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

"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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    Also, UK customers should see the UK store's Top 100 free bestsellers.

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

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

More on raids in price-fixing probe. Publishers "explain" high ebook pricing.

The title should read, "...try to explain" the fixed higher-pricing of e-books.  See earlier article here on the raids.

The Guardian has a piece today on the raids, which includes quotes from some publishers trying to explain or defend the fixing of pricing so that prices are generally much higher and must be the same at all online bookstores needing Agreements with the Big 5, with no way for the online stores to offer sales or lower prices no matter what the case.  Random House has decided not to join Agency pricing in Europe during this time of probing questions.

Benedicte Page and Leigh Phillips report from Brussels, where they say that officials there have "refused to say how many or which publishers were targeted although a spokesman for Hachette, famed for its dictionaries, confirmed that it was among them.  The inquiry is understood to be focused on French companies."

Excerpts of particular interest, emphases and bracketed comments, mine:

' The EU competition spokeswoman, Amelia Torres, said: "We have suspicions of collusion to keep prices high.  But if our suspicions prove to be founded, this would have an impact across the EU because ebooks are sold across borders."  She added that the firms involved face fines if the commission finds "hard evidence".

The development comes on the heels of an investigation in January by the UK's Office of Fair Trading into whether arrangements between certain publishers and retailers over the sale of ebooks "may breach competition law".

Investigation teams have asked many of the biggest London publishing houses, including HarperCollins, Hachette and Penguin, for all records and documents relating to ebook sales.
. . .
Publishers see the agency model as crucial because it allows them to trade with Apple [which created the Agency plan and insists on it], which was already using it for iTunes, and also to control the price at which their ebooks are sold.
. . .
Ronald Blunden, Hachette's head of communications, denied that the company engaged in price fixing. "Emphatically no," he said. "We are dealing with distributors [such as Amazon] who have considerable clout.

"We found that in the US, electronic retailers began to apply large discounts on ebooks, driving the cost down.  Steadily the spread between the price of a printed book and an ebook became so substantial that we felt it was just unacceptable."

"It's important for the publisher to control the retail price," Blunden continued. "We don't want the items sold below cost, as the perceived value of books becomes damaged.  Once this happens, can we expect online retailers to absorb the cost of financing the editing and publishing of books?"

John Makinson, the Penguin group chief executive, argued that the "very important" agency model contributes to a competitive ebooks marketplace.  "To have vibrant competitive markets, it's important that Apple and the other digital vendors have a place in that market.  The agency model made it possible to have that choice," he said.

Makinson added that he saw "a certain irony" in an OFT [Office of Fair Traiding - UK] investigation designed to ensure competition and consumer choice.  "That in our view is what the agency agreement has provided," he said.

Their view of 'competition' is that the online booksellers must not be allowed to offer lower prices, which means online bookstore "Sales" are no longer possible and the customer cannot look for a lower price elsewhere as it would be fruitless.  Some consider this 'price fixing' while others consider it necessary publisher-control of book pricing, no matter how artificial or without reason.]

Novelist Nick Harkaway, author of The Gone-Away World, agreed. "If the agency model is really a problem under EU law, the law is the problem, not the industry," he said. "Otherwise you fall back into a situation where Amazon controls the market.  This is not to demonise Amazon, but they are a massive portion of the physical market and if their wholesale model also dominates the digital book market, it becomes much harder to negotiate with them." '

The Bookseller's deputy editor, Philip Jones, feels that if you let the market decide, then ebooks will become "too cheap" and they'll be unable to pay authors, editors or all the infrastructure that sustains the industry."

Yes, if an industry or individual companies (as we saw with digital music and with companies still limiting themselves to distributing physical copies of DVDs) cannot find a way to adjust to a vastly changing world, they won't be able to sustain the infrastructure as it stands.  The answer is not unceasing efforts to Stop the World from moving naturally (and insisting customers just pay up, and up) but to modify their infrastructure to reflect the real world and evolving technology, no matter how upsetting it may all be for them to have to change anything.

Read more at The Guardian story.

EARLIER BLOG ARTICLES ON THE E-BOOK PRICING WARS, WITH SOURCING
A Kindle World Blog history of articles on the e-book pricing wars


Kindle 3's   (UK: Kindle 3's),   DX Graphite

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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.
UK-Only: recently published non-classics, bestsellers, or highest-rated ones
    Also, UK customers should see the UK store's Top 100 free bestsellers.