Tag Archives: publishing industry

United States vs. Apple (and the Big Six, I mean Five)

I’m not going to go into any depth on the Apple ruling. It wasn’t really a close case or even an interesting bit of law. Just straight-forward collusion on price fixing. I do however have a few comments and recommendations.

Don't worry. I'm not going to let the motto drag me into another Latin discussion.

Don’t worry. I’m not going to let the motto drag me into another Latin discussion.

First of all, I recommend that you read the fact section of the opinion. You can find it, and just about everything else involved with the case if you have a couple of days to kill, on the DOJ website here. Look for “Opinion & Order.” The factual portion is written in narrative form and is pretty accessible to anyone. The reason I recommend reading it is it gives you a glimpse into the business and minds of big publishers. Read it to get a glimpse at the motives of the publishers in all of this. And I’m not trying to imply judgment of those motives, just that seeing through their eyes is interesting.

Let me add one caveat though. This was written by a judge as findings of fact – to support the conclusions of law. In other words, it has a slant – to make the legal conclusions look obvious.

If you want a quick summary, take a look at Professor James Grimmelmann’s post. He correctly points out what many flew past – that the publishers’ motives were not just about setting higher price expectations, but also about protecting the physical retail sector (that is their last trump card in the whole thing we call book publishing).

The Atlantic breaks it down into “6 bullet points.” While the article does provide a quick summary, it’s a bit light on Amazon an a bit heavy on Apple. For example, it states “Amazon was actually losing money on ebook sales, but it didn’t care. The long-term goal was to get people to buy Kindle e-readers.” Selling more Kindles may be a goal for Amazon, but in the long-term, selling more Kindles is just a means toward accomplishing its true goals (e.g. locking customers into Amazon through hardware-DRM combinations).

Later, the article refers to “Apple’s plan to raise ebook prices overall” which I think is a little unfair in its characterization of Apple’s goals. Apple did not just decide one day that eBook prices needed to be higher. Apple wanted to open an eBook store to help sell iPads, and Apple wanted to make money off eBook sales in that store. Giving publishers a way to accomplish their goals – which was to raise eBook prices – was simply Apple’s quickest option to get the publishers on board and its iBookstore off the ground. I’m not saying their actions were not illegal. I’m just saying that raising eBook prices was not their “plan.”

The article does a good job overall and  provide an excellent summary of the publishers’ thinking processes:

With Amazon’s aggressive pricing, the publishers reasoned, the Internet company might grow so powerful as to be able to drive down prices for all books, even the hardcovers sold in mom-and-pop stores. Amazon might even begin to negotiate directly with authors and cut out the publishing houses altogether.

For a slightly different take on the ruling, see this Forbes article describing the potential downsides for the industry and consumers.


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