Commentary

Authors Guild Backs Apple In E-Book Price-Fixing Battle

The Authors Guild has been among the most vocal critics of the Department of Justice's decision to prosecute Apple for conspiring with publishers to increase the price of e-books.

The organization has long made clear that it believes Apple's conduct helped writers, and boosted competition, by preventing Amazon from monopolizing e-book sales. "The irony bites hard: our government may be on the verge of killing real competition in order to save the appearance of competition," Authors Guild former president Scott Turow said in a blog post in early 2012, in response to a report about the impending antitrust filing.

Since then, the Authors Guild has backed Apple every step of the way while it unsuccessfully fought the charges. This week, in line with its prior efforts, the Authors Guild is asking the Supreme Court to hear Apple's appeal of a finding that it illegally conspired with publishers to raise the price of e-books.

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"After Apple’s entry into the e-book market, a single distributor no longer controlled the electronic marketplace of ideas, consumers had access to more content and a greater variety of retailers from whom to purchase and learn about e-books, and authors ... had a choice among electronic distribution platforms," the Authors Guild writes in a friend-of-the-court brief filed this week. The group adds that those results "should have been considered when determining whether Apple committed an antitrust violation."

Apple has asked the Supreme Court to hear its appeal of a finding that the company violated antitrust laws. Earlier this year, a federal appellate court in New York upheld U.S. District Court Judge Denise Cote's finding that Apple illegally orchestrated a price-fixing conspiracy with five major publishers.

The legal battle dates to 2012, when federal and state authorities charged Apple and five publishers -- Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster -- with conspiring to end Amazon's policy of charging just $9.99 for electronic versions of new releases and bestsellers.

When Amazon introduced the Kindle, the company was able to discount e-books because the industry ran on the “wholesale” model, meaning that Amazon purchased books at wholesale and then decided what price to charge. In 2010, Apple and publishers forged an agreement to shift to an "agency" model, which meant that the publishers would set prices while retailers like Apple and Amazon acted as agents and sold the books for a commission.

The price of bestselling ebooks soon rose to $12.99 and higher. Apple wanted the shift in order to sell books on the then-new iPad, but for more than $9.99 -- a rate that reportedly was below cost, at least in some cases.

The publishers, which allegedly met regularly in private rooms of Manhattan restaurants to discuss Amazon's ebook pricing, quickly settled the charges.

But Apple fought the case. In the process, the company garnered support from the Authors Guild, Barnes & Noble and other players in the book publishing world, who argued that Apple (and the publishers) prevented Amazon from monopolizing the e-book market.

Cote rejected Apple's arguments, ruling that the company "changed the face of the e-book industry” by masterminding a price-fixing conspiracy with five major publishers.

The Authors Guild now says that ruling didn't account for the ways that Apple benefitted writers. "Whatever else may be said about how Apple entered the market, one thing is clear: Following its entry the industry became more competitive," the Authors Guild writes in its Supreme Court papers. "Increased competition among authors to write e-books, publishers to price them, and retailers to sell them has been good for readers and good for American democracy."

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