Understanding the EU's antitrust inquiry into Apple's iBookstore (Digital Trends)

Remember back in early 2010 when Apple launched iBookstore? The idea of selling electronic books wasn?t new ? the Kindle, Sony Reader, Barnes & Noble Nook, and other e-readers were already on the market, along with their associated book stores and third-party efforts like Google Books. But one thing that made consumers? jaws drop when Apple unveiled iBookstore was the price tags: New releases were initially priced at $12.99 to $14.99 each, compared to the $9.99 typically offered by Amazon and others. Now, the European Commission has launched a formal antitrust investigation looking into whether five major publishers ? perhaps with Apple?s help ? abused their market position to effectively raise the price of e-books in Europe.

J?accuse

The investigation specifically targets Simon & Schuster, Harper Collins (owned by News Corp), Penguin (owned by the UK?s Pearson Group), Hachette (part of France?s Lagardere Publishing), and Verlagsgruppe George von Holzbrink (which owns MacMillan). The EC intends to examine whether those publishers, perhaps in collusion with Apple, conspired to fix pricing for e-books. If so, the actions could be in violation of EU regulations that prohibit cartels and restrictive business practices. The EC notes that the fact they?ve launched a probe will not prejudice the outcome, but it will be treating the case as a matter of priority.

The EC?s investigation follows on the heels of a similar probe by the UK?s Office of Fair Trading earlier this year, and mirrors a class action lawsuit filed against Apple and the same five publishers in the Northern District of California earlier this summer. Earlier this year, the EC carried out unannounced inspections at the locations of several e-book publishers.

This week, the UK?s OTF closed its investigation ?on the grounds of administrative priority,? but will be working closely with the EC as it conducts its own inquiry.

Agency versus wholesale

Here?s how the logic of the anticompetitive argument works: Apple was the first e-book retailer to offer publishers an agency pricing model, rather than a wholesale pricing model. Under a wholesale pricing model, booksellers pay a fixed price for a particular book title, but are free to try to sell it to consumers at any price. They might be able to get a particular book from a publisher for $5, but under a wholesale pricing agreement they can try to sell it for $100 a copy?if they think they can find enough gullible consumers.

Under an agency model, publishers set the prices retailers can charge for books. Book sellers (like Apple?s iBookstore) are just agents of the publisher, and have to stick to the publisher?s prices. If a publisher decides a book should cost $19.99, then all retailers under that agency deal have to charge $19.99.

Publishers generally favor an agency model: it means prices for particular titles are consistent across a wide range of retailers,offering a better consumer experience, and publishers don?t have to get into complicated negotiations with individual booksellers, distributors, and partners, all of whom are angling for the best price possible. The agency model also makes it easier for publishers to manage their costs and revenue streams. However, retailers ? especially big retailers ? generally favor a wholesale model: Negotiate the lowest price possible, then sell as many units as they can at the highest price the market will bear. Big retailers benefit from wholesale models because they can leverage their buying power to make bulk purchases, lowering their per-unit costs and increasing their margins. Small, locally-owned bookstores might be able to match Walmart?s pricing on books, but they are almost certainly paying a higher price than Walmart for the same product, and making less money from selling it.

How is an agency model anticompetitive?

An agency pricing model isn?t anticompetitive on its own. However, the European Commission is concerned that Apple setting up agency-based deals with many major publishers at the same time had a negative impact on competition between online booksellers. After all, online booksellers using an agency model can?t really compete with each other by setting lower prices.

Since the introduction of iBookstore, a number of online booksellers have shifted to an agency pricing model. In most cases, they do it so they can continue to sell popular e-book titles from leading publishers ? like the five in the investigation. That includes Amazon.com, which was forced to convert over to an agency model in April of 2010. The question before the EC?s antitrust investigation is, essentially: Did Apple?s decision to go with an agency model in its iBookstore force the rest of the industry to convert to an agency model, effectively raising e-book prices for most consumers?

Is Apple to blame? Or merely a victim?

