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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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Why iBooks anyway
By rcarroll05 on 5/15/2013 11:02:44 AM , Rating: 5
Why would I buy a book on iBooks when I can only read it on an apple device? Buy it on kindle and then read it on any device. Android, iOS, windows, Mac and I assume blackberry has a kindle app too.

RE: Why iBooks anyway
By bug77 on 5/15/2013 11:22:28 AM , Rating: 2
I just went with Kobo. Not a trace of lock-in.

RE: Why iBooks anyway
By GulWestfale on 5/15/2013 11:46:03 AM , Rating: 2
there is a kindle app for iOS, but you can't buy books through it, only read what you already own. this is due to apple wanting a share of profits from books sold through the kindle app, and amazon -obviously- refusing.

a tip: if you want books that you can read anywhere, anytime: but from smashwords. their catalog is a bit on teh small side, but their books can be downloaded in any format, for any e-reader (or even be read online in a browser0 and are always DRM-free.

RE: Why iBooks anyway
By bug77 on 5/15/2013 12:30:08 PM , Rating: 2
I just opted for the Kobo because it doesn't have any DRM (I don't think it even supports DRMed formats). I don't buy many ebooks, I still like a real library better.

RE: Why iBooks anyway
By BRB29 on 5/15/2013 12:56:15 PM , Rating: 5
you can buy kindle books on iOS. It's called a browser.

RE: Why iBooks anyway
By CZroe on 5/15/2013 2:20:09 PM , Rating: 3
Yeah. I always thought it was funny that I can order a pizza from Dominoes or Pizza Hut in the iOS app and Apple doesn't get their 30% cut but I can't buy Amazon eBooks.

RE: Why iBooks anyway
By Fritzr on 5/16/2013 1:55:02 AM , Rating: 2
To buy Amazon books ... use browser to go to Amazon bookstore ... Use the Kindle app to *read* your books
To buy any third party book ... use browser to go to bookstore/archive/library ... download the book & use an ereader app such as Kobo, iBooks or other application that can read ePub & whatever proprietary format is needed for those rare books that cannot be found in ePub.

B&N for example sells "Nook" format. Nook==ePub

Avoid bookstores like the iBookstore that use a proprietary DRM or install the appropriate DRM remover on your computer and unlock the books that are only available in a DRM version

Tor is DRM free

Baen is DRM free & even has a FREE library on their site.

When you can't avoid DRM
Start here:

For iBooks (which Calibre can not currently unlock)

Enjoy the world of vendor independent eBooks with an eReader that is selected according the user's unique needs and is not selected based on the store where the books are found. Make sure any eReader selected can handle ePub even if your preferred store defaults to something else as that is the default cross platform format today.

Disclaimer: I use iBooks on an iPod Touch ... I have 1 book from the iBookstore that was a free offer. The other 700 are from Baen, Tor, Project Gutenberg, B&N, Internet Archive, Sigil (I created my own version of an unavailable title) and other Apple unrelated sources.

RE: Why iBooks anyway
By Motoman on 5/15/2013 12:56:16 PM , Rating: 5
For the same reason that people use iTunes, buying music and such that can only be played through Apple software with massive DRM and therefore unshareable/usable on anything else.

Because people are stupid.

RE: Why iBooks anyway
By Shadowself on 5/15/13, Rating: -1
RE: Why iBooks anyway
By Motoman on 5/15/2013 8:27:31 PM , Rating: 1
...the degree to which you're lost is staggering.

You can only play iTunes-bought crap through iTunes. And only on devices that are registered to *your* iTunes account. And there's even a limit to how many devices you can have attached to your iTunes account. exactly is that not DRM? iTunes is the most DRMd thing on the planet.

RE: Why iBooks anyway
By wookieiscool on 5/16/2013 12:14:48 AM , Rating: 1
You are partially wrong, the music purchased from iTunes has no DRM. I am not sure about books and to be honest, I don't care. Movies are DRM as far as I know, I am unsure about TV episodes but I assume they are as well. I am however, 100% certain that the music is DRM-free. Which makes you wrong. :)

RE: Why iBooks anyway
By Cheesew1z69 on 5/16/2013 12:21:27 AM , Rating: 2
Products Affected
iTunes, iTunes Store

What is iTunes Plus?
iTunes Plus is the new standard on iTunes. iTunes Plus downloads are songs and music videos available in our highest quality 256 kbps AAC audio encoding (twice the audio quality of protected music purchases), and without digital rights management (DRM). iTunes Plus music can be burned to CD as many times as you need, synced to any AAC-enabled device (such as iPod, iPhone, or Apple TV), and played on any Mac or Windows computers you own.

RE: Why iBooks anyway
By TakinYourPoints on 5/16/2013 3:13:08 AM , Rating: 3
Incorrect, music bought through iTunes does not have DRM, nor does it require an Apple device to play. iTunes was the first store to drop DRM for music, mostly because of pressure from Steve Jobs:

EMI was the first label to go along with it, and other record labels followed shortly after. Amazon followed with no DRM after Apple did.

Publishers and labels set the terms for wholesale prices and DRM restrictions, not Apple or Amazon. The best Apple and Amazon can do is use their leverage to convince content owners that DRM is useless, or on things like pricing structures. Labels wanted far more than the standard $1 per song that Apple pressured them into, and they didn't cave into removing DRM until they could raise their wholesale prices on them.

There is always a lot of pushback. Just look at the trouble Netflix is having with content owners, they're the leading streaming service for video content but they still rotate content or lose entire studio libraries when their contracts expire.

RE: Why iBooks anyway
By LRonaldHubbs on 5/16/2013 9:33:43 AM , Rating: 2
Apple removed the DRM from all songs on iTunes in 2009. They started the process in 2007 after Steve Jobs wrote an open letter to the record labels about the need to abolish DRM. Initially only songs from certain labels were DRM free and they carried a price premium. But in 2009 all songs on iTunes became DRM free, and they offered the option of redownloading DRMed songs that you already owned.

RE: Why iBooks anyway
By Piiman on 5/18/2013 10:45:22 AM , Rating: 2
You can always burn the music to CD and rip it with MS media player to remove any DRM and play it anywhere you like.

RE: Why iBooks anyway
By Reclaimer77 on 5/15/2013 6:32:51 PM , Rating: 5
Why would I buy a book on iBooks when I can only read it on an apple device?

Why buy stuff on iTunes? Why buy anything made from Apple?

We all know the P.T Barnum quote about suckers. Apple thrives on the idiocy of the common man.

"This week I got an iPhone. This weekend I got four chargers so I can keep it charged everywhere I go and a land line so I can actually make phone calls." -- Facebook CEO Mark Zuckerberg

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