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Expanded lawsuit: publishers picked Apple to punish Amazon

updated 01:45 am EST, Sat January 21, 2012

Hagens Berman amends Apple suit over collusion

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 amendments to the complaint also turn Walter Isaacson's biography of Steve Jobs against Apple. Jobs had said that Amazon had "screwed it up" by not only picking the wholesale model where it set the price but of selling below cost, often at $10 or less. The late CEO had seen the "desperation" at the publishers and took advantage, not only moving them over to the agency model of publishers setting prices but establishing a most-favored-nation policy where Amazon would have no choice but to agree to publishers' price increases if it wanted the books at all.

Book prices climbed an average of more than 30 percent, and 40 percent for the hottest new books, lead counsel Steve Berman said, in some cases leading to prices higher than paper.

Also collected were quotes from various publishing executives, including Hachette US' chief David Young observing that it would be "game over" if readers got too used to books costing $10. Macmillan CEO John Sargent had argued that it would only be "stable and rational" under the agency model.

To Hagens Berman, the collective evidence showed that publishers were jointly determined to raise Amazon's price "one way or another."

Neither Apple, Amazon, nor publishers had commented on the updated lawsuit.

The lawsuit is partly an instance of sensationalist lawsuits, which often take advantage of issues with popular companies to draw the limelight to themselves. Unlike most such lawsuits, though, both public and private records are believed to exist that would show at least a mutual desire to keep prices high, if not direct teamwork between them.



By Electronista Staff
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Comments

  1. jpellino

    Fresh-Faced Recruit

    Joined: Oct 1999

    +19

    What part...

    ... of free market do these folks not understand? If they're successful, I want to hire them - those meanies at Mercedes Benz need to be taught a lesson too. I'm sick of only being able to buy Chevys and Toyotas at reasonable prices.

  1. boleric

    Fresh-Faced Recruit

    Joined: Apr 2007

    +5

    So if all the oil companies get..

    ...together and agree a 40% increase in prices would be great for them, then that is a "free market"? I must be reading my economics text upside down. I thought free market was something different. Har har. Honestly though this is a more complicated scenario with big boys like amazon and apple pushing their weight around. Probably the only way for the publishers to push back is to band together.

  1. immovableobject

    Fresh-Faced Recruit

    Joined: Jan 2012

    +9

    Deja Vu

    Didn't the record companies force Apple to abandon its iTunes fixed price (under $1.00 per track) model to allow charging 30% more for popular tracks? They did this by giving competitor Amazon preferential terms: the right to sell music without DRM, and at a higher bit rate than iTunes. They didn't mind if Amazon undercut Apple on price either. But when Apple ultimately submitted to record company demands, Amazon's loss-leader prices went up too. What a coincidence!

    Clearly publishers will band together to play venders off against each other to get what they want. Now Amazon is having their business model screwed with, and they don't like it one bit. Now they know how Apple felt when they were victimized.

    I'm not taking sides here. Just pointing out an observation.

  1. airmanchairman

    Fresh-Faced Recruit

    Joined: Dec 2011

    +3

    Go Apple or Game Over?

    The lawsuit quite rightly refers to the effort to keep prices from "racing to the bottom", where a $10 eBook scenario means game over for the publishers.

    Amazon is happy to go along with this initially loss-leading scenario as it will result in their eating every publisher's lunch (their share of any profits, that is) and lead eventually to their extinction, leaving the giant online retailer as last man standing and in control of all price points.

    In the light of the foregoing, Apple's Newsstand, iBooks and iTunes U stand as the only feasible option to stave off Amazon's relentless takeover march.

    Between a rock and a hard place, Scylla and Charybdis, the Devil and the Deep Blue Sea is where the publishers find themselves. Put yourself in their place and make your choice, quickly, now...

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