Apple CEO Tim Cook digs at Amazon: ‘They’re not a product company’

15 September 2014

From Geekwire:

Apple CEO Tim Cook was on The Charlie Rose Show last night for the first of a two-part interview about topics ranging from the company’s new products to the legacy of Steve Jobs.

But one comment in particular will sting for Amazon, as Cook essentially dismissed efforts by Jeff Bezos & Co. to compete in smartphones and tablets.

“They’ve come up with a phone. You don’t see it in a lot of places. They have some tablets. But they’re not a product company. Apple is a product company. And so, in the long term, will they become a bigger product company? I don’t know. You would have to ask Jeff what his plans are. But when I think of competitor, I would think of Google… much above anyone else.”

Link to the rest at Geekwire

Why is U2’s latest album on your iPhone? How to remove Apple’s publicity stunt

12 September 2014

From GigaOm:

Apple may have succeeded at breaking two records at once with the free release of U2’s latest album via iTunes yesterday: The album, titled Songs of Innocence, instantly became “the largest album release of all time,” as Apple CEO Tim Cook announced on stage during the company’s iPhone 6 event. But now, it looks like it’s also on track to become one of the worst music publicity stunts of all time.

To turn Songs of Innocence into a record release, Apple decided to add it to every iTunes user’s music library without asking. For many iPhone users, this meant that the album also automatically downloaded onto their device — and that left many people confused, if not upset.

To get a sense of how badly the distribution scheme was received, one has to look no further than Twitter, where more than 24 hours later, complaints are still pouring in.

Apple owes me a new iPhone, because I had to purify this one with fire after finding a U2 album on it

— Warren Ellis (@warrenellis) September 10, 2014

. . . .

That brings up a good point: How do you actually get rid of the album? Turns out that’s not as easy as it should be.

Link to the rest at GigaOm and thanks to Matthew for the tip.

PG suggests this falls under the Big Brother is watching category for high tech mistakes.

Phones and tablets and computers comprise personal space for many people and you don’t intrude into personal space without asking.

A reminder that just because you can do something doesn’t mean you should.

Apple CEO, other execs hit with shareholder suit over ebook conspiracy

9 September 2014

From GigaOm:

Apple shareholders are suing CEO Tim Cook along with some of the company’s other executives and directors, claiming that their role in a price-fixing conspiracywith publishers damaged the company.

According to a complaint filed on Thursday in California state court, Cook and other senior Apple figures bear “responsibility for ensnaring Apple in a multi-year anticompetitive scheme” that resulted in a highly-publicized trial and a proposed $450 million payout by the company to settle related complaints that it illegally raised the price of ebooks.

. . . .

In the case of Apple, the shareholders claim that Cook and others, including directors Al Gore and Bill Campbell, breached their fiduciary duty to the company and engaged in “waste of corporate assets.” They want the court to order Apple’s board to implement better governance measures, and for Cook and the other defendants to pay restitution to shareholders and to pay the shareholders’ legal bills.

Link to the rest at GigaOm and thanks to Dusty for the tip.

E-Book Price Increase May Stir Readers’ Passions

11 August 2014

From The New York Times – in 2010:

In the battle over the pricing of electronic books, publishers appear to have won the first round. The price of many new releases and best sellers is about to go up, to as much as $14.99 from $9.99.

But there may be an insurgency waiting to pounce: e-book buyers.

Over the last year, the most voracious readers of e-books have shown a reflexive hostility to prices higher than the $9.99 set by and other online retailers for popular titles.

When digital editions have cost more, or have been delayed until after the release of hardcover versions, these raucous readers have organized impromptu boycotts and gone to the Web sites of Amazon and Barnes & Noble to leave one-star ratings and negative comments for those books and their authors.

“This book has been on the shelves for three weeks and is already in the remainder bins,” wrote Wayne Fogel of The Villages, Fla., when he left a one-star review of Catherine Coulter’s book “KnockOut” on Amazon. “$14.82 for the Kindle version is unbelievable. Some listings Amazon should refuse when the authors are trying to rip off Amazon’s customers.”

The angry commenters on Amazon and online message boards could just be a vocal minority. But now, with e-books scheduled to cost $12.99 to $14.99 under new deals that publishers negotiated with Apple and Amazon, a broader swath of customers may resist the new pricing. The higher prices will go into effect within the next few months.

. . . .

“I just don’t want to be extorted,” said Joshua Levitsky, a computer technician and Kindle owner in New York. “I want to pay what it’s worth. If it costs them nothing to print the paper book, which I can’t believe, then they should be the same price. But I just don’t see how it can be the same price.”

. . . .

