Techdirt. Stories filed under "prices"

French Politician Wants To Limit How Cheaply Companies Can Sell Goods Online Compared to Physical Shop Prices

Glyn Moody — Fri, 12 Apr 2013 05:45:18 PDT

A couple of weeks ago, Techdirt wrote about a store that was trying to charge customers $5 for "just looking", because it felt that many people were merely inspecting goods there before then buying them online. Guillaume Champeau points us to a French politician who is also worried about the same problem, and has proposed modifying the law governing commerce to deal with it (original in French). Here's the politician's explanation in the preamble of why it is needed:

Currently, regardless of the margin necessary for commercial activity the prices charged by distributors in town centers are often much higher than the prices charged by suppliers on their online sites.

This leads local shops to become mere showcases for products, products that consumers prefer afterwards to buy online at lower prices.

Equally, this decay of urban centers affects other sectors, such as hotels and catering.

Also, the proposal submitted to you aims to prevent suppliers from selling online at a price lower than the price at which they sell to distributors. The prices of products sold online may thus remain lower [than in physical shops], but in a reasonable and acceptable way.

The key problem with this idea is that it won't work. Even if the law were passed, people would just buy from online stores outside France, where prices will still be lower, because they would be unaffected by the new French legislation. Nor can that be stopped, because one of the impulses behind the European Union is to encourage precisely this kind of competition among companies located in different countries in order to bring about lower prices across Europe for the consumer's benefit.

The real solution, as Mike noted in the previous case, is for physical stores to become more attractive, not for governments to pass yet more clueless and ineffectual laws trying to diminish the power of the Internet.

Follow me @glynmoody on Twitter or identi.ca, and on Google+

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A Reminder: Lower Prices Can Make You More Money

Mike Masnick — Thu, 8 Nov 2012 20:16:52 PST

This is certainly not the first time that we've tried to make this point, but it always amazes us how little people understand price elasticity, and the idea that a lower price can make you more money by increasing the quantity sold significantly more than the decrease in price. Instead, we hear claims by economically illiterate people about how lowering the price "devalues" the work. Of course, I've never understood how making less money devalues a work in the first place, but to each his own. Rafe Needleman has yet another story of how lowering your price can make you more money, playing off an older story he wrote, in which he was convinced by the developer of the ShareMouse app that people should be paying more, not less, for apps.

ShareMouse is $25, and Rafe thought it was too expensive, and suggested that the developer would make more money by lowering the price. But the developer, Gunnar Bartels, pushed back and convinced Rafe otherwise. First he argued that his product was better than the alternatives. Second, that lower price would lead to more support costs from less sophisticated users. And, finally, he pulled out the "developers gotta eat" card -- which doesn't make much sense if you actually can make more money by lowering the price. In the end, Rafe was convinced that perhaps Bartels had a point.

Except, now, months later, Bartels did experiment with lowering the price... and all of his arguments and assumptions fell apart.

For kicks, he offered a one-day $10 sale on Sharemouse.

“Holy cow!” Bartels wrote. Translation: He sold more licenses than the elastic pricing model predicted.

Part of the success of the trial can be attributed to the valuable marketing and promotion that came with the CNET post. Even so, Bartels says the sales figures were “overwhelming and surprising.” So he’s now planning on bifurcating the ShareMouse product line.

As for those concerns about the massive onslaught of stupid support questions? That didn't happen.

Bartels says that the expected downside of selling at the lower price, higher support expenses, has not borne out. “Maybe our product is so good,” he says.

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Australian Consumer Advocate CHOICE Encourages IP Spoofing To Get Better Prices

Timothy Geigner — Fri, 26 Oct 2012 03:29:14 PDT

I'll be honest about my viewpoint to start this piece: I hate geo-restrictions, particularly on digital goods. I simply cannot see how they benefit anyone. Customers are blocked or pay different prices for like goods, often times angering them (not something you typically want to do to customers). Companies feel the brunt of this anger, or else at least feel the impact of the a restricted customer base through their own unwillingness to deal fairly in a global marketplace. Perhaps most importantly, for savvy customers, there are tools to simply get around the artificial barriers these companies erect, making them just more useless DRM-like nonsense.

And, apparently, some consumer advocate groups out there are beginning to feel similarly. Take Australian advocacy group CHOICE, for instance, who recently submitted to a parliamentary inquiry on technology pricing with the opinion that consumers down under should be spoofing their IP addresses to get better deals from global providers.

The group has today released a guide explaining how to do so using virtual private networks (VPNs) and alternative domain name systems (DNSs).

Choice also suggested setting up US iTunes accounts and using surrogate US addresses for forwarding packages from American stores. Choice has noted previously that Australians pay 52 per cent more for digital music downloads on iTunes compared to US users.

If you just heard a loud thumping sound, it was probably the collective fainting of technology and media providers over the idea of Australians paying the same price for goods as Americans. You can almost hear their angry cries now, can't you? "This is geo-piracy! They aren't playing by the rules!"

And that might be true. But the thing is, if the rules suck, why should you play by them? Take the iTunes example: how in the world, with a globally connected internet and the offering of digital goods, could it possibly make sense for a consumer in one nation to pay more than a consumer in another? Excluding the false barriers that have been erected (like licensing, geo-restrictions, etc.), where is the logic in this practice? Minus the occasional invalidation of product warranties, there is none, as CHOICE notes.

"As long as consumers are aware of the risks and do their due-diligence, there is no reason why they cannot pick up a bargain online with confidence," Levey said. "It also undermines the virtual walls these companies have built around the Australian market, which in the long term will help bring down prices to a global parity."

Or, in other words, position global providers to actually compete in a global marketplace, not the artificially segmented anti-consumer marketplace they've constructed for themselves.

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Rovio Recognizes That Massive, Massive Volume At Cheap Prices Beats Low Sales At Inflated Prices

Tim Cushing — Thu, 18 Oct 2012 15:47:29 PDT

Maybe it takes a "digital native" like an app developer to instantly "get" digital publishing. Asking those who've spent most of the ebook era actively fighting the new medium is frustrating for both sides of the conversation.

