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MacRumors
Jun 12, 2013, 09:34 PM
http://images.macrumors.com/im/macrumorsthreadlogo.gif (http://www.macrumors.com/2013/06/12/steve-jobs-email-in-e-book-case-provides-insight-into-thinking-process/)


http://images.macrumors.com/article-new/2012/05/ibooks_icon.jpgThus far in the ongoing e-book price fixing case (http://www.macrumors.com/2013/06/03/justice-department-presents-opening-arguments-against-apple-in-e-book-price-fixing-trial/), Apple has maintained that it was indifferent to what business model book publishers adopted with Amazon. However, an email from Steve Jobs to Eddy Cue submitted today by the U.S. Department of Justice appeared to undermine Apple's argument, according (http://tech.fortune.cnn.com/2013/06/12/apple-ebook-jobs-smoking-gun/) to Fortune:
"I can live with this as long as they move Amazon to the agent model too for new releases for the first year. If not, I'm not sure we can be competitive ..."Apple's chief counsel quickly noted that the email was never sent, and AllThingsD now reports (http://allthingsd.com/20130612/doj-misfires-on-jobs-email-in-apple-e-book-case-it-was-a-discarded-draft/) that Jobs later sent a longer, more detailed email with his complete thoughts on the negotiations with book publishers.
"I can live with this, as long as they also agree to the other thing you told me you can get: The retail price they will set for any book will be the LOWER of the applicable "iTunes" price below OR the lowest wholesale price they offer the book at to anyone else, with our wholesale price being 70% of such price. For example, normally our retail price for a $26 book will be $12.99 and we will pay 70% of that, or $9.10. However, if they offer the same book to Amazon for a wholesale price of, say $12.50, then our retail price for the same book shall be set at $12.50 and we will pay 70% of that price for the book."The emails provide some insight into Jobs' thought process during the negotiations. The draft and final versions of the email show that Jobs initially appeared to have strong feelings on how Amazon's pricing would have to be affected, but then according to the emails' timestamps he reconsidered his position within two hours to offer a different angle and concern about the negotiations.

The testimony portion of the case is now in the second week, with Cue set to take the stand tomorrow.

Article Link: Steve Jobs Email in E-Book Case Provides Insight Into Thinking Process (http://www.macrumors.com/2013/06/12/steve-jobs-email-in-e-book-case-provides-insight-into-thinking-process/)



iMikeT
Jun 12, 2013, 09:43 PM
Fascinating to see this and seeing how Jobs thinks and is involved in negotiations.

komodrone
Jun 12, 2013, 10:33 PM
Steve would have never let...uh n/m

donutbagel
Jun 12, 2013, 10:35 PM
Too bad they didn't get more serious about this. iBooks (not the laptop) are too much of a pain to use.

cuda12
Jun 12, 2013, 10:47 PM
Wonder how the government got that email :/

appleguy123
Jun 12, 2013, 11:07 PM
Wonder how the government got that email :/

Probably from a subpoena, which is perfectly legal.

Zachari
Jun 12, 2013, 11:08 PM
Wonder how the government got that email :/

NSA + Verizon (most likely)

lolkthxbai
Jun 13, 2013, 12:08 AM
NSA + Verizon (most likely)

E-book pricing is not a threat to national security...

Zachari
Jun 13, 2013, 01:14 AM
E-book pricing is not a threat to national security...

It's called "a joke".

ufwa
Jun 13, 2013, 01:23 AM
Something doesn't look right in this. Unless what is be shown by allthingsD isn't what's actually shown in court or the pictures got mixed up in posting. But from their article it doesn't look like it as they elaborate on the content.

the DOJ email has a received time stamp 1/14/2010 @ 18:23:09

Apple claims what the DOJ submitted it was a "draft" entering into evidence the "final" email.

Apple's email has a received time stamp of 1/14/2010 @ 18:21:39

Why would an email that's a "draft" have a received time stamp?

Also the time stamp of the "draft" occurs about 2 minutes AFTER than the "final". Shouldn't the "draft" have an earlier time stamp? Apple's contention is that Steve later sent a more complete email.

vmachiel
Jun 13, 2013, 02:27 AM
Spoiler alert: the case closes with a sum of money being paid. Not much will change

macUser2007
Jun 13, 2013, 02:36 AM
Spoiler alert: the case closes with a sum of money being paid. Not much will change

Unfortunately, this is the most likely outcome.

Apple really screwed the ebook market for consumers, as well as for small retailers, many of whom went out of business.

Even if Apple disgorges all of their ebook profits, they'll still be ahead, as they used ebooks to sell hardware.

