Print 10 comment(s) - last by sigmatau.. on May 27 at 10:33 PM

This judge will oversee the trial starting June 3

A federal judge's preliminary statement in the Apple e-books price fixing case seemed to fall in favor of the U.S. Department of Justice (DOJ). 

"I believe that the government will be able to show at trial direct evidence that Apple knowingly participated in and facilitated a conspiracy to raise prices of e-books, and that the circumstantial evidence in this case, including the terms of the agreements, will confirm that," said U.S. District Judge Denise Cote.

Cote, who will oversee Apple's e-book trial starting June 3, said that this statement made Thursday morning was by no means final and based on only part of the evidence presented.

"We strongly disagree with the court's preliminary statements about the case today," said Orin Snyder, a lawyer for Apple. 

The hearing on Thursday discussed pretrial topics like which witnesses could testify in the trial. 

Apple is the target of the e-books investigation along with book publishers Hachette Livre (Lagardère Publishing France), Harper Collins (News Corp., U.S.A.), Simon & Schuster (CBS Corp., U.S.A.), Penguin (Pearson Group, United Kingdom) and Verlagsgruppe Georg von Holzbrinck (owner of inter alia Macmillan, Germany).

However, all the book publishers have already settled with the DOJ. Apple is the only one who hasn't settled yet, and is looking to go to trial June 3. 

This all started in April 2012, when the U.S. Department of Justice (DOJ) sued Apple and the five book publishers over anticompetitive practices concerning e-book sales. The book publishers were accused of partaking in an agency sales model with Apple, which meant that publishers were allowed to set the price of a book and Apple would take a 30 percent cut. In addition, the publishers could not let rivals sell the same book at a lower price. Traditionally, publishers sell physical books to retailers for about half of the cover price, which is considered a wholesale model. Retailers then had the ability to sell those books to customers for a lower price if they wanted to.

But when e-books came along, this model was challenged. Amazon started selling best sellers for as low as $9.99 to encourage its Kindle e-reader sales. Publishers were not happy. Apple then came along with iBooks, and publishers began to worry that it would take over the book industry the way Apple's iTunes took over the music industry, where customers would choose to purchase cheap, digital books instead of physical books.

However, Apple attempted to resolve this when it struck a deal with publishers to implement the agency model in 2010. This helped Apple at the time of its iPad and iBooks launch. But its deal with publishers made it seem like an attempt to thwart Amazon's dominance.

Earlier this month, DOJ used an old email from former Apple CEO Steve Jobs as evidence in the e-books case. The email (dated in 2010) from Jobs to James Murdoch of News Corporation said, "Throw in with Apple and see if we can all make a go of this to create a real mainstream e-books market at $12.99 and $14.99.”

Source: Reuters

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

By Motoman on 5/24/2013 1:53:34 PM , Rating: 5
"We strongly disagree with reality." said every Apple lawyer ever.

By Motoman on 5/24/2013 2:50:51 PM , Rating: 4
Also, just to not start another thread...

publishers began to worry that it would take over the book industry the way Apple's iTunes took over the music industry, where customers would choose to purchase cheap, digital books instead of physical books.

Note to publishers: you shouldn't care.

Producing traditional books is an expensive, equipment- and material-intensive process. If 50% price margin gives you the operating profit margin you need to keep up that equipment, material handling, labor, etc. then great. Continue to sell traditional books at 50% price margin on your traditional cover prices. eBook costs you, ummm <gets out slide rule>...nothing. Your production cost is as close to zero as one can possibly imagine. Your editor saves the final version to .pdf (or whatever) and then emails it to Amazon. Done.

You have no equipment to maintain. No material to buy, stock, and handle. No labor. No factory. No...anything. Every dollar you make off that eBook is as close to pure profit as any industry can ever get.

Look at how much of your 50% margin on the sale of a traditional book goes into paying for the equipment, materials, maintenance, labor, and physical factory space. What's your actual profit margin, at the end of the year on your financial statements? 10%? Now look at the costs involved with eBook sales. No equipment. No materials. No maintenance. No labor. No factory.

