Not too surprisingly, the five major publishers originally named in the U.S. Department of Justice’s e-book case regarding their collusion with Apple on pricing have now themselves filed a complaint regarding the Justice Department’s proposal to eliminate the use of the agency model in any Apple agreements with publishers for a period of five years.
Publishers like the agency model as it allows them to set prices for e-books, instead of the distributor, as Amazon did before Apple’s own iBooks system launched on the iPad.
The ongoing iBooks antitrust case between Apple and the United States Department of Justice took a very interesting twist this morning when the DoJ and 33 state Attorneys General laid out plans to remedy Apple’s wrongdoings and restore competition to the market.
The DoJ wants Apple to terminate all of its deals with book publishers, and refrain from entering into any new ones for at least five years. It also wants the company to start selling e-books from rivals like Amazon and Barnes & Noble.
Today, the fourth day of the Apple e-book anti-trust trial taking place in New York, Google’s director of strategic partnerships testified as a government witness. Thomas Turvey, under cross examination from Apple lawyer Orin Snyder, told the court that while the publishers named in the original suit had told him that they had moved to an agency model due to deals with Apple, he also acknowledged that his lawyer had helped him draft his own statement for the court, and that he was unsure of the details within the statement.
In other words, the exact opposite of what a credible witness says.
According to Reuters, US authorities have called Apple out for collusion with electronic book publishers, saying that the Cupertino-based company conspired with publishers to raise eBook prices when negotiating iBooks by playing them all against each other and against rival eBook retailer, Amazon.
The US Justice Department accused Apple of price fixing in April 2012 in relation to Apple’s negotiations with five publishers when it was launching the iPad in early 2010. The Justice Department has settled out of court with each of the publishers, which included HarperCollins, Simon & Schuster, Hachette Book Group, Macmillan, and Pearson’s Penguin Group.
These might get a bit cheaper in the months to come – a good thing for consumers.
Cheaper e-books would be great, right? According to industry executives, that may just happen in the next one to three months after a federal judge entered an approval of an antitrust settlement between several e-book publishers and the Justice Department itself.
In the final settlement today, publishers Lagardere, Hachette Book Group, Simon & Schuster, and HarperCollins have the next 10 days to notify e-book retailers like Amazon that any previous agreements regarding e-book pricing are no longer valid. The deal gave publishers only seven days to notify Apple, interestingly enough.
According to the report in the Wall Street Journal, one executive, who asked to not be identified, said, “It could be pretty fast.”
The publishers have to let retailers out of any agreements that prevent discounting, and the retailers are also able to terminate said contracts within 30 days.
Is the Financial Times leading a mass exodus from Apple’s Newsstand?
When Apple announced the terms for Newsstand and digital subscriptions, many publications felt that the company was being too hard on them. Apple’s requirement that publishers offer the same deals through the App Store that they do elsewhere while still taking its typical 30% cut of the income ruffled a lot of feathers in the publishing world. While there was a lot of angry discussion about the policy when Apple announced and implemented it, many publications decided to accept the policy – at least initially.
Since then, however, a handful of publications have decided to abandon their presence on iOS devices. Some are planning to build a web app as their only iOS or mobile presence. Others are looking to create deals with various news aggregators. Regardless of their plans, Apple’s terms are one of the key reasons that publishers are getting out of the App Store.
French publishing and price-fixing laws might have been the model for Apple’s iBookstore price-fixing
One of the ironic twists about the anti-trust lawsuits against Apple and the major publishing companies is that Apple’s entrance into the ebook market actually broke Amazon’s virtual monopoly on the ebook business. In the process, publishers gained the ability to control ebook pricing, which can be seen as actually encouraging competition in the industry.
While the U.S. Department of Justice and attorneys general from many states are pursuing lawsuits around the matter, not every country would see the situation in the same terms as the U.S. government. In France, for example, publishers can legally control pricing and are protected from booksellers undercutting their business as Amazon had been doing with its power over the ebook market. It’s even possible that France’s laws protecting publishers may have served as inspiration for the agency model that Apple used in building the iBookstore.
Despite a presence in Flipboard, The Economist's CEO sees the app as competition
Apple’s Newsstand feature wasn’t without controversy as the company rolled it out. Issues around Apple’s control of subscriptions as well as the company’s 30% cut of content sales were hotly debated last year. However, with Newsstand a hit, publishers (and Apple) are reaping $70,000 a day from it.
And, if publishing execs everywhere agree with The Economist’s CEO Andrew Rashbass, that controversy is dead and buried – and it’s other iOS digital distribution models that pose a threat to publishers.
Few iPad publications include interactive or immersive ads
It’s pretty clear that digital distribution is going to play a large role in the future of magazines and newspapers. That doesn’t mean, however, that print editions are going away any time soon. For the foreseeable future, we’re likely to see print/digital hybrids while consumers and publishers test the waters of both digital products and distribution channels.
The road to digital hasn’t been a smooth ride for many publications. Part of the reason is the lack of resources being devoted to creating engaging and immersive digital content that doesn’t feel as if you’re simply reading a PDF of the print edition.
One big area where publisher are still failing is advertising – despite excellent interactive ad systems like Apple iAd, publishers are still stuck in a print mentality when it comes to ads. In fact, according to a new study, publications often simply toss the exact same print-formatted ads into digital editions that run in their print counterparts.
With the U.S. Department of Justice gearing up to slap Apple with an antitrust lawsuit, the Cupertino company has spoken out over claims it has teamed up with publishers to raise the price of e-books, and downplayed the threat from Amazon’s Kindle. It argues that it gave publishers the opportunity to set their own prices, and that it cannot be blamed for e-book price hikes.