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Court evidence: Jobs read AppleInsider, queried Cue on reports

updated 07:19 pm EDT, Mon June 17, 2013

Was concerned about how self-publishing, aggregators would be handled

According to a an email exchange between then-CEO Steve Jobs and Senior Vice President of Internet Software and Services Eddy Cue submitted in court earlier today as part of the Department of Justice's e-book price-fixing trial, Apple's co-founder and then-leader read Mac rumor-and-news sites such as AppleInsider and would question the veracity of items found there. In the exchange, which happened just three months after Apple had launched the iBookstore, Jobs wants to know more about self-publishing options.

He references a report on AppleInsider referring to the iBookstore inking a deal with Smashwords, an e-book "aggregator" that lets authors directly control the transformation of a work into an e-book suitable for Apple, Amazon, Barnes & Noble and other e-book outlets, along with packaging and marketing assistance, for a small percentage. Jobs wanted to know if such companies get the same deal as traditional publishers, meaning that Apple would still get 30 percent of whatever the selling price of the e-book was.

Cue answered in the affirmative, explaining that Smashwords took its own fee out of the 70 percent that it keeps of the selling price, passing the remainder to the author, meaning they get about 85 percent of the net price of the book. As an example, if a "self-published" Smashwords e-book sold for $10, Apple would get $3, and Smashwords would receive $7, of which it would pass $5.95 on to the author. Titles for aggregators can be as low as 99 cents, or as much as the author desires. Apple describes aggregators as "experts in ePub conversion, formatting, marketing, promotion and price optimization" that are able to format e-books correctly to Apple's specifications as well as those of other channels, helping authors that are not well-versed with the technical aspect of self-publishing.

He mentioned in the initial reply that such companies exist for music as well, and that Apple's 30 percent cut applies to all of them. Examples of music "aggregators" include CD Baby and Bandcamp, which are often used by as-yet-unsigned bands to get product onto the iTunes store as inexpensively as possible. At that point, Apple had signed two book aggregators -- Project Gutenberg and Smashwords. The company now handles e-books from some additional aggregators as well, such as Bookbaby, Bookwire, Ingram and InScribe.

Jobs would occasionally make fun of or belittle Mac rumor sites -- and on at least one occasion, sued them out of existance -- but the email exchange shows that the CEO was very engaged in what those sites were saying about the company and potential forthcoming Apple products. The exchange also reveals that Jobs didn't know some of the minutia of the deals the iBookstore and iTunes Store was making with publishers and authors, but wanted to be sure that all deals were as close to identical in net terms as possible.

In a second exchange, Jobs asked Cue if Apple was going to let "anyone" self-publish, and whether Amazon had a similar practice. "Yes and yes," was the reply from Cue, who added that at the time he believed that about half of Amazon's e-book count -- about 200,000 titles at the time -- came from self-publishing aggregators. Cue's "biggest concern" with opening up more self-publishing outlets was that Apple would have to "review each submission." Jobs' reply: "Yep. What does Amazon do [in that regard]?"

The DOJ is using the email as part of its attempt to show that Apple was obsessed with breaking Amazon's monopoly on e-book sales, though the fact that the exchange is dated well after the launch of Apple's iBookstore and the iPad would seem to remove any hints of conspiracy from it. Jobs' questions are the same as any CEO would ask about rivals and how they handle a particular issue to help research what the best solution might be for his own company.

by MacNN Staff



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