This article repeats the canard that Amazon has been selling ebooks at a "loss", using this as a key example for its thesis. In actuality, Amazon wanted to discount ebooks, but the big publishers wanted no discounts so they could maintain ebook prices higher than paperbacks generally. Take the example in the article, where the publisher set an ebook price at $12.99. The standard publishing contract required a retailer to pay the publishing company about 50% of this amount, or about $6.50. Amazon paid approximately this royalty, and retailed for $9.99, making a gross profit of about $3.49 per unit. This is clearly not selling the item at a loss. The author of the article, claiming to be an expert on business, thinks that any discount from list price is selling at a loss - in other words, the article author, who claims to propose a better way to approach a fundamental part of business law (antitrust) doesn't understand the first thing about retail business. Discounts are not selling at a loss, unless the retailer sells for less than its cost.
I suppose you could try to make some argument that it cost Amazon more than $3.50 a ebook over and above the cost of the product itself, but the author makes no effort to do so. And Amazon clearly has not been selling its products below cost generally, though in a business of its size, of course its likely that there are some exceptions. Consider, if Amazon really was selling books and other products below its cost, losing money on each transaction, where would the money come from to invest in all the new businesses like AWS, production of films and TV shows, etc, that the article's author thinks are such a problem?
So here's a proposal for a "better" idea for antitrust law based on an article demonstrating lack of understanding of the first thing about business.
One of the strategies that they [the publishers] employed was the
elimination of the existing discount on wholesale prices of
e-books. This meant that the wholesale price for e-books would
equal the wholesale price for physical books, and as a result,
the wholesale price that Amazon paid for an e-book would be set
at several dollars above Amazon’s $9.99 price point. This
tactic, however, failed to convince Amazon to change its pricing
policies and it continued to sell many NYT Bestsellers as loss
leaders at $9.99.
I suppose you could try to make some argument that it cost Amazon more than $3.50 a ebook over and above the cost of the product itself, but the author makes no effort to do so. And Amazon clearly has not been selling its products below cost generally, though in a business of its size, of course its likely that there are some exceptions. Consider, if Amazon really was selling books and other products below its cost, losing money on each transaction, where would the money come from to invest in all the new businesses like AWS, production of films and TV shows, etc, that the article's author thinks are such a problem?
So here's a proposal for a "better" idea for antitrust law based on an article demonstrating lack of understanding of the first thing about business.