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Tag: Macmillan

  • Apple Injunction Issued Over e-Book Price Fixing

    Weeks of litigation ended this week when the Department of Justice issued Apple Inc. an injunction in the e-books antitrust case. The injunction will last for five-years, starting in early October. It is accompanied by an External Compliance Monitor; the candidate can be one suggested by Apple.

    The filing was released Friday, and DOJ achieved a lot of what it had intended with the ruling. Apple was found liable of conspiring with publishers to fix e-book prices in the iBookstore last July by Judge Denise Cole. Apple denied the accusation, “Apple did not conspire to fix e-book pricing… The iBookstore gave customers more choice and injected much needed innovation and competition into the market,” Tom Neumayr, Apple spokesman, said in an early statement, promising that Apple would appeal. Apple may seek a stay of the injunction upon appeal.

    The court can extend the injunction for one-year periods, pending its expiration. Apple faces separate trials related to damages demanded by states seeking related claims.

    DOJ antitrust Assistant Attorney General Bill Baer praised the development on behalf of customers: “The court’s ruling reinforces the victory the department has won for consumers… consumers will continue to benefit from lower e-book prices as a result of the department’s enforcement action to restore competition in this important industry.”

    The decision further forbids Apple from imposing most-favored-nation clauses in their e-book publishing contracts for the term of the injunction as well as prohibiting Apple from entering into contracts with publishers that include them. Apple had hoped this requirement would only relate to those five publishing companies, all relatively silent today, who had already settled their cases—Lagardere SCA’s Hachette Book Group, Inc; News Corp’s HarperCollins Publishers LLC; Verlagsgruppe Georg von Holtzbrinck GmbH’s Macmillan; Penguin Random House LLC; CBS Corp’s Simon & Schuster.

    DOJ’s full intent was reportedly to change Apple’s in-app purchase policies and allow competitor e-book suppliers (think Amazon) to use the apps without giving Apple a 30% commission. Apple lucked out in this specific as Judge Cole had previously determined not to affect the App Store, stating last week that she wanted the ruling, “to rest as lightly as possible on how Apple runs its business.”

    The five publishing houses who have already settled will have to stagger new contract negotiations with Apple. Retailers will be able to discount the publishers’ books for two years with other vendors. Judge Cole dictated the order in which Apple would work out new contracts, with the last to settle waiting the longest. The order is as follows: Hachette, 24 months after final judgment effective date; Harper Collins, 30 months; Simon & Schuster, 36 months; Penguin, 42 months; Macmillan, 48 months.

    So readers, if you didn’t pay attention before to what publishing house your favorite authors are under, now’s the time!

    [Images compiled from Apple, Hachette, HarperCollins, Macmillan, Penguin, Simon & Schuster.]

  • Publishers Strike Back at Amazon

    Publishers Strike Back at Amazon

    It was recently reported that the U.S. federal government is suing Apple and book publishers Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster, on the assumption that they’d worked together to raise the prices of e-books. Three of the merchants so far have settled and restored discounting options to Amazon. Those remaining, Apple, Penguin and Macmillan, have called out the U.S. Department of Justice, accusing it of siding with “monopolist retailer Amazon,” manipulating facts and piling “innuendo on top of innuendo”.

    Apple and the publishers named in the suit were trying to stop Amazon from selling digital editions of new releases for $9.99, which cuts into profits for new hardcovers. Apple has been important to publishers, as before the launch of the iPad, Amazon controlled 90% of the e-book market – but as the iPad became popular, publishing executives were able to negotiate with Apple in order to set new release prices to whatever they’d like. This drove new book prices up to $14.99, with Apple taking 30% of the profits. The federal complaint states that this cost consumers tens of millions of dollars that they otherwise wouldn’t have had to pay. As of now, Amazon controls 55 to 60% of the e-book market, against Apple’s 10 to 15%.

    Macmillan’s response was that the DOJ found a “lack of direct evidence of conspiracy”, and its complaint is thus “based entirely on the little circumstantial evidence it was able to locate during its extensive investigation, on which it piles innuendo on top of innuendo, stretches facts and implies actions that did not occur and which Macmillan denies unequivocally.”

    Penguin’s response took more shots at Amazon, calling the retail giant “predatory,” and that it “threatened the long-term, overall health of the book publishing industry.”

