US DOJ Plans Anti-Trust against iBooks (1 Viewer)

The Justice Department has warned Apple Inc. and five of the biggest U.S. publishers that it plans to sue them for allegedly colluding to raise the price of electronic books, according to people familiar with the matter.

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"We told the publishers, 'We'll go to the agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that's what you want anyway,'" Mr. Jobs was quoted as saying by his biographer, Walter Isaacson.

The publishers were then able to impose the same model across the industry, Mr. Jobs told Mr. Isaacson. "They went to Amazon and said, 'You're going to sign an agency contract or we're not going to give you the books,' " Mr. Jobs said.

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Originally Posted by Steve_Tk /t/319120/us-doj-plans-anti-trust-against-ibooks#post_3904983
"The Justice Department has warned Apple Inc. and five of the biggest U.S. publishers"
Yet every story I've seen has the title Apple. If you didn't know better, you would believe Apple was possible the only wrong do'ers.

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Originally Posted by Steve_Tk /t/319120/us-doj-plans-anti-trust-against-ibooks#post_3904983
"The Justice Department has warned Apple Inc. and five of the biggest U.S. publishers"
Yet every story I've seen has the title Apple. If you didn't know better, you would believe Apple was possible the only wrong do'ers.

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Patrick_S said:

Apple, with their corporate culture will surely follow them into court.

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Anyway, here's the important take-away:
DRM on ebooks is dead. (Or if not dead, it's on death row awaiting a date with the executioner.)
It doesn't matter whether Macmillan wins the price-fixing lawsuit bought by the Department of Justice. The point is, the big six publishers' Plan B for fighting the emerging Amazon monopsony has failed (insofar as it has been painted as a price-fixing ring, whether or not it was one in fact). This means that they need a Plan C. And the only viable Plan C, for breaking Amazon's death-grip on the consumers, is to break DRM.
If the major publishers switch to selling ebooks without DRM, then they can enable customers to buy books from a variety of outlets and move away from the walled garden of the Kindle store. They see DRM as a defense against piracy, but piracy is a much less immediate threat than a gigantic multinational with revenue of $48 Billion in 2011 (more than the entire global publishing industry) that has expressed its intention to "disrupt" them, and whose chief executive said recently "even well-meaning gatekeepers slow innovation" (where "innovation" is code-speak for "opportunities for me to turn a profit").
And so they will deep-six their existing commitment to DRM and use the terms of the DoJ-imposed settlement to wiggle out of the most-favoured-nation terms imposed by Amazon, in order to sell their wares as widely as possible.
If they don't, they're doomed. And all of us who like to read (or write) fiction get to live in the Amazon company town.

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The Justice Department finally took aim at the monopolistic monolith that threatened to dominate the book industry. So imagine the shock when the bullet aimed at threats to competition went whizzing by Amazon — which not long ago had a 90 percent stranglehold on e-books — and instead, struck five of the six biggest publishers and Apple, a minor player in the realm of books

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Sam Posten said:

http://www.nytimes.com/2012/04/16/business/media/amazon-low-prices-disguise-a-high-cost.html?_r=1&ref=technology

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Presumably, though, the change did not happen without some support from the top. It also offers a possible model for how other publishers might drop DRM — in bits and pieces or by imprint, rather than all at once — though that could be problematic in some ways. (How do you decide which books go first? Is it fair to readers?)
Note that Mike Shatzkin wrote today, “I heard a rumor from a very reliable source that two of the Big Six are considering going to DRM-free very soon. The rumor is from the UK side, but it is hard to see a global company doing this in a market silo. Another industry listener I know was hearing similar rumors from different sources.”
Maja Thomas, VP of digital for Hachette, recently described DRM as “a speedbump” that “doesn’t stop anyone from pirating.”

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1. The rapid current pace of change in the electronic publishing sector is driven by the consumer electronics and internet industry. It's impossible to make long term publishing plans (3-10 years) without understanding these other industries and the priorities of their players. It is important to note that the CE industry relies on selling consumers new gadgets every 1-3 years. And it is through their gadgets that readers experience the books we sell them. Where is the CE industry taking us?
2. Dropping DRM across all of Macmillans products will not have immediate, global, positive effects on revenue in the same way that introducing the agency model did ...
3. However, relaxing the requirement for DRM across some of Macmillans brands will have very positive public relations consequences among certain customer demographics, notably genre readers who buy large numbers of books (and who, while a minority in absolute numbers, are a disproportionate source of support for the midlist).
4. Longer term, removing the requirement for DRM will lower the barrier to entry in ebook retail, allowing smaller retailers (such as Powells) to compete effectively with the current major incumbents. This will encourage diversity in the retail sector, force the current incumbents to interoperate with other supply sources (or face an exodus of consumers), and undermine the tendency towards oligopoly. This will, in the long term, undermine the leverage the large vendors currently have in negotiating discount terms with publishers while improving the state of midlist sales.

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“If Apple is suggesting that Amazon was engaging in illegal, monopolistic practices, and that Apple’s combination with the Publisher Defendants to deprive a monopolist of some of its market power is pro-competitive and healthy for our economy, it is wrong,” Cote said.She also noted that even if Amazon was engaging in unfair behavior, that two wrongs don’t make a right. “Another company’s alleged violation of antitrust laws is not an excuse for engaging in your own violations of law. Nor is suspicion that that may be occurring a defense to the claims litigated at this trial”
On the chilling effect on the industry: Cote is careful to acknowledge the argument Apple made in court -- that essentially punishing the company for trying to break into a new market will discourage others from doing so in the future. But, ultimately, she said, Apple’s actions when it entered the market were anticompetitive.
“While a Court must take seriously a prediction that its decision will harm our nation’s economy, particularly when made by skilled counsel on behalf of an esteemed company, it is difficult to see how competition will be stifled by the ruling in this Opinion.” Cote wrote.

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