Battle Over Minimum Pricing Heating Up 272
The Wall Street Journal is covering developments in the gathering battle between manufacturers and retailers / discounters, especially online ones, over minimum prices. Earlier this year the Supreme Court upheld the right of manufacturers to enforce price floors for their products. Since then, manufacturers have increasingly been employing service companies like NetEnforcers to snitch on discounters who offer goods below "minimum advertised prices" (or MAPs), and to send DMCA takedown notices to the likes of eBay and Craigslist for below-minimum offers. Separately, the Journal reports that a coalition of discounters and retailers is using eBay as a stalking-horse in a campaign to get consumers, and then politicians, fired up enough to pass legislation outlawing MAPs.
Mr. Looomis may have problems of his own. (Score:2)
He developed software to track the company's authorized dealers and prices. From there, he devised companion software to identify online sales that were discounted. This put the stereo discounting to an end, Mr. Loomis says. In 2003, he launched NetEnforcers using similar software.
Mr. Loomis may be in violation of any NDAs and non-compete agreements he may have signed with his employer for whom he designed this very lucrative software for.
Just saying.
Shouldn't need a new law, but... (Score:5, Insightful)
Shouldn't existing law prevent MAPs already? This sounds an awful lot like collusion and price-fixing to me. But since the Supreme Court has already said that manufacturers can enforce price floors, it sounds like new legislation is definitely needed.
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Price fixing implies different manufacturers colluding, which is not the case for MAP. MAP is about protecting the seller channel for a specific brand. Some product that is sold well above the cost to make and is sold through specific channels - like Bose or Apple. The folks competing with those sellers can sell something else for much less, just not the branded product.
Minimal Pricing = Legal Monopoly? (Score:5, Insightful)
How can minimal pricing be legal or logical?
If I sell you an apple from my apple tree then what right should I have to say that you sell that apple at? Or what rights do I have to then your apple at all?
Obviously the original manufacturer has certain rights like copyright, trademark, but I fail to see how these right extend to something like price further down the supply chain.
This whole system just seems abusive and will make it harder for competition to ensue which last I checked was meant to be what a capitalist society was all about.
Re:Minimal Pricing = Legal Monopoly? (Score:5, Interesting)
Precisely, and here's a quote from that article:
NetEnforcers alerts its clients including Sony Corp..... they can allege that the discounter's use of the product's name or image constitutes trademark or copyright infringement, in an effort to force the seller to stop listing the discount....
So if I have a brand-new, never-used Sony PS3 and for whatever reason I decide to duimp it for cash, I might list it for $200 on amazon oe Ebay. BUT then along come the "netenforcers" claiming I violated the MAP, or I violated copyright, or some such bs, and yank my listing straight off Amazon/Ebay.
They shouldn't be able to block my sale of my product! I can set any damn price I feel like setting, even as low as a penny, because *I* own it.
Re:Minimal Pricing = Legal Monopoly? (Score:4, Interesting)
NetEnforcers says that this year through Oct. 13, it helped shut down 1.2 million seller pages on eBay
Frak. That's a lot of takedowns and I bet most of them were completely harmless and legal. I had one of my auctions yanked last year, not by these people but by some lawfirm in California because they BELIEVED my copy of Star Trek TNG season 1 was an illegal copy. I called this lawfuck...er, firm and tried to reason with the man in charge but he refused to listen. He just kept repeating that if I list TNG-1 a second time, he'll prosecute and yelled loud enough for my secretary to overhear the threats.
I ignored him and relisted it anyway... fortunately the threat turned out to be the babbling of a power-tripping, windbag lawyer... it sold and my customer was happy. I hate corporations, I hate lawyers, and I hate politicians that serve corporate masters.
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Unless you signed a contract with the manufacturer saying that you would do no such thing.
(Needless to say, didn't read tfa; have no idea if that is the case here).
Re:Minimal Pricing = Legal Monopoly? (Score:4, Insightful)
No. You don't own it. That was the end result of the supreme court decision. You no longer own the goods you buy. You only have a "licence" for them. Just like in the software industry.
Manufacturers took their cue from software developers. They wanted the ability to sell a product, yet maintain ownership. They got it. When the day comes and you cannot sell or paint or add and extension to your "Hometech" built house because the company still holds rights over it, then the gravity of the court decision will truly hit home. You can't own anything anymore without a company charter and a team of high priced lawyers.
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Hmmm. No wonder Thomas Jefferson advised the Supreme Court could not be trusted.
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Too bad he didn't say anything about not trusting random people on the internet.
not for second sale (Score:5, Interesting)
they don't seem to be distinguishing (Score:5, Informative)
You're correct legally, but NetEnforcers et al seem to be demanding that eBay take down all sales of new products below the minimum price, assuming that these must be prohibited first-sales.