    Apple chimed in last week, stating that the fed “sides with monopoly, rather than competition, in bringing this case.” Now that all parties have filed their responses, the Department of Justice will move forth with their case.

  • Amazon Possibly Behind Justice Department e-Book Lawsuit

    When the Justice Department filed an antitrust lawsuit against Apple and other major publishers for allegedly banding together to drive up book prices, Amazon was named several times in the 36-page complaint. The company was named so repeatedly, roughly 90 times, that some speculate that Jeff Bezos and Co. might’ve prompted the suit in the first place, and the retailer likewise looks to be the sole beneficiary of the Justice Department’s decision to proceed.

    While the U.S. federal government is suing Apple and book publishers Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster, on the assumption that they’d worked together to raise the prices of e-books, three of the merchants so far have settled and restored discounting options to Amazon – but Apple, along with other publishers, filed their own federal complaint against Amazon on behalf of consumers, stating that the online retail giant is threatening their “traditional position as gatekeepers of the publishing world.” Amazon CEO Bezos’ response to the matter was “even well-meaning gatekeepers slow innovation,” as quoted in his annual letter to shareholders Friday.

    Apple and the publishers named in the suit were trying to stop Amazon from selling digital editions of new releases for $9.99, which cuts into profits for new hardcovers. Apple has been important to publishers, as before the launch of the iPad, Amazon controlled 90% of the e-book market – but as the iPad became popular, publishing executives were able to negotiate with Apple in order to set new release prices to whatever they’d like. This drove new book prices up to $14.99, with Apple taking 30% of the profits. The federal complaint states that this cost consumers tens of millions of dollars that they otherwise wouldn’t have had to pay. As of now, Amazon controls 55 to 60% of the e-book market, against Apple’s 10 to 15%.

    Suffice it to say, publishers aren’t happy with Amazon, who is benefitting from the lawsuit. The aforementioned three publishers who are settling, Hachette, HarperCollins and Simon & Schuster, were given a deal to where Amazon would be able to sell their books at discounted prices for at least 2 years. Digital media consultant Bill Rosenblatt states, “publishers are really, really angry over this, and not just because they’ve been sued. They’re also angry because this gives a lot of power back to Amazon.”

  • Macmillan CEO John Sargent Responds To DOJ Lawsuit

    A short while ago we brought you news that Apple and five publishers had been sued by the U.S. Department of Justice. The suit alleges that Apple colluded with Macmillan, Penguin, Hachette, HarperCollins, and Simon & Schuster to raise e-book prices by instituting the agency model for e-book sales.

    While Hachette, HarperCollins, and Simon & Schuster have reportedly agreed to settle out of court, Apple, MacMillan, and Penguin apparently mean to contest the suit. A little while ago, Macmillan CEO John Sargent made a post to Macmillan’s news page explaining his company’s refusal to settle the lawsuit.

    He begins with the assertion that Macmillan is innocent of any wrongdoing in its adoption of the agency model: “Macmillan did not act illegally. Macmillan did not collude.” In fact, he said, the decision to adopt the agency model was not made in concert with other publishing CEOs, but rather Sargent himself came to the decision “on January 22nd, 2010 a little after 4:00 AM, on an exercise bike in my basement.” He also called it “the loneliest decision I have ever made.”

    Sargent also argues that the choice to adopt the agency model was not motivated by a desire for increased profits, but by a desire to preserve competition. The agency model, he says, means that Macmillan makes less money on e-book sales, but that the change was made “to support an open and competitive market for the future.”

    He also called the settlement terms the DOJ was demanding “too onerous.” Though Macmillan would have preferred to settle out of court and avoid the costs “in time, distraction, and expense.” These terms, though, “could have allowed Amazon to recover the monopoly position it had been building before our switch to the agency model.”

    Sargent noted that Hachette, HarperCollins, and Simon & Schuster had decided to settle, and said that it was “their decision to make.” Macmillan, however, would continue to fight in court because “[i]t is hard to settle a lawsuit when you know you have done no wrong.”

    Sargent’s statement closes with a quote from Author’s Guild president Scott Turow, who had the following to say:

    The irony of this bites hard: our government may be on the verge of killing real competition in order to save the appearance of competition. This would be tragic for all of us who value books and the culture they support.

    What do you think? Is the agency model actually better for competition, or should it be abandoned, at the risk of Amazon gaining a monopoly? Let us know in the comments.