Rovio, the Finnish developer behind the omnipresent "Angry Birds" game, is releasing its first ebook/app, based on the print version that debuted last year. Mike Cane has a brief but excellent rundown on what Rovio's doing right, and where other publishers are continuing to fall short.

Cane starts by quoting from PaidContent's article on the ebook release, which points out a couple of important aspects of Rovio's offering:

[T]he app is "not just a book," said Peter Vesterbacka, Angry Birds CMO. "We took the content from the book, 41 egg recipes, but didn't want to just take the book, make a PDF and sell it to people. We actually made it a lot more interactive."

"Bad Piggies' Best Egg Recipes" is on sale for an introductory price of $0.99 or €0.79 in the iTunes Store and includes step-by-step photo instructions, an egg timer and photos of the finished dishes. Users can also upload their own pictures of the recipes they make.

First off, the app/ebook is not just a quick and cheap "port" being thrown into iTunes to grab some quick digital dimes. Secondly, the price is well under what most publishers would be willing to charge for a comparable ebook.

Why is this such a frikkin big deal?

[T]hey are selling an app-book for one-tenth of the print version's discount price. ($9.99) One-tenth!

That's a much steeper discount than most publishers would be willing to take, especially on a potential cash cow like this. Sure, one could argue that it's just an app spinoff, or that Rovio made plenty of money with its games, or that there's no "real writing" involved, or any number of tangents in an effort to minimize Rovio's deep discounting. One could even argue that Rovio is leaving money on the table or, as an outsider, just doesn't "get" publishing and price points.

Here's what Rovio has to say about the price point:

"We're not looking thousands or tens of thousands of downloads," he [Peter Vesterbacka, Angry Birds CMO] continued, "we're looking for millions of downloads of this book…We're going for massive, massive volume."

Oh, those crazy Finns and their madcap ideas! Volume! It's as if Rovio believes that it can distribute an infinite good at an extremely low price and still make some very good money. Insanity! Mike Cane points out the sheer incongruity of the situation:

He gets it. None of the Big Six of publishing — or the Little Sixes of it — do.

What if the Big Six started massively discounting their frontlist titles, going for that volume instead of trying to bleed each reader for the most they could squeeze out of them? They'd be able to transition their businesses to e faster and make lots more money in the process — and also help to thwart piracy!

Yeah. What if? Unfortunately, that's still largely open to speculation as none of the publishers seem willing to try it out. Even in the wake of a DOJ investigation into price fixing, prices have tended to move up rather than down (or remain unchanged) as publishers burn through remaining discounts. Even after various self-published authors have demonstrated the ability to make a living selling thousands of cheap ebooks rather than dozens of expensive ones, the tendency is to price ebooks in the same neighborhood as their physical counterparts.

Mike suggests deeply discounting the frontline titles and making more money through volume. But even if publishers aren't ready to take their current bestsellers down that road, what's stopping them from knocking the price of their back catalogs down to an impulse purchase level? Making the back catalog a bargain bin could turn casual fans into completists and give readers a reason to dip their digital toes into unfamiliar waters.

But, if nothing else, Rovio's pricing strategy has to, at the very least, highlight how many publishers are overvaluing their digital offerings, as if charging unrealistic prices will somehow prevent "devaluation." In reality, these higher prices simply show the huge gap between what the publishers desire and what the customers actually want.

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Bug In Kobo's Online Store Offers Up Random eBook Prices [Update]

Tim Cushing — Wed, 17 Oct 2012 05:39:17 PDT

UPDATE: Cerys from Kobo has responded with further details on the pricing bug and what Kobo is doing to rectify the situation:

A bug in our online system resulted in a small group of US-based customers being offered international pricing instead of their in-country pricing. In the large majority of cases, there was no price difference, but for some books where publishers set two different prices, the international one was displayed. This issue has now been resolved. We will be working directly with those customers affected over the next month to examine their accounts and provide them with a refund should it be owed. We will be contacting affected customers directly, but in the meantime if anyone has any questions related to their account, we ask that they please call our Support Line at 1-855-732-3662.

Canadian ereader manufacturer Kobo hasn't really endeared itself to its customers in recent months. A few months ago, it botched the debut of its Kobo Touch ereader in Japan, falling well short of the promised 30,000 launch titles. In addition, its desktop software tended to turn new ereaders into shiny bricks. As the complaints mounted, Kobo's parent company, Rakuten, decided the best course of action was to hide all online reviews.

A new set of issues has arisen, this time centered around Kobo's ebook store. eBook prices at Kobo seem to be strangely liquid, responding to stimuli only known to Kobo itself. The Digital Reader dragged these pricing inconsistencies out into the open earlier this month. While holding off absolute judgement until more data was in, Nate Hoffelder took time to point out the mutating prices, which bizarrely increased for many logged in customers.

While some retailers like Amazon like to selectively discount prices in order to get you in the door, other sites like Kobo prefer to jack up the prices charged to their regular customers.

Earlier today Mike Cane hooked me up with a friend of his on Twitter. @RevBobMIB was browsing the Kobo eBookstore this morning when he noticed something odd. The pricing seemed strangely inconsistent, and after checking the price of the ebook mentioned above he discovered a fascinating secret about Kobo.

As you can see in this screenshot and this screenshot, Kobo offers some of their customers a lower price than the price offered to other customers. Here is a composite, and please note that I have seen these prices as well:

Hoffelder pointed out that prices may vary in different markets and some price fluctuation is normal, depending on geographic location. But Kobo's inexplicable price shifts aren't related to market or geographic variances.

Kobo is changing the prices shown to a single customer, browsing from a single computer, getting online from a single IP address.

This post generated plenty of response, including some commenters raising the theory that this was possibly a database bug and not Kobo attempting to draw in new customers with low prices while making up the difference by gouging returning customers.

After exchanging some emails with a Kobo programmer, Hoffelder was able to draw out the real story.