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But they might block the sale of the guy who signed a contract (MAP).
One of the reasons is that manufacturers want several outlets selling their product, allowing one, probably a very large one, to sell it below a certain price could cause other suppliers to stop distribution or even go under.
The end result would be that the large supplier, say Walmart, would become the only retailer and thus dictate his pricing to the manufacturer.
Here in Europe there is a fear only internet
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This requires some careful balancing of various interests.
Not at all... let it happen. High street shops go under, at first this means less high street shops. But that causes prices for renting high street shops to go down until it becomes profitable again, the shops come back and prices work out to be where they should be without "careful balancing".
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>>>They won't block your sale.
They already have. They falsely told Ebay that my store-bought DVD was an illegal copy, and the sale got yanked. So yes they can block my and your private sales.
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Judas Priest. Doesn't anyone read the article? QUOTE: "When NetEnforcers finds goods for sale below minimum advertised price (MAP)..... if the seller isn't an authorized dealer -- NetEnforcers says other tactics are used to try to force a lowball price off the Internet. In these cases, they can allege that the discounter's use of the product's name or image constitutes trademark or copyright infringement"
In other words, they make up a bunch of lies just so they can enforce MAP upon people who are no
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NetEnforcers alerts its clients including Sony Corp..... they can allege that the discounter's use of the product's name or image constitutes trademark or copyright infringement, in an effort to force the seller to stop listing the discount...
So if I have a brand-new, never-used Sony PS3 and for whatever reason I decide to duimp it for cash, I might list it for $200 on amazon oe Ebay. BUT then along come the "netenforcers" claiming I violated the MAP, or I violated copyright, or some such bs, and yank my listing straight off Amazon/Ebay.
Because eBay is so stupid about such things, your listing will get yanked, but it's not because there is any law behind Sony on this.
Sony's trademark rights are there to prevent confusion, so that people know what they are actually purchasing is what they expect. If you have a real Sony PS3 (and I don't know of any "Sorny" knockoffs of the PS3), then you can use the Sony and PS3 logo in your ad as long as you note that they are trademarks of Sony.
Second, unless you are using Sony copyrighted pictures of th
Re:Minimal Pricing = Legal Monopoly? (Score:4, Interesting)
Re:Minimal Pricing = Legal Monopoly? (Score:5, Insightful)
If I sell you an apple from my apple tree then what right should I have to say that you sell that apple at? Or what rights do I have to then your apple at all?
Simple. Before selling that apple, you make a contract that says what the buyer can do with it. If he does something else with it, it's a breach of that contract.
So if we want to prevent for example these MAPs, or any other similar thing, we need a law specifically saying that such contracts aren't valid.
It's always a trade-off, because here we have two private parties (seller and buyer), and then we make legislation about what kind of contracts they may make between them. Ie. it limits freedom of people and freedom of trade. Then again, it may help prevent monopolies or other bad stuff that would in effect limit freedoms even more.
As far as I can see, it's a slippery slope both ways, and right now it's earthquake season too... We need to try to stay at the top, but it requires constant vigilance.
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When the Hell did I sign a contract saying I can't sell stuff *I* bought for less than X amount of money?
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> If I sell you an apple from my apple tree then
> what right should I have to say that you sell
> that apple at?
MAP does not claim any jurisdiction on the selling price of an apple. If you have a store that sells, to slightly warp your analogy, Apples, and Apple has a product that has a MAP of $149.00, there's absolutely no law or contract provision that forces you to sell that Apple for $149.00. You can sell it for $89.00 if you want to.
If the Apple company were to tell you that you can't sell Appl
All these Apple analogies (Score:5, Informative)
I find humorous. No one has mentioned Macintosh computers. Apple has a very interesting way to get around this problem. They have a MAP but they don't really need one.
Reason is, they sell them to you (the retailer) at VERY near their online store's price. When you, as an Apple Authorized Reseller sell a mac, you send proof of your purchase to them, and at the end of the month you get a check from them. Depending on a wide variety of factors, basically "how much you've behaved like Apple WANTS you to behave as their representative", that determines the amount of cash they give you back per machine. They call it "metrics". We call it "kickbacks".
AARs don't make ANY money on selling a mac. Many of them even LOSE money. But those BDU checks are what make their profit.
This has several interesting effects. First off, when a customer calls us asking about prices for all the systems, we can just direct them to the online Apple store, because all our prices will be the same as theirs, and will be the same as all our competition's. Second, Apple still holds us to MAP, so we can't sell at a loss to make more with the BDU checks. Third, we don't have to worry about direct competition in our market because no one else can sell below MAP, because everyone that's getting the computers from Apple directly has to sell at that price so they're not available anywhere below MAP to be bought "wholesale" and then retailed elsewhere.
