Apple on Wednesday stated that its confronting a Department of Justice lawsuit over e-book pricing was deliberate. Attorney Daniel Floyd told Judge Denise Cote that Apple believed the lawsuit was "not an appropriate case" and wanted to prove itself in court. The company wanted this to be "decided on the merits," Reuters heard while observing Floyd at a hearing.
(Updated with settlement news) As suspected, the US Department of Justice has sued Apple and publishers over claims of unfair e-book pricing. The complaint accuses Apple of colluding with publishers by both requiring a switch to an agency model, where publishers set the prices and ask for more, as well as demanding "most favored nation" status where no rival could have a lower price than the iBookstore. Some publishers are believed to have settled, but Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster are all targeted.
European Competition Commissioner Joaquin Almunia in comments Monday said his agency was willing to settle with publishers over an e-book price fixing investigation. He was willing to put an end to possible penalties for Hachette Livre, HarperCollins, Penguin, Simon & Schuster, and Macmillan if they addressed "all our objections [at the EC]" over the group allegedly raising prices unfairly, Reuters heard. The European regulator was working in tandem with matching US investigators, although he didn't directly confirm leaks of a possible Department of Justice lawsuit.
The US Department of Justice is readying an antitrust lawsuit against Apple and publishers unless they change their pricing strategy for e-books, leaks revealed Wednesday night. Agency officials reportedly slipped to the Wall Street Journal that both the iPad designer as well as Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster would face legal action for possibly having colluded on e-book pricing. DOJ prosecutors objected to Apple's since confirmed insistence on an agency model, where publishers set the price, as it allegedly kept e-book prices artificially inflated.
Random House helped set a possible precedent for e-books in libraries late last week after it agreed to a deal on lending. While it would raise the price for an e-book by an unspecified amount, the term would guarantee that libarires could have any title they want and provide an unlimited number of loans. The deal was portrayed to Publishers Weekly and others as giving authors fair compensation while still letting libraries treat e-books like they would paper.
Hagens Berman's class-action over iBookstore prices was expanded on Friday with potentially more serious evidence. New claims from the law firm allege that Hachette Livre (incorrectly described as Hatchett) chairman Arnaud Noury met with an unnamed Amazon executive on December 3, 2009 several weeks before the iPad unveiling to convince him to raise the price of e-books on the Kindle Store. According to the anecdote, Noury had said that a $2 to $3 price hike over the existing $10 would solve not just Hachette's problems but those of its competitors, suggesting that it was aware of and working together on raising prices.
The European Commission detailed plans Tuesday for a formal investigation into major publishers and Apple as to whether their deal might violate EU antitrust law. Officials will determine whether Hachette Livre, HarperCollins, Penguin, Simon & Schuster, and Macmillan have possibly used Apple to shut out e-book competition from rival stores or publishers. EC staff are worried that the agency model, where the store makes a flat rate and the publishers set the prices, is keeping the price of titles on the iBookstore and elsewhere artificially high.
Seattle-area law firm Hagens Berman on Tuesday filed a class action lawsuit accusing Apple of colluding with publishers to fix iBookstore prices. The suit, submitted in a Northern District of California court by representing members Anthony Petru and Marcus Mathis, accuses Apple of making unfair deals with Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster to artificially keep prices high. In adopting the agency pricing model, where the store takes a fixed cut but lets publishers dictate the price, Apple set terms that forced Amazon to abandon the wholesale model for the Kindle and raise its prices.
Only a relative handful of magazines are so far adopting Apple's in-app subscription scheme, an Advertising Age report claims. The major obstacle is said to be demographic data, which publishers normally use to sell advertising space. Because turning over the data is strictly voluntary in iOS apps, magazines are thought to be resistant. "Without the demographics, which iTunes [Apple] won't release, the print world is castrated," says Gary Armstrong, a consultant on branded content and a former Wenner Media executive.
Over 100 illustrated books have been added to the iBookstore in tandem with the release of iBooks 1.2, says the New York Times. These are spread across several different genres, including cooking, photography and children's books. Some notable titles include Thomas Keller's Ad Hoc at Home, a photo collection by Ansel Adams and the Olivia series of picture books.
In tandem with Canada Day, Apple has finally expanded the availability of paid books to the Canadian iBookstore. Several major publishers have begun selling titles, including Hachette, HarperCollins and Simon & Schuster. Book prices may vary substantially, but some featured launch titles range in cost between $12 and $18, roughly in line though perhaps slightly more expensive than US editions.
Texas' attorney general is investigating Apple and publishers for possible anti-competitive e-book pricing, multiple sources said on Wednesday [sub. required]. At least Hachette and HarperCollins have confirmed they were asked to provide documents, but Apple is also believed to be a target. The WSJ speculates that the investigation may have to do with Apple's preference for an agency model on the iBookstore, where publishers have control over the pricing.
The iPad and a more concerted effort from Google will cut the Amazon Kindle's share of the e-book field by two thirds, Credit Suisse analyst Spencer Wang said in a report issued Tuesday. He believes Apple's entry into the field has "stoked fears" about the growth of the Kindle and that this, combined with Google Books, will drop Amazon's e-book sales share from a near-monopoly 90 percent today to just 35 percent within five years.
Amazon today confirmed that it has put back Macmillan's titles on both the Kindle store and in its regular store. The move follows after Amazon agreed to raise prices on e-books last weekend as the result of a three-day standoff. Amazon had unsuccessfully tried to withdraw books as a negotiating tactic to keep prices at $10.
Hachette today followed Macmillan's pricing strategy and said it would raise prices on its e-books. The approach will use the agency model where the publisher, not the retailer, sets the prices. It will notably use the Apple price scheme and ask between $13 and $15 for new and bestselling titles as well as change prices over time, with some older and shorter titles costing as little as $6.
HarperCollins is the latest publishing house to announce it will delay the release of new electronic books in order to give their hardcover counterparts more time on the shelves and to ensure the longevity of the book industry in general. The chief executive of HarperCollins, Brian Murray, said the delays will start in January or February and involve the delay of five to 10 new hardcover titles each month. Depending on the book, the delay could range from four weeks to six months.