A lot has happened in the couple weeks since I reported that story. After exchanging a few emails with a Kobo programmer it became clear that this was not a simple bug, nor was it a consistent one. While I still don’t know how the bug works I do know that the simple and obvious solutions don’t fix it.

And oh yeah, the bug is still happening today.

So, not a "feature," but a bug. This clears Kobo of any ill will towards its most loyal customers, at least in terms of pricing. But, it hardly clears Kobo of any wrongdoing in terms of customer service. Digging into this a bit more, Hoffelder found evidence that this bug had been adjusting prices for at least a month:

My earliest confirmed report comes from MobileRead, and it is dated 10 September:

Is anyone else getting different prices on the checkout page? For instance, I want to get “Catching Fire” and it’s listed at $5.99. I click on the “buy now” button and the price jumps to $11.97. I contact Kobo’s customer service and they said that I should be logged in as to get the correct pricing. I log in and the same thing happens. I contacted them again, and they told me that the correct price is $11.97. But it’s still listed at $5.99?? Any ideas??

So Kobo has had this bug on their website for at least a month. As bad as that sounds the actual situation is very likely worse.

Some input from readers suggested the problem has been around for much longer than that. "Unverified reports" date the bug back as far as December 2011, and that Kobo customer service has known about the issue for at least 6 months.

Another report pulled from MobileRead (from February 2012) mentions something that sounds quite a bit like the price bug, but one that the purchaser didn't notice until it was too late.

Oh I had a similar issue. The price of the ebook I bought was much more lower on the website than what I was charged for on my credit card, that took a few weeks to resolve as well. They gave me a credit for the difference, but I did phone them about 4-5 times and emailed them at least once a week.

And then there's this, dating all the way back to December 2011.

When I go to the Kobo store I will see a book for $7.99 but when I log in the price updates to $8.99. Is this because the default price is in $US but when I log in using my Canadian they update to $CDN? I’m just wondering.

This doesn't bode well for Kobo's already-shaky customer service track record. A bug that alters prices not only during log in/log out but also during the actual checkout process isn't the sort of thing that should go unfixed for a month, much less (possibly) the greater part of the year. (Speaking of the checkout process, there's no verification screen during the purchase process. Once your purchase information is entered and the customer clicks "Buy Now," there's no turning back, and no way to verify the price is correct before it's charged to their card.) But Kobo seems very uninterested in providing even adequate customer service.

Based on my own experiences, the 2 readers who claim they contacted Kobo customer service are very likely telling the truth. I have seen in the past at least one occasion where Kobo customer service got a complaint from a customer, responded, but appeared to not have forwarded the complaint to the relevant party inside the company who could have fixed the error.

Speaking of Kobo’s questionable customer service, there was a period of at least 3 months last year where Kobo gave out this blog as the warranty repair site for the Slick ereaders. I kid you not.

I know a number of people will step forward to defend Kobo, but I’m not sure how. A month-long bug which over-charges some readers is indefensible. Customer service dept failing to forward a bug report is indefensible.

If you want customers, especially loyal ones who will increase your market through word-of-mouth, the worst thing you can do is subject them to ineffective customer service and a roulette wheel masquerading as a pricelist. There are still plenty of happy Kobo customers, but I wouldn't expect that number to grow anytime soon. And with this parade of misdeeds and miscues swiftly becoming the public face of Kobo, I fully expect that first group's numbers to start shrinking.

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University Requires Students To Pay $180 For 'Art History' Text That Has No Photos Due To Copyright Problems

Mike Masnick — Mon, 17 Sep 2012 11:28:25 PDT

Brent Ashley shares the absolutely crazy story of how his daughter, a student at OCAD University in Canada, is taking a class on "Global Visual and Material Culture: Prehistory to 1800" which has a textbook that is required for all students... which costs $180. Now, we all know that textbook prices are absolutely insane these days, but here's where it gets crazier. The text -- and, remember, this is an art textbook has no images because they couldn't clear the copyrights:

This year, however, the textbook for Global VISUAL and Material Culture has no pictures. Students have been told that the publisher couldn’t get the copyright permissions settled in time for the print run, so students will have to read the book, and see the pictures online by following along on their computer.

There is no discount on the $180 price for an ART textbook that has NO PICTURES. Devoid of pictures. Bereft of art. If I am going to have to pay $180 for an art history book that is of no resale value to next year’s students, it had damn well better be an excellent visual reference with hard cover and full colour plates, to keep around for years, festooning my coffee table and that of my heirs.

Students in the class have put up a petition to protest what they quite correctly call a "sham." It's even more bizarre given that recent court rulings in Canada would suggest that the images in question would be given pretty broad "fair dealing" protections for the purpose of education. But, just the threat of copyright claims, apparently, are creating an absolutely ridiculous situation.

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Hachette Hits Libraries With 220% Price Increase On Its Ebooks

Tim Cushing — Mon, 17 Sep 2012 07:19:25 PDT

Publishers are at it again, levying what amount to economic sanctions against that infamous freeloader hangout, The Library. In a move that will endear it to exactly no one, Hachette is increasing its back catalog prices 220% for ebooks, sticking it to the cherished public institutions whose shelves (including the digital ones) are lined with nothing but Lost Sales (apparently).

Hachette has been hard at work dragging its reputation through the mud. You may remember it from a few weeks ago, when it greeted Tor's announcement that it was going DRM-free with "HAHAHA but no, seriously, there will be DRM." This move seems ill-advised at best, what with some authors banding together to offer their titles to libraries for $dirt cheap, a price that falls more in line with the economic realities of the average library.

Hachette isn't the only publishing fish in the sea (and not even the only fish to jack up its prices -- Random House dialed its prices up 300% in March). Hachette is one of several publishers, many of whom haven't increased prices (or at least, not as severely). Of course, other publishers have gone other routes, including limiting the number of lends on their ebooks, making their digital offerings the equivalent of poorly manufactured physical books (Falls Apart After 26 Uses!). As a whole, the Big Six treat libraries like an intrusive vagrant.

