According to the Vice President for Kindle content at Amazon, Russell Grandinetti, publishers gave retailers an ultimatum on allowing them to set the prices of e-books courtesy their deals with Apple, or settle for selling the digital versions of hard cover editions at a much later date. This ultimatum was issued a few months after publishers signed up for the agency model approach proposed by Apple in an attempt to extend its monopoly over the e-reader market as well.
Grandinetti gave the aforementioned statement as a testimony on the third day of an antitrust trial taking place in a federal court in Manhattan. The Department of Justice filed an antitrust lawsuit against Apple and five major publishers in April last year on grounds that this so called partnership was conspiring to fix prices of e-books in the market. The publishers who were accused in the trial settled for a sum that totaled $164 million. The settlement is also being cited in the trial. Apple, which became the Kindle’s rival with the launch of the iPad in 2010, refused to settle on the matter.
Amazon, which started operations pertaining to its popular Kindle e-reader in 2007, controlled almost 90% of the markets within two years of its launch. Amazon was also pricing new and bestselling e-books at $9.99, which was at times well below the retail price of the physical book. Apple’s model gives the publisher better opportunities to increase the price of books, allowing them to increase prices to $14.99 or even more. Grandinetti further went on to say that if Amazon were given the chance of further reducing the costs of e-books, it would go ahead with the same.
Amazon’s involvement in the lawsuit comes courtesy of the DoJ, which is trying to portray the popular retailer as an alleged victim in this entire antitrust saga. The DoJ claims Amazon played host to a sea of disapproval from publishers, who were against Amazon’s policy of offering low prices for popular e-books. Grandinetti, at the trial, narrated an incident that happened between him and chief executive at the Macmillan publishing, Jon Sargent, claiming that he was offered a choice between moving to the Apple-adopted agency model or settle for a delay between the hardcover and the e-book version, a period that could almost extend to a period of seven months.
June 9, 2013 at 3:57 am
I have a new theory. Could the ITC decision awarding Samsung a win over Apple on a standards essential patent be tied to this case? Could the Govt had urged the ITC to make such a poor decision in order to give themselves a bargaining chip with Apple should the case take a turn in Apple’s favorite??
This could explain the delay in making the decision. Delay it as long as possible so that the decision comes right in the middle of trial.