AllThingsD » e-books

Apple's Cue Says Publishers Pushed for Higher E-Book Prices

John Paczkowski — Thu, 13 Jun 2013 23:27:44 +0000

Just days after introducing Apple’s new iTunes Radio streaming music service at the company’s Worldwide Developers Conference in San Francisco, Eddy Cue — Apple’s senior VP for Internet services and software, and its master dealmaker — appeared in a Manhattan federal court as a central witness in the U.S. Department of Justice’s e-book price-fixing case.

According to the government, Cue was the main intermediary between Apple and five major publishers, and the “chief ringleader” of an alleged conspiracy to shift the e-book industry from the wholesale pricing model established by Amazon to an agency model where publishers, not retailers, set e-book prices, sending them higher than they had been in the past. But on the witness stand Thursday, Cue maintained he was anything but.

Presented with phone records that suggested a group of five publishers were discussing among themselves Apple’s agency model proposal, Cue denied any knowledge of the communications. In fact, Cue said he didn’t even suspect the publishers might be coordinating. “I don’t believe they were working together to do the deal that I was working on, because I did those deals and I struggled and fought with them for many, many days to get them to sign,” Cue said. “And they argued different points. So if they were talking to each other, I would have assumed that I would have had a much easier time getting those deals done.”

And while the government was able to force him to acknowledge that the price of some e-books did rise after Apple opened its iBookstore, Cue remarked that this shouldn’t have been a surprise, given the publishers’ dissatisfaction with Amazon’s lowball $9.99 pricing. “They had expressed they wanted higher prices from us,” he said, reiterating what Cupertino has argued throughout this process: That it was the publishers who raised e-book prices, not Apple.

And when pressed to admit that higher e-book prices were not in the best interest of the general public, Cue refused to concede. Instead, he insisted that Apple’s entrance into the e-book market dramatically improved it. “We gave consumers great prices and a great selection of books that weren’t available elsewhere, in a better bookstore,” Cue said. “We gave them a great offer.”

Questioned by Apple’s chief counsel, Orin Snyder, on Thursday afternoon, Cue was a bit more forthcoming, bolstering Apple’s argument that it was concerned only with its own deal with publishers, and not with those of other retailers.

“My focus [on these deals] was from an Apple point of view. I [wasn't] interested in [the publishers'] business, or how they do business with the — with anybody else. … I didn’t care at all what type of deals the publishers got or didn’t get from Amazon or Barnes & Noble or anybody else. I knew that if Barnes & Noble or Amazon were able to negotiate a better deal than I had from a consumer price point, I would get it as part of our MFN (Most Favored Nation agreement).”

And speaking directly to those MFNs, which ensured that Apple would always be able to sell e-books at least as cheaply as other retailers, Cue insisted that they were not — as the government alleges — intended to force rival e-book sellers like Amazon and Barnes & Noble to the agency model.

“We did the MFN for the purposes of being able to compete on price,” Cue said. “The MFN has nothing to do with whether you’re on an agency model or any other model. That wasn’t the goal. [That] didn’t matter to us. That’s not what we were thinking. What we were thinking is, does the MFN give us competitive pricing irrespective of whatever models Amazon, Barnes & Noble, or anybody else is in.”

Cue will return to the stand on Monday.

Apple's E-Book Market Share Is Bigger Than You Think

John Paczkowski — Thu, 13 Jun 2013 11:55:30 +0000

Apple’s portion of the U.S. e-book market may be far larger than previously thought — double, actually.

On the stand this week in the U.S. Department of Justice’s e-book price-fixing case against Apple, Keith Moerer — head of the company’s iBookstore — defended the storefront against a government attorney who characterized it as a “failure.”

“E-book sales grew 100 percent last year at the iBookstore, and it had over 100 million customers,” Moerer said.

So, how much of the U.S. e-book market does Apple actually control? According to Moerer, 20 percent.

“I believe that Apple has about 20 percent market share,” Moerer said. “It’s very difficult because there are not industry-wide sales reporting for e-books, but I believe that the iBookstore’s market share is approximately 20 percent in the U.S. and growing.”

That’s twice the 10 percent share typically attributed to the company. And if it’s an accurate accounting of Apple’s share, it means that the 65 percent and 25 percent shares often attributed to Amazon and Barnes & Noble respectively might be in need of reassessment. It also means that e-books are becoming a significant contributor to Apple’s iTunes business.

Is Steve Jobs Message a Smoking Gun in Apple E-Book Case?

John Paczkowski — Wed, 12 Jun 2013 20:34:14 +0000

Since it was first accused of conspiring to raise the prices of e-books, Apple has maintained it didn’t care what sort of deals publishers arranged with other retailers, as long as they honored the terms of their agreement to sell books on its iTunes store. Apple’s lead counsel Orin Snyder claimed as much in his opening arguments in the Department of Justice’s e-book antitrust case against the company last week.