Authors have been taken aback by some of the vehemence of the reader protests.

“The sense of entitlement of the American consumer is absolutely astonishing,” said Douglas Preston, whose novel “Impact” reached as high as No. 4 on The New York Times’s hardcover fiction best-seller list earlier this month. “It’s the Wal-Mart mentality, which in my view is very unhealthy for our country. It’s this notion of not wanting to pay the real price of something.”

Amazon commenters attacked Mr. Preston after his publisher delayed the e-book version of his novel by four months to protect hardcover sales. Mr. Preston said he was not sure whether the protests were denting his sales. But, he said, “It gives me pause when I get 50 e-mails saying ‘I’m never buying one of your books ever again. I’m moving on, you greedy, greedy author.”‘

. . . .

“Entertainment and media companies keep forgetting that consumers have a choice. They can decide not to buy the book at all,” said David Pakman, a venture capitalist and former chief executive of the digital music store eMusic. “They can play a video game, use an iPod Touch.” He added: “If you don’t get the price tag right and make it convenient, they just go elsewhere.”

Link to the rest at The New York Times and thanks to Felix for the tip.

This 2010 pricing uproar was, of course, the result of an illegal conspiracy between Apple and every big publisher except Random House. Its purpose was to force Amazon to increase ebook prices.

PG doesn’t remember that a group of Big Publishing authors bought an ad in The New York Times to defend the high prices in 2010, however. But the Stockholm Syndrome relationship between Big Publishing and its authors was certainly much in evidence back then.

Making Sense of Amazon-Hachette

11 August 2014


The only thing that has exceeded the volume of the comments surrounding the ongoing Hachette-Amazon book retailing negotiation is the irrationality you see in those comments. On the one side you have authors that see Amazon as wanting to chew up Hachette on their path to a monopoly, while on the other side you have Amazon outlining that the publisher desire for higher prices will kill the ebook business. Of course neither is true. What we have is a simple battle over profit margin.

. . . .

A key point that is almost universally missed outside of the tech world is that Amazon’s position in the ebook business is fragile. There is no greater chasm between author and Silicon Valley understanding than this. A very large percentage of authors feel that Amazon is in a commanding position in the ebook industry and that one of their goals is to create a monopoly position. While Amazon is in a commanding position, to think that monopoly is their goal illustrates a lack of understanding of Amazon’s relatively weak position.

Again, those in the tech industry understand the fragility of Amazon’s position: First of all, the barrier to entry for creating an ebook online store is absurdly low. In fact, Microsoft, Apple, and Google already have ebook online stores. Think about that for a minute: Three of the most formidable digital companies in the world are operating in the ebook space.

Another argument you hear is that Amazon also controls the device business. But this completely ignores the fact that Apple’s and Google’s devices are even more popular than Amazon’s. Microsoft certainly isn’t ceding this space either, as the recent purchase of Nokia indicates.

For Amazon to make any progress at all they would have to either make the ebook space not worth pursuing for those companies or to flat out beat them. But the reality is so much harsher than making progress. The assets that Apple, Google, and Microsoft bring to the table mean that Amazon’s market share is inherently tenuous. The result is that Amazon isn’t thinking offense, it is thinking defense, and this is the thinking behind their “not worth pursuing strategy.”

. . . .

So how is Amazon making the ebook business not worth pursuing? They are doing it by discounting so aggressively that the value of the book business for ebook retailers is so miniscule that it doesn’t even raise the eyebrows of the major tech companies. While the book business is big, why even bother with it if the profit margins are so small as to not even move the needle? Your time is better spent focusing on video games with in-app purchases, among many other things.

Apple’s collusion in fixing higher prices with the major publishers makes total sense in this light. The book business with Amazon cutting margins to the bone makes no sense for Apple. The book business with the major publishers setting prices and Apple getting a full 30% margin on those sales? That’s the kind of margin that gets Apple’s attention.

Unfortunately for Apple, they had to break the law to combat Amazon’s discounting. This should tell you two things: One is that the scope of Amazon’s discounting is obviously immense. If Amazon was just discounting on a small scale, Apple, Google, and Microsoft would be a lot more interested. The second is just how much Amazon subsidizes the publishing business and author earnings thanks to their discounting. Remember: They are still paying publishers and authors based on list price. When the customer pays the discounted price, Amazon eats the difference.

So we can see that Amazon has created a very low margin business, and we can also see that Apple at least has shown that if the margins are higher then they would put more attention to this line of business.

. . . .

One of the key side-effects of Amazon’s strategy of turning books into a low margin retailing business is that publishers and authors have been reaping enormous benefits. With Amazon aggressively discounting, publishers were watching their books sell in greater volume at a higher price point. Authors similarly reaped the benefit by seeing the lower price point lead to higher volume for sales without hurting their royalties.