The only two problems this causes us is #1 we have no way to compete with the deals Apple offers, such as discounts on ipod with computer purchase, or especially the student discount. #2 some of the places like Mac Warehouse get around this by throwing in free stuff like printer or memory upgrade and that's hard for us to compete with.
This whole thing wouldn't normally work because if Apple makes a price drop when a new model comes out, everyone would be stuck with merchandise they paid more for than they can sell for, so Apple also cuts us checks for any unsold inventory to make up the difference when they drop a price. (they call it "price protection")
The BDU checks and the price protection both are at Apple's discretion, so it gives them a lot of leverage to tell us what we can and cannot do. So even though we're independently owned/operated, we have to basically do whatever they say, or they'll cancel our AAR status and we lose the BDU checks and price protection and that puts us out of business. Really annoying when Apple does something like prohibit us from selling iPhones, and then turns around and lets places like Best Buy and Wal Mart sell them. Sort of a swift kick in the balls and we have no real recourse but to bend over and take it. For example, if Apple catches us selling an iPhone we'd get delisted instantly. If we were caught so much as displaying a pre-release of any Apple software, such as Snow Leopard or the new Aperture, same thing. So in this respect, the manufacturers can have a lot of control over their retailers - it goes far beyond just MAP.
I don't know for sure, but it seems like their preventing us from selling iPhones is something that should be illegal? Apple is notorious for taking steps to eliminate competition within their market, specifically from their partners. "competes with an Apple product" is the #1 reason for iPhone apps to be rejected by Apple from being sold on the Apple Store.
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If the Apple company were to tell you that you can't sell Apples for $89.00, that would be illegal. But they can ask that you not use their logo or trade name in an advertisement that SAYS and Apple is $89.00, and it's legal for them to enforce that as a condition for selling Apples to YOU, the retailer.
No, they can't stop you from using their trademark or logo when selling, since you are selling real Apple products and not fakes.
Trademark is to prevent confusion for the consumer, not to allow the holder of the trademark to control the mark in all instances. As long as you note that the marks you use are trademarks held by Apple, you are in the clear, legally, although it might be expensive to prove it.
The only thing Apple can legally do is stop selling you products directly.
but you DIDN'T buy that apple (Score:4, Interesting)
Retailers are only consignment dealers, they don't buy anything up front. The manuftcr stocks their stuff on the floor, and the BestBuy remits as each item goes past the register. It's a form of floor planning like car dealers. If the item disappears from stock without going past the register (stock shrinkage aka employee theft) Apple eats it.
Since the mfr assumes the risk, then the mfr sets the terms and prices. This is how WalMart "Keeps Prices Low."
If the stores actually bought this stuff from the mfr as it came into the store, then it would be their property to dispose of as they see fit. But we don't.
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If I sell you an apple from my apple tree then what right should I have to say that you sell that apple at?
None. But MAP isn't about that. You can sell your EXISTING inventory at whatever price you want, since you've purchased it and it's in your storeroom. If you don't comply with MAP guidelines though, the manufacturer will refuse to resupply you in the future, as is their right in a "capitalist society". Thus, you as the retailer will never be given more apples to sell from that apple tree.
This whole system just seems abusive and will make it harder for competition to ensue which last I checked was meant to be what a capitalist society was all about.
Actually, the problem with minimum advertised prices is that they are pro-competition.
Consider the following. Big Bo
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It's more like if you buy a pallet of PS3s and turn around and sell them for a dollar over what you paid, which would still be pretty far under the MSRP.
Is this free market? (Score:4, Insightful)
How exactly could a market be described as "free" if a single market actor is able to force other market actors to not sell the goods at a price they see fit?
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I sell you a good and tell you not to resell it less than $50. You freely buy it and resell it for $45. I am then free to not sell you any more.
I cannot imagine that Craigslist is doing anything other than telling the companies to take a leap. Ebay, on the other hand, has shown a willingness to bow to outside pressure at the expense of its users.
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Easy thing to do for nontrivial stuff (that has serial number)
List the serial numbers that you were sold as being "stolen" = UnSupported (but the customer will be told that the serial is listed as being stolen)
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It might be worth pointing out that hardly anyone experiences a free market in the purest sense of the term. Even so, MAP does not impede a free market. In the majority of market segments there are multiple tiers and multiple marketers within each of those tiers. If Brand X requires a MAP contract and Brand Y does not the market is still free because there are multiple choices available at the wholesale and retail level.
If Sony (for example) wants to enforce a MAP with those retailers/wholesalers they h
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In a free market, minimum pricing wouldn't work because there would be multiple oth
Price limits (Score:5, Insightful)
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When you look at America's tax structure, it's clear that we mostly have regressive taxes, i.e. the poor pay a larger percent of their income to taxes than do the rich, overall.
