New in OS X: Get MacRumors Push Notifications on your Mac

Resubscribe Now Close

Apple Rebuts Antitrust Charges Over E-Book Pricing

An Apple spokeswoman has officially responded to the lawsuit filed yesterday by the U.S. Department of Justice over the Apple-backed agency model of e-book pricing.

In a statement to All Things D, Apple spokesman Tom Neumayr:
The DOJ’s accusation of collusion against Apple is simply not true. The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon’s monopolistic grip on the publishing industry. Since then customers have benefited from eBooks that are more interactive and engaging. Just as we’ve allowed developers to set prices on the App Store, publishers set prices on the iBookstore.
Legal experts commenting on the case said the Justice Department has a steep hill to climb to catch Apple on antitrust charges. Some experts suggest that even amid claims that the publishers met to discuss a shift to an agency model being championed by Apple, the publishers may not be found guilty of antitrust violations.

Top Rated Comments

(View all)

98 months ago
Publishers also determined their own revenue per book prior to the agency model. The difference now, is that the customer pays more and Apple (or Amazon) gets a larger percentage of the overall price.

If Amazon wants to forgo their profits and pass the savings along to the customer (while still allowing the publisher to determine their own profit per book), they should have that option (and as customers, so should we).

The fact that paperbacks on Amazon are now cheaper than ebooks just highlights how ridiculous the agency model is. If a publisher wants to make $7.99 per book, they should sell the book to Amazon for $7.99 and allow Amazon to determine their own revenue by choosing the final price payed by the customer (as per the wholesale model). Apple had no right to require publishers to change their relationship with Amazon, just so Apple (not the publisher) could increase their own profits.
Rating: 11 Votes
98 months ago
Popcorn at the ready, this is gonna be fun. I don't see the DOJ getting up that hill!
Rating: 5 Votes
98 months ago

There was the Sony Walkman, then an assortment of mp3 players. Apple simplified technology and now owns the music industry. They did the same thing with Apps. And now, it looks like the same thing will happen with eBooks. Providing an effective, efficient, and easy method to purchase products will always win over cumbersome, time consuming systems. People will pay more for 'easy' because of it's perceived value.

We're not talking about simplifying the way people buy books/ebooks. That had already been done by Sony, Amazon, Kobo and Barnes and Noble long before Apple got in the game. What's at issue is Apple conspiring with the six largest publishers to fix prices in a monopolistic scheme that has long been illegal in this country.

Anybody who had an ereader knows what happened to ebook prices when Apple cut this deal. There is case precedent, ala Standard Oil, that says the DOJ doesn't need proof of the conspiracy, only evidence of what happened in the market after the deal went into place. Here, as in the famous Standard Oil case, prices shot through the roof. I saw ebooks that had been selling for $5.99 go to $14.99. This is what is going to nail Apple's hide to the wall. It has nothing to do with "innovation."
Rating: 4 Votes
98 months ago

If you bleed the publishers and authors dry with low low low final sale prices (like Amazon is trying to do) just for more sales, then eventually you get less quality content. Because less people will find it economically viable to write that book.


If you cut out the middleman (the publishers), then authors will make a lot more money.

Talented authors can hire editors (say $5,000-10,000 to edit a book). Self-publish the books and get 70% royalties (instead of the 17.5% that the publishers offer).

Price it at $4.99. With 70% royalties, the author will get $3.49 for each book sold.
Sell 100,000 ebooks = $349,000 royalties to the author.

Customers will also benefit. Good books at $4.99.

Publishers are good at 2 things

1) marketing
2) distribution to book stores (which in a digital world, they won't have this advantage anymore).

This author made $100,000 in 3 weeks from his self-published books that were rejected by the Big 6 Publishers.

One hundred grand. That's how much I've made on Amazon in the last three weeks.

This is just for my self-pubbed Kindle titles. It doesn't include Shaken and Stirred, which were published by Amazon's imprints. It doesn't include any of my legacy sales, print or ebook. It doesn't include audiobook sales. It doesn't include sales from other platforms.

This is from my self-pubbed books. The ones the Big 6 rejected.

