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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

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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.

"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA

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