It's socialism for the rich, paid for by the no-safety-net capitalism for the poor.
Re:Price limits (Score:4, Informative)
False. Here is my source:
http://www.cbo.gov/ftpdocs/88xx/doc8885/EffectiveTaxRates.shtml#1011537 [cbo.gov]
Do you have a source for your claim?
I suppose we could quibble over households vs individuals, but note on that page, there is no instance where moving up into a higher income group results in a cut in overall taxes.
And maybe the wealthy should be paying even higher taxes, I don't know, but the idea that they are paying lower taxes is simply false.
Re:Price limits (Score:4, Informative)
You are only looking at income tax rates. Rich people derive a big portion of their income from capital gains, which is taxed at a much lower rate. The best known example is Warren Buffet, who is taxed a lower rate than his personal secretary (he uses this to support higher taxes on himself).
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Read that link more carefully. They rolled capital gains into the stated incomes.
Warren Buffett is a hilarious special case. The majority of the top 1% do not have millions of dollars of capital gains income, they have millions of dollars of earned income.
I'm not trying to argue about whether the rates are appropriate, I'm just countering the notion that they are heavily skewed downward.
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The majority of the top 1% do not have millions of dollars of capital gains income, they have millions of dollars of earned income.
I seriously doubt that. Rich people make most of their money by either owning a business or by stock options (ISOs) if employed high up in a corporation. Both of these are taxed as capital gains.
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There aren't that many people that do that, compared to the numbers of people who simply have high earned income working for somebody else. Somehow or another, as a group, the top 1% are paying an effective rate of 30%, so I don't find it particularly likely that the majority of the top 1% are paying less than that (it's mathematically possible, but not likely). I'm not real worried about why they pay those taxes (which is basically what we are discussing).
People like Warren Buffett are certainly getting a
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But the richest people tend not to work for someone else.
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Steve Jobs has $1 of earned income, and the rest is capital gains income. That is not untypical for rich people.
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Umm, sales tax is flat, thus it can't be regressive. The poor pay just as large a fraction as do the rich.
(As other point out, property tax may be another story.)
property taxes (Score:2)
Property taxes tend to be regressive when look at on income terms, because someone making $1m doesn't on average own a 10x as expensive house as someone making $100k.
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But someone making $100k will often usually own more than 5x someone making $20k because the later will likely rent an apartment and own a cheap car (if that). While the former will likely own a house a $20k car and maybe a boat.
(On top of this, a $20k car may also have a tax more than 2x that of a $10k car depending on local laws.)
I looks like somewhere in between $100k and $1m there will be a break point. Below that break it's progressive, above that break it's regressive.
(Note: I am assuming the living
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(Not that I'm accusing you of such; it seems common for people to miss that point.)
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Sounds like your definition of poor and mine differ.
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"Barking nincompoop" is one of the funniest insults I've heard in a while. Made me laugh.
Seriously though, I think what GP was trying to say is that the poor are more affected by taxes, even if they don't pay as much, or even as much by percentage.
If you earn a million bucks a year, who gives a damn if you pay $400,000 in taxes? You may be pissed off that you have to pay it, but you're still living like a king off the remaining $600,000.
But if you only earn $20,000 a year you care a lot about having to pa
price ceilings are actually okay, too (Score:2)
The Supreme Court overturned the former ban on retail price ceilings a decade before they overturned the one on retail price floors. See State Oil v. Khan [findlaw.com] (1997), which held that a gasoline distributor could put a cap on the retail price the gasoline stations could resell it for.
Makes for an awkward situation (Score:5, Interesting)
Enforcing MAPs is often more about maintaining supply chain and sales stability than explicitly trying to be profiteering.
Recently in the model-aircraft world, we had one large online, offshore (Asia) store acquire a large lump of stock from a supplier via proxy (because the supplier explicitly didn't want this online retailer selling their stock), the store promptly dumped the stock into the market at a price within 10~15% of the supplier cost price which was about 30% below MAP (on a $400~$600 item).
This had a couple of immediate effects;
1) Everyone bought stock from the one online store
2) Other major US/Europe stores couldn't match due to legal issues with going below the MAP
3) Said US/European stores stopped purchasing from the factory
4) Existing customers became enraged at the "huge profiteering" (many electronics goods are retailed at roughly 400% of their factory cost or higher)
Ultimately, the factory goes into a situation where they're between a hard place and a rock.
Certainly quite an effective way to crush some competitors in your market space.
We don't like to think that people are carving out huge profits on the items we buy, however the reality is that a lot of what we pay for items -is- profit that pays the wages of people like us who need to buy things to keep on living.
Re:Makes for an awkward situation (Score:5, Insightful)
Funny. The "nightmare" situation you describe resulting from a retailer ignoring MAP only becomes a problem because of MAP. 1,2,3 and 4 would not have happened if the regular retailers were "allowed" to lower their prices in response to the current (temporary) situation in the marketplace. Its plain and simple legal manipulation of the retail markets by manufacturers, and hurts everyone else.