“The negotiations make clear that the interests of the publishers and Apple were not aligned,” Snyder said. “Apple wanted lower prices on its own book store, and was indifferent to prices throughout the rest of the industry.”

But a new document entered into evidence Wednesday by the DOJ suggests that Apple may not have been quite as indifferent to publishers’ deals with Amazon as it professes to be. It’s a Jan. 14, 2010, message from Steve Jobs to Eddy Cue, his point man for e-book negotiations, and in it he says he wants publishers to push Amazon to an agency pricing model where publishers, not retailers, set prices.

“I can live with this as long as they move Amazon to the agent model too for new releases for the first year,” Jobs wrote. “If not, I’m not sure we can be competitive …”

A smoking gun? The DOJ certainly thinks so, and it used the message to great effect Thursday, shaking up the head of Apple’s iBookstore on the stand and undermining the company’s claims of indifference to other industry pricing arrangements.

Apple hasn’t yet had a chance to explain the message, which Snyder claims was never sent. But it promises to do so tomorrow when Eddy Cue takes the stand. Just how isn’t yet clear, though it’s worth noting that the subject line of the message in question is “Book prices thoughts” and it’s clearly part of a longer thread. Apple has argued throughout the trial that the DOJ’s case is built on cherry-picked documents that don’t support its theories when put in broader context. Perhaps that’s what we’ll see tomorrow.

Apple has not yet responded to a request for comment.

UPDATE: DOJ Misfires on Jobs Email in Apple E-Book Case — It Was a Discarded Draft

Amazon Demanded Same Terms From Publishers For Which Apple is Now On Trial

John Paczkowski — Thu, 06 Jun 2013 11:55:45 +0000

When Apple negotiated its e-book contracts with the five publishers with which it would ultimately launch iBooks, the company demanded a “most favored nation provision” that required publishers to match in its bookstore any lower prices they offered elsewhere.

That provision today is central to the U.S. Department of Justice’s e-book price-fixing case against the company. With it, the government argues, Apple was able to force booksellers like Amazon to shift their e-book business model from wholesale, where prices are set by distributors, to agency, where the publishers set the prices, in the process putting Apple in the enviable position of “not having to compete on price at all.” For Apple, then, the MFN was the nefarious fulcrum with which it shifted the entire e-book industry from wholesale to agency and raised e-book prices in the process.

Now here’s the thing. When Amazon, whose complaints are believed to have initiated the case, finally did renegotiate its e-book agreements from wholesale to agency pricing, what do you think it demanded from publishers?

The very same agency terms that Apple demanded and that the government decries as components of an Apple-led conspiracy: A 30 percent commission on e-book sales, pricing tiers and caps, and, yes, a “most favored nation” clause. In fact, according to documents shown in court on Wednesday — documents that Amazon fought aggressively to keep out of the public eye — the company’s MFN’s were at times even more favorable to its business than Apple’s.

What’s more, during cross-examination on Wednesday, Russ Grandinetti, vice president of Kindle Content at Amazon, acknowledged that the retailer adopted those terms specifically to protect its legitimate business interests. He noted that Amazon wanted to make sure it had a “level playing field” with other retailers. Like Apple, Amazon didn’t want to be disadvantaged competitively in the e-books space.

Said Grandinetti, “We were not prepared to sign a contract for whatever length of time this was going to be, where we weren’t confident we could not be further discriminated against by these publishers.”

If that’s a reasonable view, one that’s in Amazon’s own lawful business interests, why isn’t Apple’s behavior also lawful?

Apple Says Differences in Publisher Deals Belie E-Book Conspiracy Charges

John Paczkowski — Wed, 05 Jun 2013 19:22:05 +0000

Central to the U.S. Department of Justice’s e-book price fixing case against Apple are the Most Favored Nation (MFN) agreements the company struck with publishers that ensured it would always be able to sell e-books at least as cheaply as rival retailers.

These contracts required publishers to match in Apple’s iBookstore any lower prices they offered elsewhere. And the DOJ has been hammering Apple over them, arguing that they spiked the average price of e-books in the U.S. once they went into effect and put Apple in an enviable position.

“[Apple's MFN] was not structured like a standard MFN in favor of a retailer, ensuring Apple that it would receive the best available wholesale price,” the DOJ argued in its complaint against the company, contending that “instead of an MFN designed to protect Apple’s ability to compete, this MFN was designed to protect Apple from having to compete on price at all, while still maintaining Apple’s 30 percent margin.”

And with these MFNs, Apple did indeed architect a sweet deal for itself, one very Jobsian in its conceit. It got exactly what it wanted — a lowest price guarantee from publishers and the ability to claim that those publishers were still free to sell their books at whatever price they liked.

