Court documents reveal Steve Jobs email pushing e-book 'agency model'
New details that were previously redacted from a class action suit claiming Apple and two publishing houses colluded to falsely inflate e-book prices revealed that Steve Jobs personally persuaded one of the publishers to ink a commitment to the company's "agency model."
An amended complaint to the class action lawsuit that accuses Apple, MacMillan and Penguin of e-book price-setting was released on Friday and saw the plaintiffs grow by 17 states as New York and the District of Columbia joined the fray, reports Paid Content.
First filed in April on the same day as a Department of Justice antitrust suit regarding the same matter, the states' case has revealed previously sealed statements and evidence including an email from Jobs to an executive at an unnamed publisher's parent company.
In the recently amended complaint, the states claim that Apple Senior Vice President of Internet Software and Services Eddy Cue, who was acting as Apple's liaison with the publishers, ?could not secure one of the Conspiring Publisher?s commitment directly from an executive."
At issue was Apple's agency model which allows publishers to set prices under a "most favored nations" clause that contractually keeps them from selling the same content to other resellers at a lower price. This went against the the then-dominant wholesale model used by Amazon which let resellers set their own prices, sometimes at a loss, in order to drum up sales.
Not all of the five major book companies were on board with Apple's pricing plan, and Jobs apparently stepped in with a personal email in late January.
From Jobs' email:
Thus far, the class action suit has seen moderate progress and the DoJ has separately settled with Hachette, Simon & Schuster and HarperCollins. Internationally, an identical suit was filed in Canada and the issue is being examined by the European Commission.
An amended complaint to the class action lawsuit that accuses Apple, MacMillan and Penguin of e-book price-setting was released on Friday and saw the plaintiffs grow by 17 states as New York and the District of Columbia joined the fray, reports Paid Content.
First filed in April on the same day as a Department of Justice antitrust suit regarding the same matter, the states' case has revealed previously sealed statements and evidence including an email from Jobs to an executive at an unnamed publisher's parent company.
In the recently amended complaint, the states claim that Apple Senior Vice President of Internet Software and Services Eddy Cue, who was acting as Apple's liaison with the publishers, ?could not secure one of the Conspiring Publisher?s commitment directly from an executive."
At issue was Apple's agency model which allows publishers to set prices under a "most favored nations" clause that contractually keeps them from selling the same content to other resellers at a lower price. This went against the the then-dominant wholesale model used by Amazon which let resellers set their own prices, sometimes at a loss, in order to drum up sales.
Not all of the five major book companies were on board with Apple's pricing plan, and Jobs apparently stepped in with a personal email in late January.
From Jobs' email:
The publisher reversed its decision and signed on with Apple three days later.As I see it, [Conspiring Publisher] has the following choices:
1. Throw in with Apple and see if we can all make a go of this to create a real mainstream ebooks market at $12.99 and $14.99.
2. Keep going with Amazon at $9.99. You will make a bit more money in the short term, but in the medium term Amazon will tell you they will be paying you 70% of $9.99. They have shareholders too.
3. Hold back your books from Amazon. Without a way for customers to buy your ebooks, they will steal them. This will be the start of piracy and once started, there will be no stopping it. Trust me, I?ve seen this happen with my own eyes.
Maybe I?m missing something, but I don?t see any other alternatives. Do you?
Thus far, the class action suit has seen moderate progress and the DoJ has separately settled with Hachette, Simon & Schuster and HarperCollins. Internationally, an identical suit was filed in Canada and the issue is being examined by the European Commission.
Comments
so.. what's the big deal?
so what's the big deal ????
Wait... If Steve had to talk the publisher into it, doesn't that imply they made the decision independent of the other publishers?
The email suggests that it's either Apple or Amazon and it reads as if the publisher can't choose both. Now, with Apple being the outsider with essentially no market share, that probably wouldn't lead anywhere, but it has the potential to create some problems.
I do not, however, see anything there that sounds like price fixing.
