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Macmillan, Penguin Finally Respond to DoJ eBook Lawsuit

By - Source: PaidContent | B 15 comments

Two publishers accused of eBook price fixing has responded, seemingly throwing Apple under the bus.

Macmillan and Penguin have officially denied any wrongdoings in the recent eBook price fixing fiasco surrounding the original Apple iPad. The two book publishers have filed their separate responses to a lawsuit submitted by the Department of Justice back in April which claim they conspired with Apple to raise the price of eBooks just before the launch of the popular tablet.

"Macmillan did not participate in any illegal conspiracy," Macmillan’s filing states (pdf). "The lack of direct evidence of conspiracy cited in the Government’s Complaint is telling…[it is] necessarily 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."

The company also states that Apple proposed Agency terms on a "take it or leave it" basis. Unlike the wholesale model which allows retailers to set their own prices, the Agency model sees publishers setting their own pricing, forcing retailers to follow. Macmillan claims the decision to move to the Agency model -- to accept Apple's "take it or leave it" proposal -- was made by CEO John Sargent alone.

Penguin offered a longer response, claiming that the company began to consider the agency model on a serious note when Apple proposed it as a method of doing business for the then-proposed iBookstore. Penguin said it actually offered the wholesale/retail distribution agreement to Apple on January 4, 2010. But the iPad company rejected the proposal, and offered up the Agency model as a "take it or leave it" scenario instead.

"[Penguin] admits that it believed that Apple could not have a successful iBookstore without the participation of and supply of books from other publishers, because if the iBookstore’s inventory was limited to only a small percentage of available eBooks, the iBookstore would almost certainly fail," reads Penguin's response (pdf). "Penguin sought assurances from Apple that Apple could deliver the breadth of participation Penguin felt was necessary for a successful eBook store."

As with the reply submitted by Macmillan, Penguin claims that many publisher conversations cited by the Department of Justice suit had nothing to do with the Agency model. Instead, those conversations related to participation in the U.S. and UK eBook joint ventures aNobii and Bookish. However the publisher defends the Agency model, claiming that it doesn't eliminate price competition. The company even notes that the iPad changed the eBook sector by supporting an enhanced format.

"There is more dynamic pricing of eBooks, which has resulted in lower consumer prices on many, many eBook titles, more robust competition at the device level in terms of both the cost and variety of eReading devices, handsome and imaginative enhanced, full-color eBooks, which did not even exist as a category before Apple introduced the iPad, and more vibrant and differentiated marketing of eBooks by Penguin’s agents, all to the benefit of consumers," the filing reads.

Macmillan and Penguin are the only two publishers that have chosen to fight the DoJ's price-fixing lawsuit -- all others have settled out of court. Apple has naturally chosen to fight as well, and was the first to respond to the lawsuit, calling it fundamentally flawed.

"Apple's entry into e-book distribution is classic pro-competitive conduct [that created competition where none existed]," Apple said in its court papers. "For Apple to be subject to hindsight legal attack for a business strategy well-recognized as perfectly proper sends the wrong message to the market. The government's complaint against Apple is fundamentally flawed as a matter of fact and law."

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  • 18 Hide
    g00fysmiley , May 31, 2012 2:46 AM
    so again they are assuring us that paying more for ebooks than a actual physical paperback that they have to print and ship makes the product better... how dumb do they think we are. I hope the DoJ crucifies them and apple while they are at it
  • 13 Hide
    xerroz , May 31, 2012 2:57 AM
    Here's hoping the DoJ doesn't back down. Apple and these publishes need to be smacked down...especially Apple. Price fixing - which is clearly what they've done no matter what they say- is illegal and these companies need to be punished with the FULL extent of the LAW.
  • 11 Hide
    v3nom777 , May 31, 2012 4:00 AM
    SolamarEh? Clearly what they have done? They simply too what they did with the app store and expanded it to the ibooks store. Are you saying I can't sell what I write for what I want? That's what Apple let's them do. Fact is Amazon had the one ring rules them all until Apple stepped in.now we have competition and you want to crush it.and show me what books have cost you more! everyone screams this but has no hard numbers to back it up!With the release of the iBooks publishing kit they have made it easy and cost effective for writers to publish and now you want to kill it? How stupid are you?



    I can get "A Game of Thrones" ebook for $12.99 on itunes, or I can get the paperback for $7 bucks, brand new on Amazon.