So the current state of the library ebook market is this:

2 major publishers which charge high prices (Hachette, Random House)

2 major publishers which won’t sell at all (Macmillan, Simon & Schuster)

Penguin, which is only selling ebooks to libraries grudgingly and with support for the Kindle explicitly blocked

HarperCollins, which imposed a 26 checkout limit for library ebooks

I realize the publishers are running businesses, not charities, but those on the end of these price hikes are running something much closer to a charity than a business, relying on late fees, used book sales and donations to keep their shelves stocked. Considering many potential customers use libraries as tools for discovery, it would seem to be in their best interest to get as many of their titles in front of readers as possible, rather than price themselves out of a well-respected lending system.

Hachette's pricing "strategy" is doubly disappointing, considering it was once one of the "good guys:"

Hachette used to be one of the bright lights in library ebooks because they charged the regular retail price for their ebooks. And even though they wouldn’t sell their front list titles to libraries, at least we knew the titles would eventually be available. Only now those titles will be terribly expensive.

Christopher Harris, writing for the American Library Association, wonders if Hachette has forgotten how to publish.

Hachette is increasing backlist prices by 220% and … what? And we get ownership? And we get increased simultaneous lending? And we get anything other than another price gouge from a publisher that seems to not comprehend the basic fundamentals of publishing?

Let’s make this really easy to understand. Publishers publish content. Libraries buy content. As long as publishers keep publishing content, libraries will keep buying content. Why? Because libraries buy content. Only we buy it from a relatively fixed budget.

By drastically increasing the price of backlist titles, all Hachette is doing is reducing the funding that can go towards purchasing its new titles.

Harris points out that libraries aren't looking for handouts. They're looking for a mutually beneficial relationship, one that rewards publishers, readers and writers. But trying to turn a back catalog into a cash cow on the back of the library system helps no one.

That is why I cannot begin to comprehend this move by Hachette. Increasing backlist prices must either reduce the available budget for new titles or reduce acquisition of backlist titles—lost sales for Hachette either way. Furthermore, it reveals a lack of focus on the part of Hachette; instead of building profits on releasing the best possible titles every year, the company is stuck looking backwards. Finally, it shows a lack of understanding about the benefit of having more open access to backlist titles as additional entry points into new book purchases.

This short-sightedness seems to be more and more commonplace, especially in industries affected by digital disruption. The focus has shifted from building a sustainable business to concentrating on quarterly reports. Concentrating on immediate results tends to lead toward efforts that do far more long-term damage than any short-term gains can hope to balance out.

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Streaming Rights On Whitney Houston Movie NOT Pulled In Order To 'Make Really A Large Amount Of Money On DVD Sales' [Updated]

Mike Masnick — Mon, 20 Feb 2012 11:59:37 PST

Update: Netflix denies this story, ~~though the reporter stands by it~~. See update at the end.

We covered how Sony Music UK jacked up prices on Whitney Houston's music minutes after her death -- then changing them back and apologizing. However, in an even more extreme case, it appears that whoever holds the copyrights on the Whitney Houston movie, The Bodyguard has pulled those rights from Netflix, where it had been streamable (found via Karl Bode, but kudos to Dan McDermott who noticed the problem and found out the details from Netflix). The reasoning is that they figure lots of people will want to buy it now, and this is a chance to cash in on her death:
Netflix rep: "Okay Dan, I just went and talked to my main supervisor as to why the movie had been pulled and the reason it was pulled was the production company pulled the streaming rights from us because all the publicity after Whitney Houston's passing there was an opportunity to make really a very large amount of money on the DVD sales of her movies. So they're going to pull all the streaming titles we have of Whitney Houston so they can make more money off the DVD sales of her movies."
Now, watch the copyright holder complain that there's too much infringement of the movie as well...

Update: Apparently Netflix is denying the story though McDermott -- a long time reporter stands by the story. Netflix claims that the streaming rights to the movie went away last year when a licensing deal ended (and it is true that Netflix has lost some streaming rights in the last few months, though I have no idea if this is one of them). However, McDermott insists that he got the story from Netflix directly. As he told Andrew Couts at Digital Trends:

“I publish three newspapers and first started in news when I was news director at WLVA in 1987. I was aware of the sensitive nature of the story and was cautious and responsible,” McDermott told us via email. “The quote I printed is accurate. I cannot speak to whether the Netflix representative was telling me the truth but I asked him to verify what the Netflix users were saying (that it was pulled after her death) and the guy came back and said what he said. I tripled checked to get the quote accurate.

“He said that he had checked with two supervisors and that the ‘main’ one told him why it had been pulled.

“Personally I believe that the kid told me what his supervisors said. I can’t imagine that they were pulled after her death in some bizarre coincidence.

“Also, it is important to note that Netflix is not the bad guy in this. Unless they lie now.”

I guess it's possible that Netflix is right, and there was confusion on the part of the supervisors...

Update 2: Indeed, it looks like my guess was correct. Netflix was right, and the supervisors of the customer service guy were wrong. Dan McDermott has admitted that the report the guy gave him appears to be wrong. He reported it correctly, but Netflix staffers gave him incorrect info. The movie was pulled from streaming back in January...

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Sony Says Raising Prices On Whitney Houston Music Was A 'Mistake'

Mike Masnick — Wed, 15 Feb 2012 04:32:57 PST

Following the news that Sony Music raised prices on Whitney Houston's music very, very soon after news broke that she passed away, the company has now said that it was a "mistake" and issued an apology:

"Whitney Houston product was mistakenly mispriced on the UK iTunes store on Sunday. When discovered, the mistake was immediately corrected. We apologize for any offense caused."

Of course, that seems to raise more questions than it answers. What kind of "mistake"? Human error? Did someone just accidentally jack up the price? Or was it someone doing it on purpose... and Sony now thinks that his or her decision to do so was the mistake?