Apple?s launch of iBookstore corresponded to the release of the original iPad. Although Apple was (and remains) the dominant digital music retailer, the company had not yet branched out into e-books. In fact, Apple CEO Steve Jobs raised eyebrows in 2008 when he claimed in the New York Times ?people don?t read anymore,? leading many to question whether the iPad would be a capable e-reader. Nonetheless, the Amazon Kindle was seeing tremendous success in the marketplace, and Apple apparently decided that if the iPad was going to take on the Kindle? especially at a substantially higher price point ? it would have to be in the e-book business.

However, rather than make a deal with Amazon, Sony, Barnes & Noble, or other companies running e-book stores, Apple decided to chart its own course and integrate e-books into its existing digital goods infrastructure. After all, Apple was already handling music, movies, television shows, and apps. That meant Apple had to make its own deals with publishers; however, unlike selling all those other forms of content, which it helped pioneer, Apple came very late to the game on e-books.

Publishers had been chafing against Amazon?s discount wholesale model for some time. The wholesale pricing model was developed from the physical process of printing, shipping, and selling books. Publishers would sell to a retailer (like Amazon or the now-defunct Borders) or an distributor like Ingram, charging a price based on the suggested retail price and a discount schedule ? typically 50 percent off the retail price. But under this model, publishers who offered discounts on e-books that were the same as physical book discounts were effectively subsidizing e-book retailers, who were then able to cut e-book prices to consumers. That?s how Amazon started selling new titles at $9.99.

Publishers realized an agency model for e-books would be much more advantageous for them: Not only does it give them more control over e-book pricing and make for a more consistent customer experience across digital goods retailers, but it also brings in more revenue.

So when Apple knocked on publishers? doors and said ?Hey, we?d like to start selling e-books!? the major publishers may have realized they had Apple over a barrel, and replied with ?Sure. But we?re not going to make the same mistake with you we did with Amazon.? As long as enough of the major publishers held the line on only signing a deal with Apple if it used an agency model, Apple probably had a choice between agency pricing and a very thin selection of titles for the iBookstore. Publishers then used Apple compliance to force agency pricing on other e-book retailers, with Macmillan being the first to play hardball with Amazon over agency pricing.

How it might play out

If the publishers are found to have colluded to force Apple, Amazon, and others to accept agency pricing models for e-books, they could be forced to pay hefty fines and alter their business practices ??? that could mean a return to some form of wholesale pricing for e-books in the future. If Apple is found to have cooperated or assisted, Apple could also be on the hook for penalties.

European anti-competition law has no caps, and can extend to up to 10 percent of the worldwide revenue of each company taking part in the infringement, although the commission has wiggle room for lesser and higher penalties.

So far, Apple and Hachette have had no comment on the investigation; Harper Collins and Simon & Schuster indicated only that they are cooperating with the investigation, and representatives of Penguin and Macmillan have denied any wrongdoing.

This article was originally posted on Digital Trends

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The Business Finance Store Discusses How Financial Education ...

The Business Finance Store discusses resources for small businesses owners, employers and employees to improve financial literacy.

Santa Ana, CA (PRWEB) December 03, 2011

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Financial literacy is a broad subject, but for businesses, literacy can make a big difference in every aspect of work. Comparing and contrasting equipment costs, making estimates quickly and other tasks can definitely be improved with some financial literacy training. Small business owners and their employees could benefit from financial education by not only improving their knowledge but saving money as well. For more information and resources on financial education and financial literacy, visit the Business Finance Store blog.

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Source: http://pressreleases.bloginteract.com/2011/12/03/the-business-finance-store-discusses-how-financial-education-can-benefit-small-businesses/

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Video: Republican race update (cbsnews)

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Publishers warm to e-books on their own terms (Reuters)

PARIS (Reuters) ? Book publishers have survived the first stage of a digital revolution in better shape than the music industry and are now embracing the shift to e-books in their search for new revenue streams and lower costs.

The industry has been battered this year by a significant shift from physical books to e-books that has transferred power to Internet retailers led by Amazon and helped put some high-street chains like Borders out of business.

Publishers have fought and won for now a key battle to keep pricing control over their titles, unlike the music industry, which a decade ago allowed Apple to impose a flat rate of $0.99 on music tracks in its iTunes store.

Penguin and Hachette told Reuters this week they were quite optimistic that e-books would help them increase profitability and reach bigger audiences, although they had not yet figured out how to sell digital extras to readers.