The bankrupt small retailers and consumers will get cold comfort.

AppleMark
Jun 13, 2013, 03:11 AM
Genius....

Laird Knox
Jun 13, 2013, 04:13 AM
Unfortunately, this is the most likely outcome.

Apple really screwed the ebook market for consumers, as well as for small retailers, many of whom went out of business.

Even if Apple disgorges all of their ebook profits, they'll still be ahead, as they used ebooks to sell hardware.

The bankrupt small retailers and consumers will get cold comfort.

:confused:

The DoJ says that Apple caused an increase in the price a consumer pays and your assertion is that this forced out the smaller vendors? It didn't have anything to do with Amazon undercutting the industry rates? Oh Kay

mrxak
Jun 13, 2013, 04:17 AM
Unfortunately, this is the most likely outcome.

Apple really screwed the ebook market for consumers, as well as for small retailers, many of whom went out of business.

Even if Apple disgorges all of their ebook profits, they'll still be ahead, as they used ebooks to sell hardware.

The bankrupt small retailers and consumers will get cold comfort.

Laughable assertion. Amazon drove the small retailers out of business, not Apple. Apple just entered the market for the first time having a model that could compete with Amazon's juggernaut.

Before Apple entered the market, there is no competition. After Apple entered the market, there is competition. For some reason the DoJ has a problem with this???

Mactendo
Jun 13, 2013, 04:22 AM
wonder how the government got that email :/

Prism.

numlock
Jun 13, 2013, 05:12 AM
Laughable assertion. Amazon drove the small retailers out of business, not Apple. Apple just entered the market for the first time having a model that could compete with Amazon's juggernaut.

Before Apple entered the market, there is no competition. After Apple entered the market, there is competition. For some reason the DoJ has a problem with this???

what is the basis for your assertion that before apple entered there was no competition and after the agency model was enforced there was competition?

btw i dont know you can read the emails and exchanges listed and think of the word competition

samcraig
Jun 13, 2013, 06:42 AM
Before Apple entered the market, there is no competition. After Apple entered the market, there is competition. For some reason the DoJ has a problem with this???

You really don't understand what this case is about, do you? If you do - maybe you can explain why, if true, the DOJ should not have a problem with collusion?

Then you could tell me why the major publishers all immediately settled out of court.

Things like that...

mrgraff
Jun 13, 2013, 07:33 AM
I find it interesting that both the draft and final email are available. Usually when I write an email, it gets saved as a draft as I write it, but then it becomes the final email as soon as I send it. Never have I created a draft and then created a new email based on the draft, sent it and then also held on to the draft.

JUiCEJamie
Jun 13, 2013, 07:45 AM
Wonder how the government got that email :/

Maybe from Eddy Cue? (He's not dead).

samcraig
Jun 13, 2013, 08:05 AM
I find it interesting that both the draft and final email are available. Usually when I write an email, it gets saved as a draft as I write it, but then it becomes the final email as soon as I send it. Never have I created a draft and then created a new email based on the draft, sent it and then also held on to the draft.

New feature in iO7 ? ;)

Bubba Satori
Jun 13, 2013, 08:31 AM
NSA + Verizon (most likely)

E-book pricing is not a threat to national security...

It's called "a joke".

Is there an app that explains humor?

mcfmullen
Jun 13, 2013, 08:59 AM
Prism.

Not admissible in court. Yes, the gov't spies on you. No, it isn't legal. Evidence gathered isn't admissible in court. They'd still need a warrant to gather the same evidence legally first then use it against you. Keep your conspiracy theories out of here.

Boomchukalaka
Jun 13, 2013, 09:46 AM
I find it interesting that both the draft and final email are available. Usually when I write an email, it gets saved as a draft as I write it, but then it becomes the final email as soon as I send it. Never have I created a draft and then created a new email based on the draft, sent it and then also held on to the draft.

Might the draft have been on a server?[COLOR="#808080"]

Mactendo
Jun 13, 2013, 10:08 AM
Not admissible in court. Yes, the gov't spies on you. No, it isn't legal. Evidence gathered isn't admissible in court. They'd still need a warrant to gather the same evidence legally first then use it against you. Keep your conspiracy theories out of here.

wtf. It was a joke, but ok. What 'conspiracy theories', PRISM is a reality. Keep your orders of what to do out of there.

autrefois
Jun 13, 2013, 10:10 AM
Are unsent email drafts normally admissible in court? Especially in this case, to try to prove Apple's intentions or business plans? Doesn't quite seem fair.

It's almost like a teacher assigning a grade on a student's rough draft of a paper before they finished it. After you type something sometimes you realize it isn't what you really meant, or your thinking evolves and you realize what you originally thought wasn't developed or was plain wrong in retrospect.