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Sony Music Raised Prices On Whitney Houston's Music... Less Than 30 Minutes After She Died

Mike Masnick — Tue, 14 Feb 2012 07:31:57 PST

It's no secret that the major record labels are a business where the bottom line is everything. However, they like to present themselves as something much more than that. They talk about lofty ideals of delivering culture, of sustaining art and of helping artists. But, when tragedy strikes... dollar signs seem to win over all. According to various reports, within 30 minutes of Whitney Houston being reported dead, Sony Music jacked up the prices on her Ultimate Collection album on iTunes and Amazon.

But instead of reverence in the wake of Houston’s passing, Sony chose to raise the price of one of her most popular hits collections. The Ultimate Collection album in the U.K. jumped in price by more than 60 percent from £4.99 to £7.99 within 30 minutes of Houston’s death, according to Digital Spy. The album price fell back down to £4.99 some time during the weekend, but it’s unclear when it happened.

Fans originally blamed Apple for the price hike on iTunes, but The Guardian is reporting that Apple automatically raised the price after Sony Music “lifted the wholesale price” of the album.

You have to think the price dropping back down was due to someone, somewhere realizing just how crass that looked.

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Local Bookstores Call For Boycott Of Amazon For Advertising Their Prices

Timothy Geigner — Fri, 16 Dec 2011 05:53:01 PST

Amazon has faced controversy in the past. They've been involved in ongoing state sales tax disputes, mostly brought on by people who can't figure out what it means to actually have a corporate presence within a state. There have been patent disputes over one-click technology. Even issues of working conditions have raised their ugly heads. But now we will witness the most evil action ever by Amazon: price advertising.

Yes, according to a Huffington Post piece, we learn that Amazon is seeking to make lower priced versions of retail goods easier to find for customers. They've released their Price Check App for smartphones. You'll never guess what it does...it does price comparisons for you! It works like many similar apps, utilizing the phone's camera to scan the barcode of items in retail stores and then listing any identical products and their price through the Amazon online store. Fortunately, we consumers have a savior from this superevil, money-saving device that certainly isn't the first of its kind.

Yes, retail bookstores, in what may be the single most backward thinking request of all time, are asking the general public (i.e. customers) to boycott Amazon due to the release of this phone app. For those too busy playing solitaire to really think this through, let me break this down for you. Amazon can offer goods at lower prices than many retail stores, they release an app that allows consumers to verify whether that's the case on an individual product, the customer stands only to save money through this app, and retailers are asking customers to boycott the company saving them money over it. It'd be like boycotting a doctor for offering a cancer cure because, well, what about all the other doctors who have been making money offering chemo treatments?

Now for the fun part. Some quotes from the article.

"This Saturday, Amazon will offer Price Check customers an extra incentive: up to five dollars off products whose barcodes are scanned using their app. The effect of this is to encourage consumers to use their local brick-and-mortar stores as "showrooms," while not spending money supporting them."

Gasp! Encouraging folks to browse stores for items and then price shop them to get the best deal? And, more to the point, actually providing the consumer with the tools to do so? It's like something Lex Luthor would do! Where the hell is Superman to stop this dastardly customer-friendly company?

"David Didriksen, president of Massachusetts-based Willow Books & Cafe, told Publishers Weekly that the offer is “another in a long series of predatory practices by Amazon. You would think that a company of that size would be willing to just live and let live for small retailers who can’t possibly affect them. But, no, they want it all.”

Uh oh. Apparently Superman got hit one too many times in the head. What does the size of a company have to do with anything? Either you can compete with them, or you can't. And here's a fun question: what competitive act has a company ever taken in the existence of business that couldn't be called "predatory" by its competition? And, to put the ridiculous cherry on top of this nonsense sundae, Amazon's $5 off offer doesn't even apply to books!

Maine Senator Olympia Snow, seeing something grand and wishing to stand on it, called on Amazon to cancel the promotion because "paying consumers to visit small businesses and leave empty-handed is an attack on Main Street businesses that employ workers in our communities.”

First, Amazon isn't paying them to leave a shop empty-handed, they're promoting their new phone app and offering a discount on purchases made using it. Secondly, Amazon employs folks too, the overwhelming majority of them in the United States, so put the jobs nonsense aside as well. Maybe we should go back to bookstore owners to find a real idea on how to compete with this app.

"Meanwhile, Third Street Books in McMinnville, Oregon has chosen to mark Amazon's Price Check offer with a counter offer of their own: on Saturday, customers will get 15 percent off their purchase, plus a $5 gift certificate. All they have to do is provide proof that they have cancelled their Amazon account."

Uh huh. Let's ignore the fact that Amazon provides much more than books, so your coupon doesn't have all that much value over an Amazon account. Let's ignore the fact that there are several other barcode scanning price check apps already on smartphone markets. Let's ignore the fact that Amazon's $5 promo doesn't apply to books. Let's ignore the fact that, even if we grant that droves of customers are going to spend hours mulling through retail bookstores scanning book after book after book, don't folks do the opposite all the time? Who doesn't browse or search products online and then go buy them retail, either for convenience, for atmosphere, or because they don't want to wait for the product to ship?

Perhaps its time local bookstores concentrate on what they can offer to compete with Amazon: their atmosphere. Not unlike the home-viewing vs. movie theater quandary, mom and pop bookstores can add value to the shopping experience. They can have staff picks of books, offer advice on purchases, offer reading clubs and writing classes, sell rare/used books, partner with food vendors for things like coffee, have book-signings, etc. So stop trying to convince your customers to boycott another company for making their lives better and start competing by also making consumers' lives better.

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High Prices, Lack Of Availability Driving Lots Of Infringement

Mike Masnick — Wed, 26 Oct 2011 10:04:27 PDT

As we've seen before, if you make authorized content available in a convenient and useful manner, it can really help minimize infringement. Of course, if you don't make it available, or if you price it wrong, it just makes the problem worse. A new report out of the UK took a look at the availability and price online of some top films and found that the movie industry isn't doing a very good job, likely leading to much greater infringement.

DVDs are available for just shy of 100% of the films. But a wealth of British cultural history is simply not available through legal providers. Only 43% of the top 50 British films can be bought or rented online. Similarly, only 58% of the BAFTA Best Film award winners since 1960 have been made available.