"The consumer sort of slightly shrugs his shoulders and says: 'Well, that's marvelous but that's not something I'm going to pay for very much,'" Penguin Chief Executive John Makinson told the Reuters Global Media Summit.

As an example, he said Penguin had created an e-book of Jane Austen's Pride and Prejudice enhanced with clips from the Hollywood movie with Keira Knightley, as well as recipes and dance moves from the period, to no avail.

Children, he added, had taken more quickly to extra features, especially on touch screens like Apple's iPad. Many classic kids' books such as Alice in Wonderland and the Cat in the Hat have been rejuvenated in the digital form with added animation and games.

Hachette CEO Arnaud Nourry agreed that readers of e-books had proven conservative so far.

"Customers do not want these enriched things that we are talking about all day," he said. "I don't think we would have sold more Dan Brown books with recipes."

The shift to e-books, which is most advanced in the United States where Amazon catalyzed the market with its Kindle device and store four years ago, has already touched off changes to publishers' business models, distribution systems and costs.

While e-book prices are on average 20-30 percent lower than those of physical books, they save publishers the cost of storing and moving books around, and reduce the working capital tied up in inventory.

In markets where book prices are not regulated by law, including the United States and Britain, this has already made e-books more profitable for publishers than print books.

In regulated markets like France and Germany where laws prevent book stores and supermarkets from discounting in an effort to protect local culture and prevent the book from being a commodity like any other, print books are still more profitable.

In the United States, e-books account for about 25 percent of book sales by volume and 20 percent by revenue. In Britain, the figure is about 10 percent by volume, while the rest of Europe and Asia excluding Japan are just getting off the ground.

Germany, the world's second-biggest book market after the United States, was the first in continental Europe to get the Kindle and local language titles in April. Amazon launched the Kindle in France in October, and in Spain and Italy this week.

"We're just at the beginning of the curve," Nourry said.

Publishers have reached a kind of peace for now in their often stormy relationships with Internet giants like Amazon and Google, who were largely responsible for bringing the digital revolution to the world of books.

Google enraged publishers and authors in 2004 with a controversial book-scanning project it billed as an effort to make the content of the world's libraries available to all but was seen by opponents as intellectual property theft.

U.S. publishers and authors took Google to court over the matter in 2005. The parties have since tried to settle the case but the issue has meantime escalated and a U.S. judge rejected it in March.

Google has meanwhile scanned more than 13 million books and reached a pragmatic compromise with publishers and authors in many countries.

With Amazon, publishers fought an intense battle over how e-book prices would be set, opposing the Internet retailer's effort to impose $9.99 as a standard for new titles on the Kindle, Apple iTunes-style.

Ironically, it was only the emergence last year of Apple with its iPad as a counterweight to Amazon that allowed the so-called "Big Six" publishers to win back control of pricing.

In what was a major shift for the industry, the publishers, determined to avoid the mistakes made by the music industry, imposed an "agency model" in which they set their own prices.

In the traditional "wholesale model" prevalent in non-regulated book markets like the United States, publishers set a recommended retail price but the seller is then free to offer deep discounts.

With these fights behind them, Penguin and Hachette seemed to have mellowed in their attitude to their one-time foes.

"We had to bring Amazon into line and eventually we did," said Makinson. "The results have been good."

He said there was now a very competitive market in the U.S. with Google's eBookstore, Apple's iBookstore and Barnes & Noble's Nook -- to the advantage of publishers.

Hachette's Nourry, once one of Google's fiercest opponents during the book scanning row, is today rooting for the search engine company to sell more books: "I would love to see Google be a stronger animal," he said.

The evolution of the book market is still in its early days, however, and issues like piracy are re-emerging as digital booksellers try to replicate features popular with book-lovers, such as lending, in the digital world.

A new front has recently opened over Amazon's new Kindle lending library, which allows members of the website's loyalty program known as Prime to borrow a book every month for free.

The Big Six -- Hachette, HarperCollins, MacMillan, Penguin, Random House and Simon & Schuster -- have all refused to join the lending library, arguing that it devalues books in the eyes of customers.

Nourry said Hachette would not join the program even if Amazon offered it a slice of revenue from the lending.

"It's not that I am against libraries, or a book being sold and then read by 10 different people, but it's clearly a way invented by retailers to change the balance of power."

Makinson said Penguin would continue to talk with Amazon about the lending library concept, but that the issue was as much about the risk of piracy as pricing.

"Amazon is embarking on new initiatives that could put file security at risk and that would be not good for anyone."

Nourry said he would like to one day find a way for readers to lend each other e-books, but said copyright protection was currently more important as the industry's new business models were still fragile.

"My business consists of selling books," he said. "People who buy Kindles every 18 months and iPads for $600 -- they don't need our help."

(Reporting by Gwenaelle Barzic, Kate Holton, and Marie Mawad; Editing by Erica Billingham)

Source: http://us.rd.yahoo.com/dailynews/rss/digitalmusic/*http%3A//news.yahoo.com/s/nm/20111202/media_nm/us_media_summit_ebooks

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Penn State officials say applications up despite scandal (Reuters)

STATE COLLEGE, Pa (Reuters) ? Penn State officials on Wednesday said applications to attend the university that has been rocked by a sex abuse scandal are ahead of last year and reassured students worried about the school's reputation.

"Prospective students are saying, 'I really want to come to Penn State. I understand this isn't something that represents the whole university,'" Penn State President Rodney Ericksontold more than 400 students in a packed university auditorium who gathered for an evening question and answer session.

Of the 40,000 undergraduate applications received, only eight have withdrawn their applications, Erickson said, adding that applications are about 4 percent ahead of "last year's record rate."

Student questions were polite but often anxious following the shock news on November 5 that Jerry Sandusky, longtime former assistant to legendary Penn State football coach Joe Paterno, had been charged with sexually abusing eight boys over more than a decade.

The allegations forced the firing of Paterno and dismissal of university President Graham Spanier. Athletic Director Tim Curley and finance official Gary Schultz were also charged with perjury by the grand jury, with investigations continuing.

Paterno has not been charged and lawyers for all three accused have said they are innocent of the charges.

On Wednesday none of the students, who were joined by students watching via satellite at Penn State's many branch campuses, mentioned Sandusky, Curley or Schultz by name.

One student asked if there was a "rush to judgment" by the Penn State Board of Administrators in firing Paterno, while another student asked if the school was planning to take down the bronze Paterno statue outside of Beaver Stadium and to rename the library that now bears his name.

Erickson simply said "no" when a student asked if the university was bullied by national media into firing Paterno. There were no plans to remove the statue or change the library name, he said.

But students wondered how the scandal might affect tuition next school year and some worried that state lawmakers would punish Penn State by slashing its state aid.

"A lot of us are worried how the scandal is going to affect us after graduation," one student, a junior, asked Erickson and the seven other school administrators who joined him to answer questions during the two-hour forum.

Damon Sims, Penn State's vice president for student affairs, said students "don't have to worry about that" because many of the school's alumni are "re-emphasizing their commitment" for new graduates.

"Alumni want to open doors for you," Commonwealth Campuses Vice President Madlyn Hanes said. "Employers are still very, very interested in our students. I hope you have solace with that," she said.

"Perhaps this experience will make you a better person; a better employee," said Terrell Jones, PSU's vice provost for educational equity.

Henry Foley, Penn State's dean of graduate school, said the immediate task at hand for the university is to regain student trust and prepare them for the end of the fall semester.

"None of you are guilty," Foley told the students. "You may feel shame, but none of you are guilty of anything."

(Editing by Peter Bohan)

Source: http://us.rd.yahoo.com/dailynews/rss/crime/*http%3A//news.yahoo.com/s/nm/20111201/us_nm/us_crime_coach_students

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Queen Elizabeth II meets Yoko Ono in Liverpool

AAA??Dec. 1, 2011?12:29 PM ET
Queen Elizabeth II meets Yoko Ono in Liverpool
AP

Britain's Queen Elizabeth II, left, with Yoko Ono, right, during her visit to the Museum of Liverpool in Liverpool, England, Thursday, Dec. 1, 2011. With 8,000 meters of public space, the recently opened museum looks at Britain and the world through the eyes of Liverpool, with 6,000 objects showcasing the city's unique contribution to the world. Woman at center is unidentified. (AP Photo/Tim Hales-Pool)