So I'm not sure about legality, but if the actual email he sent two hours laters doesn't say this, I think that's what you'd have to go by if you're being fair — unless there were some other evidence indicating he continued to think this or thought so all along.

I find it interesting that both the draft and final email are available. Usually when I write an email, it gets saved as a draft as I write it, but then it becomes the final email as soon as I send it. Never have I created a draft and then created a new email based on the draft, sent it and then also held on to the draft.

This sometimes happens to me and I haven't quite figured out why — sometimes a draft will be kept of the email even after I've sent it. I'd think it'd either do it all the time or not at all, and have never taken the time to look into it why this happens sometimes (is it when I start it on one device and finish on another? etc.). It also could have been deliberate — on a rare occasion I will write a draft of an email and decide not to send it, or to start it over. I'm sure I'm not alone in this, so Jobs may have had one thought, got interrupted, then started a new email later.

EDIT: I guess it's also possible that even when the draft is "deleted" from our accounts, there is still sometimes a digital trail of it if it was ever saved to the server, backed up on Time Machine, etc.

mabhatter
Jun 13, 2013, 11:21 AM
E-book pricing is not a threat to national security...

There's no stipulation on the Patriot Act that the information collected be ONLY for national security. Once collected it can be shared all over.

itr81
Jun 13, 2013, 12:12 PM
Unfortunately, this is the most likely outcome.

Apple really screwed the ebook market for consumers, as well as for small retailers, many of whom went out of business.

Even if Apple disgorges all of their ebook profits, they'll still be ahead, as they used ebooks to sell hardware.

The bankrupt small retailers and consumers will get cold comfort.

Umm you do realize most smaller retailers and some mid size business went out business due to Amazon because like Walmart they will sell things at a loss to get folks in the door where your typical small business owner can not. I use own small business until Walmart decided it wanted part of the tee shirt market and sold at cost or below. Then Target joined in so did other stores before long you can bleed only so much before you have to shut down. During that time I saw a many small businesses shut down due to online shopping and Wal mart. So if anything amazon doing more harm then apple could have ever done. Amazon will eventually shut down most Barnes and nobles and books a million and etc..

----------

Laughable assertion. Amazon drove the small retailers out of business, not Apple. Apple just entered the market for the first time having a model that could compete with Amazon's juggernaut.

Before Apple entered the market, there is no competition. After Apple entered the market, there is competition. For some reason the DoJ has a problem with this???

Too me if apple can not compete then amazon is basically forming a monopoly on online ebooks if that's the case then apple should counter sue DOJ and Amazon.

wkadamsjr
Jun 13, 2013, 12:17 PM
I find it interesting that both the draft and final email are available. Usually when I write an email, it gets saved as a draft as I write it, but then it becomes the final email as soon as I send it. Never have I created a draft and then created a new email based on the draft, sent it and then also held on to the draft.

Damn that Time Machine application… :D

Bubba Satori
Jun 13, 2013, 12:19 PM
There's no stipulation on the Patriot Act that the information collected be ONLY for national security. Once collected it can be shared all over.

Somebody understands the problem.

itr81
Jun 13, 2013, 12:19 PM
You really don't understand what this case is about, do you? If you do - maybe you can explain why, if true, the DOJ should not have a problem with collusion?

Then you could tell me why the major publishers all immediately settled out of court.

Things like that...

Umm most are hurting for money as is. Most don't want to endure 1-2 yr court battle that they may or may not win. Also most people won't fight the gov they just give in. It happens ever day when people get speeding tickets but they just pay the fine instead of fighting it in court. So paying a fine doesn't mean they are guilty I've had to pay fine on my friends car due to his tag being out of date. Is that fair? Not when I was keeping my friend from getting a DUI and police officer and judge both knew this.

sputnikv
Jun 13, 2013, 01:10 PM
It's called "a joke".

neither am i but they certainly have records of my activity

lolkthxbai
Jun 13, 2013, 01:21 PM
There's no stipulation on the Patriot Act that the information collected be ONLY for national security. Once collected it can be shared all over.
That's nice to know. I was just pointing out the obvious.

IJ Reilly
Jun 13, 2013, 02:39 PM
Wonder how the government got that email :/

The normal discovery process.

----------

Are unsent email drafts normally admissible in court? Especially in this case, to try to prove Apple's intentions or business plans? Doesn't quite seem fair.

