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Apple's lawyer said the agency model is beneficial to both consumers and markets

The e-books price-fixing trial with Apple has begun, and a U.S. government lawyer accused Apple of conducting shady business practices with the five book publishers. 

"Apple told publishers that Apple - and only Apple - could get prices up in their industry," said Lawrence Buterman, a lawyer at the U.S. Department of Justice (DOJ). 

Buterman also added that Apple's agency model with publishers (where publishers set the price and Apple takes a 30 percent cut) hurt consumers by raising prices. 

"Overall, average prices of e-books went up, costing consumers millions of dollars," said Buterman.

The three-week trial, which started yesterday, concerns the DOJ's lawsuit against Apple in regards to its method of fixing prices for e-books. 

Orin Snyder, Apple's attorney, disagrees with the DOJ's statements. 

"What the government wants to do is reverse engineer a conspiracy from a market effect," said Snyder. "Agency [model] is good and beneficial to consumers and markets."

Snyder added that DOJ's evidence, such as emails from former Apple CEO Steve Jobs, will likely be misinterpreted. He also said that average e-book prices fell after Apple entered the market, dropping from $7.97 to $7.34.

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 DOJ, so Apple is the only company going to trial. 

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, and 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 with this because they thought the prices were too low.

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.

In April of this year, 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.”

U.S. District Judge Denise Cote, who is overseeing the trial, said last month in a preliminary hearing that the e-books price fixing case seemed to fall in favor of the 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 Cote.

Source: Reuters

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RE: Am I reading this wrong?
By BRB29 on 6/4/2013 2:30:23 PM , Rating: 1
Sure, we can complain about how overpriced they are, but accusing a company of being "evil" because they seek to maximize there revenue is off-kilter. They're charging a price that the market is apparently willing to bear. And that's about all that can be said about that.s $5 that goes right back into their pockets.

How could you say that when the class specifically state I have to use that ISBN and there's only 1 publisher. Schools usually have a close relationship with publishers. Amazon and many other book retailers made text books cheaper. The new thing publishers are doing now is make "special" edition books for that specific school. Usually there's hardly any difference besides a CD and account for some online study guide/quizzes.

Yea I go to GMU and I was forced to buy GMU edition books all the time. The book itself has no difference with the regular version. It comes with a CD and account that you cannot get anywhere else unless you buy that book there new. It normally cost an additional $50-100. Buying a used book is useless because the teacher requires you to complete online materials.

Then when I dig deeper I hear from the staff and several professors that the school has a contract with publishers. Several professors also have contracts with them.

I think you may have been out of school in a long time. Education is a business these days and a lucrative one.

RE: Am I reading this wrong?
By Motoman on 6/4/2013 2:52:34 PM , Rating: 2
Oh, believe me, textbooks were horrendously expensive when I was in school too. The contracts and such have been the norm for decades. None of this is new. Well...any online bits would be new since I was in school...the internet had just begun at that point. I was one of a select few students who was allowed to remotely access the school's mainframe (via my boss 2400 baud modem) to do my programming work.

This was a time when IBM sponsored our computer labs...some of which were OS/2. And our school had one of hte first 1Gb hard drives ever produced for "mass consumption" - it was about the size of a mini-ATX tower by itself and cost something like $2,000.

So yeah...long time ago. But the same issues were at play. If colleges wouldn't accept the contracts and students wouldn't go to those schools and pay their costs, then things would change. They may ultimately anyway, with the needed concern for the cost of education at the moment.

“So far we have not seen a single Android device that does not infringe on our patents." -- Microsoft General Counsel Brad Smith

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