Now the government contends that Apple’s MFN agreements were a crucial part of the company’s conspiracy to raise e-book prices and reap the benefits. But in vetting that argument, it failed to answer a key question about those arrangements prior to trial. Specifically, were they the same for each publisher or were they different? If, as the DOJ argues, Apple was facilitating collusion among a cabal of publishers, you’d think that MFN agreement terms would be identical across the cabal with all participants guaranteed the same terms.

But they weren’t. Turns out, Apple negotiated different MFNs with each publisher. And in court Tuesday, Apple’s lead counsel, Orin Snyder, repeatedly pointed that out. While the the core price-matching provision was present in each of the five publisher agreements, guaranteeing Apple the ability to compete at the lowest price, the MFNs themselves were materially different.

Simon & Schuster, for example, wanted flexibility to do one-off, limited-time promotions. There were book clubs to take into account as well. Other publishers demanded their own specific considerations, so that by the time the deals were signed, each MFN contained numerous exceptions that were not present in the others. And according to the Tuesday testimony of Apple Associate General Counsel Kevin Saul, negotiating these exceptions wasn’t exactly a simple matter. “[It was] particularly difficult,” he said on the witness stand. “Twelve hours a day negotiations, emails, exchanging drafts. It was a challenging, tiring and difficult couple of weeks.”

That’s a detail worth noting, because part of the government’s case against Apple is that the company offered publishers materially similar MFN terms and that this furthered an alleged e-book price-fixing conspiracy. But according to Saul’s testimony, the MFN terms for each publisher were different. And when the exec was shown slides of each in court Tuesday, he stated on the record that “they are not the same.”

That’s a direct refutation of one of the assertions on which the government is building its case, and it bolsters Apple’s defense — if only a bit. “It does make the government’s case harder,” Stanford law school professor Mark Lemley told AllThingsD. “But it doesn’t mean there was no conspiracy.”

Pam Samuelson, director of the Berkeley Center for Law and Technology, took a similar view. “It is quite possible for antitrust co-conspirators to mask agreements in restraint of trade by adopting differently worded documents,” she said. “Using identical language would make the anticompetitive nature of an agreement too obvious.”

Of course. But, according to Saul’s testimony, Apple conducted separate negotiations with each publisher and, ultimately each publisher decided it own course of action. So, straightforward, above-board dealings or collusion and clever obfuscation? Another one for the judge to decide.

Here's the DOJ's E-Book-Pricing Case Against Apple (Slide Deck)

John Paczkowski — Mon, 03 Jun 2013 17:57:43 +0000

Where there’s smoke, there’s fire. That seems to be the gist of the U.S. Justice Department’s case against Apple in a trial over whether the company conspired with five major book publishers to fix prices in the e-book market.

In opening arguments this morning, DOJ attorney Lawrence Buterman presented a broad overview of the government’s case against Apple, offering up a bevy of email and phone record evidence that he claimed showed the company rallying publishers around a new electronic book business model that drove up the price of e-books just prior to the 2010 introduction of the iPad. “Apple’s conduct cannot be excused,” Buterman said. “Consumers in this country paid hundreds of millions of dollars more for e-books than they would have.”

Below, the full slideshow Buterman is using to argue the case:

U.S. v. Apple et al Opening Slides –

Apple CEO Tim Cook: "The E-Book Case to Me Is Bizarre"

John Paczkowski — Mon, 03 Jun 2013 09:44:37 +0000

Apple today squares off against the U.S. Department of Justice in a Manhattan courtroom, defending itself against charges that it was the “ringmaster” of a cartel of publishers that conspired to raise prices in the e-book market. And, at first glance, the odds appear to be stacked against the company.

The DOJ claims to have clear evidence of collusion — incendiary email messages from Apple co-founder Steve Jobs and other company executives, and the like. The five publishers with which Apple allegedly schemed — HarperCollins, Hachette, Macmillan, Simon & Schuster and Penguin — have all since settled, leaving it as the lone company fighting the suit. The judge presiding over the trial, Denise Cote, said earlier this month that she doesn’t think it has much of a chance of winning. And legal experts are dubious about Apple’s chances.

As Pam Samuelson, director of the Berkeley Center for Law and Technology, told AllThingsD, “The DOJ would not be pursuing this case if they thought they would lose.”

But then neither would Apple.

Which is worth considering, because the company is clearly taking a “come heavy or not at all” approach to this case. To wit, CEO Tim Cook’s comments last week at our D11 conference.

“The e-book case to me is bizarre,” Cook said. “We’ve done nothing wrong there, and so we’re taking a very principled position. … We’re not going to sign something that says we did something we didn’t do. … So we’re going to fight.”

In other words, it’s Apple’s opinion that the government’s case against it is utter fantasy. And today the company and its legal team will set out to prove it, arguing that Apple acted lawfully when it entered the e-book market in 2010, and that its entrance transformed the market for the benefit of all.

Apple and the Department of Justice both declined comment on the case.