Of course they are. It's no different than notes a person might have written to a file for their own purposes. Whether they were sent to someone else or not has no bearing on their admissibility. Apple can however argue that Steve's thoughts on the matter changed, and we can be sure they will do just that.

macUser2007
Jun 13, 2013, 10:41 PM
:confused:

The DoJ says that Apple caused an increase in the price a consumer pays and your assertion is that this forced out the smaller vendors? It didn't have anything to do with Amazon undercutting the industry rates? Oh Kay

Smaller vendors did not compete for consumers against Amazon's (mostly best-seller list) loss leaders. Smaller vendors competed by offering price differentiation for titles which were less popular.

Agency meant that the split went from 50/50 to a set 70/30 for the publishers (hurting low volume retailers).

Fixed pricing removed any incentive for consumers to shop around, basically delivering the second punch and ensuring that indie retailers like BooksOnBoard went out of business.

Apple knew what will happen, but didn't want to compete on price, so it colluded with the publishers to fix prices and sell single-platform DRM-ed ebooks to those too stupid to know what hit them.

Oh Key, get it now?

thelatinist
Jun 14, 2013, 04:07 PM
So if I understand this correctly, Apple was using its hardware and software position to require ebook publishers to accept a payment of just 70% of the lowest wholesale price it offered any other retailer, such that any other dealer who priced their book at the iPhone price would be at best breaking even while Apple would be guaranteed a profit of 30%?

jaymzuk
Jun 15, 2013, 11:37 AM
So if I understand this correctly, Apple was using its hardware and software position to require ebook publishers to accept a payment of just 70% of the lowest wholesale price it offered any other retailer, such that any other dealer who priced their book at the iPhone price would be at best breaking even while Apple would be guaranteed a profit of 30%?

That's a very good summary.

The core issue at hand was that Apple and publishers colluded to increase prices and screw Amazon.

And while publishers might have been bitching and moaning about the wholesale price that Amazon were willing to pay, the publishers were the ones signing the agreements with Amazon in the first place.

TMay
Jun 15, 2013, 04:26 PM
Smaller vendors did not compete for consumers against Amazon's (mostly best-seller list) loss leaders. Smaller vendors competed by offering price differentiation for titles which were less popular.

Agency meant that the split went from 50/50 to a set 70/30 for the publishers (hurting low volume retailers).

Fixed pricing removed any incentive for consumers to shop around, basically delivering the second punch and ensuring that indie retailers like BooksOnBoard went out of business.

Apple knew what will happen, but didn't want to compete on price, so it colluded with the publishers to fix prices and sell single-platform DRM-ed ebooks to those too stupid to know what hit them.

Oh Key, get it now?

This has nothing to do with the Agency model, nothing at all.

I read the article. It has everything to do with size (undercapitalized to begin with) and BooksOnBoard's business model. Whatever model, BooksOnBoard wasn't attractive to the publishers, and it took too long to get the publishers back on board. That was the issue.

Nothing at all to do with Apple, except BooksOnBoard didn't have 500 million accounts like Apple has, no a device, and no infrastructure of its own. That is the issue.

Companies die all the time because they can't compete. It was their time to die.

----------

That's a very good summary.

The core issue at hand was that Apple and publishers colluded to increase prices and screw Amazon.

And while publishers might have been bitching and moaning about the wholesale price that Amazon were willing to pay, the publishers were the ones signing the agreements with Amazon in the first place.

Apple signed an agreement that a reduction of retail price to any distributor had to simultaneously be given to Apple. If Amazon sells it for $10, then Apple sells it for $10, and for that matter, I'm assuming B&N could sell it for $10 as well. This is a level playing field for pricing controlled by the Publishers.

The issue at hand is that Amazon was using its position and negative pricing to capture market share, and devaluing the works of many authors and their publishers. Predatory pricing to support the Kindle as well as an increase in market share, is not a sustainable business model for the ebook industry.

macUser2007
Jun 15, 2013, 07:04 PM
This has nothing to do with the Agency model, nothing at all....

Why do you bother to comment if you do not understand (or want to understand) the issue?

So, price-fixing across the board does not impact independent ebook sellers? Why would anyone bother shopping outside of their hardware platform provider, if the price is set to be the same everywhere?

And no, it's not just BooksOnBoard, it's many others small ebook sellers.

For example, here is a snippet about BeamItDown, the makers of iFlowReader, which also shut down because of the collusion between Apple and the publishers:

The End of the Road for BeamItDown and iFlowReader App (http://gizmodo.com/5800886/the-end-of-the-road-for-beamitdown-and-iflowreader-app)


The crux of the matter is that Apple is now requiring us, as well as all other ebook sellers, to give them 30% of the selling price of any ebook that we sell from our iOS app. Unfortunately, because of the "agency model" that has been adopted by the largest publishers, our gross margin on ebooks after paying the wholesaler is less than 30%, which means that we would have to take a loss on all ebooks sold. This is not a sustainable business model.