The situation looks worse if iTunes is discounted. Excluding iTunes, only 27% of the BAFTA award winners are available, with 29% of the best British films. Only 6% of the best 50 British films are on Film4 OD or Virgin Media, with 14% available through a LoveFilm subscription and 4% through pay per view on LoveFilm.

The industry wants so badly to blame infringement for many of its structural problems. But, perhaps if it just focused on making the content available in a convenient fashion at a reasonable price, they'd realize that it really was just a business model issue all along and had nothing to do with "piracy."

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Desperate Drug Companies Raising Prices On Drugs Still Under Patent

Mike Masnick — Fri, 8 Apr 2011 06:07:53 PDT

In recent weeks, we've discussed how drug companies are freaking out because they can't find anything new to patent, and their popular drugs are about to go off patent. Of course, as we've seen, having a monopoly lets them charge ridiculously high prices, and so the various drug companies (at least those who can't get the FDA to just hand them a new monopoly) are apparently dealing with the first issue by embracing the second one: they're ramping up prices on pretty much anything they still have under patent, with the largest increases being for those drugs that are closest to going off-patent.

Talk about a short-term strategy. Historically, it's been shown that when brand name drugs go off patent, they still command a significant premium in price over generic competitors. Yet, if the drug companies keep raising the prices higher and higher, it'll simply drive more people to seek out cheaper alternatives. If the drug companies actually priced the drugs reasonably, and recognized that they already had a strong branding lead (often on the backs of huge marketing campaigns), they'd realize they could keep a decent share of the market, even with somewhat higher prices. But simply trying to squeeze every last penny out of people while the drugs are still under patent seems like a strategy to completely give up once the drugs go off patent.

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Cornell Library Rejects Non-Disclosures On Journal Pricing; Will Reveal All Prices

Mike Masnick — Fri, 25 Mar 2011 01:10:00 PDT

One of the more pernicious areas of locking up knowledge that we've seen and discussed involves academic journals. These tend to involve private publishers who get a tremendous amount of completely free labor in terms of content submissions and even reviewers/editors... and then demand the copyrights of the research, while charging universities ridiculously high fees. Those publishers have also gone to great lengths to try to block the US government from trying to make federally funded research available to the public at no cost after a limited amount of time. And, of course, the journals often rely on secrecy to get the most money -- including requiring universities to sign non-disclosure agreements (NDAs) that forbid them from revealing how much they're paying for a journal.

It's nice to see some universities really starting to push back, and it's even nicer when it's a university that I attended and from which I received two degrees. My sister informs me that Cornell University has decided to take a stand and is refusing to sign any NDAs from various journals, and will make the prices they're being charged for such journals public. As the University made clear in a statement about this policy, it feels these agreements go against the basic nature of openness and fairness:

It has become apparent to the library community that the anticompetitive conduct engaged in by some publishing firms is in part a result of the inclusion of nondisclosure agreements in contracts. As Robert Darnton recently noted, by "keeping the terms secret, ... one library cannot negotiate for cheaper rates by citing an advantage obtained by another library." For this reason, the International Coalition of Library Consortia's "Statement of Current Perspective and Preferred Practices for the Selection and Purchase of Electronic Information" states that "Non-disclosure language should not be required for any licensing agreement, particularly language that would preclude library consortia from sharing pricing and other significant terms and conditions with other consortia." The more that libraries are able to communicate with one another about vendor offers, the better they are able to weigh the costs and benefits of any individual offer. An open market will result in better licensing terms.

Additionally, nondisclosure agreements conflict with the needs of CUL librarians and staff to work openly, collaboratively, and transparently. This conflict increases the likelihood that the terms of a nondisclosure agreement would be inadvertently violated, posing a threat to the university

The next step is focusing more and more on truly open journals and increasing their acceptance in academia.

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Retroactive Drug Monopoly Raises Rates From $10... To $1,500

Mike Masnick — Fri, 11 Mar 2011 19:39:00 PST

A bunch of you have been sending in the somewhat horrifying story of how KV Pharmaceutical has been retroactively granted a monopoly on the drug Makena, which is use to prevent premature births. The product has been on the market for years, and normally costs about $10 per dose... but thanks to the new monopoly, the price is immediately jumping up to an astounding $1,500 per dose -- and this is something that many pregnant women need around 20 doses of during their pregnancy. That increases the overall price from about $200 to $30,000. For something that's been on the market for years. I'm reminded of Thomas Macaulay's famous statement:

"the effect of monopoly generally is to make articles scarce, to make them dear, and to make them bad."

Tragically, many obstetricians and the March of Dimes had vociferously supported this move, without understanding the basic economics of monopoly pricing. They thought that granting a monopoly to one company would mean that it would make the drug "more available." Joke's on them, and now they're upset:

"That's a huge increase for something that can't be costing them that much to make. For crying out loud, this is about making money," said Dr. Roger Snow, deputy medical director for Massachusetts' Medicaid program.

"I've never seen anything as outrageous as this," said Dr. Arnold Cohen, an obstetrician at Albert Einstein Medical Center in Philadelphia.

"I'm breathless," said Dr. Joanne Armstrong, the head of women's health for Aetna, the Hartford-based national health insurer.

Doctors say the price hike may deter low-income women from getting the drug, leading to more premature births. And it will certainly be a huge financial burden for health insurance companies and government programs that have been paying for it.

It's really amazing that people don't understand the basics of monopoly pricing and how drastically it has distorted the market for drugs. Hopefully this story of Makena will get some people to wake up as to why this is a massive problem.

