E-Book Price Fixing: What, if Anything, did Apple do Wrong?

Apple recently filed an appeal over a federal court ruling that condemned the software giant for colluding with publishers to fix prices of eBooks sold through the iBooks web store. The ruling decrees monitoring of future practices and a breaking of those contracts with publishers that include price point agreements. The company is denying any wrongdoing in the case, steadfastly driving forward on an appeal that several experts have stated will be hard to win. It is also somewhat brow raising that publishers have already agreed to take their medicine and put the nasty business behind them by settling their cases. Apple CEO Tim Cook described the case as "bizarre," and e-mails sent by Steve Jobs were even dredged up during the case proceedings. What, if anything, did Apple do wrong? Read on to hear my ruling in the case...

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First, I have indeed reviewed (third-hand, of course) all the available evidence (on the internet) about this case (or some of it, anyway). And being known (in my own mind) for my lawyerly and scholarly skills, I am going to shock everyone with an angle that many i-Thing pundits and critics may have missed. Consider the main thrust of the government case if you will:

That Apple had (excerpts from Judge Denise Cotes's ruling follow):

"...shown not just by a preponderance of the evidence but through compelling direct and circumstantial evidence that Apple participated in and facilitated a horizontal price-fixing conspiracy."

And, that Apple and publishers, "...conspired with each other to eliminate retail price competition in order to raise e-book prices,"

And, "...that Apple played a central role in facilitating and executing that conspiracy. Without Apple's orchestration of this conspiracy, it would not have succeeded as it did in the spring of 2010."

Most damning... "the evidence showed "a clear portrait of a conscious commitment to cross a line and engage in illegal behavior."

The Court of Nate's Mind:

If one could put judge Denise Cotes on the stand, one would have to ask...

Prosecution: "Have you, maam, ever conspired or intended to read an e-book on anything other than an iPad?"

Defense: "Objection! Badgering the witness and irrelevant"...

Response: "Overuled, the witness will answer the question please". (I happen to be both judge, prosecutor, and defense in this bizarre courtroom of the mind).

The witness breaks down..."No, the horror!"

Yes, the response should be that the horror of trying to read an e-book on anything but an iPad is too terrible to consider. It is said that tests involving monkeys and Kindle devices usually result in terrible angry monkey outbursts and violent destruction of the device (according to unsubstantiated reports.) Put a monkey in a room with an iPad e-book, and he will likely come out smoking a pipe.

The central core of the case is that Apple spoke to publishers about specific prices, and that publishers willing to play ball would get a deal. It would seem (whether Steve sent the damning emails or not) that there may have been a notion running around at Apple that a book purchased and experienced through iBooks should carry a specific price premium for the trouble. Hmmm, that sounds kind of like successful business practice to me. 

One cannot know if these were merely pricing suggestions or specific "fixing." I believe and argue that what was really being discussed was the Apple penchant for setting a benchmark for what is always a notably "Apple-esque" experience. Go to iTunes or iBooks; the whole experience, from the browsing to the ease of shopping, is decidedly Apple. The Apple iPad iBook experience is also decidedly Apple, with fancy page turning animations and a flexible reader app. Doesn't a company have a right to set a premium for that experience, regardless of the price of the book? It is possible that that intention is being misconstrued in this case, though I cannot prove that in any court (not being a lawyer and all). Didn't Steve Jobs do something similar with the iPod and the mp3? (anyone remember 99 cent mp3s?) Was that price fixing, then?

If Apple merely wanted to work closely with publishers that were attracted to that "Apple-esque" framework, then what's wrong with saying, "Hey publisher, you need to make room for that premium in your price model, so we can all stay competitive with monsters like Amazon."? So do I know what the heck I'm babbling about? I don't, really (not being a lawyer and all), but it sounds good anyway.

My Verdict

Apple did nothing wrong. They were merely offsetting the risk and cost of offering a premium reading and browsing experience at a competitive price.

But the publishers are still guilty in my opinion.

I personally hate e-book prices. You pay as much, or more, for an electronic version of something that could get deleted by a simple software glitch (bye-bye book). Of course, with iCloud, you can download it again, but still. In my opinion, the whole publishing industry has been over-pricing books for years, which is why I am starting to boycott e-books altogether (except indie or Smashwords authors below the $6.00 point.) I also get many of my best reads trolling yard sales. (Which is also where I picked up my legal background.) 

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Nate Adcock's picture

Nate Adcock is a system and integration engineer with experience managing and administering a variety of computing environments. He has worked extensively with mobile gadgets of all shapes and sizes for many years. He is also a former military weather forecaster. Nate is a regular contributor for the iphonelife.com and smartphonemag.com blogs and helps manage both websites. Read more from Nate at natestera.tumblr.com or e-mail him at nate@iphonelife.com.