Apple contended at the trial that it had done nothing wrong by entering into agreements with the publishers that would guarantee it a most favored nation status by declaring that Apple could match the lowest price offered by any other digital vendor (read Amazon). The publishers went with an agency model, that allowed them to set the price of the ebooks and pay the retailers a flat 30% commission.
The fear of Amazon's $9.99 pricing under the wholesale model was so great that even though authors would take a serious financial hit under the agency model, they supported it with a statement on the website of the Author's Guild expressing their belief that the publishers had "no real choice."
In records cited by the government, Macmillan concluded that “the royalty payment for each sale of an e-book with the corresponding hardcover list price of $ 26.99 fell from $4.04 under wholesale to $2.28 under agency,” for example. And for a $14.99 trade paperback, “the decline was from $2.25 to $1.75.”So, when the iPad was introduced in January, 2010, with agency agreements from all but Random House, Amazon was forced to agree to the same terms, resulting in the end of the promised $9.99 cap on every New York Times Bestseller-listed book. And increased prices for the consumer. And lowered earnings for the authors.
Kindle Locations 646-648
When the five publishing houses settled with the DOJ they agreed to refund $175 million to customers in the form of credits, some as high as $1.25 per book. And because they are credits to the customers' accounts and not cash refunds, the publishers will probably get most of that money back as consumers use them to buy more books. Those of us affected might see credits as early as this summer.
Judge Cote acknowledged the arguments of the publishers and Apple that Amazon's pricing policy could serve to restrict competition in the ebook marketplace by virtue of its 90% market share. The low prices could cause sales of hardback books to decline, hurting the entire industry, both retail and publishing.
But protecting business interests, such as brick-and-mortar bookstores, e-book retailers, or existing publishing houses, she explained, is not the type of harm the Sherman Antitrust Act is designed to prevent.The case is now in the hands of Judge Cote, and her decision is expected later this year.
“The birth of a new industry is always unsettling,” she explained. “It is not the place of the Court to protect bookstores and other stakeholders from the vicissitudes of a competitive market.”
Kindle Locations 767-771
In breaking news, instead of taking the months that we thought, Judge Cote issued her ruling today, and Apple lost.
A federal judge on Wednesday found that Apple violated antitrust law in helping raise the retail price of e-books, saying the company “played a central role in facilitating and executing” a conspiracy with five big publishers.From the Judge's ruling (a pdf file):
Apple and the Publisher Defendants shared one overarching interest -- that there be no price competition at the retail level. Apple did not want to compete with Amazon (or any other e-book retailer) on price; and the Publisher Defendants wanted to end Amazon’s $9.99 pricing and increase significantly the prevailing price point for e-books. With a full appreciation of each other’s interests, Apple and the Publisher Defendants agreed to work together to eliminate retail price competition in the e-book market and raise the price of e-books above $9.99.What it means. It means more legal action as anti-trust actions rarely end with the first round. After the hearing on damages and relief, Apple will likely appeal the ruling. According to the New York Times:
Based on the trial record, and for the reasons stated herein, this Court finds by a preponderance of the evidence that Apple conspired to restrain trade in violation of Section 1 of the Sherman Act and relevant state statutes to the extent those laws are congruent with Section 1. A scheduling order will follow regarding the Plaintiffs’ request for injunctive relief and damages.
Keith N. Hylton, a professor at Boston University’s School of Law, said that Apple should have some good arguments to back its appeal, but it will be a difficult fight. “The new problem Apple faces is that the judge’s massive opinion relies so heavily on facts and inferences that an appellate court is unlikely to have room to modify the decision substantially,” Mr. Hylton said.This is a very big deal, for if Apple loses its appeal, or fails to file one, the DOJ could be allowed to monitor its business practices. And because it is the DOJ, it is likely that they could look over more than just Apple's iBookstore. Mr Albanese, in his book has suggested that there would be nothing to stop the Department of Justice from examining the business practices that Apple employs in its iTunes and App Store as well as its iBookstore.
More news from the digital world of ebooks is below the divider doodle.
- According to a LexisNexis® press release, the company is joining with OverDrive® to provide digital content to law libraries.
Give your lawyers and staff around-the-clock access to the library on all major devices. Combine the benefits of a physical book with online functionality — understand the big picture when investigating an unfamiliar topic, and streamline research with intelligent links to online research. Plus, researchers can carry several books on a single device without the added bulk.
- Cory Doctorow has weighed in on the SiDiM that the German Fraunhofer Institute recently released in his Publishers Weekly column, Lost in Translation. This new DRM would act as a watermark by changing punctuation or using synonyms so that each digital copy of a book sold is slightly different than any other. It was included in this diary. After explaining how very easy it would be to hack this type of watermark (compare the texts of two copies using the Unix command "diff" find the changes and modify them), Doctorow goes on to explain how useless SiDiM would be as a protection mechanism.
The idea that copyright owners might convince a judge, or, worse, a jury that because they found a copy of an e-book on the Pirate Bay originally sold to me they can then hold me responsible or civilly liable is almost certainly wrong, as a matter of law. At the very least, it’s a long shot and a stupid legal bet. After all, it’s not illegal to lose your computer. It’s not illegal to have it stolen or hacked. It’s not illegal to throw away your computer or your hard drive. In many places, it’s not illegal to give away your e-books, or to loan them. In some places, it’s not illegal to sell your e-books.