Apple Starts E-Book Trial Monday at a Disadvantage

Joe Palazzolo — Sun, 02 Jun 2013 21:30:28 +0000

Apple heads to a U.S. federal court Monday to face civil accusations that it conspired with five publishers to drive up the price of electronic books in the weeks leading up to the 2010 introduction of the iPad.

The Justice Department will try to prove during the three-week trial in Manhattan that the publishers seized on Apple’s entrance into the e-book market as an opportunity to shift from low prices set by Amazon.com to higher ones set by the publishers themselves.

“Stripped of the glitz surrounding e-books and Apple, this is an unremarkable and obvious price-fixing case,” Justice Department lawyers said in a May 14 court filing.

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Judge in E-Book Pricing Case Thinks Apple's Going Down; Apple Begs to Differ

John Paczkowski — Fri, 24 May 2013 17:14:35 +0000

Apple hasn’t formally argued its position in the U.S. government’s e-books antitrust case against it; indeed, the trial hasn’t even begun. Yet already the federal judge presiding over the hearing has gone on record as saying Apple is likely to lose the case.

Asked during a pretrial hearing Thursday for her thoughts on a likely outcome, U.S. District Judge Denise Cote said her view is that the U.S. Justice Department will prevail over Apple.

Said Cote, “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.”

Though delivered with a caveat noting that she has not yet reviewed all the evidence in the case, and that her view was delivered without “the benefit of the testimony of the witnesses and further argument from counsel,” Cote’s remarks are a little unusual, to say the least, and don’t bode particularly well for Apple’s chances at trial.

That said, they also don’t reflect particularly well on Cote’s impartiality. The case hasn’t even been heard, and she has just gone on record saying she is reasonably certain that the plaintiff will win. And while her comments don’t quite rise to the level of smack talk that undermined Thomas Penfield Jackson’s ruling in the United States v. Microsoft case, one could imagine them resurfacing at a later date in an appeal if this trial goes south for Apple. Cote here is commenting on a potential outcome for the case without having heard testimony from Apple’s witnesses or the cross-examination of the DOJ’s witnesses. That’s a crucial test of truth. And if this case does end up in appeal, Cote’s apparent prejudging here could be harmful to her ruling.

Apple disputed Cote’s remarks and characterized them as premature.

“Apple fundamentally disagrees with the judge’s preliminary comments,” Apple attorney Orin Snyder told AllThingsD. “We look forward to presenting our side of the evidence and bringing our witnesses to court. We will prove that Apple did nothing wrong and that consumers greatly benefited from Apple’s entry into a new and emerging market.”

The case heads to bench trial on June 3.

Penguin to Settle in E-Book Dispute

Lilly Vitorovich — Wed, 22 May 2013 17:53:17 +0000

Pearson PLC’s book publishing business, Penguin Group, has agreed to pay $75 million to settle a dispute in the U.S. over the way it priced electronic books, drawing to a close an investigation into the publishing industry’s e-book pricing tactics.

In a brief statement Wednesday, Pearson said that Penguin has reached a “comprehensive agreement with the U.S. State Attorneys General and private class plaintiffs to pay $75 million in consumer damages plus costs and fees to resolve all antitrust claims relating to e-book pricing.”

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Here's That Steve Jobs E-Book Email to James Murdoch

John Paczkowski — Thu, 16 May 2013 00:41:13 +0000

“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.”

That’s an excerpt from an email sent by Apple co-founder Steve Jobs to James Murdoch of News Corporation (which owns this site) that figures prominently in the Department of Justice’s looming e-book price fixing case against Apple. The DOJ claims it’s clear evidence that Apple conspired with Murdoch’s HarperCollins imprint and other publishing companies to raise e-book prices and undermine Amazon’s $9.99 e-book pricing model. And, taken out of context, it might be.

But put in context, with the other dozen or so sentences in the message that contained it, that line seems a little less damaging. Certainly, it doesn’t quite imply that the two execs are about to embark on a “caper.” Read as a whole, Jobs’s email doesn’t have quite the conspiratorial tone the DOJ suggests. The late Apple co-founder doesn’t seem to be presenting $12.99 and $14.99 as hard and fast prices, but as price caps in broader pricing tiers. And he openly concedes that the agency model he’s proposing may well fail and that publishers who opt against it may succeed.

“We simply don’t think the e-book market can be successful with pricing higher than $12.99 or $14.99,” Jobs wrote. “Heck, Amazon is selling these books at $9.99, and who knows maybe they are right and we will fail even at $12.99. But we’re willing to try at the prices we proposed. We are not willing to try at higher prices, because we are pretty sure we’ll all fail.”

Now, this is but one piece of evidence in a much larger case. And the DOJ does claim to have other evidence that reflects poorly on Apple, specifically testimony that suggests it used its prowess in the apps market to push reticent partners into signing its e-books deal. But in this particular case, it does seem to have cherry-picked a quote for maximum effect.

