Order Confirms Publishers Can Renegotiate Apple Terms on Staggered Schedule; For Macmillan, a Four-Year Wait

As expected, the court has ordered Apple to modify its contracts with the five publisher defendants in the price-fixing case to exclude any restrictions on ebook discounting for at least another two years. After the two-year period, publishers can renegotiate their deals, including adopting agency terms, on a staggered schedule, one every six months.

The schedule corresponds to the order in which the publishers settled with the Justice Department in the case. Hachette will be the first at 24 months “after the Effective Date of the Final Judgment,” according to the order for injunctive relief signed by Judge Denise Cote. HarperCollins comes next, at 30 months. Simon & Schuster comes third, at 36 months. The final two publishers to settle come last, with Penguin at 42 months and Macmillan at 48 months.

That means Macmillan, the first publisher to openly defy Amazon by deciding to sell books on agency terms, will be locked out of using the model for the next four years.

Cote’s written order, set to go into effect on Oct. 5, confirms her comments at a recent court hearing, when she indicated that she would impose an injunction on Apple that was significantly softer than what the DOJ had originally requested. Apple nevertheless said on Friday that it will appeal the injunction .
Under Cote’s order, Apple will be overseen by an external monitor for two years (the DOJ first proposed 10 years), with a one-year extension if the court decides it’s necessary. Terms for selling content other than books won’t be affected. And Apple won’t, as the DOJ proposed, be forced to let other ebook retailers directly link to their own bookstores for in-app purchases without paying a commission.

The injunction may close one chapter in this long, tumultuous period for the publishing industry. But Apple still faces a trial on money damages next spring. And it is appealing not only the injunction, but the judge’s original guilty verdict. So we are far from seeing the end of this.

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