Susanne...............
Exactly.................enjoyed last night's surprise ending..................great hook for watching next week, which I would anyway, and also hoping that other shoe never drops.

It's about time that a wealthy venture capitalist is shown as the good guy, and the government is shown as the bad guy. I watch the show waiting for the other shoe to drop, but so far it hasn't.

Susanne..........."Bobby Axelrod would be disappointed in my lack of foresight. --grins--"

Loved that one......................................

Well, Susan the $450 million is about 8 cents a share based on 5.5 billion shares outstanding.
Apple had earnings of $3.28 per share in the most recent quarter, more than 40 times the settlement amount. (Not that any amount of earnings should justify government meddling.)

While I did understand your point, I thought a little sarcasm would be amusing. I appreciate you taking time for further explanation, too.

Hear hear. Really famous instance from the early 20th century was this small plate that Ford attached to the dashboard of their cars that stated:

"THIS CAR IS SOLD SUBJECT TO RESTRICTIONS AS TO PRICE AT WHICH,
AND TERRITORY WITHIN WHICH IT MAY BE SOLD OR DELIVERED. ANY
VIOLATION OF SUCH RESTRICTIONS MAKES THE SELLER OR USER AN IN-
FRINGER OF SAID PATENTS AND THE TITLE OR THIS CAR REVERTS TO THE
Ford Motor Company, Detroit, Mich., U.S.A."

Ford apparently tried to enforce this on a purchaser of one of its cars that, as the story was told to me, tried to sell his Model T Ford (back when it was relatively new) for a price that was in violation of Ford's policy, to one of it's competitors (which was also verboten), and Ford tried to reclaim the vehicle to keep the competitor from getting this car. Seems silly, but that was then. Anyway, the new owner, rather than turning the car over to Ford (for free) per its demand, took them to court, and won.

IIRC... I did a report on this when I was a kid for school... the court said Ford DID have the right to set the terms and conditions under which it could sell it's new automobiles, but once the car had changed ownership from Ford to the purchaser Ford lost all rights to said car. The later dash plates no longer had this wording, and I was told it was because of this court case that instilled in the owner of something the right to do with it as they please. I also heard of a similar case, years later, involving a rather garishly-redesigned and accoutermented Rolls Royce, and similarly the courts decided once the car was sold, the owner could do as they wished with it.

I still contend that, whether it was doing it of its own volition or in concert with their distributors, Apple has the absolute right to set whatever price it so desires... and if it comes to that price point decision after discussions with their retailers, then that's their right - and the government should keep it's obtrusive nose out of it.

Then again, being the government... Keeping their nose out is a concept foreign, no, make that alien, to them...

The point was that the publishers did not want e-books to essentially cannibalize their print businesses. It is an entirely rational strategy based on elasticity of demand. Apple, on the other hand, might have preferred a lower price point simply so they could get more volume. After all, at the margin, there is virtually NO WORK for Apple to do in selling an e-book. Therefore, all that matters is the total revenue from Apple's standpoint (and that might be maximized by a lower price point per book). That isn't the same interest that the publishers have since publishers have costs associated with each individual sale (such as royalties for the authors).

Poor Apple, being forced to collect more for the same amount of work. Guess they just had to do it.

The government my should just get out of it

The issue is that retail price maintenance policies are usually illegal (forcing the retailer to set a specific price named by the manufacturer even though the manufacturer will see no more money as a result). They shouldn't be because I should be able to dictate any policy I want -- if I won't sell you my book unless you do a headstand for an hour that should be my right. Of course, if you turn around and decide to violate my agreement with you then really all I should be able to do is stop selling to you. In other words, Apple was NEVER forced to sell for the publisher's price point -- that is, provided they didn't mind not getting additional e-books later.

Actually, it is a little more complicated than that. In a free market, the publishers could ALWAYS sell it for more to Apple (say $12 if they wanted to do so!) and then Apple COULD cut the price to $9.99. However, the publishers did not want Apple to sell it for $9.99 under ANY circumstances. Essentially, the publishers told Apple to set the price to the consumer even though they weren't necessarily getting any more money from Apple for it.

It won't actually work that way. The publishers have exclusive rights (copyright -- created by government!) to the product and will threaten to withhold product if the retailer doesn't follow suit. That's their right to do so as they are the producers of the product. Thus, you are incorrect about the vendor collusion being hard to maintain so long as the products are differentiable. They again, so what? If a company wants to withhold its wares that is their right. You cannot force me to sell to you and the government shouldn't be able to force me to sell to you either.