    But Thats not more expensive?
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  • 9 Hide
    SmileyTPB1 , May 31, 2012 1:54 AM
    It's very sad that Steve Jobs died so young and that we lost such a visionary in the tech world. But now in hindsight we really get a feel for his controlling, destructive, evil side. He really had a "One Ring to Rule Them All" mentality. Maybe Apple is better off without him.
  • 18 Hide
    g00fysmiley , May 31, 2012 2:46 AM
    so again they are assuring us that paying more for ebooks than a actual physical paperback that they have to print and ship makes the product better... how dumb do they think we are. I hope the DoJ crucifies them and apple while they are at it
  • 13 Hide
    xerroz , May 31, 2012 2:57 AM
    Here's hoping the DoJ doesn't back down. Apple and these publishes need to be smacked down...especially Apple. Price fixing - which is clearly what they've done no matter what they say- is illegal and these companies need to be punished with the FULL extent of the LAW.
  • 11 Hide
    v3nom777 , May 31, 2012 4:00 AM
    SolamarEh? Clearly what they have done? They simply too what they did with the app store and expanded it to the ibooks store. Are you saying I can't sell what I write for what I want? That's what Apple let's them do. Fact is Amazon had the one ring rules them all until Apple stepped in.now we have competition and you want to crush it.and show me what books have cost you more! everyone screams this but has no hard numbers to back it up!With the release of the iBooks publishing kit they have made it easy and cost effective for writers to publish and now you want to kill it? How stupid are you?



    I can get "A Game of Thrones" ebook for $12.99 on itunes, or I can get the paperback for $7 bucks, brand new on Amazon.

    But Thats not more expensive?
  • -8 Hide
    ericburnby , May 31, 2012 4:28 AM
    v3nom777I can get "A Game of Thrones" ebook for $12.99 on itunes, or I can get the paperback for $7 bucks, brand new on Amazon.But Thats not more expensive?

    I checked out amazon. A Game Of Thrones is $7.19 paperback and $10.36 for Kindle.

    So let me get this straight: Amazon is selling a title you want for LESS than iTunes, and you say Apple is being anti-competitive by forcing prices higher? Seems to me you have a choice to buy Amazon and get a lower price.

    Amazon is also selling an e-book (your example, Game of Thrones) for MORE than a paper version, and people say Apple is being ridiculous for doing the same thing?
  • 6 Hide
    v3nom777 , May 31, 2012 4:31 AM
    ericburnbyI checked out amazon. A Game Of Thrones is $7.19 paperback and $10.36 for Kindle.So let me get this straight: Amazon is selling a title you want for LESS than iTunes, and you say Apple is being anti-competitive by forcing prices higher? Seems to me you have a choice to buy Amazon and get a lower price.Amazon is also selling an e-book (your example, Game of Thrones) for MORE than a paper version, and people say Apple is being ridiculous for doing the same thing?


    I'm saying that the price for ebooks should be lower sir. I don't care about Apple or Amazon. There is little to no overhead for ebooks, so they should be cheaper. I used examples that I could find.
  • 0 Hide
    alidan , May 31, 2012 6:09 AM
    xerrozHere's hoping the DoJ doesn't back down. Apple and these publishes need to be smacked down...especially Apple. Price fixing - which is clearly what they've done no matter what they say- is illegal and these companies need to be punished with the FULL extent of the LAW.


    i can argue for price fixing, just not in the case of books.

    lets go tvs, where they have been accused of it.
    it would cut so far into the margins that making a tv wouldn't be viable anymore, and at some point would result in a monopoly.

    i agree that 1080P+ monitors cost to much, but look at the 1080p line up now... look how cheap they are.
  • 9 Hide
    Vladislaus , May 31, 2012 8:01 AM
    ericburnbyI checked out amazon. A Game Of Thrones is $7.19 paperback and $10.36 for Kindle.So let me get this straight: Amazon is selling a title you want for LESS than iTunes, and you say Apple is being anti-competitive by forcing prices higher? Seems to me you have a choice to buy Amazon and get a lower price.Amazon is also selling an e-book (your example, Game of Thrones) for MORE than a paper version, and people say Apple is being ridiculous for doing the same thing?

    This is the point of DoJ lawsuit. The DoJ is saying Apple and book publishers conspired to bring the ebook prices up. Not just in iTunes but to every etailer. This is why the ebook costs more than the paperback on amazon. Before the launch of the iPad ebooks were cheaper.
  • 2 Hide
    ubercake , May 31, 2012 11:31 AM
    VladislausThis is the point of DoJ lawsuit. The DoJ is saying Apple and book publishers conspired to bring the ebook prices up. Not just in iTunes but to every etailer. This is why the ebook costs more than the paperback on amazon. Before the launch of the iPad ebooks were cheaper.

