On Friday, Judge Denise Cote will consider whether to grant the Justice Department’s request that Apple be forced to accept long-term monitoring and sweeping changes to how it operates or impose the much more limited consequences Apple wants.
In a proposed remedy submitted to the court, The DOJ contends that Apple must be compelled to take steps to “ameliorate the harm its conspiracy caused to competition and consumers.” Among the remedies proposed is a five-year restriction on engaging in agency pricing agreements for any content. That means Apple would be required to throw out its contracts with the five publisher defendants in the price-fixing case, agreements that were set as part of the publishers’ settlements with the DOJ.
In its reply, the company calls the proposal “a draconian and punitive intrusion into Apple’s business.” It asks for “reasonable limitations on Apple’s ability to share information,” similar to what is contained in the publisher’s settlement agreements, a prohibition on retail price MFNs that also echo the publishers’ settlements, and “reasonable antitrust training obligations.”
Apple points out that the publishers’ settlement agreements already prohibit publishers from entering into agency agreements without discounting for a two-year period, which the court has endorsed as long enough to “restore retail price competition to the market for trade e-books, to return prices to their competitive level.”
In addition, Apple argues that any injunction should only apply to the publishers involved in the conspiracy, not the thousands of independent publishers who also sell books through Apple.
Objecting to the proposal to dictate terms for non-book content such as music, movies and apps, the company contends, “There is no justification for this invasion into Apple’s businesses that were not directly at issue in this lawsuit, for which no conspiracy allegations were made.”
The DOJ also wants Apple to operate under the oversight of an outside compliance officer for 10 years, necessary, says the DOJ, since the conspiracy was orchestrated by people at the highest levels of the company. Apple responds that, “This unduly burdensome remedy is plainly punitive, not to mention out of proportion to the circumstances of this case.”
The Department of Justice today asked Judge Denise Cote to force Apple to throw out its existing contracts with the five publisher defendants in its ebook price-fixing case and essentially impose a five-year ban on agency model terms.
“Apple shall not enter into or maintain any agreement with any E-book Publisher or supplier of any other form of content (e.g., music, other audio, movies, television shows, or apps where such agreement likely will increase, fix, or set the price at which other E-book Retailers or retailers of other forms of content can acquire or sell E-books or other forms of content,” according to the proposed injunction filed in U.S. District Court.
Under the proposal, Apple would also have to let other ebook retailers provide links to their ebookstores from their iOS apps, “allowing consumers who purchase and read e-books on their iPads and iPhones easily to compare Apple’s prices with those of its competitors.”
Apple’s compliance with the new rules would be overseen by a monitor. And the company would have to hire an internal Antitrust Compliance Officer, who “will be hired by and report directly and exclusively to the Audit Committee of Apple’s Board of Directors.”
We’ll have more on this story Monday.
How do you protect the intellectual property of authors in the digital market?
The question was posed this weekend to Tim Hely Hutchinson, group chief executive of Hachette UK, during an interview with the South China Morning Post. Hutchinson responded:
“One of the most important new roles for publishers is the protection of copyright – how do we protect authors against piracy and casual file sharing? We have a subcontractor who sweeps the internet every day to find infringing editions and we send every infringer a takedown notice. If they persist we take legal action. And that is successful – the books do get taken down.”
Hutchinson also discussed DRM (encrypting digital files such as ebooks to discourage illegal copying), a hot-button topic in some circles:
“And on casual file sharing, we strongly support the maintenance of DRM – digital rights management – so all the files, e-books and audio are encrypted and all our contracts with people like Amazon make it impossible for people to share or to lend. Lots of people say take DRM off, it’s old-fashioned, but that’s wrong. Our primary job is to represent authors and authors deserve to be paid. One way is by making sure we keep the DRM on.”
While the interviewer did not specifically mention piracy in China, widespread theft of intellectual property in the country makes DRM all the more important.
Last year Hachette opened a sales office in Hong Kong, stepping up its focus on the region. During the interview, Hutchinson contrasted Asia’s robust growth to the “relatively small and static market” for books in the U.K. And he said Asian readers tend to prefer nonfiction such as business and self-improvement books. “It’s less literary and more to do with getting on in life,” he said.
Double-Digit Ebook Sales Lift Adult Trade Market; Steep Drop in Children’s/Young Adult Sales Attributed to Hunger Games Fall-Off
Sales of adult ebooks continue to rise rapidly, according to new figures from the Association of American Publishers. In the first quarter of this year, sales of adult ebooks totaled $328.2, up 13.6% from the same time in 2012, making the category the largest measured in the organization’s StatShot report. Sales of children’s and young adult books in print and digital form dropped nearly 25% compared to last year, when, as Galley Cat points out, The Hunger Games was in movie theaters, spurring sales of the series’ books.
The increase in adult ebook sales, while modest compared to the growth shown in some previous reports, allowed overall adult trade sales to tick up 3.3% despite lackluster demand for print books. Hardcover sales were flat at $226.5 million, trade paperback sales rose less than 2% to $306.6 million and mass market paperback sales dropped 14.6%, to $89.9 million.
All figures are based on sales by 1,192 publishers who report to the AAP.
