Print 67 comment(s) - last by kileysmith104.. on Jun 9 at 11:03 AM

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

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

RE: Am I reading this wrong?
By testerguy on 6/5/2013 3:55:17 AM , Rating: -1
Wow you're lost.

With no justification whatsoever... nice start...

OK sure, we'll let the courts play this out

The logical amongst us always do this. It isn't your decision to make. It's just the irrational fanboys who make claims before the decision is made.

So if you want to keep your head firmly planted in your a$s for a while and pretend what Apple was doing was legal

Where did I say what Apple was doing was legal? Hint - I didn't. God, the more people I come across on this site the more I realise none of you are capable of reading properly. The factual point I made is that Apple has not been found liable yet. So you cannot claim that they factually broke the law. It's not complicated.

Now, the rest of your rant is about cost of production - and your link (absolutely ridiculously, and laughably) is a link to a company who offer CONSUMERS custom printing. Frankly laughable.

So lets inject a bit more intelligence in here, shall we (you're lost, little boy - tell me who, are you)...

Lets look at the numbers you actually put forward:

For example:

even if the big publishers do it at a quarter

You claim $5.80 for a paperback, to a normal consumer. Quarter that, is $1.45. Convert to pounds, and you get 95p. Which is a high percentage from what I claimed, but only 45p, small enough to make my point stand. Seems like you switched to percentages, instead of actual costs, for a reason.

Now lets look at some other evidence:

E-book production “costs 10% less” than print book production, said Molly Barton, Penguin’s global digital director. Hardly the vast savings that many consumers imagine. “But the largest expense is author payment and always has been.”

Now if we assume they sell for $12 to Amazon, and make a profit of say, 50%, that means their cost for a normal book is $8.

Now lets remove the 10% cost to get the E-book cost. That leaves $7.2, meaning a rough extra cost of printing of 90c.

"Well, there may be a reason why they call them 'Mac' trucks! Windows machines will not be trucks." -- Microsoft CEO Steve Ballmer

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki