From The Wall Street Journal:

In a potential major setback for Apple Inc., a federal judge who will preside over a coming antitrust trial that will determine whether it engaged in a conspiracy to raise prices for e-books said on Thursday that the government is likely able to prove its case against the computer maker.

The Justice Department sued Apple and five major publishers, alleging they colluded to raise the price of e-books in response to discount pricing by Amazon.com Inc. The publishers have all entered into settlements with the Justice Department and in a separate lawsuit by a group of state attorneys general.

. . . .

On Thursday, U.S. District Judge Denise Cote, acknowledged that she hadn’t reviewed all of the evidence in the case and that no final decision has been made. But she said her preliminary view favors the U.S.’s theory at trial.

“So, understanding that this is a tentative view, before I have the benefit of the testimony of the witnesses and further argument from counsel, I believe that the government will be able to show at trial direct evidence that Apple knowingly participated in and facilitated a conspiracy to raise prices of e-books, and that the circumstantial evidence in this case, including the terms of the agreements, will confirm that,” the judge said in a lengthy and, otherwise, uneventful hearing Thursday afternoon.

. . . .

Orin Snyder, a lawyer for Apple, said after Thursday’s hearing that the company strongly disagreed with the court’s preliminary statements about the case.

Link to the rest at The Wall Street Journal (Link may expire) and thanks to Joshua for the tip.

From The Verge:

Amazon has opened pre-orders for its Kindle Fire tablets in over 170 countries and expanded its Android Appstore in nearly 200 regions . It’s the biggest device rollout the company has embarked on since it entered the tablet market, and sees it take on Apple in terms of availability and distribution. Before today, the Kindle Fire was available in only seven countries — including the US, UK, Germany, France, Italy, Spain, and Japan.

. . . .

Selling its Kindle Fire models at low margins, Amazon’s tablets have consistently topped the charts as its most popular product. Amazon is clearly looking to compete with Apple on price and availability, with a lock in to its broad ecosystem.

Link to the rest at The Verge

From the Amazon Media Room:

Today, Amazon Publishing announces Kindle Worlds, the first commercial publishing platform that will enable any writer to create fan fiction based on a range of original stories and characters and earn royalties for doing so. Amazon Publishing has secured licenses from Warner Bros. Television Group’s Alloy Entertainment division for its New York Times best-selling book series Gossip Girl, by Cecily von Ziegesar; Pretty Little Liars, by Sara Shepard; and Vampire Diaries, by L.J. Smith; and plans to announce more licenses soon. Through these licenses, Kindle Worlds will allow any writer to publish authorized stories inspired by these popular Worlds and make them available for readers to purchase in the Kindle Store.

Amazon Publishing will pay royalties to both the rights holders of the Worlds and the author. The standard author’s royalty rate (for works of at least 10,000 words) will be 35% of net revenue. As with all titles from Amazon Publishing, Kindle Worlds will base net revenue off of sales price—rather than the lower, industry standard of wholesale price—and royalties will be paid monthly.

In addition, with the launch of Kindle Worlds, Amazon Publishing will pilot an experimental new program for particularly short works—between 5,000 and 10,000 words. For these short stories—typically priced under one dollar—Amazon will pay the royalties for the World’s rights holder and pay authors a digital royalty of 20%.

Beginning today, interested writers are encouraged to visit Kindle Worlds (www.amazon.com/kindleworlds) to learn more and get a head start on writing.

. . . .

 

World Licensors benefit from Kindle Worlds because:

• It’s an entirely new way to monetize their valuable franchises
• It allows them to extend their Worlds with new stories and characters and more deeply engage with existing fans, while also reaching new audiences
• Amazon Publishing will work with them to establish content guidelines that balance flexibility and openness for writers with what’s reasonable for the franchise

. . . .

Writers benefit from Kindle Worlds because:

• Amazon Publishing has already secured the necessary licenses to write about any Kindle World
• They can earn royalties writing about established characters and universes
• The Kindle Worlds self-service submission platform is easy to use

Link to the rest at Amazon Media Room and thanks to Margaret for the tip.

This is an interesting attempt to commercialize fanfic. As you might imagine, the copyright issues for intertwined works by two authors are interesting.