At the end, Apple was responsible for killing competition in a whole growing segment of the industry, as well as killing a bunch of small ebook vendors, and for across the board price increases for consumers.

I can only hope that they make them disgorge all profits plus multiple times profits in damages (since Apple didn't care about ebooks (Jobs famously said nobody reads anymore), but wanted to sell high-margin iPads).

TMay
Jun 15, 2013, 08:59 PM
Why do you bother to comment if you do not understand (or want to understand) the issue?

So, price-fixing across the board does not impact independent ebook sellers? Why would anyone bother shopping outside of their hardware platform provider, if the price is set to be the same everywhere?

And no, it's not just BooksOnBoard, it's many others small ebook sellers.

For example, here is a snippet about BeamItDown, the makers of iFlowReader, which also shut down because of the collusion between Apple and the publishers:

The End of the Road for BeamItDown and iFlowReader App (http://gizmodo.com/5800886/the-end-of-the-road-for-beamitdown-and-iflowreader-app)




At the end, Apple was responsible for killing competition in a whole growing segment of the industry, as well as killing a bunch of small ebook vendors, and for across the board price increases for consumers.

I can only hope that they make them disgorge all profits plus multiple times profits in damages (since Apple didn't care about ebooks (Jobs famously said nobody reads anymore), but wanted to sell high-margin iPads).

Businesses die all the time from competition. Beamitdown died because they had a weak business model as an ebook distributor. Apple's successful negotiations with publishers made Apple into a distributor. Because of that, apps that used in app sales were then required to provide the same 70/30 split to Apple.

This impacted Amazon's and Barnes and Noble's reader apps no different than Beamitdown's reader app. Getting around the in app sales split required a separate web sales presence, not an issue for Amazon or Barnes and Nobel, but it would have been difficult for Beamitdown to get any kind of web presence to compete with Apple, Amazon or Barnes and Nobel.

As for Beamitdown's issue with Publishers and the conversion from Wholesale to the Agency Model; I can't see that it would have made any difference. Most iOS users would naturally gravitate to the iTunes/ iBookstore or secondarily Amazon's or Barnes and Noble bookstores before even considering an open search for lowest pricing.

macUser2007
Jun 15, 2013, 09:46 PM
Businesses die all the time from competition....

Businesses and competition also die as a result of the forming of cartels and price-fixing.

To avoid competing in an open market (because of the way its iTunes Sore is set up), Apple did go to the publishers and gave them a better split than they were getting before, in exchange for an agreement for industry-wide price-fixing.

...Most iOS users would naturally gravitate to the iTunes/ iBookstore or secondarily Amazon's or Barnes and Noble bookstores before even considering an open search for lowest pricing.

And this is the whole point:

The price-fixing engineered by Apple and the publishers removed ANY incentive for consumers to shop around, locking them instead into whatever hardware/software "walled garden" they had entered when purchasing their device. Apple looked at the market penetration of the iPad and decided that by removing price competition, they will have an instant lock on a significant portion of the market.

The removal of price competition is what killed the plethora of small ebooks sellers, both in the Apple ecosphere and elsewhere, not some inherent weakness of their business model. It will take a while for the market to recover from what Apple pushed and enabled, and for consumers to benefit from such recovery.

TMay
Jun 16, 2013, 10:20 AM
Businesses and competition also die as a result of the forming of cartels and price-fixing.

To avoid competing in an open market (because of the way its iTunes Sore is set up), Apple did go to the publishers and gave them a better split than they were getting before, in exchange for an agreement for industry-wide price-fixing.



And this is the whole point:

The price-fixing engineered by Apple and the publishers removed ANY incentive for consumers to shop around, locking them instead into whatever hardware/software "walled garden" they had entered when purchasing their device. Apple looked at the market penetration of the iPad and decided that by removing price competition, they will have an instant lock on a significant portion of the market.

The removal of price competition is what killed the plethora of small ebooks sellers, both in the Apple ecosphere and elsewhere, not some inherent weakness of their business model. It will take a while for the market to recover from what Apple pushed and enabled, and for consumers to benefit from such recovery.

What exactly can small ebook sellers provide that Apple or Amazon can't?

If they are providing authors and works not available on Apple's or Amazon's store's, then I'm all for it. But there isn't any way that they will survive competing with any of the bigger online ebook distributors.

If it had been only Amazon at wholesale, I can't see small sellers surviving with the wholesale model for long either.

Really, what we need are more independent ebook publishers.