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Anti dumping laws generally take care of that, of course assuming they're within a jurisdiction where the law can reach ;) Unfortunately the smaller companies are long since dead from it before the law yanks on the collar of the offender and usually then it's all factored in as the "cost of doing business".
Re:Makes for an awkward situation (Score:4, Interesting)
The difference to notice though is that there's a higher cost involved in maintaining a support infrastructure for the product, as apposed to dumping the product and running with the (slimmer) profits.
Essentially the "ultra low cost seller" takes a higher effective profit because they pay no contribution towards maintaining the support network (advertising, support, repairs etc).
You can remove the MAP's, yes, what you'll see then is a lot of retailers refusing to take on the products at the risk of margins going too low to warrant carrying the stock and the after-sale responsibilities.
The problem is in the form of the rogue trader who sells today and is gone 14 days later and yes, customers will and do go and find one of the other resellers to scream and yell when it doesn't work, whom -will- then get shafted if they don't support the item in terms of bad-mouthing (by the customer) or financially (by taking on the problem above and beyond their responsibility - simply to keep the good name). If stores don't like the MAP enforcement then they shouldn't buy the stock to sell. If no one buys the stock then your market has sorted itself out.
MAPs are a minor assurance, from the factory, that when you hand over your money to buy their stock you're not going to end up with something worthless in your hands two weeks later because of some fly by night jerk who submarines the market to make a quick buck and leaves the existing sellers to clean up the mess (as if there aren't already enough market forces pushing against you).
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MAPs are a minor assurance, from the factory, that when you hand over your money to buy their stock you're not going to end up with something worthless in your hands two weeks later because of some fly by night jerk who submarines the market to make a quick buck and leaves the existing sellers to clean up the mess (as if there aren't already enough market forces pushing against you). ...but they do NOTHING to protect the retailer that the product they buy from the factory is not going to be suddenly replace
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I don't know if it's so simple. Stuff like that does protect the smaller retailers from big B&Ms and online stores. Online stores don't have nearly as many expenses and big B&Ms tend to cut costs by just hiring much cheaper, less skilled and largely ignorant workers. In that particular market (hobby model stuff), the small shop tends to have people that know what they are selling, know how to help the customer and have a bigger variety of kits, supplies & equipment. Online, you do get variet
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5) US/European customers get much higher costs of living due to things like MAP
6) US/European customers/workers, laden with the highly anti-competitive legal structure cannot compete with Asian workers buying products at factory price.
Ultimately, after borrowing to fund their living for some decades, the citizens are stuck between a hard place and a rock, and simply cannot afford to pay the inflated prices anymore, the last few resources have been pressed out, and we get widescale deflation and an economic
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Regulation that protects my company = good, regulation that protects someone else (or even just all of us) = bad.
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That's pretty cheap compared to the £97.86 Currys [currys.co.uk] charge here for a 2m HDMI cable. The strange price is due to a recent reduction in sales tax, it used to be £99.99.
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You can and they did (incidently I wasn't personally involved, just watched the scene from afar, though I am in the industry),
However once people get a taste of the "very low price", it's a bit tricky to get them back to eating the higher price be it legitimate or not in a reasonable time span.
Ultimately the debate comes down into a couple of camps;
1) The theoretical market equilibrium / idealism / no-restrictive-laws-or-boundaries / unlimited-market view
2) The "I'm working in
What Is The Trademark/Copyright Violation (Score:3, Insightful)
It's probably bogus but I can't even figure out what the theory is on which manufacturers sue unauthorized distributors. I mean my understanding of trademark law is that it's uncontroversial that using a product's name to correctly identify the item you are selling isn't a violation of the trademark. Moreover, merely listing the item name isn't enough to create a copyright violation.
I mean I see how this might work against retail operations or online stores. After all they usually need to put up a description of the product, pictures of the box and other information to make it attractive to the customer. No doubt the allegation is that the text on the box or the blurb describing the item are copyrighted. But how does this reach ebay sellers?
some seemed based on contract law (Score:2)
The case that went to the Supreme Court actually didn't involve a suit against unauthorized distributors at all: the manufacturer simply cut off the retailer from further shipments after they started offering discounts, and the retailer sued the manufacturer over that, alleging an antitrust violation.
Saturns, anyone? (Score:2)
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This is the old stereo store model; you remember, the one you could never afford to buy in? Or like Lisa Simpson moans she can never afford any of Apple's products?
This is all about control, increasing their margins, and creating a profitable, controllable secondary (and price fixing) layer.