. . . .

As I mentioned, the trouble for Amazon is that if they just stop discounting or cut back their discounting to select titles then the book retailing business is suddenly interesting to some pretty big players. Authors tend to think of Amazon’s strategy as driving Barnes & Noble out-of-business, but if they stop discounting they are much more worried about the aforementioned Apple, Google, and Microsoft .

Link to the rest at and thanks to Cynthia for the tip.

Unpacking Amazon’s propaganda

7 August 2014

From The Global Indie Author:

As the dispute between Amazon and Hachette ramped up earlier this year, Amazon tried to exercise some leverage by delaying the sale of Hachette titles as well as increasing prices and changing Amazon’s algorithms to Hachette’s disadvantage. Hachette authors took to social media, and Amazon customers, accustomed to finding what they want at prices they like, were similarly annoyed.

. . . .

In the announcement, Amazon suggest they are happy with their 30% cut, but are committed to the $9.99 price point except for “a small number of specialized titles.” Amazon then offer unsubstantiated evidence that ebooks priced at $9.99 sell 1.74 copies to every ebook priced at $14.99, and suggest to authors that if they would agree to that price they would be earning 16% more from an audience 74% larger:

So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same e-book at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000. The important thing to note here is that at the lower price, total revenue increases 16%. This is good for all the parties involved.

. . . .

Having read the entire 160-page Opinion and Order of United States v. Apple Inc, et al, I can report that the 30% commission was never the publisher’s idea or ideal — it was imposed upon them by Apple — and that a $9.99 price point would have meant a 46% decrease in publisher revenues compared to the old distributor discount (wholesale) model. Under that model, publishers were releasing the ebook and hardcover at the same time, and charging the same price; the average was $26.00. The ebooks were sold to Amazon at 50% off list, or $13.00; Amazon would then discount the list price to whatever they wanted, as they do with print books. But Amazon, in an attempt to drum up business for its Kindles, began selling these new releases at $9.99, taking a 23% loss. This is what started the fight. In Madame Justice Cote’s missive you can read the whole story of how Apple skillfully manipulated the publisher’s twin Achilles’ heels — fear and arrogance — the machinations between Apple, the Big Six, and Amazon a surprisingly riveting read, with a theme of mutually assured destruction not witnessed since the Bay of Pigs.

. . . .

In any case, to make a long story short, Amazon accepted agency pricing because they saw the advantage to them by the new model, and by demanding the inclusion of the same most-favoured-nation (MFN) clause* that Apple had ingeniously added, AND adding a model-parity clause,** Amazon ensured that they, despite being unhappy with the higher price point dictated by the agency contract ($12.99 for ebooks with a $26.00 hardcover counterpart), would now earn 30% of all sales and, in fact, would never risk a loss again on any ebook.

Secondly, Amazon is notorious for manipulating figures, and in their forum post they do so again: just how many authors sell 100,000 copies of a single ebook? Very, very few, estimated at about .0001% of books published per annum in the United States.

Link to the rest at The Global Indie Author and thanks to Tarra for the tip.

PG would note that Amazon’s figures are illustrative only and don’t apply only to instances in which a single book sells 100,000 copies.

The relevant numbers are that an ebook priced at $9.99 will sell 174% as many copies as an ebook priced at $14.99. That applies across the universe of ebooks sold by Amazon and should apply to a book that sells 100 copies as well as one that sells 100,000 copies.

On the conspiracy side of things, based on his professional experience with both groups, PG tends to believe that typical tech execs are a bunch smarter than typical publishing execs. He doesn’t doubt that Apple execs were perfectly capable of out-maneuvering Big Publishing CEO’s.

Apple Secretly Acquired “Pandora For Books” Startup BookLamp To Battle Amazon

26 July 2014

From MacRumors:

Apple has acquired BookLamp, a “Pandora for books” startup that aimed to provide personalized book recommendations to readers via specialized algorithms, reports TechCrunch. BookLamp first shut down in April.

BookLamp was known for its Book Genome project, a book discovery engine that analyzed the text of books to break them down by various themes and variables to let readers search for books similar to books they liked.

For example, analyzing The Da Vinci Code, the search engine would break it down to elements of 18.6% Religion and Religions Institutions, 9.4% Police & Murder Investigation, 8.2% Art and Art Galleries, and 6.7% Secret Societies and Communities, and then it would be able to recommend a book similar to The Da Vinci Code based on that data.

. . . .