In the end, it will be up to the court to decide which interpretation to embrace. Below, Jobs’s email, and below that, the full exhibit from which it’s taken.

Jobs-Murdoch-exchange –

Apple's E-Book Argument: Deals With Publishers Improved Competition

John Paczkowski — Wed, 15 May 2013 22:38:19 +0000

The United States Department of Justice has described Apple’s defense against allegations that it conspired to illegally fix e-book prices “unconvincing” and “untethered from both precedent and logic.”

Evidently, Apple feels much the same way about the DOJ’s charges.

In an 81-page April 26 filing that was made public today, Apple pointedly denied federal prosecutors’ accusations, saying the discussions they’ve painted as collusion were simply tough business negotiations and that their end result — an “agency” e-book pricing model where publishers, not retailers, set prices — made the e-book market more competitive, not less.

“Apple did not conspire to fix e-book prices,” the company said in its filing. “The evidence proves that Apple acted independently, to further its own legitimate business goals, in negotiating agency agreements with the publishers to enter the e-book market.”

Apple disputes the DOJ’s view that it was the “ringmaster” of a publisher conspiracy to eliminate price competition and raise e-book prices. Instead, it claims it was simply a new entrant in a market that was “roiled by a public conflict between publishers and Amazon” — a market that was already considering the agency pricing model currently at issue.

“Amazon at the time sold 9 out of every 10 e-books, and many publishers publicly disagreed with Amazon’s uniform, below-cost pricing strategy for New York Times bestsellers,” Apple said in its filing. “This tumult in the industry inspired the second largest e-retailer, Barnes & Noble, to push for agency agreements with the publishers. And Amazon used an agency-like model for small publishers and self-published authors. In other words, Apple did not introduce agency to the e-book industry; it was simply the first to reach an agency agreement with the industry’s largest publishers.”

And for a new entrant to the e-book market, as Apple was at the time, the agency model was a logical one. The company was looking for a 30 percent commission on every sale; it was hardly going to get that from publishers at the $9.99 price point Amazon had established.

Which is not to say that it was opposed to $9.99. According to its filing, it wasn’t. As long as it was able to collect that 30 percent commission, Apple said it didn’t particularly care what price publishers sold their books at. Yes, it required a “Most Favored Nation” agreement from publishers that gave it the right to lower prices to match low prices offered by competing retailers, but it argues it did this to remain competitive with Amazon, not to influence its business model.

“The evidence shows that Apple told the publishers that they were free to remain on a wholesale model with other retailers, even as the publishers sold e-books on Apple’s bookstore under an agency arrangement,” Apple argues.

And that’s Apple’s broader point in this filing: By negotiating for an agency pricing model with publishers, it was simply seeking to enter a new market and offer competitive prices. It wasn’t colluding to push e-book prices higher. It wasn’t attempting to change Amazon’s business model. It was just conducting business — legitimately. To Apple, the DOJ’s allegations that it was doing anything else, let alone engaging in an “illegal conspiracy” that “increase[ed] the retail prices of trade e-books” is “demonstrably false.” And the company insists the facts are on its side:

The bottom line, said attorney Orin Snyder of Gibson, Dunn & Crutcher, is that “Apple should be commended, not sued. Apple injected much-needed competition and innovation into the eBook business. … The DOJ’s case is based on fictions and incomplete quotations. The actual evidence proves that Apple did not conspire to fix prices in the eBook business. We look forward to trial.”

The DOJ’s case against Apple is currently scheduled to go to trial on June 3 in a New York District Court. Apple’s filing in full is below, and there’s more on the DOJ’s view of the case here.

Apple’s Pre-Trial Memorandum of Law _as Redacted_ –

DOJ Filing Calls Apple "Ringmaster" of E-Book Pricing Rise

John Paczkowski — Wed, 15 May 2013 15:40:11 +0000

Apple’s creation of the iBooks electronic book store and its agency pricing model was not an altruistic attempt to break Amazon’s grip on the nascent e-book market, but a conspiracy to eliminate price competition and raise e-book prices.

That’s the gist of a new U.S. Department of Justice filing against Apple in the agency’s upcoming lawsuit against the company. According to the DOJ, Apple was the “ringmaster” of a plan that raised mainstream e-book pricing well above the $9.99 price point Amazon had established by shifting the industry from a wholesale model, where retailers set prices, to an agency model where publishers set prices. Among the agency’s evidence supporting that allegation:

An e-mail from Apple co-founder Steve Jobs to James Murdoch of News Corp. — parent company of HarperCollins — that reads in part, “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.”
A comment Jobs made to biographer Walter Isaacson, explaining that Apple “told the 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.’”

According to the DOJ, those statements are clear evidence of collusion. “Apple knew that the plan it was proposing involved a ‘dramatic business change’ for publisher defendants,” the agency argued in its filing. “Accordingly, Apple kept each publisher defendant aware that it was orchestrating and coordinating a common approach for all of them.”