Bringing up anything else (like service, whatever that is) is secondary, a smoke-screen. Spin any "service" to someone who makes his bread and butter, or lives and dies, by it. Not someone who lives mostly off the initia
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This isn't about "good" products. This is about increasingly complex products. Sony doesn't want to have to run an 800 number to field calls from shoppers who were handed the wrong (or no) cables by a no-margin retailer that refuses to answer questions from the person to whom they just sold a DVR. The retailer can prevent all of that by taking five minutes with the customer during the sale, or by having adequate signage and display info
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"Companies like Sony don't want to have to wear a bunch of customer service complaints about a retail outlet that "can't afford" to take a lot of time taking care of a customer's problem because they gave away all of the margin on the sale."
Ironic that you mention Sony here. Sony is a lot happier selling their products in big box stores where not only do the stores give away the vast majority of the margin on the sale but they also "take care of customers" by expecting Sony to take back any broken hardware
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Right - because the VAST majority of those returns are from people who simply don't RTFM, and don't understand that Teh Interwebs don't come free in the box... or that WiFi involved other hardware, too. HP would rather take those phone calls and preserve the sale. That's part of their agreement with the retailers. Different products - especially computers - i
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No, I'm saying that it's a very direct way for manufacturers to help prevent erosion of their reputation. Retailers that don't make enough on the sale to be able to handle the job of selling the product, or who sell the brand without any commitment to supporting the sale afterwards
this is basically job protection for leg
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oh wait
Just another day among the chattering lunatics. (Score:2, Insightful)
I contract with and certify authorized fruit distributors who certify me that in advance of doing business with me, they must staff up and provide gentle handling and quickly respond to consumer complaints. In return for their investing in this staffing up, I set a minimum retail price they will charge and maximum wholesale price so the distributors of all sizes will have some assurance of gross profit.
Welcome to ChinaMart (Score:2)
The real reason that this was put into law was because with every manufacturer making their pieces of plastic and software offshore in China and similar places, all form the same few factories in some cases. Take computer cases. Most are made in a handful of factories and re-badged as required.
"Protecting their image" is actually better translated as keeping the public in the dark as to what their products really cost. If the supplier in China or Malaysia or wherever decides to undercut Apple, well, they
If it ain't broke, (Score:2)
Manufacturers should be able to chose who they are going to sell their product to wholesale. If they want to fix their prices by refusing to sell to people who advertise below they price they've outlined, that's their business and the government should stay out of it.
The only alternative is writing laws to determine who I can sell goods to, and under what circumstances. That's a huge blow to freedom, and yet another step to building a large oppressive
How is DMCA involved? (Score:2)
"and to send DMCA takedown notices to the likes of eBay and Craigslist for below-minimum offers"
How (I'm afraid to ask) can DMCA be used to enforce MAP violations?
KeS
Re:MAP vs Price Fixing (Score:4, Informative)
Re:MAP vs Price Fixing (Score:5, Informative)
Exactly. Protecting the Dealers from other dealers is the reason for MAP Pricing.
I worked in pro audio for 5 years. MAP is very prevailent in that market. I live in North Dakota. Its not like I sell 1000 dollar speakers every day like Musician's Friend does. So if I'm a dealer and the 1000 dollar speaker costs me 800 dollars. plus 70 dollar shipping. I'm making 130 dollars per speaker.
If there is no MAP. then The online retailer is able to then sell the speaker for say 850 dollars and and then sell more, getting better pricing so that the speaker may only costs them 700 dollars. well now they're able to sell it for less than what the smaller local dealer can and still make a profit. and make up the extra amount in gross sales. Isn't this reminding you of Wal-Mart?
These companys want to keep their local dealers open. They want to have a place for you to take your unit back to for support. if they don't have MAP there is no reason for that local dealer to even been selling the product if they can't even be competitive with the pricing.
Make sense?
Re:MAP vs Price Fixing (Score:5, Interesting)
I sell "dual core intel computer with 2gb" for $1000 (or even more). Now, the customer *could* go to tigerdirect.ca and buy the "same" system for a few hundred dollars. I make my client VERY aware of that option. Really, I don't want any buyers remorse or anxiety over purchasing a system from me.
But... on-site setup, customized media software, lifetime labor, quality parts, little to no noise, and a nice pvr case.
Let's see tigerdirect.ca compete with that.
If *all* you are doing is selling the speakers -- I don't have much sympathy. Take your $50 dollar profit, if that's all you can get. Buy more speakers, and go "internet" as well.
MAP *does* gouge the consumer; if only to keep your business model afloat.
Personally, I think that MAP is designed to protect "reputation". Without the need for anyone to apply any extra elbow grease.
Re: (Score:2)
Just a quick question.
Are you an authorized dealer with Intel, the case manufacturer, and the Ram Manufacturer? If you are I'm sorry as this won't apply.
