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Apple, DOJ may land e-book settlement within weeks

updated 05:10 pm EDT, Fri March 30, 2012

Leaks have Apple giving up lowest-price claue

Apple may be ready to make important concessions to settle a possible Department of Justice lawsuit over e-book pricing, a pair of sources claimed Friday. Although not concrete, a deal could come "in the next few weeks," the Reuters insiders said. The core of the deal would revolve around Apple dropping its "most favored nation" clause, which bars publishers from offering a lower price at other stores.

The deal might also reinstate the wholesale model, where the store sets the price and publishers are paid a flat rate for any book, regardless of its selling cost.

None of the involved parties would comment.

The DOJ is said to suspect that Apple may have colluded five top publishers in adopting the agency model just ahead of the launch of the iPad and the matching iBookstore. By letting publishers set the prices and having that be the new minimum, Apple gave publishers relief from concerns that Amazon was underpricing Kindle e-books but also forced every other store to raise its prices if it wanted to do business with Apple.

Apple has claimed that Steve Jobs' remarks as quoted by biographer Walter Isaacson have been misinterpreted. It has argued that Apple just wanted to be more competitive and pointed to Amazon having a near-monopoly of e-books at the time. Amazon still leads, but at 65 percent now faces substantial competition from Apple (10 percent) and Barnes & Noble (20 percent).



By Electronista Staff
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Comments

  1. Grendelmon

    Dedicated MacNNer

    Joined: Dec 2007

    +1

    Yeah,

    Apple isn't the underdog anymore. Welcome to the new Microsoft.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    0

    um.....

    The DOJ is said to suspect that Apple may have colluded five top publishers in adopting the agency model just ahead of the launch of the iPad and the matching iBookstore.

    Um, I think they more than suspect, otherwise Apple wouldn't be in negotiations.

    By letting publishers set the prices and having that be the new minimum, Apple gave publishers relief from concerns that Amazon was underpricing Kindle e-books

    That is incorrect. The relief wasn't in what they were getting paid, it was because Amazon was starting to get people to think that book prices should be cheap (say $10) rather than expensive. Even if Amazon was selling at $10, they still might have been giving the publisher $12. Publishers wanted to raise the retail price of books, not so they could make more, but because they didn't want to lose control of pricing the way the music industry did to Apple and the iTMS.

    So, the relief was in allowing the publishers to name their price (something Apple refused to let the music industry to do, amazing how Apple's stance changes based on who's the market leader!). And Amazon was fighting the apple war of "It's less confusing to the consumer if the prices are near fixed!".

    But, of course, since it wasn't Apple making that claim, it was dismissed as just Amazon trying to wield control, where Apple is all about the publisher (no mention of the book buyer anywhere from Apple). With music, it was all about the 'consumer' with Apple. But I'm sure there's some logic in there.

    but also forced every other store to raise its prices if it wanted to do business with Apple.

    Not do business with Apple. Do business with the book publisher. If Random House wanted to do business with Apple, they would either have to cut off Amazon or force Amazon to use Apple's model (or at least just raise their price). Same with B&N. Random House was OK with that, for they wanted the prices raised, and this was a good lever to do that. And Amazon had to change, because they had no choice other than lose book sales.

    The deal might also reinstate the wholesale model, where the store sets the price and publishers are paid a flat rate for any book, regardless of its selling cost.

    They can't force the publishers to use that model if they don't want. Publishers can sell with whatever model they want to sell with. If they don't like the wholesale method, that's up to them to decide that. But they can't join forces with the other people and decide as a whole it can't be done.

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