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Apple isn't going down without a fight over eBook pricing

Yesterday, the U.S. Department of Justice formally filed a lawsuit against Apple and five book publishers, accusing the "gang" of colluding to raise prices on eBooks. At the time, Apple didn't bother to release a public statement regarding its role in the alleged price fixing, but Apple spokesman Tom Neumayr issued the following statement this evening to AllThingsD:
 
The DOJ’s accusation of collusion against Apple is simply not true. The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon’s monopolistic grip on the publishing industry. Since then customers have benefited from eBooks that are more interactive and engaging. Just as we’ve allowed developers to set prices on the App Store, publishers set prices on the iBookstore.
 
 
Of the five publishers, three decided to settle (HarperCollins, the Hatchette Group, and Simon & Schuster). The other two publishers -- Penguin and MacMillan -- have decided to stick to their guns and dig in for a long fight.
 
In fact, John Sargent, CEO of Macmillan Publishers USA, made it clear that he feels that his company did nothing wrong. In a blog post on Wednesday, Sargent stated his case:
 
It is also hard to settle a lawsuit when you know you have done no wrong. The government’s charge is that Macmillan’s CEO colluded with other CEO’s in changing to the agency model. I am Macmillan’s CEO and I made the decision to move Macmillan to the agency model. After days of thought and worry, I made the decision on January 22nd, 2010 a little after 4:00 AM, on an exercise bike in my basement. It remains the loneliest decision I have ever made, and I see no reason to go back on it now.
 
Other publishers have chosen to settle. That is their decision to make.
 
For its part, Penguin Group CEO John Makinson also issued a statement regarding its decision to take the issue to court:
 
A responsible company does not choose a path of litigation with US Government agencies without carefully weighing the implications of that course of action. Nonetheless, countless hours discussing this issue with colleagues here at Penguin, as well as with our parent company, Pearson plc, have not led any of us to the view that we should settle this matter. Indeed, alone among the publishers party to the investigations that resulted in today's announcements, we have held no settlement discussions with the DOJ or the states.
 
We have held strongly to this view for two, and only two, reasons. The first is that we have done nothing wrong. The decisions that we took, many them of them costly and difficult, were taken by Penguin alone…
 
The second, and equally powerful, reason for our decision to place this matter in the hands of a court is that we believed then, as we do now, that the agency model is the one that offers consumers the prospect of an open and competitive market for e-books.
 
This is likely to be a long and drawn out battle, and given how stubborn Apple can be at times, it likely won't go down without a fight -- after all, it has plenty of money to burn through in a drawn-out legal fight.

Sources: Macmillan, Penguin Group, AllThingsD



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Touch to Get a Conviction?
By ltcommanderdata on 4/13/2012 12:19:53 AM , Rating: 3
http://news.cnet.com/8301-13578_3-57412861-38/doj-...

Legal commentators seem to believe it maybe tough for DoJ to get a conviction against the publishers and even tougher against Apple. Previous rulings have said that discussions impacting prices among competitors aren't necessarily collusion/price fixing and companies do have some ability to set/enforce minimum pricing. In the case of Apple, the irony is that Amazon had the ebook monopoly before Apple came in and Amazon still has a majority share of the ebook market, so this isn't the standard antitrust case.

It'll be interesting to see how the DoJ reconciles their public statements about this case being about the principle of lowering ebook prices for consumers to the publisher belief that Amazon's previous practices of setting ultra-low even below-cost ebook prices seemingly amount to dumping and would be unsustainable and anti-competitive since no other book or ebook retailer could match them.




By ltcommanderdata on 4/13/2012 12:20:42 AM , Rating: 2
I meant the title of my previous post to be Tough and not Touch.


RE: Touch to Get a Conviction?
By TakinYourPoints on 4/13/2012 3:58:15 AM , Rating: 5
I've bought all my books on Kindle since 2008 and I watched as prices went up after Apple entered the market. The strange thing is that Amazon's monopoly over ebooks is what kept prices low. The emergence of competing ebook stores is what allowed prices to go higher.

It is a really strange case given that less of a monopoly is what allowed prices to go higher, not lower, very much the opposite of what you see usually happen when competitors enter the market. In the publishers eyes I'm sure they see the newer prices as "fair market value".

