On April 3, 2010 Apple launched the iPad. One other important thing happened that day. Apple’s late CEO Steve Jobs had numerous interviews with reporters, natural given that his company was launching a major product. What came as a surprise was that when asked why consumers would pay $14.99 to Apple to purchase an e-book that was selling at Amazon for $9.99, Jobs replied, “Well, that won’t be the case.” As a follow up to a question as to why that wouldn’t be the case Job’s responded, “The price will be the same.”
While Apple would have us believe that Mr. Jobs and the company as a whole did nothing illegal to ensure that the prices were equal, U.S. District Judge Denise Cote ruled differently. Apple has been found guilty of price-fixing and in the process violated antitrust laws. If you’re interested, you can find the decision here.
Here is how Judge Cote recapped what happened: “The plaintiffs have shown that the publisher (and) defendants conspired with each other to eliminate retail price competition in order to raise e-book prices, and that Apple played a central role in facilitating and executing that conspiracy. Without Apple’s orchestration of this conspiracy, it would not have succeeded as it did in the Spring of 2010.”
The ruling has been seen as a major victory for the Department of JUstice in spite of the fact that Apple has stated that it will appeal the decision. Apple, by the way, is the last man standing. The major publishers who had been part of the conspiracy have already settled.
According to Apple spokesperson Tom Neumayr, in a statement made to ABC News, Apple had sought only to give customers more choice. I find it interesting that Apples first thought in giving customers more choice meant forcing others to raise their prices in order to match that offered by Apple, not lowering theirs in order to compete. In fact, Apple showed exactly how they felt about customers in the following quote from Steve Jobs : “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, “ he told the publishers. That quote appears in Steve Jobs by Walter Isaacson.
The fact that both Apple and the publishers wished to squeeze extra dollars out of their customers is no surprise to me. Apple is not known for their reasonably priced products after all. They are innovative but they make you pay for that innovation. And as a longtime reader, the one thing I know about major publishers is that they seem to have little concern for anything other than getting money out of me. So no surprise that when they saw a chance to prevent prices dropping they grabbed it.
What does this actually mean for e-book consumers though? Given that Apple plans to appeal, I don’t think it means much in the immediate short term. If there is a final resolution coming, it may be some time down the road. I know that as disturbed as I am by what happened I am sure as heck not throwing my iPad out a window in disgust. I just read a book on it this morning. Various apps allow me to read on the device without purchasing directly from Apple. However upset I am by their businesses practices it doesn’t affect the quality of what they sell. Should I stop doing business with them just on principle? I’ll give it some thought but I can’t guarantee I’ll take the moral high ground. Competitors just don’t fill that void completely.
I also won’t stop doing business with the major publishers entirely. Many of my favorite authors still publish through them and as long as they have good books I will most likely continue to buy them. Will I drop them like hot potatoes when the chance presents itself? Yes. As I mentioned in a recent blog, I am fulfilling more and more of my reading desires via small press and independent publishing. But they aren’t meeting all my needs/wants and I will keep doing business with the biggies till they no longer have anything to offer me.
Still I feel the decision is important for readers and consumers. It shows companies that laws set out to protect the American people from corrupt business practices will be enforced even against big corporations. This is a lesson American businesses seem to need on a somewhat regular basis and I am grateful that the government is taking the issue seriously. Since the initial ruling brought some fairness back to e-book pricing, this ruling just solidifies the fact that the government intends to do what is necessary to assure that everyone understands the law regarding that area.
It also leaves Amazon in an even stronger position. This past Monday Barnes & Noble announced that chief executive officer William Lynch Jr. resigned over the Nook conundrum. The N.Y. Times had this to say about the change:
The decision(on Apple) came two days after Barnes & Noble lost its chief executive and said it would not appoint another, signaling that the biggest chain of physical bookstores could be immediately broken up.
I had known that B&N was struggling. I just hadn’t realized how much of a struggle it is.
In the same article the Times had this to say about Amazon:
Some in publishing suspected that Amazon had prompted the government to file its suit. The retailer has denied it, but it still emerged the big winner. While Apple will be punished — damages are yet to be decided — and the publishers were chastened, Amazon is left free to exert its dominance over e-books — even as it gains market share with physical books.
Since I already do a ton of business with Amazon, being forced to do more business with them won’t even appear on my radar. But it does make me a bit uneasy. I dislike the thought that at some point Amazon may destroy all of its competition, leaving them no motive to offer good prices on books. Perhaps in the future what price fixing will look like will simply be Amazon getting to decide all prices for e-books.
So what are your thoughts – much ado about nothing or an issue of great import? Does it affect how you will read in the future? Will it affect your purchases re the big publishers or Apple?
– Maggie Boyd