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The Artificially High Price Of Academic Journals And How It Impacts Everyone

Mike Masnick — Fri, 4 Mar 2011 01:05:56 PST

It's been a few years since we first discussed the ridiculous racket known as academic publishing. Unlike pretty much any other publication, all of the writing for these publications is done for free. Hell, in some subjects and for some journals, you actually have to pay to submit your papers. The "peer review" is all done for free and often any editing is done for free by an academic to build his or her reputation and CV. So, basically, you have just a tiny fraction of the costs of most any other publication, and yet, the mega-publishers behind these journals charge ridiculous amounts for subscriptions and even for single articles. Even worse, a significant percentage of academic research is still heavily funded by the US government (our taxpayer dollars), yet much of it is locked up behind these incredibly high prices. In many cases, the journals forbid the researcher from releasing the paper elsewhere (though many academics, thankfully, ignore this and offer up PDF downloads). NIH now requires research it funded to be publicly published a year after its published in a proprietary journal, and there are efforts to expand that to other government funding as well -- but the publishers have lobbied very hard against this, and even wish to repeal the NIH rule.

An article over at the Atlantic delves into this issue, going through the ridiculous economics showing how much lower the costs are for journals -- especially in this digital age -- and pointing out that this impacts everyone, rather than just doctors and scientists. The rest of the world shouldn't be cut off from research like this -- especially when it's federally funded. As John Bennett points out in response to that article, this is another example of intellectual monopolies making things ridiculously more expensive than the market should allow. As Thomas Macauley famously said a century and a half ago:

"the effect of monopoly generally is to make articles scarce, to make them dear, and to make them bad."

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Despite Promises That Franchise Reform Would Lower TV Rates, The Opposite Has Happened

Mike Masnick — Wed, 29 Dec 2010 21:06:00 PST

For years, the telcos pushed for cable franchise reform, which was sorely needed to some extent. Basically, for decades, various local municipalities would offer a "franchise" for cable TV providers, so that residents really only had a single choice. When I was growing up, if you wanted pay TV you had one option and one option only. The reason for this did make some sense at the time. Laying infrastructure for cable was disruptive and expensive, and towns didn't want multiple providers to dig up everyone's lawn or whatever. On top of that, with a single franchise managed by local government, that local government could put conditions on the franchise that helped local residents (for example, here in Silicon Valley some franchises required super high speed broadband connections between schools, government building and a few other facilities). However, with it also came the downsides of a monopoly.

In pushing for franchise reform, one of the key arguments made was that adding competition would lower prices -- which is not a ridiculous assumption at a high level. However, as Broadband Reports is now noting, that's not what's actually happening. It points out how AT&T, which benefited massively from said franchise reform, has continually raised the prices on U-Verse, and there's also been a similar corresponding increase in prices of cable TV, contrary to the promises.

All that said, I'm not ready to claim that franchise reform was a mistake. I agree that the claims of telco supporters appears to have been bunk, but that's to be expected. The real problem was that with basic franchise reform, we didn't get significant competition, but limited competition from companies who are still using regulatory capture to enable higher prices.

I think the real turning point on pay TV prices (contrary to the claims of some) won't come due to franchise reform, but as more people ditch pay TV altogether and cut that cord to go internet-only.

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Comcast Buying NBCU Will Lead To Higher Prices... But Is That Really A Bad Thing?

Mike Masnick — Tue, 9 Nov 2010 18:49:55 PST

I've said from the beginning that I really don't understand all of the complaints about the Comcast/NBCU merger. It's the modern equivalent of AOL/Time Warner, which really only served to hasten people to move away from crappy old solutions. So, when I see a report claiming that the end result will mean higher prices for consumers as NBC jacks up its rates, I'm still not convinced this is a bad thing. As we've seen, there's a growing trend towards people cutting the cord on cable (even if the cable folks are in denial about this). Having prices shoot up even higher seems only likely to hasten the inevitable. You can't raise prices indefinitely if there's real competition -- and the problem is that the TV companies still don't believe (or simply don't realize) that there's increasing competition every day. If NBCU/Comcast really does lead to higher prices, it'll likely also lead to more subscribers realizing that there are alternatives as well.

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Hollywood Seeks To Kill Off 3D Golden Goose With Much Higher Prices

Mike Masnick — Fri, 26 Mar 2010 19:39:00 PDT

Ah, Hollywood. While the movie business has been doing quite well at the box office lately, many in the industry still haven't quite realized why. Obviously the rise of 3D flicks has given people a reason to actually leave the home and go to the theater -- in part because the experience is much better, and seeing movies in the theater is a social experience. Of course, now that 3D televisions are starting to come to market, there may start to be some more challenges there, and the way to deal with that is to improve the experience and make it even more worthwhile.

So what's Hollywood doing? They're just making it more expensive. Yes, they're jacking up the prices on 3D movies, in a typical short-term strategy. Rather than recognize how this might just drive more people to more seriously consider getting a 3D setup at home, Hollywood's simplistic business modeling seems to be "let's see how much we can squeeze out of people as quickly as possible." There is no recognition of the value of building up a longer term relationship and providing reasonable value at a reasonable price. And then they're going to complain about people not going to the movies, and blaming file sharing, rather than recognizing that they're driving willing customers away with much higher prices.

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Too Little Too Late: Universal Music Finally Realizes That Maybe CDs Were Too Expensive

Mike Masnick — Fri, 19 Mar 2010 14:07:00 PDT

David Herron alerts us to the news that it's finally occurred to the brain trust at Universal Music that, perhaps, CD prices were too high. They've introduced a "new pricing structure," which effectively means they've lowered the suggested retail prices on many CDs to between $6 and $10. Amusingly, the article quotes an anonymous person at a competitor who doesn't like this at all:

"Why does Universal feel the need to get below $10?"

Uh, perhaps because the market is shrinking because people find it too expensive otherwise. Either way, this move seems like way too little, way too late. Doing this in the late 90s might have been a start, but this isn't going to get people who have stopped buying CDs back into a plastic disc fix.

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Oh No! Nobody Reads! Oh No! It's Too Cheap For Everyone To Read!