I also see nothing wrong with the concept of price-fixing by a company but I do need to correct you that Apple wasn't held liable for setting the prices of a product it produces. It was found liable for conspiring with the producers (publishers) to fix the prices at a price point that the publishers preferred. It was the "retailer" rather than the "producer" of the e-books in question and it merely was listening to the publishers as to what the price point should be.

In truth, the producer has no business telling the retailer what the price needs to be either and that is where the problem also lies. In essence, if I purchase something from you, it is now mine and I can sell it for whatever price I desire. Now you have the right to not sell to me in the future if I sell at a price lower than you prefer (and that is actually what was occurring) but you have no right to insist on "retail price maintenance" policies as a manufacturer after I have purchased the product from you (again, you can decide not to sell to me if I refuse to follow your price guidance but that is another story entirely).

In essence, the free market would have hit back at Apple and the publishers in the end anyway. Let them reap what they sow, so to speak but let the free market do it rather than the overbearing hand of government.

but the various companies that "colluded" could just consolidate into one company and then it would be ok? The free market is when it is free of government orders. Companies join together to get competitive advantages all the time, and that is part of the free market. In the end, trying to force consumers to buy your product at higher prices by collusion doesn't work either. Small upstarts and innovations tend to break up the market anyway.

As to apple, I haven't bought their e-books, since I like Kindle and get them from amazon.

The concept of monopolies doesn't really apply in the long haul as its very hard to maintain a monopoly (look at microsoft- it was a monopoly pretty much, but it got top heavy and lost its position to apple.)

No, that is not a free market as it reduces free-market competition.

Actually even if vendors get together and set a price, so what. Thats free market too. In practice, vendor collusion is hard to maintain as someone always wants to cheat and get a little more of the market by cutting prices.

So books are a little different than a lot of normal products. They are intellectual works which are protected as monopoly products through copyright laws, thus there are no pure substitutes for the works themselves. And indeed, the works themselves are unique - what is at issue is the distribution method and the price of that distribution. And what was ruled is that the distributors who would normally be competing with each other to distribute the product are now colluding in order to drive up their profits by attempting to circumvent normal market forces.

I would note that the author gets paid a fixed price per book sold - not a percentage of gross sales. So it doesn't matter what price is charged by the distribution channel, the author is getting their agreed-upon cut.

In theory, its vendor collusion setting prices vs free market competition setting prices. In reality with government interference it's rarely a free market.

Any judgment based on Sherman Anti Trust is of course, anti free market. The more the government tries to regulate prices, the more pricing gets screwed up. Inevitably, the ones who suffer are the public. There are hundreds, perhaps even thousands of examples of this which illustrates that when you try to manipulate the free market, no one wins, sometimes not even the manipulators. If you want the proof, go do the research. I'm old and tired.

How do you think prices are set? If we look at it as an auction, then bid and asked are the vehicles for setting the "market" price. If Apple is asking for $15, and you accept, then that's the "market" price. If you go to Amazon, and pay $9.99, then THAT's the "market" price. Of course, there is no ONE market price, but a collection of prices, that average out to the "market" price. When you look at the supply/demand curve, the equilibrium price is the so-called "market" price, but there are a host of prices in that graph, from the point at which demand and supply are far apart, all the way to "equilibrium." How do you think the supply curve works? The price at which the producer is willing to supply his product is the "price." What the article is saying is that the producer has no right to set the price at which he's willing to sell his product, but must sell at the cheapest price, for the sake of fairness, or some such drivel.

Is it any wonder people use the likes of "Pirate bay"

Damn, I should have shorted Apple and then bought in at the slump. Should have seen it coming - Bobby Axelrod would be disappointed in my lack of foresight. --grins--

Regardless that Apple can absorb this hit, the idea (to me) that a company can be held liable for setting the prices of a product it produces isn't just obscene - it feels like a scam devised by the Socialist Rotter Racketeer-class under one of those "you must participate in our fair share scheme".

If their ebooks are better... then damned skippy, they should get what the market will bear for them. And if you want to read their books... get Apple's e-reader.

Interesting. Thanks for the article. A ruling that collusion did take place on the part of Apple and book publishers isn't really my idea of free markets setting prices.

Well judgments on Apple for seeking its own contract arragements when others have done precisely the same is picking winners and loosers...whether gov fattens its own pig or not. Just sayin'. Good point made by the author as to whether it's high, low or in between don't matter.