So given the consumer has the choice to buy from Amazon or Apple, how can that be price fixing? Isn't the consumer still in control?
So much for all who claimed that while the book publishers may have conspired, Apple was not part of it. According to them, apple got duped into being a part of it.
But now it looks like Apple was instead the ringleader.
Only in your own distorted mind.
Where in the above memo do you see Apple promoting either conspiracy or price fixing?
Quote:
Originally Posted by jragosta
Quote:
Originally Posted by I am a Zither Zather Zuzz
So much for all who claimed that while the book publishers may have conspired, Apple was not part of it. According to them, apple got duped into being a part of it.
But now it looks like Apple was instead the ringleader.
Only in your own distorted mind.
Where in the above memo do you see Apple promoting either conspiracy or price fixing?
Quote:
From Jobs' email:
Apple was seemingly the ringleader, and not some dupe of the publishing industry.
No one with a clue as said that Apple was a dupe. Apple offered the same terms they use in all their stores. Steve reached out to one or more companies that didn't jump in right offer with a second argument, like he had probably done in other cases.
that Steve was aware that the publishers were keen to dump Amazon when he decided the time was ripe for the iBookstore, which would use the same agency terms as the rest of iTunes, doesn't make Apple party to collusion by the publishers. Steve positioned it as one or the other because he figured they would dump Amazon, not band together to force Apple's system on them
Fact is, the publishers could have done what they did regardless of Apple ever starting the whole iBooks thing. And then when Apple created the store months later you would still claim they were behind it
Quote:
Originally Posted by Ed Steinberg
so.. what's the big deal?
Bingo. Steve's email is perfectly sensible, perfectly common-sense. It basically says, join the App Store "model" where you set a reasonable price, you make money, Apple makes money, customers get WORLDWIDE (ideally, as per App Store) access to legitimate, legal, wide-ranging books.
I don't give a darn about "agency model" or whatever "model" is being bandied about. Old business models and the Amazon model is monolithic.
The idea of a "business model" is also on the way out, because it implies that you have some knowledge about how the market is going to react, which you usually don't.
Dead-tree industries, of course, won't disappear, but how many books does mainstream society, particularly emerging markets, read?
Steve, as always, thought he was going against the grain but it's just common sense, which ironically is not that common.
The way I see it is this. I create a book. I publish it to the iBookStore. I set a price, Apple takes 30%, I sell it worldwide. As we've seen from Apps, where's the problem?
Obviously with the major publishers, there is some level of collaboration needed in getting everybody on board. Is this collusion? Well, technically, yes, just like iTunes music, TV shows and movies, which by definition is price-fixing, since generally almost all music, TV shows and movies are sold at, well, a fixed price. In this case of course in places like Australia it becomes a concern because these fixed-prices are higher than one would imagine, hence collusion with possible price-gauging is a concern.
In the case of the initial iBook launch with major publishers, so far I don't see something where they are out to price-gauge or put up increased prices just for the sake of it. Yes, it's more expensive than Amazon, because the traditional and Amazonian "model" is pumping through as many books as possible into "bestseller" lists and then worrying about making money later (eg. authors not making money but relying on speaking tours instead).
In looking into publishing my own iBooks, I noticed as well in terms of copyright it's a nightmare, because books are not seen to be valuable in and of themselves, but things like merchandising, movie rights, speaking rights, and so on.
The traditional and Amazonian model is clearly antiquated and seriously flawed. The Apple App Store "model" is certainly reasonable and has massive potential for the present and future, and there are currently no reasonable competing models.
Even ePub, Lulu, Kindle and so-on for eBooks is interesting but somewhat tenous because they are convenient but devalue the content of the book in some ways because you feel, well, it's just a text file or PDF, which granny down the road typed up in her spare time, why would I pay $20 or even $10 for something like this?
Hence the iBooks2 "textbooks", essentially the new Hypercard e/iBook "model" where the message(content) and the medium are both in tune with each other. You're not taking a dead-tree medium aka books and mashing it into an eBook.
