DOJ Settles With 3 Publishers in Apple E-Book Antitrust Suit

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DoJ E-Book SettlementImage via Shutterstock.

The Department of Justice has reached a settlement with three of the publishers targeted by this morning’s antitrust lawsuit, Attorney General Eric Holder announced (via 9to5Mac). Hachette, HarperCollins, and Simon & Schuster have reached an agreement with the Department, ending their involvement in the litigation.

While the exact details have not been disclosed, the settlement is said to grant the publishers “freedom to reduce the prices of their e-book titles,” which will allow Amazon to return to a wholesale pricing model if it so chooses.

Apple, Macmillan, and Penguin refused to settle and will continue to fight the issue against the DoJ in court. Macmillan CEO John Sargent published an open letter today, calling the agency model that is at the heart of this litigation the future of “an open and competitive market.” 

He added, “The government’s charge is that Macmillan’s CEO colluded with other CEO’s in changing to the agency model. I am Macmillan’s CEO and I made the decision to move Macmillan to the agency model. After days of thought and worry, I made the decision on January 22nd, 2010 a little after 4:00 AM, on an exercise bike in my basement. It remains the loneliest decision I have ever made, and I see no reason to go back on it now.”

Comments

Lancashire-Witch

” After days of thought and worry, I made the decision on January 22nd, 2010 a little after 4:00 AM, on an exercise bike in my basement. It remains the loneliest decision I have ever made, and I see no reason to go back on it now.?

That’s a very worrying sentence. Why all the agonising and worry if you know you are doing the right thing?

ipaqrat

Indeed, why the worry over doing the right thing?  Sargent didn’t claim he was doing the RIGHT thing. There is no right thing, at least not such as outside observers are qualified to judge. In a zero-sum market, any move you make for your own benefit intrinsically screws someone else. What you do is keep your company profitable, keep out of court (OOPS!) and keep your ass in the CEO chair.

Lancashire-Witch

@ ipaqrat.  Right. He didn’t claim he was doing the right thing but he does say in that paragraph of his open letter - “It is also hard to settle a lawsuit when you know you have done no wrong….” 

The paragraph is not phrased in support of the decision he made on that fateful morning in January 2010 but that he made the decision alone; without colluding with others.

Alone in his basement at 4AM how can he collude; so why worry?

adamC

@Lancashire-Witch

The game before Apple was:
1) Publisher set a list price e.g. ?20.
2) Amazon would take 70% of that and give the remaining 30% back to the publisher. So Amazon would get ?14 while the publisher got ?6.
3) Amazon then promoted some books at 50-70% off the list price, paying for the discount with their own commission - sometimes even selling at a loss. For example a ?20 book would sell for ?6. This was entirely decided at Amazon’s discretion, using Amazon’s commission.
Now what happened if you were a publisher and didn’t bend over to Amazon and their secret backroom agreements? BOOM, your book would not be on “sale” and would be sold at list price - the full ?20 (but still get the same ?6)
Punters would never buy your books, when others were at crazy discounts, and you were finished as a publisher. So no wonder the publishers were bending over ( and you can be sure the bending over included Amazon dictating some of the pricing)

Terrin

That?s a very worrying sentence. Why all the agonising and worry if you know you are doing the right thing?

You think doing the right thing is always easy? Doing the right thing sometimes is the hardest thing to do.  Further, he was going up against the 900 pound Gorilla Amazon.

Terrin

I don’t buy this. Publishers were complaining for two reasons. First, Amazon pressured them to lower the whole sale price of hardcover books. Second, Amazon threatened to not carry publisher’s hardcover books if they didn’t substantially lower the whole sale price of their e-Books thereby allowing Amazon to solidify its dominance in the e-Book arena by offering artificially low prices.


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The game before Apple was:
1) Publisher set a list price e.g. ?20.
2) Amazon would take 70% of that and give the remaining 30% back to the publisher. So Amazon would get ?14 while the publisher got ?6.
3) Amazon then promoted some books at 50-70% off the list price, paying for the discount with their own commission - sometimes even selling at a loss. For example a ?20 book would sell for ?6. This was entirely decided at Amazon?s discretion, using Amazon?s commission.
Now what happened if you were a publisher and didn?t bend over to Amazon and their secret backroom agreements? BOOM, your book would not be on ?sale? and would be sold at list price - the full ?20 (but still get the same ?6)
Punters would never buy your books, when others were at crazy discounts, and you were finished as a publisher. So no wonder the publishers were bending over ( and you can be sure the bending over included Amazon dictating some of the pricing)

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