The United States Department of Justice (DoJ), which filed an antitrust lawsuit against Apple and five major publishers for alleged price fixing of electronic books sold on the iBookstore, is painfully lost in the intricacies of the so-called agency model exercised on the iBookstore, says Apple’s Eddy Cue.
Unlike Amazon which gets to dictate prices, often at the expense of publishers, Apple lets publishers set their own price tags on the iTunes store, opting instead to take its standard 30 percent cut.
Somehow, the government alleges such a practice, which has been widely accepted on iTunes since the dawn of time, is the product of a conspiracy.
Now, Apple had to dispatch its online services boss to set the record straight, saying the government doesn’t have a clue…
As you know, te government sued book publishers Hachette SA, HarperCollins, Macmillan, Penguin and Simon & Schuster in New York district court, claiming collusion over e-book pricing.
According to the Wall Street Journal story from yesterday, Eddy Cue, Apple’s vice president in charge of iCloud, told author Gordon Crovitz:
I don’t think you understand. We can’t treat newspapers or magazines any differently than we treat FarmVille.
Cue, who became Apple’s new Senior Vice President of Internet Software and Services last September, was referring to Apple’s standard 30 percent commission on content sales through iTunes, which covers mobile and desktop applications, ringtones, music, movies, television shows and electronic books.
The 30 percent cut has been Apple’s standard business practice for years so both Apple and publisher Macmillan decided to fight DoJ’s allegations in courtroom.
The author observes that, to Cue, “there was no difference between a newspaper and an online game”.
It should be noted that the author made his point in the Wall Street Journal newspaper, itself owned by News Corp, parent company of HarperCollins, one of the publishers the government named in its case. Harper and two other publishers settled with DoJ in order to dodge costly and lengthy litigation and avoid risking potentially high damages.
What’s your take, are they for real? Does the government lack basic knowledge on the agency model, which has been around for ages and is standard business practice for iTunes sales?