From ReadWrite:

From the earliest days, it was clear to me (and a few others, obviously) that Amazon was no ordinary company, at any level. However, three attributes set it (far) apart in my mind:

1. Vision and ambition that were orders of magnitude beyond those of others team that I encountered (until, that is, I met Google);
2. A cult-like dedication to customer experience/satisfaction that permeated every decision made by every person at the company; and,
3. A business model that not only valued long-term cash flow and absolute profit potential, but also deemed near-term profits and profit margin largely irrelevant.

Individually, these characteristics have been powerful; in combination, they have been revolutionary. Jeff Bezos’ worldview gave his entire team permission — in fact, it gave them the mandate — to think Big, with a capital “B.” Customers’ pure delight with every Amazon interaction gave the company permission to sell (almost) anything to (almost) anyone.

And, finally, management’s clarity of financial intent (i.e., to perpetually focus on long-term potential) has, from day one, conditioned shareholders and Wall Street to expect a business that will forever be amorphous and unpredictable, with razor-thin margins.

. . . .

Liberated from more typical corporate constraints, Amazon has evolved like few other companies in history — from its humble origins as an online bookstore into: Amazon Elastic Cloud Compute, Amazon Marketplace, Amazon Flexible Payments Service, state-of-the-art warehouses (~70) everywhere, Amazon Cloud Player, AmazonFresh, Amazon Mechanical Turk, Amazon Prime, A9, Amazon Simple Storage Service, Diapers.com, Silk, Amazon Cloud Drive, Zappos, Amazon CloudFront, Kindle, and so on.

Sound familiar? It should, because this transformation mirrors that of Google, itself, which began as “just” a search engine company focused on “organizing the world’s information,” and has now become: Gmail, Maps, Apps, Drive, Chrome, Android, Motorola, YouTube, Wallet, Voice, Google Cloud Storage, Shopping, Chromebook, Google App Engine, Google+, and so on.

While not perfectly matching each other solution-for-solution, Amazon and Google now find themselves overlapping across, and competing within, most major categories of Internet-fueled technology and business.

. . . .

I actually think there’s one final aspect to Amazon’s business with which Google cannot (yet) directly compete, and which may prove to be the difference-maker in this faux-ish battle: Data.

With 17+ years of history and hundreds of millions of transactions across almost every category of goods, Amazon now has massive quantities of data about the actual buying habits of tens, if not hundreds, of millions of consumers around the globe.

. . . .

Armed with this unique transaction- and SKU-specific data, at scale, Amazon.com has the potential to become one of, if not the most signficant advertising platforms in the world, in my view — matching, if not besting, Google.

. . . .

For instance, do you think Volvo, Toyota, Lexus, Ford, et al., might be willing to pay a small fortune to be introduced to an individual in Huntington Beach, CA, who suddenly begins buying newborn diapers by the pallet? What about Gymboree? Gerbers? Whole Foods? Safeway? Fab? Gap? Pottery Barn? Ross? Home Depot?

Link to the rest at ReadWrite

From Salon:

Jay Goltz, proprietor of a small retail store, has hit upon e-commerce’s real threat to his business which he accurately says goes beyond economies of scale or even ability to avoid sales taxes. It’s impossible to make money competing with Amazon, he says, because Amazon itself isn’t making money:

Why would a company choose to operate without a profit? Because it wants to provide great value? Check. Because it wants everyone to love the brand? Check. Because it wants to gain market share? Check. Because it wants to put everyone else out of business, so that it can one day flick a switch to raise prices and make a fortune? CHECK!

Don’t believe me? Well, here is Jeff Bezos of Amazon, explaining why making a profit isn’t important. Of course, he doesn’t say he’s planning to raise prices after he puts a lot of people out of business, but let me translate something for you: Gaining market share by not taking a profit makes the most sense if you are planning to raise prices later when you have less competition.

. . . .

But “drive the competition out and then raise prices” is very much a meatspace business strategy. In a world where physical location doesn’t matter very much, it’s hard to see how you could pull it off.

Link to the rest at Salon and thanks to Sariah for the tip.

The same accusation has been leveled at Wal-Mart at least a million times in meatspace. When Wal-Mart announces it is building a store, particularly in a small town, someone always claims that, after it drives the local merchants out of business, Wal-Mart will raise prices sky-high.