And this blog list 120+ authors who have sold more than 50,000 self-published ebooks. Cutting out the middleman will get you 70% royalties instead of 17.5%

Listing the top 10 out of those 120 authors:

Amanda Hocking - 1,500,000 ebooks sold (December 2011)
Barbara Freethy - 1.3 million self-published ebooks sold (Dec 2011)
John Locke- more than 1,100,000 eBooks sold in five months
Gemma Halliday - over 1 million self-published ebooks sold (March 2012)
Michael Prescott - more than 800,000 self-published ebooks sold (Dec 2011)
Chris Culver - over 550,000 (Dec 2011)
Heather Killough-Walden - over 500,000 books sold (Dec 2011)
Selena Kitt - "With half a million ebooks sold in 2011 alone"
J.A. Konrath - more than 500,000 ebooks sold (November 2011)
Stephen Leather - close to 500,000 books sold (Nov 2011)
Rating: 3 Votes
98 months ago

The DoJ's action looks to me like collusion to keep the cost of textbooks high. College students pay upwards of $100 for a book they can use for 1 semester, after which the publisher makes a few minor changes rendering the previous edition worthless. Students get a much lower resale value for their edition and then the whole cycle begins again.

Apple's model breaks that cycle, with books having a top price of $15 including unlimited updates. It's better for schools, better for students and better for teachers. But I guess it's just not better for the DoJ.

Your argument is nonsensical, because there is nothing at all in the DOJ case that would preclude Apple from continuing to sell textbooks, and nothing in it to make them raise the prices of those textbooks (if anything, its the opposite). How often updates are brought out and what the charge for them is, is irrelevant to the case and since its entirely in the control of the publishers its nothing at all to do with Apple either.

The whole antitrust action is because of collusion to keep prices high, a fact Steve Jobs himself acknowledged , so reality is the exact opposite of what you are arguing about !
Rating: 3 Votes
98 months ago

It s not a slam dunk, but it's likely to never get to a judge.

Apple doesn't need the agency model any longer. The iBook store has plenty of momentum now.

They will likely admit no wrong doing, settle out of court, drop the agency model, then lower prices to force Amazon to lose money to compete. They can spend $1,000,000,000 punishing Amazon this way.

Wanna play hardball Amazon? Let's play.

That's pretty much what I've been saying in the other threads on this topic. The vast majority of antitrust cases are settled by consent, not by a judge. The folks who are cheerleading for Apple to go the distance really don't know what they are arguing for. The last thing Apple wants or needs is the prolonged agony of an antitrust trial.
Rating: 3 Votes
98 months ago
A lot of people claiming that Apple wasn't doing anything wrong and that Amazon (who isn't even part of the suit) was 'ruining things' have apparently not read the lawsuit and probably do not understand what Apple did in concert with the book publishers.

I hope Apple gets destroyed by the feds in court. Anyone abusing their position and breaking the law to illegally extract more money out of consumer pockets deserves punishment.

Apple damned well knew what the publishers doing was illegal collusion, and looked the other way. Apple's involvement implicates them since they have directly profited from the illegal action.

Go DOJ, go!
Rating: 3 Votes
98 months ago

What is your source for the iPad marketshare? I found with a Google search a few sources claiming that the iPad has the highest tablet market share, 61% or so. This includes the Kindle Fire, but I don't know if it includes all Kindles.

iPad market share doesn't translate into iBookstore market share.

I use the iPad as my eReader, and it's almost completely within the Kindle app. I very rarely use the iBooks app.
Rating: 3 Votes
98 months ago
All I can say is that I had all the content I wanted and paid a lot less before Apple got involved.

Apple appealed to publishers greed to get content they couldn't get any other way and all end users suffered higher prices as a result.

I have no problem with Apple negotiating whatever contracts they wanted to between themselves and publishers. But where those contracts impacted entities other than Apple and the publisher (e.g. other retailers), I consider that interference and collusion which should be punished.
Rating: 3 Votes
98 months ago

But then why are they targeting Apple, which has worked with the publishers to lower textbook costs by nearly 90%?


before: $9.99 for popular titles

after Apple got involved: $12.99 or $14.99 for popular titles

If it was

before: $9.99
after Apple got involved: $9.99

nobody would have raised any complaint.


textbooks have nothing to do this this.

p.s. 2
Did you read the DOJ complaint?

Look at it this way:

Apple selling digital music at wholesale right now. Same with Amazon.

Apple sell popular songs at $1.29
Amazon sell popular songs at $0.99

If Apple and the music record labels did the same thing as they did with ebooks, Amazon would be forced to raise the popular songs to $1.29 (from $0.99) or have no songs to sell.

Does Apple and the music record labels have a right to forced Amazon to raise its MP3 price?
Amazon purchase MP3 at $0.91 and sell it at $0.99. (8% profit margin)
Same with Apple who purchase the MP3 at $0.91 and sell it at $1.29. (30% profit margin)

If Digital Music switched to agency, Amazon would be forced to raise it to $1.29.

Amazon profit margin would increase from 8% to 30%. But customers who buy MP3 at Amazon would pay more.
Rating: 3 Votes

[ Read All Comments ]