Britain's Queen Elizabeth II, left, with Yoko Ono, right, during her visit to the Museum of Liverpool in Liverpool, England, Thursday, Dec. 1, 2011. With 8,000 meters of public space, the recently opened museum looks at Britain and the world through the eyes of Liverpool, with 6,000 objects showcasing the city's unique contribution to the world. Woman at center is unidentified. (AP Photo/Tim Hales-Pool)

Britain's Queen Elizabeth II, left, meets Yoko Ono, right, during their visit to the Museum of Liverpool in Liverpool, England, Thursday, Dec. 1, 2011. With 8,000 meters of public space, the recently opened museum looks at Britain and the world through the eyes of Liverpool, with 6,000 objects showcasing the city's unique contribution to the world. (AP Photo/Tim Hales-Pool)

Britain's Queen Elizabeth II, second left, meets Yoko Ono, right, during their visit to the Museum of Liverpool in Liverpool, England, Thursday, Dec. 1, 2011. With 8,000 meters of public space, the recently opened museum looks at Britain and the world through the eyes of Liverpool, with 6,000 objects showcasing the city's unique contribution to the world. (AP Photo/Tim Hales-Pool)

Britain's Queen Elizabeth II, left, meets Yoko Ono, right, during her visit to the Museum of Liverpool in Liverpool, England, Thursday, Dec. 1, 2011. With 8,000 meters of public space, the recently opened museum looks at Britain and the world through the eyes of Liverpool, with 6,000 objects showcasing the city's unique contribution to the world. (AP Photo/Tim Hales-Pool)

Yoko Ono waits to meet Britain's Queen Elizabeth II during her visit to the Museum of Liverpool in Liverpool, England, Thursday, Dec. 1, 2011. With 8,000 meters of public space, the recently opened museum looks at Britain and the world through the eyes of Liverpool, with 6,000 objects showcasing the city's unique contribution to the world. (AP Photo/Tim Hales-Pool)

LONDON (AP) ? Queen Elizabeth II has met Yoko Ono on a visit to the birthplace of The Beatles.

The British monarch chatted with Ono, widow of John Lennon, on a visit to the Museum of Liverpool in the northwest England port city where the Fab Four formed.

Ono said she was impressed by the queen's burgundy coat, dress and matching hat, saying it "made her look so young, so elegant. She is always elegant. It's always nice to meet her."

In honor of the queen's trip to Liverpool on Thursday, the band of the Coldstream Guards played a medley of Beatles songs during the Changing of the Guard at Buckingham Palace in London.

Associated Press

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Security, amenities of Anti-Wall Street camps lure homeless (Reuters)

SAN FRANCISCO (Reuters) ? Oscar Wesley McKinney doesn't carry a placard, and he doesn't chant slogans. He's not even sure he agrees with the message of the Occupy Wall Street movement.

But a month ago he left a ballpark where he had been sleeping outdoors and moved into a protest camp in San Francisco's Financial District for one simple reason: "I know my stuff is going to be here when I get home from work."

Such practical considerations have drawn hundreds of homeless people from the "skid row" areas of their cities to relatively safer shelter with more amenities in the encampments of anti-Wall Street activists around the country.

The presence of homeless contingents in the camps has highlighted the very economic disparities in American society that the Occupy movement is protesting against. But with them has come the squalor, drug abuse and mental illness often associated with life on the street.

Political leaders in some major cities have cited those same issues as reasons for evicting the camps, usually after first trying to lure protesters away with incentives that have included assurances of providing shelter for the homeless.

Police swept away a large camp in Los Angeles this week, arresting hundreds of protesters as the city joined the ranks of other municipalities that lost tolerance for camps aligned with the 2-month-old Occupy movement. Philadelphia protesters vacated a similar site under threat of a raid.

Even liberal San Francisco, home to one of the largest remaining Occupy settlements, is trying to persuade campers to trade the downtown Justin Herman Plaza for a new site 2.5 miles away, pointing to substance abuse and sanitation problems.

No one has counted how many of the roughly 300 people who eat at the San Francisco camp every night are homeless, but it is clear that it has become a beacon for the down and out.

In Los Angeles, the homeless accounted for around a third of the roughly 800 people who camped outside City Hall, and homeless contingents were also noted in New York and Philadelphia.

