TV makers kill discounts; e-book publishers can't
(MoneyWatch) COMMENTARY If you are an e-book consumer, or just follow any news that contains the word Apple (AAPL), you've doubtless heard that the Department of Justice has sued Apple and a number of major publishers over alleged e-book price fixing. And there's a consumer lawsuit over the same issue.
But why is it that Apple and publishers come under scrutiny, but not other actions in high tech that look like price fixing? Especially when the Supreme Court has ruled that vendors can enforce minimum pricing and restrict discounting by retailers?
Why Apple needs to settle its e-book suits
How Apple's battle over e-books helps consumers
Will publishers kill Amazon's golden goose?
Take Sony (SNY) and Samsung as examples. Both manufacture television sets. Both feel the pain of dropping prices in consumer markets. Sony even blames much of its major financial woes and losses for years running on the sliding price of TVs. Flat screen prices have been tumbling for a few years now. Retailers keep cutting prices to compete with each other, while manufacturers feel pressure to lower prices to meet consumer demands. It's a vicious feedback loop, but hardly an uncommon one.
So what did Sony and Samsung do? They decided to rein in retailers and prevent them from advertising or selling their sets for less than the manufacturers' suggested list prices.
I've seen the same thing in the camera space. When I purchased a name brand mirrorless camera for photo work when traveling, I was told by the local pro retailer that the vendor forbade discounting on the product. As I checked online, I noticed a uniformity of pricing.
Collusion to fix prices? It seems like it. And yet, in 2007 the Supreme Court ruled in the case Leegin v. PSKS that manufacturers can set minimum retail prices, preventing retailers from discounting. The court argued that minimum pricing can supposedly benefit consumer by ensuring that retailers can improve customer service without fearing being undercut by rivals.
Good service at a retailer: Right.
So how are Sony and Samsung any different from publishers and Apple? The publishers want to set a minimum price and give up a percentage to the retailer, preventing discounting. Oh, right, they just did it a slightly different way that had the same result.
There are good arguments for and against the so-called agency pricing model that the publishers created with Apple. But to slam them when unilateral action is perfectly legal seems unfair, and something that might not hold up in court when Apple and a few of the publishers challenge the DOJ's action.
Image: stock.xchng user djayo