Publishers Weekly has more, including stats on audiobook sales (related story: Amazon and the Growing Audiobook Market), which continued to grow strongly as it shifts rapidly from physical media (CDs and tapes) to downloadable digital delivery:
Judge in Apple Case Cites Publishers’ “Frequently Coordinated” Efforts to Upend Amazon’s $9.99 Ebook Pricing
In her ruling against Apple today, Judge Denise Cote cites witness testimony as well as documentary evidence including emails and other records of communication considered during the three-week price-fixing trial. She says circumstantial evidence also “compellingly” supports the idea that Apple gave publishers the means to pull off a pricing conspiracy they couldn’t accomplish on their own.
Here’s the sequence of events as detailed in Cote’s decision:
Late 2008-through 2009: Major publishers who would later be named as defendants along with Apple tried “frequently coordinated their efforts” to pressure Amazon to raise its $9.99 price point for digital books.
U.S. District Judge Denise Cote has ruled against Apple in the Justice Department’s ebook price-fixing case, saying the tech company coordinated a scheme involving five major publishers that were looking for a way to challenge Amazon’s ebook pricing strategy. In a decision issued today, Cote said:
“The plaintiffs have shown that the publisher defendants 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.”
Apple released a statement saying it plans to appeal the decision.
“Apple did not conspire to fix e-book pricing,” Apple spokesman Tom Neumayr said. “When we introduced the iBookstore in 2010, we gave customers more choice, injecting much needed innovation and competition into the market, breaking Amazon’s monopolistic grip on the publishing industry. We’ve done nothing wrong.”
Cote also called for a trial on damages, noting that the conspiracy caused ebook prices to rise, resulting in some consumers paying more, buying a title other than the one they wanted or forgoing a purchase altogether.
The publishers named as defendants settled with the Justice Department long before the case went to court.
In a statement announcing Lynch’s resignation, the company did not indicate any plans to name a new chief executive. Its CFO Michael P. Huseby has been appointed CEO of NOOK Media and president of Barnes & Noble, reporting directly to Leonard Riggio, Executive Chairman of Barnes & Noble, Inc.
Riggio, who has made an offer to buy B&N’s trade retail business, said in the statement, “the Company is in the process of reviewing its current strategic plan and will provide an update when appropriate.”
Lynch’s departure follows a disastrous quarterly financial report released June 25th that showed losses from its Nook business more than doubled compared with the same period the previous year and its retail store earnings fell by nearly 24%.
Class certification is premature in the Google mass books digitization case, says a federal appellate court. Fair use has to be decided first.
In the latest twist in the litigations over Google’s library-scanning project, The Second Circuit Court of Appeals yesterday vacated Judge Denny Chin’s class certification ruling* of last May in Authors Guild v. Google. The appellate court said that resolution of the fair use issues needed to come first since it would help determine whether “the commonality of plaintiffs’ injuries, the typicality of their claims, and the predominance of common questions of law or fact” merited treating the lawsuit as a class action.
In other words, if Google’s fair use defense requires a book-by-book analysis, then this would weigh against class certification. If a fair use ruling can be made more broadly, then judicial economy is more likely to weigh on the side of class certification.
In New York, activists, including some prominent authors, are fighting to stop a plan they say would gut the amount of research material readily available to the public.
The “Central Library Plan” calls for the sale of the Mid-Manhattan Library and the Science, Industry and Business Library. Their operations would be absorbed into Manhattan’s Fifth Avenue branch after it is renovated, a project that includes opening up seating space and desk space by removing research stacks, displacing millions of books that will be moved offsite.
The New York Times reports that about 50 people spoke at a legislative hearing on the project Thursday, including noted presidential biographer Edmund Morris, who said that because of the plan, he has decided not to leave his research archive to the library.
“An exquisite repository is now going to be turned into a populist hangout, and have its former stack space stuffed with more and more and more and more miles of computer cable,” he said in prepared remarks. “That’s O.K. for scholars whose attention span extends back no farther than the early 1980s. But those of us cognizant of what happened to civilization after the great library in Alexandria burned down can only think with trepidation of what the Central Plan is going to do to the historical memory of New York.”
An author caught selling a book that plagiarizes from works by romance writers Tammara Webber and Jamie McGuire is blaming a rogue ghostwriter for the copying and has removed the book from all sales outlets.
The author, Jordin Williams, tweeted: “I am officially letting all funds go. I’m sadden by this that a ghostwriter did this through guru. Thankfully I never received any money.”
Jane Litte of the Dear Author blog noticed the plagiarism and posted screen shots of Williams’ Amazingly Broken alongside strikingly similar passages from Webber and McGuire Wednesday. The book was pulled within hours of the Dear Author post, after readers complained directly to Amazon and to Williams via social media.
In a Twitter conversation posted by Jason Boog on the GalleyCat blog, Williams apologized directly to Webber and McGuire. She said she hired the writer who copied their work through the online freelancer marketplace odesk.com (she earlier thought she’d used Guru.com). Williams tweeted, “I take the blame. Just saying how it happened. I do wish someone would give me a website to check plagiarism of ‘books’. Others don’t work.”