"We're happy to accept responsibility for San Francisco's illegitimate children," said Chance Martin, a homeless advocate who volunteers at the camp.

AN UNCOMFORTABLE ISSUE

Organizers say the problems of the homeless plagued the city long before the Occupy movement came along, and that the camps have simply forced the mainstream public to confront an uncomfortable issue long overlooked or hidden from sight.

Ryan Landis, who arrived this week in the San Francisco camp, said Justin Herman Plaza was simply his most recent stop in a sorry path that began when the recession destroyed his landscaping business in Grass Valley.

Struggling with drug addiction, Landis lost his house and went through a divorce. After a drug treatment clinic in the northern California town of Redding turned him away, Landis stumbled across a small Occupy camp setting up in that town. Activists there referred him to San Francisco, 200 miles away.

"San Francisco has more opportunities for growth," he said, as he pulled a black rolling suitcase into the Occupy camp, a stone's throw from posh restaurants and the Federal Reserve building. "This city is famous."

Occupy protesters have largely welcomed the homeless in their makeshift communities, touting them as a legitimate part of the 99 percent and sharing food and medical assistance.

Those factors helped attract Gary Boatwright from skid row in Los Angeles -- a 50-block area believed to harbor the highest concentration of homeless in the nation -- to the now dismantled Occupy camp in that city in early October.

"The 24-hour Porta Potties is a big one," Boatwright said. "Toilet paper is another big one, and you don't have to take your tent down."

The camps have also offered homeless people a reprieve from city ordinances aimed at rousting them from public spaces, including one passed this year in San Francisco that bans sitting and lying on sidewalks during the daytime.

Maria Foscarinis, executive director of the National Law Center on Homelessness and Poverty, said it could be harder legally and politically for cities to use such laws against Occupy campers because "they are making a public statement."

About half of U.S. cities prohibit loitering or camping in public places, according to a survey by the center released in November, and that number is rising. San Francisco officials bill that city's ordinance as humanitarian.

"The sit-lie ordinance was designed to help the homeless," San Francisco police spokesman Officer Carlos Manfredi said, adding that officers who find people sleeping on sidewalks give them information about city services, including shelters. Only repeat offenders face punishment.

INCENTIVES

As cities have sought to remove the Occupy camps from often prime downtown locations, they have often focused their efforts on incentives that could also appeal to the homeless.

Los Angeles and other cities, including Philadelphia and Oakland, offered shelter beds to homeless campers before shutting down their settlements.

David Snow, a University of California at Irvine sociologist who studies homelessness, said it was only natural to find a connection between Occupy protests and homelessness given the protesters' focus on economic inequality issues.

"The rise of homelessness in the 1980s could be seen as the canary in the coal mine signaling a rise in inequality that started in the 1970s, continued in the 1980s, accelerated in the 1990s, and is now reaching a crescendo," he said.

Counting the homeless has always been difficult. But the U.S. Department of Housing and Urban Development tallied 643,067 people nationwide living without permanent shelter on a single night last January, about the same number it has documented each year since 2007. However, the agency found that more of those on the streets were families.

San Francisco officials say they regularly offer shelter services to people in the Occupy camp. The city also has offered campers a site 2-1/2 miles away from Justin Herman Plaza in a former school. City negotiator Mohammed Nuru said protesters could still pitch tents there because, as he put it, "tents are part of your culture."

But that site was not specifically geared to the homeless. The proposed agreement also prohibits cooking, children and pets, and would allow city officials to inspect the inside of the tents, all of which could be deal-breakers.

In nearby Oakland, about 18 people from the Occupy camp there accepted that city's offer to move into shelters, four of whom health workers had been trying to lure indoors for years, said Susan Shelton, the city's community housing manager.

After Oakland's camp was shut down last month, activists continued a focus on charity, including a plan to serve turkey in front of City Hall on Thanksgiving that police interrupted.

"That was the main thing we were doing, feeding the homeless," organizer Julion Lewis-Tatman said. "And they came and shut us down."

(Additional reporting by Jason Kandel and Steve Gorman in Los Angeles and Dave Warner in Philadelphia; Editing by Cynthia Johnston)

Source: http://us.rd.yahoo.com/dailynews/rss/us/*http%3A//news.yahoo.com/s/nm/20111202/us_nm/us_protests_homeless

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