Mike Masnick — Wed, 18 Nov 2009 12:36:00 PST

We recently wrote about how booksellers were freaking out over the "price war" between Amazon and Wal-Mart, whereby they're starting to offer certain books at a very cheap price to bring in more customers. The whole thing was a bit silly. Reader Robin Trehaeven alerts us to a fantastic opinion piece in the Library Journal by Barbara Fister, a librarian at Gustavus Adolphus College, in which she does a superb job mocking what she refers to as the "accessibility paradox" where those who are used to being gatekeepers to information at the same time as they're supposedly promoting the benefits of greater information, suddenly start whining when information really does get more accessible. This includes those booksellers:

I'm also taken aback by the horrified response of the book industry. I thought the big crisis was that nobody reads. Now it turns out the problem is that books are so popular with the masses they're being used as bait to draw in shoppers.

Come on, guys, get your story straight! Which is it?

But most of her brilliant sarcasm is directed at those in her own profession, who both work hard to get information for free, at the same time they complain about how the internet has made it so easy to route around librarians:

It strikes me that this issue is somewhat parallel to the love-hate relationship that many academic librarians have had with the Internet. Although our complicated relationship is improving, there are still some silly assumptions floating around. Oh no, our reference stats are down! Hurrah! People are able to find answers without our help. That's awesome! Anybody can publish on the web, unlike scholarly journals which are peer-reviewed. Fine, but don't tell me all peer-reviewed journal articles are shining examples of reason and academic brilliance. A lot of them are finely-sliced research rehashing the same findings, or are closely examined and exquisitely detailed trivia. Besides, there are plenty of examples of peer review failing in spectacular ways--and examples of wonderful peer-reviewed journals that were born free online.

But this is my favorite: Unlike information you find on the web, we pay for the information in our databases, and you get what you pay for. No, actually, with what you pay for you get a lot of junk that you don't even want, but you have no choice.

You want this journal? You have to subscribe to this pricey bundle. Either that, or you purchase one article at a time for your users, something more and more libraries are doing. You spend less, but the information never visits the library--it goes straight from the publisher to the desk of one user. All the library gets is the bill. Apart from failing on its merits, the argument that paid is better than free is self-contradicting. We can't tell students that purchased information is by definition better than free and, at the same time, beg faculty to recognize how broken the current system is and please, please, please make their work open access.

It's a great overall column, and nice to see a librarian lay the smackdown on hypocrisy within the bookselling and librarian worlds.

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Why Do Ebooks Cost So Much?

Mike Masnick — Fri, 21 Aug 2009 07:48:00 PDT

Jeff Malfant points us to a nice little rant over at News.com wondering why ebooks are so damned expensive. He points out that many seem to be priced at about the same going price as the physical books, despite no physical product to produce and ship. My guess is that companies and publishers think they can get away with it for now, since people are "used to" paying the price of books, but it won't last. It just becomes an opportunity for smarter folks to start offering cheaper books (or even free ebooks). And, at some point, a lot of people will just stop paying for the higher priced ebooks.

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Magazines Looking To Raise Prices?

Mike Masnick — Mon, 20 Apr 2009 20:16:43 PDT

As newspapers are struggling with the question of whether or not to charge for content online as their print subscribers decrease, Aaron Martin-Colby points us to an article about how some magazines are also looking to increase the subscription fees for their paper magazines. Over the past few years, many magazines have followed the natural progression in a competitive market, and continually dropped their subscription prices, and made up the difference with advertising. Yet, some magazines are trying to buck that trend. The article highlights The Economist and People as examples of magazines who recently raised prices and still saw subscriptions rise. It will be interesting to see if that's sustained, however.

Oddly, the article doesn't even mention the internet as competition -- which seems to be leaving out a big part of the equation. The Economist and People are the sorts of magazines that people have subscribed to for many years, with a strong loyalty. So, I can see them sustaining subscribers even with a modest price increase -- but as alternative sources become more and more popular, you have to wonder if people will start to question if it's worth paying so much, when there's content that's just as good (if not better) available for free online.

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Wal-Mart Now Going After Search Engines For Linking To Sites With Black Friday Ads

Mike Masnick — Fri, 14 Nov 2008 10:31:00 PST

It would appear that Wal-Mart's lawyers need to come up with excuses to keep billing Wal-Mart every year around this time. Despite the fact that Wal-Mart employees admit that sites posting "Black Friday Ads" help drive more business, Wal-Mart's hired guns keep threatening sites for posting the ads, falsely claiming a copyright on the content (hint: you can't copyright prices). This year, they've stepped it up a notch and are claiming that it's illegal to even link to a site that has such content.

Specifically, Wal-Mart's high-priced law firm has sent a takedown notice to the site SearchAllDeals.com, which is a search engine/aggregator of various deals sites. The site doesn't host any content itself, but that didn't stop Wal-Mart from sending a false DMCA takedown claim to the site (and, of course, a false DMCA takedown is illegal). So, we have Wal-Mart, whose employees think deal sites are helpful, getting its lawyers to send out bogus takedown notices over content that isn't copyrighted, and then sending them to search engines that don't even host the content in question.

It makes you wonder how much the lawyers are charging Wal-Mart... and if the fees are being paid out of the legal budget, or the marketing and promotions budget.

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Wal-Mart Threatens Site Over Black Friday Ad Deals

Mike Masnick — Mon, 6 Oct 2008 11:57:47 PDT

Want to know how we know the holidays are coming? It's not the Christmas decorations already showing up in stores; it's the annual ritual of retailers threatening any website that posts the deals from their "Black Friday" (the day after Thanksgiving) sales circular prior to that day. Last year, Wal-Mart went beyond what others stores had done, in pre-threatening sites. In the past, companies like Target and Best Buy had simply threatened to sue sites after the ads went up. But Wal-Mart took it a step further and threatened to sue before the ads even went up, ignoring, of course that they don't own pricing data. The data on sales prices are not copyrightable and cannot be owned. Wal-Mart simply has no legal leg to stand on in demanding the data from the circular be taken down.

But why let that stop them? An anonymous reader alerts us to the fact that Wal-Mart is already sending the notices out to various sites, threatening legal ramifications if the sites were to post the prices prior to the date Wal-Mart makes them "official."

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