    Totally true. This is the problem.

    Hopefully they'll come down on these beyotches like they did with the RAM companies when they were keeping prices artificially high. Since then, RAM has become cheaper than books on iTunes!
  • 1 Hide
    zaznet , May 31, 2012 12:09 PM
    VladislausThis is why the ebook costs more than the paperback on amazon. Before the launch of the iPad ebooks were cheaper.


    Some people refuse to believe this and want to think this is just the DOJ going after Big Bad Apple because they have a lot of money.

    It is very telling that Apple was prepared to deny publishers access to it's store if they did not accept the agency model. That offer included preferred status for Apple which ensured Apple would always have the lowest price under the agency model. This puts a lot of the blame towards Apple even if there was no conspiracy between all parties.

    Also the price fixing which increased prices across all retailers allowed Apple to level the playing field and not have to compete on price. What Apple really wanted to do was turn the ebook business into the same model as their app store. This allows them considerable profit margin for their investment.
  • 2 Hide
    ubercake , May 31, 2012 12:54 PM
    It was funny the first time I went to buy a kindle book on Amazon and saw the Kindle price higher than the paperback. I actually sent Amazon customer service a message because I though someone had mistakenly entered the wrong price. Why on earth would a book cost more that involves nothing but a transfer of data? There is no longer a manufacturing cost and distribution cost is almost nil yet the price is higher?

    This was just after the Apple news stories regarding their dealings with the publishing houses. This seriously pisses me off. Publishing houses have almost no reason to exist other than offering editing services if needed. It's hard to feel sorry for any industry that adapts to their increased lack of necessity through price fixing rather than finding a new method of effectively serving its customers.

    I would suggest any author should just self-publish if possible. It's easy enough. There's a free publishing guide on Amazon.
  • -5 Hide
    markheber , May 31, 2012 2:00 PM
    Who cares what the price of e-books are!

    Buy the paper books if price is the only thing that brings value. I like e-books and think they are worth a little more money for the convenience they bring to my life. The price of anything has very little to do with the cost of manufacturing. Paper books could be sold at one third of the current cost. It is the fact that companies are in business to make money. "What ever the market can bare" is they phrase that should explain the price of e-books. It is what the product is worth, not how much is costs to make.
  • 2 Hide
    blazorthon , May 31, 2012 9:42 PM
    markheberWho cares what the price of e-books are!Buy the paper books if price is the only thing that brings value. I like e-books and think they are worth a little more money for the convenience they bring to my life. The price of anything has very little to do with the cost of manufacturing. Paper books could be sold at one third of the current cost. It is the fact that companies are in business to make money. "What ever the market can bare" is they phrase that should explain the price of e-books. It is what the product is worth, not how much is costs to make.


    My Windows laptop can do more than a Macbook of several times the price in the same generation of technology, so it's more convenient. Being more convenient doesn't mean I would want to spend even more money than the already overpriced Macbook to get that extra convenience, especially since the OEM Windows laptops tend to be overpriced (just not nearly as badly as Macbooks).

    I would rather pay around what something is worth with a good enough markup to get the companies involved in getting it to me a decent profit. When profit margins are in the upper 90s of percent, well, I don't care how convenient it is, a product should not have that much markup because it is then more of a scam than a proper business venture. eBook's costing more than physical books is a scam and nothing more, especially with the cost of physical books.
  • 0 Hide
    hetneo , June 2, 2012 12:26 AM
    v3nom777I'm saying that the price for ebooks should be lower sir. I don't care about Apple or Amazon. There is little to no overhead for ebooks, so they should be cheaper. I used examples that I could find.

    Is that listed or discounted price for paperback? Is that Amazon or some other retailer selling through amazon? http://www.amazon.com/Game-Thrones-Song-Fire-Book/dp/0553386794/ref=sr_1_1?ie=UTF8&qid=1338596067&sr=8-1 just saying. Amazon has it listed at $17, but discounted at $10.36, some guy Jackster27 sells it for $7.19+$3.99 shipping, there are some listed at $7.22 but are editions from 2002. You think you can sell for $17 book that was collecting dust for 10 years in some warehouse? Kindle version is $10.54, no discount. Prices at Amazon are much diff than what you think. Don't mix amazon and retailers that sell through amazon.
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