digital reading moves to features and capabilities, not just prices. Again – great for consumers. And prior to the adoption of Agency, Amazon was selling books at loss and using their market power to strong arm everyone. So agency pricing isn’t the issue. At issue are unfair practices that have long term negative effects on producers and consumers. And if anyone was guilty – it would be Amazon.
Pains me a bit to be defending Apple as other of their practices are not very nice, but in this case.. I have to agree with Apple.