Apple on ebook Prices: No Collusion, Just Hard Negotiations

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Apple has denied U.S. Justice Department claims that it colluded with publishers to artificially raise ebook prices and is saying the companies had independently decided they wanted to break Amazon's stronghold on the market ahead of iBookstore negotiations. The company said it ultimately negotiated individually with publishers to strike content deals through what it called hardline talks.

Apple denies ebook price fixing, says publishers drove hard bargainsApple denies ebook price fixing, says publishers drove hard bargains

In its most recent filing in the case, Apple said publishers had decided ahead of negotiations that they wanted stop Amazon from selling books at prices that undercut the market by taking measures to force the online retailer to increase what it charged, including selingl hardcover books first in bookstores where profits are higher, according to Reuters.

Apple said in its filing,

Early — and constant — points of negotiation and contention were over Apple's price caps and 30 percent commission. After Apple sent draft agency agreements to each publisher CEO on January 11, each immediately opposed Apple's price tiers and caps.

The company also countered DOJ accusations that the iBookstore drove ebook prices up by claiming the average ebook price dropped from US$7.97 to $7.34 after the iPad was introduced.

Despite Apple's claims, the DOJ said that former CEO Steve Jobs admitted to the ebook price fixing scheme ahead of his death when he told biographer Walter Issacson that he said to publishers, "We'll go to the agency model, where you set the price, and we get our 30 percent, and yes, the customer pays a little more, but that's what you want anyway."

Apple, Macmillan, Simon & Schuster, Harper Collins, Penguin, and Hachette were all targeted in an DOJ investigation over accusations that they collaborated to artificially raise the price of ebooks, which ultimately led to a lawsuit against the companies in April 2012. The companies were accused of forcing resellers to let publishers set book pricing instead of retailers controlling how much customers paid.

Apple and the publishers denied any wrong doing, but by August Simon & Schuster, Hachette, and HarperCollins had already agreed to a settlement with the DOJ to avoid going to court. Apple, Macmillan, and Penguin all said they would fight the DOJ in court, but later Penguin agreed to a settlement, too.

When Macmillan agreed to a settlement deal in February 2013, that left Apple as the only company still defending its position that it did nothing wrong.

There's still time for Apple to agree to a settlement with the DOJ, just as publishers did, but at this point it's looking more like the company is willing to take the case to trial.

[Some image elements courtesy Shutterstock]

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1 Comments

Just Cause

What will be more interesting is how this spills over to music and movie industries.

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