I'm still getting my head around it, it isn't like Amazon was making a mint off of the Kindle e-readers, but at the same time Kindle books have some of the most restrictive DRM of any media type out there. The same goes for file type restrictions on the Kindle until after the iPad came out, highly limited. With all those restrictions I would assume that it is in aid of Amazon making profit somewhere, either from the hardware or the media, but it doesn't seem to work that way in either direction. I guess Amazon was just chasing pure market share.


RE: Touch to Get a Conviction?
By messele on 4/13/12, Rating: -1
RE: Touch to Get a Conviction?
By MikadoWu on 4/13/2012 8:27:42 AM , Rating: 5
Load of DUMP.

THere is a huge Differnce. THe Publishers were make just as much profit is not more with Amazons origanl deal. The Publishers were greedy and wanted more profit.

I have read Finacial studies that state they can sell E-books for under $5 and still make the same profits and Bound books for $12

I hope they all get smacked HARD.

Facts - about Publishers

1. Afrraid of Self Publishing - anyone can publish now
Writers do not need them and they know it.

2. Cost Overhead of Bound Books is GONE, compaired to E-books


RE: Touch to Get a Conviction?
By GotThumbs on 4/13/2012 9:56:35 AM , Rating: 4
YOU need to stop drinking the cool-aid.

Apple forces ALL its product owners....every single one of them...through Apples market place. Apple is the complete opposite of open. Just TRY and load content onto an Apple product, without using Apple software. There are NO alternatives to Itunes...at least to the general public (hackers aside). Apple runs the biggest CULT like ecosystem today, and yet consumers still flock like zombies... waiting for the next version of the same product. Weak minded fools.


RE: Touch to Get a Conviction?
By SonofaSteve on 4/13/12, Rating: 0
RE: Touch to Get a Conviction?
By ritualm on 4/13/12, Rating: 0
By TakinYourPoints on 4/13/2012 10:49:58 PM , Rating: 2
The only devices I own that are more restrictive than the Amazon Kindle are my game consoles, and game consoles being locked down systems seems to be more accepted in general.

In terms of file formats supported and DRM for media, nothing else I have comes anywhere close in terms of restrictions, iDevices included. I love my Kindle, but I don't kid myself about it being some wonderful open platform either. It is certainly way more locked down than something like an iPhone or iPad.


RE: Touch to Get a Conviction?
By nafhan on 4/13/2012 2:04:06 PM , Rating: 2
Amazon was "dominating"* by providing a product people wanted at a price they wanted to pay. The only real downside for the consumer with Amazon's model was vendor lock in (to me at least this is a huge problem).

Apple on the other hand is providing a product people want, but using legal tactics to raise prices. So, we've got higher prices and they didn't fix what I consider to be the biggest problem with Amazon's ebook business. I'm not seeing the positive in that.
quote:
Does everybody really worship the Google ethos of something for nothing and to hell with the consequence?
I don't, and I don't know anyone who does. So, I guess your answer is, no, everyone does not believe that. More importantly, I don't think this is relevant to a discussion regarding Amazon selling (you know, for money) digital media at a lower price than Apple.

*Dominating is in quotes, because, even still, the ebook market is young. Paper books are still outselling ebooks, and there's plenty of room for someone to jump in and compete on merits.


RE: Touch to Get a Conviction?
By SonofaSteve on 4/13/2012 2:50:09 PM , Rating: 1
Apple provides a superior platform and only asks for it's fees is what I think you mean


RE: Touch to Get a Conviction?
By ritualm on 4/13/2012 5:48:57 PM , Rating: 2
It's not, and it's more expensive.

You're beginning to sound like Tony Swash.


RE: Touch to Get a Conviction?
By nafhan on 4/16/2012 9:38:47 AM , Rating: 2
Superior in what way? Better animations on page turns?

And no, that's not what I meant.


RE: Touch to Get a Conviction?
By ritualm on 4/13/2012 5:46:54 PM , Rating: 2
Or it could be that Amazon's ebook pricing is great for customers but too low for suppliers (in this case, publishers) to make any money out of it. It's like having a Wal-Mart open shop on the main street. Wally's gets all the business but many mom-and-pop stores go out of business because they simply cannot compete with the devastating price pressure. Meanwhile, the suppliers have to do whatever Wally's wants or lose money. Laptop makers often have model revisions designed specifically to meet Wal-Mart's demands.

Kindle DRM is nothing compared to Ultraviolet DRM though.