The only problem with this theory is that Wal-Mart has entered dozens (probably hundreds) of small towns, some local businesses have closed, yet Wal-Mart’s prices remain the same – lower than elsewhere, even when elsewhere is a long distance away.

Like Wal-Mart, Amazon is designed to operate over the long run with low prices. Low prices are a part of its fundamental business strategy. Better than anyone else, Amazon understands a competitor can open a retail website in a few days without spending much money and offer lower prices everywhere that Amazon sells.

PG opines that those who accuse Amazon of a devious scheme to gain dominance with low prices, then jack prices up to monopoly levels and rule as an evil king are often engaging in psychological projection wherein they’re ascribing their own inner attributes to others.

From The Miami Herald:

Florida Gov. Rick Scott, who has made job creation his top priority since coming into office, has rejected a proposed deal to bring major Internet retailer Amazon to the state.

After months of behind-the-scenes negotiations, Scott ultimately said no to a deal that would have led to the construction of Amazon warehouses in Florida. The warehouses could have created up to 2,500 jobs in the state.

Amazon’s arrival in the state, however, would have meant that Floridians would have to pay sales tax on Internet purchases made through the company.

Amazon wanted to defer collecting the state’s 6 percent sales tax until next February or when its warehouses were open and occupied.

. . . .

Scott’s reluctance may have been tied to the idea that he would allow taxes on Internet purchases shortly before he runs for re-election. Scott, whose poll numbers remain low, has said in the past he could only support the taxation of Internet purchases if the money were offset by tax cuts.

. . . .

Currently, Floridians are supposed to pay taxes for online purchases, but there’s really no way to enforce the law. The state can’t force companies like Amazon to collect the tax unless it has a physical presence such as a warehouse or store.

. . . .

Randy Miller, an executive vice president at the Florida Retail Federation, told the governor’s office earlier this year that it could accept the arrangement.

“Our objection to that date initially is that it would have given them one more Christmas season without collecting the tax,” Miller said. “But the closer we got to the date – and as aggravating as it is – we finally said `ok, that’s fine with us.“’

Link to the rest at The Miami Herald

For overseas visitors, it is common for many states to offer significant tax incentives to large business that are considering the creation of in-state operations that will create a significant number of jobs. In some cases, states compete with each other via temporary tax reductions or rebates to secure such facilities.

The political considerations for the Florida governor balanced the creation of 2500 new jobs with the Amazon warehouses vs. causing each Floridian who shops at Amazon to start paying Florida sales tax on every purchase.

Since Amazon does not presently have any facilities or operations in Florida, it is not required to collect sales tax from Florida residents. As the article says, Florida has a use tax identical to the sales tax that residents are supposed to report and pay. However, use taxes are almost universally ignored by individual purchasers and not effectively enforced in most states.

Therefore, Florida residents would see a new tax on their Amazon purchases for which they now see none.

If Amazon simply built the warehouses without seeking deferral of its obligation to collect Florida sales taxes, the Governor would probably have no say in the deal. Since Amazon wanted to defer sales tax collection until its Florida warehouses were complete, that required an agreement with Florida which the Governor rejected.

From All Things D:

The United States Department of Justice has described Apple’s defense against allegations that it conspired to illegally fix e-book prices “unconvincing” and “untethered from both precedent and logic.”

Evidently, Apple feels much the same way about the DOJ’s charges.

In an 81-page April 26 filing that was made public today, Apple pointedly denied federal prosecutors’ accusations, saying the discussions they’ve painted as collusion were simply tough business negotiations and that their end result — an “agency” e-book pricing model where publishers, not retailers, set prices — made the e-book market more competitive, not less.

“Apple did not conspire to fix e-book prices,” the company said in its filing. “The evidence proves that Apple acted independently, to further its own legitimate business goals, in negotiating agency agreements with the publishers to enter the e-book market.”

. . . .

“Amazon at the time sold 9 out of every 10 e-books, and many publishers publicly disagreed with Amazon’s uniform, below-cost pricing strategy for New York Times bestsellers,” Apple said in its filing. “This tumult in the industry inspired the second largest e-retailer, Barnes & Noble, to push for agency agreements with the publishers. And Amazon used an agency-like model for small publishers and self-published authors. In other words, Apple did not introduce agency to the e-book industry; it was simply the first to reach an agency agreement with the industry’s largest publishers.”