But with speakers There are dealer minimum sales to stay a dealer. So for JBL lets say I need to sell 15,000 in speakers a year.
If I can not sell that many speakers, I can not stay a dealer, therefor I can not become an authorized parts dealer, and I am not authorized to handle warranty work for speaker issues. Therfore A speaker I sell to a customer that h
Re:MAP vs Price Fixing (Score:5, Insightful)
You've successfully demonstrated that the problem lies upstream.
If JBL's policies are hurting the customers, then they need to change those policies. If the problem relates to the distribution model, then JBL needs to beef up their distribution accordingly.
The MAP I think is a crutch. Sure, I could save a few bucks online, but at what cost ? If anything, audio guys are aware that gear breaks down (a lot), and a web site isn't going to be of any use when your amp blows up the day before your show - might as well cancel the next 2 months' bookings! A brick and mortar store has customer service (most of the time). They will fix your amp (or ship it back for you), and give you a loaner.
You know what sucks about buying online ? Shipping. The first time you send those cheap speakers out for repair, the shipping will burn whatever you had saved by buying from www.cheapspeakers.cn
Frankly, I think we can do away with MAP. If someone wants to pay a cheaper price for less service, that's their choice. They will probably end up buying another when the first one breaks, so the manufacturer might actually benefit from the crap service.
Re: (Score:2, Insightful)
Therefore How do I sell a speaker to a customer if I am not an authorized dealer? If I sell it to them they will not have a warranty? Sure I can get it through a distrubutor but thats being shady to the customer, and downright bad business.
It would have the same manufacturer's warranty it does now. It would just mean that you were no longer on the hook for warranty work they would have to contact the manufacturer. Just like I would if I bought a PS3 or Xbox at Target I don't expect Target to do warranty work I contact Sony or Microsoft.
Re: (Score:2)
When they open up a service center and start selling the same hardware you do for $200, because they could even if it's not profitable for as long as it takes to run you out of business, call me and see if you think MAP is just a marketing tool. You've even got the benefit of working in an business where you could basically run it out of your living room if you wanted to, so you d
Re: Funny you would mention that (Score:3, Interesting)
Re: (Score:2)
But... on-site setup, customized media software, lifetime labor, quality parts, little to no noise, and a nice pvr case. Let's see tigerdirect.ca compete with that.
*opens yellow pages, finds reputable computer repair shop*
"Hello, I'm purchasing a new computer, how much would it cost for you to install my software, set it up in my office, and provide free labor for the lifespan of the computer?"
It's not going to be ~$700, the implied difference in price you've quoted. You're banking on your reputation,
Re: (Score:2)
No Walmart is so big that no one will dare send a DMCA notice (what does copyright protection mechanisms have to do with price advertising?) for violating mininium prices. THey are for it as they want to remain the lowest piced for all goods and do not like a bit of competition when it comes to price.
THis is in place to protect Walmart and other retailers so they can have the lowest prices and as a consumer you no longer get the benefits of capitalism as Walmart and Bestbuy decide what everyone pays (isn't
Re:MAP vs Price Fixing (Score:5, Interesting)
Exactly. Protecting the Dealers from other dealers is the reason for MAP Pricing.
Except the consumer gets screwed by this - essentially it's a way to make price comparison more difficult. As a result, some places don't advertise price but require a call or email to get a quote.
I worked in pro audio for 5 years. MAP is very prevailent in that market. I live in North Dakota. Its not like I sell 1000 dollar speakers every day like Musician's Friend does. So if I'm a dealer and the 1000 dollar speaker costs me 800 dollars. plus 70 dollar shipping. I'm making 130 dollars per speaker.
If there is no MAP. then The online retailer is able to then sell the speaker for say 850 dollars and and then sell more, getting better pricing so that the speaker may only costs them 700 dollars. well now they're able to sell it for less than what the smaller local dealer can and still make a profit. and make up the extra amount in gross sales. Isn't this reminding you of Wal-Mart?
If it means consumers pay less then it is a good deal - the manufacturers don't want to piss off they big buyers by not offering steep discounts but don't want to offer the same pricing to the little guy. They could offer the same price to the little guy but they don't want to take the revenue hit so they use MAP to "protect" them while hurting the consumer.
These companys want to keep their local dealers open. They want to have a place for you to take your unit back to for support. if they don't have MAP there is no reason for that local dealer to even been selling the product if they can't even be competitive with the pricing.
If they really want then don't give the big sellers a sizable discount - stay a specialty product selling through dealers only. Some companies, such as Stihl and Snapper, do this. Of course, their prices are not that much more than for a similar product at Home Depot; they simply chose not to get into the price death spiral and instead sell on quality. As the CEO of Snapper said - "My tombstone will say 'He turned down WalMart.' - whether or not that was smart remains to be seen"
Make sense?