It also solves the long standing annoyance (probably of Steve's too) that iOS Apps are good for ~functionality~ but when it comes to significant levels of content, Apps start to become difficult to create and manage. iBooks2 is essentially a way for almost anyone to make a ~content-rich~ "app"... with the requirement that the content, and hopefully reasonably vetted by Apple, has to be significant. But of course the obvious advantages are easily updateable, high-content-level, rich interactive books without compatibility and so-called "web standards" nightmares.
Quote:
Originally Posted by I am a Zither Zather Zuzz
Apple was seemingly the ringleader, and not some dupe of the publishing industry.
Wow, you get the medal for tenacity, I wish I had as much free time as you. But "ringleader" obviously is a dubious term here, because Apple is the seller and publishers the customers... In this case any business is a "ringleader" in trying to get partnerships. Where partnerships become illegal collusion is obviously the crux of the legal matter, not "who led who" per se.
In other words, where all parties were willing (eg. nobody put a gun to their head in a dimly-lit warehouse) then all parties are potentially equally responsible for any collusion - from my common-sense point of view.
Whoohoo, more Apple tax to sneak into tax havens, ain't it great, no wonder you spend so much time here.
Quote:
Originally Posted by jragosta
The email suggests that it's either Apple or Amazon and it reads as if the publisher can't choose both. Now, with Apple being the outsider with essentially no market share, that probably wouldn't lead anywhere, but it has the potential to create some problems.
I do not, however, see anything there that sounds like price fixing.
Jobs did suggest prices in this email. AFAIK under the agency model the publishers set the prices themselves. Also "we can all" hints that other publishers will participate under similar terms.
"As I see it, [Conspiring Publisher] has the following choices:
1. Throw in with Apple and see if we can all make a go of this to create a real mainstream ebooks market at $12.99 and $14.99."
Way to ignore the rest of the email. One could just as easily written:
It's what many of us do on this forum by dissecting all the avenues one can take.
Quote:
Originally Posted by I am a Zither Zather Zuzz
Apple was seemingly the ringleader, and not some dupe of the publishing industry.
It simply sounds as if Apple was trying to "create a real mainstream ebooks market at $12.99 and $14.99." I think you have to be a little delusional to see anything else. Either that or a troll, of course, but they're both pretty much the same thing.
Quote:
Originally Posted by SolipsismX
Way to ignore the rest of the email. One could just as easily written:
Quote:
From Jobs' email:
As I see it, [Conspiring Publisher] has the following choices:
Keep going with Amazon at $9.99. You will make a bit more money in the short term, but in the medium term Amazon will tell you they will be paying you 70% of $9.99. They have shareholders too.
It's what many of us do on this forum by dissecting all the avenues one can take.
I quoted the part relevant to the accusation of price-fixing. The rest, that you quoted, does add to the tone of the letter -- there's the hint that with Amazon, the publisher will be making a lot less per book. The incentive to fix the prices at $13-15 is obvious.
Of course, the publisher could have just as well thought that 70% of $9.99 at a much higher volume will be better than 70% of $14.99 but a small fraction of the sales. How it works out in the end depends on what the other publishers choose. Not much unlike the prisoner's dilemma, with the tiny addition of a go-between helping the prisoners to make the right choice.
Quote:
Originally Posted by knightlie
It simply sounds as if Apple was trying to "create a real mainstream ebooks market at $12.99 and $14.99."
Indeed, with the stress falling on "at $12.99 and $14.99", since the rest already existed.
Quote:
Originally Posted by hill60
Whoohoo, more Apple tax to sneak into tax havens, ain't it great, no wonder you spend so much time here.
LOL they're pulling out though! AUD dropping fast.
Quote:
Originally Posted by I am a Zither Zather Zuzz
Apple was seemingly the ringleader, and not some dupe of the publishing industry.
Personally I find that anything that Apple does to piss you off is just fine by me.
You're going to be in for a horrible next few years as this company moves from strength to strength.
Happiness, and a social life outside this forum: These things will be denied to you for quite a while yet.