- In another innovation, Amazon was granted a patent last week to allow it to add supplemental material to a reader's copy of an ebook that will apparently be tailored to the reader's preferences. The patent, according to Wired,
describes a way to enhance Kindle e-books by tacking on supplemental material provided by publishers or reputable sources. The e-books would be personalized by adding additional content within the specific interests of individual readers, or reader types. So, you could be reading A Game of Thrones and an additional story line or illustration (for example, a map) could be accessed from within the book, sort of like a DVD extra.It seems kind of creepy to me that Amazon would be checking on my social media "friends" in order to tailor its product to what it perceives my preferences to be. And by social media, I would imagine Goodreads, acquired by Amazon a few months back, would be considered, by them, to be social media. But the patent was just granted and Amazon has not announced any plans to implement this ebook enhancement.
The additional material could come from the publisher, or from “trusted contributors.” For example, a book that has been made into a TV series or movie could have additional story lines from those mediums, and this would allow the rights-holder to add them to the book. And while fan fiction writers would have a field day adding additional story to their favorite books, readers will only see suggestions about that additional content if they follow the creator of the extra material — either as an Amazon author or contributor, via a friend relationship on social media, or if the reader has expressed interest in similar content created by similar contributors.
- I'm sure that Amazon's continuing innovations have nothing to do with the Barnes & Noble announcement last month that it is discontinuing the color Nook. It had a lot more to do with the fact that the bookseller lost $275 million in the last fiscal year in its Nook business according to Forbes. Forbes also reported last night that the Barnes & Noble CEO, William Lynch, has resigned.
Officially, Barnes & Noble offered no explanation for Lynch’s departure. It’s not difficult to read between the lines, though. Lynch, a one-time Palm executive, was unable to push Barnes & Noble into the tablet business, a market heavily dominated by Apple's iPad, and to a far lesser extent, Amazon‘s Kindle. That’s despite Lynch’s best efforts.
- And last but not least, here are a few very cheap DRM-free books for Sci/Fi fans.
Humble eBook Bundle II is offering these books as part of a bundle for which you name your own price for the next seven days only:
Little Brother by Cory Doctorow
Boneshaker by Cherie Priest
Spin by Robert Charles Wilson
Shards of Honor by Lois McMaster Bujold
Scroll down to the bottom of Humble Bundle's page to find the average price paid. If you pay more than that for these four, you also get:
The Last Unicorn by Peter S. Beagle and
Just a Geek by Will Wheaton
Even better, you get to decide how much of your donation goes to the author, to a charity and/or to Humble Bundle.
Story Bundle is also offering DRM-free Sci/Fi for the next thirteen days by independent authors:
Hopscotch by Kevin J. Anderson
In Hero Years...I'm Dead by Michael A. Stackpole
Santiago by Mike Resnick
The Disappeared by Kristine Kathryn Rusch
On My Way to Paradise by David Farland
Swarm by B. V. Larson
If you are willing to pay more than $10 you will also receive
High-Opp by Frank Herbert and
The Stars in Shroud by Gregory Benford
Readers & Book Lovers Series Schedule
|DAY||TIME (EST/EDT)||Series Name||Editor(s)|
|SUN||6:00 PM||Young Reader's Pavilion||The Book Bear|
|Sun||2:00 PM||What's on Your E-Reader?||Caedy|
|Sun||9:30 PM||SciFi/Fantasy Book Club||quarkstomper|
|Bi-Monthly Sun||Midnight||Reading Ramblings||don mikulecky|
|2:00 PM||Political Books||Susan from 29|
|Mon||8:00 PM||Monday Murder Mystery||michelewln, Susan from 29|
|Mon||11:00 PM||My Favorite Books/Authors||edrie, MichiganChet|
|TUES||5:00 PM||Indigo Kalliope: Poems from the Left||bigjacbigjacbigjac|
|alternate Tuesdays||8:00 AM||LGBT Literature||Texdude50, Dave in Northridge|
|alternate Tuesdays||8:00 AM||All Things Bookstore||Dave in Northridge|
|Tue||8:00 PM||Contemporary Fiction Views||bookgirl|
|Wed||2:00 PM||e-books||Susan from 29|
|Wed||8:00 PM||Bookflurries Bookchat||cfk|
|THU||8:00 PM||Write On!||SensibleShoes|
|Thu (first each month)||11:00 AM||Monthly Bookpost||AdmiralNaismith|
|Thu (third each month - on hiatus)||11:00 PM||Audiobooks Club||SoCaliana|
|FRI||8:00 AM||Books That Changed My Life||Diana in NoVa|
|Fri||8:00 PM||Books Go Boom!||Brecht; first one each month by ArkDem14|
|SAT (fourth each month)||11:00 AM||Windy City Bookworm||Chitown Kev|
|Sat||11:00 AM||You Can't Read That! Paul's Book Reviews||pwoodford|
|Sat||9:00 PM||Books So Bad They're Good||Ellid|