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 Technology Stocks : Apple Inc.

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To: JP Sullivan who wrote (130863)4/14/2012 11:32:29 AM
From: slacker7112 Recommendations  Read Replies (2) of 154144
 
-- dunno for sure, just guessing here. If that were true, the publisher gets the same amount from both resellers. Only difference is Amazon is selling at a loss.

Apple's agreement with the publishers guarantees two things. One is that they will get a 30% margin on the sale price of e-books and two is that the retail price in the iBook store will always match the lowest price found anywhere else.

So let's say that Amazon pays the publishers $12 for a best seller but sells it at $10. That means that the price that Apple will sell it will also be $10, but they still get their 30% cut. The publishers will only get $7.

Since all of the major publishers agreed to these terms, it was guaranteed that all of them would have to switch to the agency model (where the publishers set the price) with Amazon. They could no longer let Amazon set prices. If they had made this agreement among themselves, it would be an obvious anti-trust violation. I dont think that adding Apple in changes that fact.


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