By TakinYourPoints on 4/13/2012 10:55:16 PM , Rating: 2
I think you're right. More than one seller allowed publishers to raise prices. Again, unusual result of a monopoly position.

You're right about Ultraviolet's DRM being worse than the Kindle's, at least you can access Kindle content with apps. It is pretty close though...


RE: Touch to Get a Conviction?
By Theoz on 4/13/2012 1:13:41 PM , Rating: 2
The writers of that CNET article did a pretty poor job. From the article:
quote:
And in a 2007 case, the court said that manufacturers can enforce minimum retail prices, which is one aspect of what publishers are accused of doing with e-books.
The problem is that the case they cite dealt with vertical price fixing (for instance, a supplier to its customers). From the syllabus of the case cited in the article (LEEGIN CREATIVE LEATHER PRODUCTS, INC. v. PSKS, INC.):
quote:
Held: Dr. Miles is overruled and vertical price restraints are to be judged by the rule of reason

The key difference, of course, is that the publishers in this case are horizontal competitors. Horizontal price fixing is still per se illegal, contrary to the poor reporting in the cnet article, as the 2007 case they cite deals only with vertical price fixing. Agreed that it may be harder to get a judgment against Apple, but even a small degree of evidence of horizontal price fixing would be enough to succeed against the publishers.


RE: Touch to Get a Conviction?
By Theoz on 4/13/2012 1:31:12 PM , Rating: 3
Should clarify:

Vertical price fixing: "Supplier, you can't sell my product for less than X"

Horizontal price fixing: "Competitor, let's agree that neither one of us can sell our products for less than X"


By GotThumbs on 4/13/2012 9:49:52 AM , Rating: 2
Time will tell, but I believe Apple is guilty. It's just that the public still sees an aura/halo when they speak of Apple.

Apple is such the opposite of open when it comes to their products and delivery of content. You can't even sample a song from their music store (Itunes), without installing the Itunes software. You can sample music WITHOUT using proprietary software in the Android Market AND Amazons music store. FACT Wake up America and stop drinking the ICool-aid




By ltcommanderdata on 4/13/2012 10:06:38 AM , Rating: 2
quote:
Apple is such the opposite of open when it comes to their products and delivery of content. You can't even sample a song from their music store (Itunes), without installing the Itunes software. You can sample music WITHOUT using proprietary software in the Android Market AND Amazons music store. FACT Wake up America and stop drinking the ICool-aid

http://itunes.apple.com/us/album/journey-greatest-...

Googling "itunes don't stop believin" yields the above link to Journey's Greatest Hits yields the above internet link to the album. (I only choose this song not because of some double entendre to support Apple, but because I remember reading it was once the top selling catalog song on iTunes no doubt thanks to Glee). Hovering over any of the track numbers displays a play button that plays a track preview in the browser without iTunes. I believe this has been available for a while so complaining about requiring iTunes to sample songs from Apple isn't a good "fact" example.


By foolsgambit11 on 4/15/2012 8:42:40 PM , Rating: 2
Only works if you use Apple's Quicktime. Better than iTunes, but still requires installing Apple software.


By dazzajc on 4/15/2012 10:53:17 PM , Rating: 2
Except it does not require quicktime or any other Apple software. All sound files in the iTunes store, including the previews, are just AAC (without any DRM). This is easily playable on just about any platform I can think of.

I just played the previews linked above using VLC for example.

Of course if you want to buy the songs, you need iTunes to do the purchase, but again you certainly do not need iTunes or any other Apple software to then play those songs.


By ritualm on 4/16/2012 9:15:55 PM , Rating: 2
Not always.

.m4a = DRM-free audio files. Winamp can handle them just fine.

.m4p (audio) = DRM-protected audio files. VLC claims it can play .m4p, but the only thing I can see is the artwork. To get around .m4p restrictions you have to burn into a CD and then rip that.


Old tune and getting boring!
By MechanicalTechie on 4/12/2012 11:47:03 PM , Rating: 2
Blah blah blah 'Innovation' blah blah 'competition'...

Typical statement from the masters of BS

Fact is the government wouldn't go through this drama if it didnt have a legitimate reason... and for what it's worth.. it's in the general publics interest for the case to go forward.

Clue... iTools




RE: Old tune and getting boring!
By GotThumbs on 4/13/2012 9:58:56 AM , Rating: 2
Especially since were talking Apple....the company that has the biggest CULT following today...other than FB. Today's general consumers are like mindless Zombies.