And for a new entrant to the e-book market, as Apple was at the time, the agency model was a logical one. The company was looking for a 30 percent commission on every sale; it was hardly going to get that from publishers at the $9.99 price point Amazon had established.

Which is not to say that it was opposed to $9.99. According to its filing, it wasn’t. As long as it was able to collect that 30 percent commission, Apple said it didn’t particularly care what price publishers sold their books at. Yes, it required a “Most Favored Nation” agreement from publishers that gave it the right to lower prices to match low prices offered by competing retailers, but it argues it did this to remain competitive with Amazon, not to influence its business model.

. . . .

And the company insists the facts are on its side:

Average prices for trade e-books have fallen, and output, whether measured in the number of sales, the number of titles, or the types and quality of e-books offered, has increased substantially. These facts are undisputed.

Apple also fundamentally transformed the e-reading experience, leaving rudimentary, black-and-white, and expensive single-purpose e-readers (e.g., the Kindle) in the dust. The e-book world changed dramatically when Apple launched its iBookstore on the iPad in April 2010. At the time, 400,000 e-book titles were available to the consuming public; today, readers can download more than 1.7 million e-books. Apple has also created or spurred a number of the most important e-reading hardware and software innovations, such as full-color, interactive, and vivid digital e-books.

The bottom line, said attorney Orin Snyder of Gibson, Dunn & Crutcher, is that “Apple should be commended, not sued. Apple injected much-needed competition and innovation into the eBook business. … The DOJ’s case is based on fictions and incomplete quotations. The actual evidence proves that Apple did not conspire to fix prices in the eBook business. We look forward to trial.”

Link to the rest at All Things D

From BGR:

European governments are casting a baleful eye on the explosive smartphone and tablet growth. The problem for many Europeans lies in the way these devices promote vehicles for American entertainment — from Amazon and Netflix to Apple and Disney. The new proposalmade by the president of France would slap a 1% tax on all smartphone and tablet retail sales, with a goal to protect “l’exception culturelle”. This exception is a concept France created in 1992 to defend protectionist measures aimed at preserving the cultural heritage of France.

Sweden is taking a different tack; it has already extended its annual, $320 television tax to encompass consumers who do not own a television, but possess a smartphone or a tablet.

. . . .

Both the French and the Swedish policies are underpinned by fear. There is a new horror of cultural imperialism pervading Europe: Netflix is expanding aggressively, Amazon is on a rampage, iTunes is bringing a wide selection of American television and film content to the heartlands of the European Union. In many European countries, the limited selection of American entertainment content by national broadcasters used to cap the amount of American entertainment consumed by innocent Europeans.

Link to the rest at BGR

From Cult of Mac:

US authorities have called Apple out for collusion with electronic book publishers, saying that the Cupertino-based company conspired with publishers to raise eBook prices when negotiating iBooks by playing them all against each other and against rival eBook retailer, Amazon.

. . . .

Apple’s filing, released today but dated April 26, says that the major publishers were battling Amazon over the Mountain View-based retailer’s practice of selling eBooks at a much lower price than the publishers wanted. Apple claims that the publishers had already decided to stop Amazon by eliminating wholesale discounts on eBooks and to sell hardcover books in physical book stores first (a practice called windowing).

According to the filing, when Apple approached publishers to set up what would eventually become iBooks, the publishers weren’t pleased with terms that included a 30 percent commission, a guarantee of not underselling Apple, and that publishers stop windowing. Each publisher, says Apple, had a different counterproposal.

“Early — and constant — points of negotiation and contention were over Apple’s price caps and 30 percent commission. After Apple sent draft agency agreements to each publisher CEO on January 11, each immediately opposed Apple’s price tiers and caps,” Apple said in an proposed filing with the court, a document that runs to 81 pages.

Link to the rest at Cult of Mac and thanks to Joshua for the tip.

From Reuters:

German labour union Verdi called on workers at Amazon.com to stage a strike in the country on Tuesday to put pressure on the global internet retailer to improve pay and benefits.

Amazon employs around 9,000 people in Germany and has come under fire from trade union Verdi for refusing to implement a collective agreement on employment conditions, similar to other mail order and retail firms.

Link to the rest at Reuters