It depends on the business model - I don't think one that gives better pricing to Big Box / large online stores and tries to keep a dealer network in place via MAP is a viable long term strategy. The big guys will find ways to sell for less (MAP only controls advertised, not selling price); squeezing the dealers.
Re: (Score:3, Interesting)
"They want to have a place for you to take your unit back to for support."
This is an old argument; I remember back in the early days of computers, this came up over and over. The argument was something like this:
"If you buy from the mail-order guy, then you don't get the kind of great support you get from your local dealer"
Okay. So you'd go in and ask about a particular piece of software, that you'd need support with. The local merchant's answer?
"How can you expect us to be
Re: (Score:2)
"These companys want to keep their local dealers open."
This may be so.
"Make sense?"
No. They have another option. Sell to the small local dealer for less than they sell to be non-local ones. Or at least on par. Naturally they don't want to do it this way, but they could.
all the best,
drew
Re: (Score:3, Insightful)
and if you can't compete go out of business that's how it is supposed to work. Goods should be as cheap as possible that still keep them selling.
No, that may work in some businesses but in others it results in higher prices and worse service.
As the GP points out;
These companys want to keep their local dealers open. They want to have a place for you to take your unit back to for support. if they don't have MAP there is no reason for that local dealer to even been selling the product if they can't even be competitive with the pricing.
Once all the small companies go out of business the big guys can raise their prices above where they were when th
Re: (Score:3, Insightful)
and if you can't compete go out of business that's how it is supposed to work. Goods should be as cheap as possible that still keep them selling.
No, that may work in some businesses but in others it results in higher prices and worse service. As the GP points out; These companys want to keep their local dealers open. They want to have a place for you to take your unit back to for support. if they don't have MAP there is no reason for that local dealer to even been selling the product if they can't even be competitive with the pricing. Once all the small companies go out of business the big guys can raise their prices above where they were when they had competition.
And then small guys come back in to compete - so either the big guys keep prices low to keep out the little guy or they raise prices and open themselves to competition. Conversely, if enough consumers want the extra service they will pay a higher local price - but that should not prevent others from offering a better price. the kicker is many stores now have the click on cart to see price to get around MAP restrictions.
Re:MAP vs Price Fixing (Score:5, Insightful)
Re: (Score:3, Interesting)
It's the long term behavior that counts - if retailers make a habit of dropping prices to end competition then jack them up other sellers will stay in the market because they know that the. price will rise.
That is simply not true. It is hard now to believe that even you seriously think that is true.
LARGE COMPANIES HAVE MORE MONEY. I normally dont like to yell, but that basic fact is one that you are completely overlooking. Small companies generally have very low cash reserves. They can only operate in t
Re: (Score:2)
It's not just because of the discount. Lets go back to the 800 dollar cost. Internet store company sells 20 of the 1000 dollar speakers a month. Well now it can put all 20 of those on a pallet and stock them because it knows it can sell them.
20 speakers will give you free freight because of the order size (Just like at many other stores you may order stuff from)So now the speaker costs 70 dollars less per speaker. Now that store may feel like selling alot of speakers for less than the normal amount to make
Government-granted monopoly (Score:3, Interesting)
This minimum pricing scheme just concerns one manufacturer's product. You're free to buy from a competitor.
Unless the product has no close substitutes, and the state enforces this lack of close substitutes.
Re: (Score:2, Interesting)
Like what, cable internet? Sure but local monopolies are subject to other laws.
I bet you were talking about copyrighted works but there are TONS of close substitutes available. Halo 3 not on your system of choice? Tons of other FPSes available. I know you love narrowing down your requirements that you could practically add "made by X and titled Y" to the list but most people do that only when advertising is in play and that's the point of advertising, to make the customer choose one brand over another. Ever
I'm talking patents (Score:2)
Halo 3 not on your system of choice? Tons of other FPSes available.
Not when Konami is using patents to sue its competitors out of existence. See Konami v. Roxor [google.com] and Konami v. Viacom [bloomberg.com].
Re: (Score:3, Funny)
Re: (Score:2)
So consumers choose between cheap products with high retail mark-up, or cheap products with high manufacturer mark-up. We need an aven
Re: (Score:3, Interesting)
It is still collusion in my book.
Wallyworld and CostMe are agreeing to sell a product for a minimum price, their just going though a middleman to make the arrangement (the product manufacturer).
Re: (Score:2)
When you buy something from somebody else, there is a contract of sale that determines the terms and conditions of the sale. The terms of the contract can be in writing, be given orally, or (in the absence of either of those), will go to a set of default terms.
If there's a written contract between a manufacturer and a distributor, one of the terms that the manufacturer can put in the contract is "You will not resell this at less than $X." Or, in this case, "You will not advertise this at less than $X."
It