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no foolinDisclaimer: I’m not a lawyer or high-falutin’ financial analyst, and this is my personal opinion, not TeleRead’s. I just call them as I see them.

I ran across this article from Motley Fool blogger Mark Hibben, and felt it was worth calling out as the example of arrant fear-profiteering it is. I could sum up the article thus: “DOOM! DOOOOOOM! (By the way, pay us.)”

To be fair, the post opens with a reasonably cogent and accurate summary of the issues surrounding the Apple anti-trust case, not unlike the one I posted a few days ago. But it goes off the rails toward the end, when Hibben discusses Apple’s claim that its “most favored nation” contract clause is just “business as usual” for the company, and the same thing it did for digital music, video content, and so on. Then he uncorks this whopper:

The problem with Apple losing is its “business as usual” defense.  If Apple’s iTunes business practices served as a model for iBooks, and these practices were found to be anticompetitive, this opens the door to a wide ranging DOJ investigation into iTunes pricing, especially Apple’s relationships with music and video content providers.  Since Apple makes about $4 billion a quarter from iTunes, now the business stakes are much higher.

iTunes pricing has uncomfortable parallels with what happened with iBooks. Once again, Apple’s agency model has produced virtually uniform pricing for digital music and video content across the industry. Every song’s a buck, wherever you go on the Internet.  Most videos are released at the same time and have the same pricing, whether for rental or purchase.  The only area where there seems to be genuine price competition is in apps, because here the developers do set their own prices and do compete on price.

This is, of course, complete bullpuckey. Where do I even begin? There is nothing illegal about the agency pricing model (Apple’s “business as usual”) per se. Even the Department of Justice admitted that, or else they wouldn’t have permitted publishers to go back to using it after a specified cooling-off period as part of their settlement agreement!

For that matter, even Apple’s “most favored nation” clause is not the problem in and of itself either. It is reasonable from Apple’s point of view to want to protect itself from suppliers doing it dirty by giving other retailers lower prices but forcing it to keep charging higher ones. You’ll see that kind of thing anywhere that the price-setter is not the seller. The problem that got Apple dragged into court is the way that Apple allegedly used its MFN clause to force publishers to impose price raises on its competitors. And even then, that might be okay, legally. It’ll probably be this issue that sends the case up to the Supreme Court.

Did Apple do that with digital music? No. Apple pretty much single-handedly created the market for (legitimately-purchased) digital music with its iPod the way Amazon created the market for e-books with its Kindle. They didn’t crowbar their way into an existing market by forcing other successful vendors to raise their prices. There were no other successful vendors at that point (at least by the standards of iTunes), and iTunes actually lowered prices for consumers by holding track prices to 99 cents and lots of albums to either $9.99 or 99 cents * number of tracks, whichever was cheaper. (That’s another parallel to Amazon right there.) And even then, Amazon was eventually able to compete with iTunes by offering DRM-free tracks, which eventually forced Apple to go DRM-free itself.

So, no—Apple didn’t stifle competition where there was some, or raise prices where prices were low. It created a market where there was none. Not the same thing, and not illegal. There’s no reason for the DoJ to care about that.

And I certainly haven’t seen any digital music or movie sellers, or consumers, complaining that Amazon conspired with competitors to make them raise prices. But with e-books…guess what?

The reason behind all this fearmongering becomes clear in the next couple of paragraphs, wherein Hibben essentially makes scary hand motions concerning what this might do to Apple’s stock prices, and then tells you that, gosh, “The Motley Fool’s senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward.” But is he going to do that for free, out of the goodness of his heart? Nope! There’s a link you can click to be taken to a several-minute-long sales spiel for a $15 report and year of updates on Apple.

(Then, when you try to navigate away from the sales spiel, you get an “Are you sure you want to leave this page?” pop-up, favored tool of spammers and scammers everywhere. Yes, you twerps, I’m sure, or I wouldn’t have clicked away! And if I want to come back, I know just where you’ll be!)

I don’t know, $15 for all that might be a bargain. But if this half-assed scare tactic is the kind of analysis you can expect from The Fool, it brings to mind the old question about who’s more of a fool—the fool or the fool who follows The Fool. (And let’s also not forget the Fool analyst who predicted the Kindle would sink like a stone, before taking a screeching U-turn to declare it was instead likely to be the best thing ever.)

Admittedly, there is a disclaimer at the top of the article indicating that “entries represent the personal opinion of the blogger and are not formally edited.” Looks like a blatant attempt to have your cake and eat it too, to me. If you’re going to earn money from that personal opinion, and that personal opinion is trying to use inaccurate speculation to scare people into paying you, trying to disclaim responsibility for it is disingenuous.

 
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