Apple is now the lone holdout in the DOJ’s lawsuit, originally brought against the company and five major publishing houses last April. HarperCollins, Hachette, Macmillan, Penguin and Simon & Schuster have all since settled. But Apple, the alleged “ringmaster,” continues to dig its heels in.

“Apple did not conspire to fix eBook pricing,” Apple spokesman Tom Neumayr said in a statement. “We helped transform the eBook market with the introduction of the iBookstore in 2010 bringing consumers an expanded selection of eBooks and delivering innovative new features. The market has been thriving and innovating since Apple’s entry and we look forward to going to trial to defend ourselves.”

Below, the DOJ’s latest filing:

apple7 –

Apple's Cook Must Testify in E-Book Antitrust Suit

John Paczkowski — Wed, 13 Mar 2013 20:21:48 +0000

Asa Mathat / AllThingsD.com

Apple CEO Tim Cook will testify in the e-book price-fixing suit brought against it by the U.S. government, despite not being mentioned in the original complaint.

A U.S. District Judge on Wednesday ordered Cook to sit for four hours of deposition in the suit, which alleges Apple and five publishers colluded to raise digital prices in an attempt to thwart Amazon’s practice of discounting e-book best sellers.

Apple, which has dismissed the Justice Department’s efforts to depose Cook as a “fishing expedition,” had argued that Cook’s testimony wouldn’t add anything new to the case. It claimed there is no need for Cook to testify since he wasn’t named in the original complaint, nor has he been mentioned by any publisher witness involved in the case.

But U.S. District Judge Denise Cote disagreed. While the government’s complaint didn’t mention Cook, it did refer to Apple co-founder Steve Jobs. And now that Jobs has passed away, Cote believes Cook should sit for the questions Jobs would have had to answer. Said Cote, “Because of that loss [of Jobs], I think the government is entitled to take testimony from high-level executives within Apple about topics relevant to the government case.”

Now that Penguin, HarperCollins, Simon & Schuster and Hachette have all settled with the government, Apple is the last man standing in this suit, which it has been fighting tooth and nail.

As the company said when the DOJ first filed charges: “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.”

Barnes & Noble's Nook Stumbles

John Kell — Thu, 28 Feb 2013 17:20:39 +0000

Barnes & Noble Inc. reported to a surprise fiscal third-quarter loss, hurt by across-the-board weakness. Most notably, sales in the Nook digital business slumped sharply.

Total Nook revenue dropped 26 percent, hurt by lower device sales, though demand for digital content increased. The adjusted loss for the business more than doubled to $190.4 million.

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Apple's iBookstore Headed to Japan This Year

John Paczkowski — Wed, 02 Jan 2013 11:19:33 +0000

Apple is preparing to take a serious run at the Japanese e-book market. The company is negotiating deals with a handful of Japanese publishers to supply a local version of its iBookstore with their e-book catalogs.

Sources with knowledge of the situation tell AllThingsD that Kodansha, Shogakukan and Kadokawa are among the publishing houses to whom Apple is talking. Conversations are said to be going well, and the company expects to have agreements hammered out soon — though not as soon as the Nikkei, which first reported news of the talks, claims.

“Later this month,” we’re told, is far too optimistic a date for launch. Remember, the Japanese e-book market is a notoriously difficult one to break into, and this is essentially Apple’s second attempt at it. When the company first brought iBooks to Japan, back in 2010, it failed to negotiate the necessary deals with Japanese publishers. So its virtual shelves ended up being filled entirely with public domain content, and have remained that way ever since.

That’s going to change this year, but probably not in January. And when it does, it will be good for Apple, and for Japan’s burgeoning e-book market, as well. The iPad is enormously popular in Japan, so it’s conceivable that the device could give the e-book market a nice boost, particularly after an October 2012 update to the iBooks application that supports Japanese-language e-books.

Apple declined comment on its plans for the Japanese e-book market.

Pearson to Invest $89.5 Million in Barnes & Noble's Nook Media

Melodie Warner — Fri, 28 Dec 2012 19:56:29 +0000

Publishing and education company Pearson PLC agreed to invest $89.5 million for a 5 percent stake in Barnes & Noble Inc.’s digital-business unit, Nook Media LLC.

Bookstore operator Barnes & Noble will now own 78.2 percent of Nook Media, and Microsoft Corp., which made a $300 million investment earlier this year, will own 16.8 percent. Pearson will also have the option to purchase up to an additional 5 percent interest in Nook Media, subject to certain conditions.

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Macmillan Renegotiates E-Book Deals With Retailers

Jeffrey A. Trachtenberg — Wed, 19 Dec 2012 23:44:33 +0000

Macmillan, the last of the major publishers still fighting the Justice Department over antitrust charges, says it has renegotiated its e-book deals with retailers to allow some discounting.