It's to the point of being pathetic.


RE: Old tune and getting boring!
By ritualm on 4/13/2012 6:48:23 PM , Rating: 2
You mean typical PR. AT&T used the same words when it argued for its now-failed buyout of T-Mobile USA.

Fool.


Greed is good?
By ricardonest on 4/13/2012 5:21:25 PM , Rating: 2
Honestly, they say they are helping by creating competition, but it sounds like they are just being greedy. Why not focus on what makes the world advance, like you know, innovation? Why not focus on building out your patent portfolio (http://bit.ly/HhOoxr)




RE: Greed is good?
By ritualm on 4/13/2012 5:52:12 PM , Rating: 2
Verizon and AT&T do that all the time. You're making it sound like it's exclusive to Apple.


Just yesterday
By amanojaku on 4/13/12, Rating: -1
RE: Just yesterday
By ie5x on 4/13/2012 3:28:12 AM , Rating: 2
For whatever reasons, I looked at the title in my Live Bookmarks and thought it to be another 3 page long Jason Mick's daily special!


RE: Just yesterday
By TakinYourPoints on 4/13/2012 3:47:09 AM , Rating: 1
Controversial/trolly titles with misleading stories = fights on forums = ad impressions. Standard for many sites out there.

There was a story about new Corsair cases a few days ago, something immediately relevant to the standard tech nerd and what you'd expect to see on a site called "Daily Tech". Myself and one other person posted comments there. Corsair makes fantastic cases. My personal build is in an 800D and I've also assembled a 600T, so I put my two cents in. Unfortunately there's no controversy to speak of, so the ad hits between the three total comments there were certainly not very impressive.

Write a post about zombie infections in Africa (complete with images from Resident Evil 5), post about climate change, hybrid vehicles, climate change, anything remotely politically related (wtf are political stores doing on DT anyway?), obviously anything about Apple and how evil they are, and oh man do the page views come rolling in.

I'm pretty sure his ability to stoke controversy is why they keep Mick around. It certainly isn't for his writing ability, the only thing you can find as often as controversy are posts complaining about his loose grasp of the English language: http://www.dailytech.com/article.aspx?newsid=24338...


RE: Just yesterday
By Brandon Hill (blog) on 4/13/2012 5:29:20 AM , Rating: 2
Actually, Macmillan and Penguin both posted public statements Wednesday, the same day the DOJ announced its decision. Both companies made their statements available on their websites in the form of a letter from the CEO.

Macmillan and Penguin knew what the outcome would be from the DOJ and hence their prepared statements. Apple surely knew what the conclusion would be as well, but kept quiet.

On Thursday, Apple released a statement, but it wasn't even addressed on their site -- it was a short response they gave to AllThingsD.


RE: Just yesterday
By amanojaku on 4/13/2012 10:42:43 AM , Rating: 2
Then it must be me. Let me repeat, I'm not defending Apple's actions that lead to this case. I think Apple and the publishers are guilty of collusion. I'm just surprised that:

1) Everyone expected a public response to the lawsuit - Apple doesn't owe anyone a response, except the courts. And it's been saying the same thing ("we didn't rip anyone off!"), so it's not like the response would change.

2) A public (i.e. not to the courts) response was supposed to be made the SAME DAY - It's nice that the publishers were waiting with bated breath to respond. Must be the FaceBook generation:

DoJ: "Dude, I posted a legal complaint on my Wall an hour ago. Didn't you get the notification?"

Apple: "I went over my 4G cap, and can't get get the Wi-Fi to work on my phone. Anyways, shouldn't you be on Timeline now?"

You should be less worried about Apple, which is known for pretending everything is perfect and magical, and more worried about other media outlets. I've barely seen any coverage on this, yet it affects everyone in the US, and possibly the world. The article would have had more impact if it said "Apple being sued by DOJ for price fixing, no one bothers to report on it. Why not?"


RE: Just yesterday
By ritualm on 4/13/2012 5:57:11 PM , Rating: 2
Apple is required to make a public response the same day the DoJ announced its intention to sue? Care to point out the specific law or stature that mandates such an action?

What nonsense.


RE: Just yesterday
By aurareturn on 5/11/2012 4:02:38 AM , Rating: 2
True. Check out jobs at http://coupongears.com


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