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The DOJ is calling Apple the "ringmaster" in the creation of this price-fixing scheme

The U.S. Department of Justice (DOJ) says an old email written by former Apple CEO Steve Jobs proves that the company was the "ringmaster" in the e-books price-fixing scheme.

A recent government filing revealed an old email (dated in 2010) from Jobs to James Murdoch of News Corporation, which 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.”

According to the Department of Justice, this email is evidence that Apple led the e-book price-fixing arrangement. The DOJ also said that this arrangement forced Amazon to raise its e-book price from $9.99 to the higher price mentioned in Jobs' email. Many publishers were onboard with this, but it ended with higher prices to consumers and dishonest profits for Apple and these publishers.

In addition to the email, there are statements from publishers saying that Apple bullied them into the e-books price-fixing situation. For instance, Jobs told Random House CEO Markus Dohle that his company would lose support from Apple if it didn't make a quick decision about joining back in 2010. Furthermore, Apple threatened to block an e-book application by Random House from Apple’s App Store if the publisher didn't agree to a deal with Apple.

The government filing also mentions that Penguin CEO David Shanks said Apple was the facilitator between publishers when making the agreement.

What does Apple have to say about all this?

“We helped transform the e-book market with the introduction of the iBookstore in 2010, bringing consumers an expanded selection of e-books and delivering innovative new features,” said Tom Neumayr, a spokesman for Apple. “The market has been thriving and innovating since Apple’s entry, and we look forward to going to trial to defend ourselves and move forward.”

Apple is set to go to trial June 3. It was initially the target of the e-books investigation along with 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), but all the book publishers have already settled with the DOJ.

Back in April 2012, 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.

Sources: The New York Times, Reuters

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By GulWestfale on 5/15/2013 10:49:06 AM , Rating: 5
i write and self-publish books on all major platforms, and i can tell you from personal experience that on amazon alone i sell twice as many books every month as on apple, kobo, and barnes&noble combined.

so this spokesperson's BS about apple having transformed the e-book market is just that, BS. nobody wants to read books on a tiny iphone screen, and few people read them in their ipads, as those are better suited to magazines, videos, and other multi-media content. i do see higher sales on apple than on kobo, but they're really only the second fiddle behind amazon.

RE: what?
By Tony Swash on 5/15/2013 12:57:13 PM , Rating: 1
write and self-publish books on all major platforms, and i can tell you from personal experience that on amazon alone i sell twice as many books every month as on apple, kobo, and barnes&noble combined.

I wonder if that is true for textbooks, I got the impression that Apple were doing very well in the education market.

RE: what?
By BRB29 on 5/15/2013 1:07:04 PM , Rating: 2
Go to any college or university and ask a few people. The first answer is always amazon.
Apple does have a good system for people to post tutorial videos of lessons though. I've used it before but I forgot what it's called.

What Apple has in the education market is their devices. It is recommended by most school to use apple laptops. They even have a $100 discount for students. The IT department also loves it because it makes it simple for them. All the universities here in the DC/maryland/virginia area promotes apple products and recommend their mac book pro as an essential tool for school. In fact, the school store sells mostly mac book pros.

RE: what?
By rlandess on 5/15/2013 3:37:15 PM , Rating: 5
A $100 discount doesn't amount to much when you pay 2x the price for an Apple laptop.

In 10yrs of IT I've never met a competent admin who prefers Apple products for a corporate IT environment. Schools push Apple for reasons other than simplicity of integration or value for the student.

RE: what?
By MojoMan on 5/16/2013 12:59:41 AM , Rating: 4
Agreed. I've been an admin for 10 years, and a school admin for the past four. I have a great Apple rep, and I've given Apple every chance to make their equipment work in an enterprise (managed) environment. They PALE in comparison to what we can do with Microsoft or Google devices. They just don't "get" enterprise management. Oh so frustrating when you have users who are not normally excited about tech, get excited about it, but you can't buy it because enterprise level management is so terrible. Even the tools they have provided are buggy and unreliable. I loathe Apple more than ever simply because of our experience with them. They are an awful choice for almost any enterprise.

We have almost 100 iPads, and they require more maintenance than any of our desktops, laptops, Neos (RenLearn), or netbooks.

RE: what?
By Reclaimer77 on 5/16/2013 1:19:13 AM , Rating: 2
No no no, see you don't understand Apple.

It's not they that need to "get" enterprise management. It's you who doesn't get how THEY want to do enterprise management for you.

That's how they roll, and why I have always loathed them as a company. Their philosophy of doing things is bullsh#t.

RE: what?
By LRonaldHubbs on 5/16/2013 9:36:29 AM , Rating: 2
Hey, this is one topic we can actually agree on...

RE: what?
By BRB29 on 5/15/2013 12:59:35 PM , Rating: 3
Even for apple users, I don't see the appeal of ibooks. Kindle can be used on any platform. I use it on PC and it works even better on a 27" screen. Kindle is just superior.
The prices on amazon is also cheaper. If using a browser to buy a book and save me 25% then I'm all game every time.

RE: what?
By TakinYourPoints on 5/16/2013 3:15:34 AM , Rating: 2
I've been a Kindle user since the first gen came out in 2007. The platform is restrictive in many ways, but they have applications for every hardware platform out there so its fine.

Great hardware too, the current Paperwhite is my favorite gadget right now.

RE: what?
By TakinYourPoints on 5/16/2013 4:07:55 AM , Rating: 2
Kindles really are the best, no other reader comes close

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