In an open letter posted on his book publishing company’s website Wednesday afternoon, Macmillan Chief Executive John Sargent said the firm is still committed to fighting the antitrust case brought by the Justice Department involving allegations that Macmillan and four other publishers plus Apple Inc. conspired to raise e-book prices.

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Justice Department, Penguin Reach Settlement on E-Book Pricing

John Murrell — Wed, 19 Dec 2012 00:20:32 +0000

The Justice Department said today it had reached a settlement with Penguin Group (USA), one of six companies it had accused of conspiring to raise prices of e-books. The agreement, if approved by the court, would leave only two companies — Apple and Macmillan — facing the lawsuit, due to go to trial in June. Settlements were reached earlier with Hachette Book Group, HarperCollins and Simon & Schuster.

Kindle Users to Get Refunds and Lower Prices on E-Books After Settlement

Arik Hesseldahl — Sun, 14 Oct 2012 04:53:10 +0000

Good news Kindle owners: If you’re the owner of an Amazon Kindle and you bought e-books from certain publishers in the last few years, you’re getting a refund on past purchases, and future purchases will be a little cheaper.

But don’t get too excited, unless you’ve been a really heavy buyer. In an email to Kindle customers today, the retailer said that a legal settlement between the attorneys general of most of the states in the union and publishers including Hachette, Simon & Schuster and Harper Collins (which, like this Web site, is owned by News Corp.), entitles consumers to refunds of between 30 cents and $1.32 on each book purchased.

Additionally, the publishers will have less power to set future prices, which means that the prices on e-books for the Kindle may be a little lower in the near future.

Collectively, the three publishers agreed to pay $69 million to settle charges that they were fixing prices on electronic books. The settlement must still be approved by the court, and a final hearing is scheduled for February of next year.

This all came about when the U.S. Department of Justice decided to sue Apple and several publishers in a federal court in New York, alleging that they colluded to inflate prices on electronic books as part of a plan to fight back against Amazon’s dominance of the e-book business. There’s a lot of detail in the original complaint via The Wall Street Journal here, and it’s worth reading The Journal’s story covering the initial filing of the suit from April.

Essentially, the DOJ claimed that the five publishers named in the suit banded together to boost the prices on best-selling books on the iTunes store to $12.99 or $14.99, and then agreed to force the same pricing structure onto Amazon. Attorneys general from many states quickly followed with a suit of their own.

The three publishers named today had agreed to settle the case right away, rather than bother with time-consuming and expensive litigation. Two others, Macmillan and Pearson, haven’t settled. Amazon was never a partner to the suit, but now is in the enviable position of letting Kindle customers know that they’re getting both a refund and probably better pricing.

At $69 million, the settlement fund is relatively small, amounting to a little less than 3.5 percent of the $2 billion worth of e-books sold last year, and even smaller when compared to the $11 billion worth of old-fashioned paper books sold last year.

The federal case is still ongoing, and as you can see from this collection of documents on the DOJ Antitrust Division site, Apple is still fighting the issue. At the time the complaint was filed, it called the accusation of collusion “simply not true,” and said that publishers, just like developers on the App Store, have been allowed to set their own prices.

Anyway, here’s the text of the email Amazon sent out today. If you’re one of the lucky ones getting a refund, you don’t have to do anything. After the court approves the settlement, it will just appear in your account.

(Image courtesy of cheezburger.com)

Amazon's Jeff Bezos Confirms Kindles Are Sold at Cost

Tricia Duryee — Fri, 12 Oct 2012 18:13:15 +0000

Asa Mathat / AllThingsD.com

Like others, I’ve asked Amazon how it manages to keep Kindle prices low while still offering some of the latest hardware, and, like others, I’ve never managed to coax out a straight answer. Just last month, I posed the question to CEO Jeff Bezos, and he dodged again, acknowledging only that “we don’t want to lose a lot of money on the device.”

But apparently Bezos has tired of dancing around the subject, because when the BBC asked on Thursday, he answered: “We sell the hardware at our cost, so it is break-even on the hardware.”

The comments came a week after the company started shipping the Kindle Paperwhite, the well-reviewed new e-reader that comes with a glowing screen. The new Kindle Fire HD with an 8.9-inch display will start shipping Nov. 20.

It should not be a surprise that Amazon doesn’t make money off the sale of these devices. Many teardowns have suggested that the hardware components alone cost close to the sale price. Additionally, Bezos has made it clear that he wants the devices’ success to be measured by the amount of books and other content people buy on them — not on the sale of the hardware alone. That’s probably why Amazon declines to disclose how many devices it sells each quarter despite pleas from Wall Street.

Amazon’s model is familiar to other retail business, where margins are low and made up on tremendous volume. But that’s in contrast with most consumer electronics companies, like Apple, which sells hardware at generous margins. Bezos declined to say which approach was better. In my interview with him, he explained: “Our approach is our approach, and we don’t even claim it’s the right approach. It’s not something that’s new, but it’s something we’ve done since the founding of the company.”