Think of what that's going to do to the profitability of your company. EVEN IF the eBooks sell at vastly smaller prices than real books (which logically they should). If an eBook sells for $10 and you get $5 from it, that $5 is effectively free-and-clear of any overhead of any kind. As opposed to getting $25 from the sale of a $50 hardback, for which some large percentage is sucked up by the overhead costs of it's manufacture.

So...stop worrying about selling eBooks at prices that are "too low." Your profit margins are going to skyrocket, and you're going to get rich while hardly having to lift a finger at all.

By ipay on 5/24/2013 5:50:18 PM , Rating: 2
As long as no one is Walmarting (dictating pricing) the publishers, then absolutely agreed.

By inperfectdarkness on 5/27/2013 3:10:43 AM , Rating: 2
I think the lesson here is that collectively, every media content owner is screaming, "I DON'T LIKE CHANGE!!!!"

From books to music to movies to games, this has been the recurring theme of the last 10 years. Virtual console could be FAR better than it currently is, but even though there are legions of games 10+ years old that could be released on VC, it doesn't happen.

Likewise, there's so much content that could be streamed on Netflix, but the owners are playing hardball.

The only "change" that these douchecanoes seem to embrace is eradication of used-media markets. How long must we wait until games on steam, e-books, etc...are all deamed to be just as legally protected for resale as a used car?

By asgallant on 5/27/2013 12:57:09 PM , Rating: 2
That would be true if the major cost of producing a book were the manufacturing process, but it's not: typical production costs for a book amount to about $2.50 for a hardcover and $0.50-$1 for a paperback. The editorial costs, layout, cover design, author's commission, and publisher's overhead make up the majority of costs; and those don't change when you move to e-books.

Triple damages for wasting time
By tayb on 5/24/2013 2:00:58 PM , Rating: 2
I hope they get hit with triple or quadruple damages for wasting time and being too arrogant to settle. They have emails from Steve Jobs discussing the price fixing. Fucking scumbags.

RE: Triple damages for wasting time
By Motoman on 5/24/2013 2:39:51 PM , Rating: 2
I think there's precedent for "treble" damages for things like contempt of court and willful obstruction of justice.

RE: Triple damages for wasting time
By dmoney13 on 5/24/13, Rating: -1
By Solandri on 5/24/2013 10:44:19 PM , Rating: 2
amazon is the real scum here. they control upwards of 90% of the ebook market, yet once a worthy competitor enters the fray they work with the gov't to bring a case against them?

If someone controls 90% of the market and they prevent you from selling stuff at a lower price than them, they get an anti-trust investigation.

If someone controls 90% of the market, and you implement a change which forces them to raise their prices, you get an anti-trust investigation.

See how that works? Actions by sellers which benefit sellers (prevent prices from dropping, or force competitors to raise prices) are worthy of anti-trust investigation. Actions by sellers which benefit buyers do not warrant anti-trust investigation. (The only tricky case is dumping, which benefits buyers in the short term, but hurts them in the long-term.)

amazon is destroying the publishing industry on a daily basis. big brother incarnate

If Amazon's terms were so onerous it would've destroyed the publishing industry, then Apple wouldn't have had to do anything. The publishers would've naturally and individually demanded higher prices, enough so that Amazon would've had to comply in order to continue selling ebooks. That's how the market works. Nobody held a gun to the publishers' heads and forced them to sell to Amazon. They agreed to do so of their own free will.

The publishing industry initially tried to foist upon the public ebook prices which matched (or in some cases were higher than) physical book prices. If the current publishing industry is so precariously constructed that correcting those ridiculous ebook prices, as Amazon has fought to do, will result in "destroying" them, then they deserve to be destroyed. Get them out of the picture ASAP so that a better, more fit publishing industry can grow up to replace them.

It's business. Compete, or die.

By sigmatau on 5/27/2013 10:33:08 PM , Rating: 1
You are an idiot. Raising prices via Apple's conspiracy is what you consider good? Are you a publisher? If not, then you should have the exact opposite point of view.

"If they're going to pirate somebody, we want it to be us rather than somebody else." -- Microsoft Business Group President Jeff Raikes

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki