Craziest Part Of Apple's Price Fixing Ruling: Publishers Knew They Were Encouraging Piracy, Didn't Care
from the because-of-course dept
You may remember that, two years ago, Apple was found guilty of price fixing for ebooks, in an effort to break Amazon's hold on the market and to artificially inflate the price of ebooks, creating significant consumer harm. Apple agreed to settle with the government last year, but dependent on how its appeals process went. Well, the Second Circuit appeals court was... unimpressed with Apple's appeal and has upheld the original ruling. The ruling (and the dissent) are interesting reads, but perhaps most interesting is the tidbit in which the big publishers admit that what they're doing will increase piracy, but they don't care because they so badly want to raise prices from Amazon's established $9.99 per ebook.
The most significant attack that the publishers considered and then undertook, however, was to withhold new and bestselling books from Amazon until the hardcover version had spent several months in stores, a practice known as “windowing.” Members of the Big Six both kept one another abreast of their plans to window, and actively pushed others toward the strategy. By December 2009, the Wall Street Journal and New York Times were reporting that four of the Big Six had announced plans to delay ebook releases until after the print release, and the two holdouts — Penguin and Random House — faced pressure from their peers.In other words, the publishers were so focused on wanting to raise the price of ebooks, they were willing to embrace a solution that they knew both encouraged piracy and harmed long-term sales.
Ultimately, however, the publishers viewed even this strategy to save their business model as self‐destructive. Employees inside the publishing companies noted that windowing encouraged piracy, punished ebook consumers, and harmed long‐term sales. One author wrote to Sargent in December 2009 that the “old model has to change” and that it would be better to “embrace e‐books," publish them at the same time as the hardcovers, “and pray to God they both sell like crazy.” .... Sargent agreed, but expressed the hope that ebooks could eventually be sold for between $12.95 and $14.95. “The question is,” he mused, “how to get there?”
It really makes you wonder what kind of boards of directors these legacy publishers have, that they'd allow their companies to purposely shoot themselves in the foot, so they could raise prices and put in place windowing, even while recognizing all the harm it causes long term.