Barnes & Noble Takes Aim at Amazon With New HD Nooks

Lauren Goode — Wed, 26 Sep 2012 05:02:05 +0000

Yesterday, Barnes & Noble revealed its plans for a Nook-branded online video store.

Today, the company is showing off the products it hopes you’ll be watching that video on: New Nook tablets, called the Nook HD and Nook HD+.

The Nook HD is a seven-inch tablet, while the Nook HD+ is a larger, nine-inch device. Both are lightweight, have high-resolution displays and are running on “forked,” or modified, versions of Google Android’s 4.0 operating system.

The tablets are available for preorder today, and are expected to hit stores in early November. They’ll range in price from $199 to $299, depending on size and storage.

If you’re getting a sense of deja vu reading this, it might be because you followed the Amazon event in Los Angeles a few weeks ago, at which the company unveiled its own new seven- and nine-inch tablets with HD displays.

What do you mean, you can’t keep all these HD tablets straight?

In truth, as the tablet market gets increasingly crowded, it gets more difficult to set some of these devices apart, aside from the obvious branding. So AllThingsD went ahead and made a couple of charts that show how these two compare with the Kindle Fire HD, Google’s Nexus 7 tablet and the new iPad.

(More after the charts …)

A few things worth noting: These comparison charts leave out some other features, like microSD, HDMI and USB ports, NFC capabilities, and speaker and camera specs. Also, as manufacturers boast better and brighter displays, you might see more references to PPI (pixel density) and IPS (In-Plane Switching display technology), said to support better viewing angles and richer colors.

And, these are battery life claims from the companies, not the results of our own tests. Battery life tests can vary quite a bit, and in Walt Mossberg’s reviews of the iPad 3 and seven-inch Kindle Fire HD, he wrote that the Kindle Fire lasted for nine hours and 28 minutes, about half an hour less than the iPad, and more than an hour less than the Nexus. The battery claims for the new Nooks are based on tests in which the display brightness is dimmed to around 50 percent, for what it’s worth.

The biggest differentiating factor between these devices has nothing to do with hardware, though; it’s the app ecosystem.

Barnes & Noble, which has seen growth in its digital content business despite disappointing device sales, says there are currently 10,000 Nook-specific apps available. This is a fraction of the apps available in Apple’s App Store and the Google Play store, though Barnes & Noble points out that the key apps you’d expect to see — popular social, media, music, productivity and gaming apps — are all there.

The Kindle Fire HD, as Walt noted in his column, also offers only a fraction of the third-party apps available on either the iPad, the Nexus 7 and other standard Android tablets.

Is the Nook app store on a new, attractive, competitively-priced tablet enough to lure consumers? Barnes & Noble Nook sure hopes so.

Update: A previous version of the charts contained an error, which showed the seven-inch Kindle Fire HD and Nexus 7 displays with a 1280 by 1800 resolution, instead of the correct 1280 by 800.

Google Play Books Update Adds Geographical Lookup, Translations

Bonnie Cha — Tue, 25 Sep 2012 17:30:16 +0000

Google is arming Android users with more tools to enhance their reading experience with an updated version of its Google Play Books application.

The most interesting feature of the update is the ability to get more information about a geographic location. Now you can tap on the name of a country, city or region, and the app will display a small information card with the location pinned on Google Maps and the option to search Google or Wikipedia for more details.

I gave it a quick whirl, selecting a reference to the Arctic Ocean in Tom Avery’s “To the End of the Earth,” and the feature worked as advertised. Sadly, it does not recognize fictional places like Mordor from “The Lord of the Rings” trilogy — I tried.

The app also now offers in-text definitions and — c’est magnifique! — translations for more than 50 languages, including French, Japanese, Spanish and Portuguese. You can mark your e-books with notes and highlights, as well, and all will be synced across your various devices.

The Google Play Books update is available now.

Judge Approves E-Book Price-Fixing Settlement

Chad Bray — Fri, 14 Sep 2012 22:01:38 +0000

A U.S. judge has approved an antitrust agreement with dozens of states in which consumers will receive more than $69 million from book publishers to settle allegations of price-fixing of e-books.

The approval follows a consent last week given by the judge to a separate but related federal antitrust settlement involving similar allegations.

Read the rest of this post on the original site »

Judge Approves Settlement in E-Book Pricing Case

Chad Bray and Jeffrey A. Trachtenberg — Thu, 06 Sep 2012 20:26:21 +0000

In a move that could reshape the publishing industry, a federal judge has approved a settlement with three of the nation’s largest book publishers over alleged collusion in the pricing of e-books.

The approval comes as Apple Inc. and two other publishers are preparing to defend themselves next June over antitrust allegations by the U.S. Department of Justice that they agreed to keep e-book prices artificially high in an effort to force Amazon.com Inc. to stop its steep discounting.

Read the rest of this post on the original site »