BookLamp also provided content analysis services to a number of e-book distributors like Amazon, Apple, and other publishers, screening books for categorization and providing a platform for publishers to screen manuscripts. The acquisition will see Apple ramping up its focus on books, according to one source with knowledge of the acquisition.

Part of the reason that Apple made the move to acquire BookLamp was because of this long list of clients. “At first Apple and BookLamp talked about growing their contract, but then they talked more from a strategic standpoint,” a source says. “What Apple wanted to do was, instead of contract, they wanted to make sure whatever work was done was done just for them.”

And what is that work? The details are not clear yet, but the source says, “in broad strokes, the goal that [founder Aaron] Stanton and three of the folks he was working with from the original BookLamp crew is to beat Amazon at their own game.”

Link to the rest at MacRumors and thanks to Simon for the tip.

Passive Guy has no idea whether BookLamp will go anywhere for Apple or just disappear like some Apple acquisitions do.

However, PG believes if someone wants to compete with Amazon, tech innovation is the best way to do it.

Apple’s iPad reaches 78% North American tablet share as Amazon’s Kindle Fire passes Samsung, Google

23 July 2014

From AppleInsider:

iPad is making gains in North American tablet web usage, reaching an 78 percent share in Apple’s “first quarter-over-quarter usage share gain since June 2013,” notes a new report by Chitika.

. . . .

Chitika Insights published its latest figures on tablet web traffic for the U.S. and Canada, noting that Amazon’s Kindle Fire, albeit with just one tenth the share of iPad, has moved into second place ahead of Samsung and Google, both of whom are selling ‘pure Android’ tablets.

“Since April 2014, the share of tablet Web traffic generated by North American Apple iPad and Kindle Fire users has increased by 0.8 and 1.2 percentage points, respectively,” the firm stated.

“These represent the two largest quarter-over-quarter increases for any tablet brand, while Samsung’s user base exhibited the largest share loss over the same timeframe, dropping two full percentage points.”

Link to the rest at AppleInsider

Apple prepared to pay $450 million for e-book price fixing case

17 July 2014

From Cult of Mac:

One year after being found guilty of e-book price fixing, Apple has reached a conditional settlement with the U.S. State to pay $450 million for its role in the price fixing conspiracy that involved five major publishers.

Apple’s settlement could bring $400 million back to consumers’ wallets, reports Reuters, but the court documents filed on Wednesday reveal that the company isn’t quite ready to throw in the towel yet, with hopes that its appeal will shrink that fee down to just $70 million.

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

The French Do Buy Books. Real Books.

10 July 2014

From The New York Times:

One of the maddening things about being a foreigner in France is that hardly anyone in the rest of the world knows what’s really happening here. They think Paris is a Socialist museum where people are exceptionally good at eating small bits of chocolate and tying scarves.

In fact, the French have all kinds of worthwhile ideas on larger matters. This occurred to me recently when I was strolling through my museum-like neighborhood in central Paris, and realized there were — I kid you not — seven bookstores within a 10-minute walk of my apartment. Granted, I live in a bookish area. But still: Do the French know something about the book business that we Americans don’t?

I was in a bookstore-counting mood because of the news that Amazon has delayed or stopped delivering some books, over its dispute with the publisher Hachette. This has prompted soul-searching over Amazon’s 41 percent share of new book sales in America and its 65 percent share of new books sold online. For a few bucks off and the pleasure of shopping from bed, have we handed over a precious natural resource — our nation’s books — to an ambitious billionaire with an engineering degree?

France, meanwhile, has just unanimously passed a so-called anti-Amazonlaw, which says online sellers can’t offer free shipping on discounted books.

. . . .

The French secret is deeply un-American: fixed book prices. Its 1981 “Lang law,” named after former Culture Minister Jack Lang, says that no seller can offer more than 5 percent off the cover price of new books. That means a book costs more or less the same wherever you buy it in France, even online. The Lang law was designed to make sure France continues to have lots of different books, publishers and booksellers.

Fixing book prices may sound shocking to Americans, but it’s common around the world, for the same reason. In Germany, retailers aren’t allowed to discount most books at all. Six of the world’s 10 biggest book-selling countries — Germany, Japan, France, Italy, Spain and South Korea — have versions of fixed book prices.

Even with the state’s help, French bookstores are struggling.

Link to the rest at The New York Times and thanks to James for the tip.

Let’s see. 1. The French “secret” is that publishers set book prices. 2. No discounting is allowed. 3. Bookstores are struggling.

Could it be that many French readers can’t afford high prices? Or that, in the face of high-priced books, more and more French people are choosing alternative low-priced entertainment options?

PG says you can’t trust traditional publishers with a nation’s literary legacy. Only authors are worthy of that trust.

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