In a lawsuit filed in U.S. District Court in New York, the government painted a portrait of an industry desperately trying to turn a profit amid rapid changes in technology and aggressive competition from online retailers. In phone conversations, e-mails and dinners at exclusive New York restaurants, the companies’ top executives colluded to wrest control of the market from Amazon.com and raise prices on e-books, according to the complaint.
"The customer pays a little more, but that's what you want anyway," Jobs told the publishers at one point, said Sharis Pozen, the acting head of the Justice Department's antitrust division.
The complaint cites email messages and specific phone calls — sometimes occurring one after another — between the publishers. It tallies “at least 56” phone calls among the publishers’ U.S. CEOs between December 2009 and January 2010. The complaint also quotes several statements by publishing executives and Jobs, without always noting the source for each quote.
The complaint alleges that the publishing executives met in “private dining rooms of upscale Manhattan restaurants,” without counsel, to “discuss confidential business and competitive matters.” According to the complaint, the meetings started no later than September 2008 and continued for at least a year.
One venue was a private dining room called “The Chef’s Wine Cellar” at a swank restaurant, Picholene, where guests currently can enjoy multicourse tasting menus for as much as $195 per diner.
Besides sitting down to expensive meals, the publishers allegedly “engaged in a series of meetings, telephone conversations and other communications in which they jointly acknowledged to each other the threat posed by Amazon’s pricing strategy and the need to work collectively to end that strategy,” according to the complaint.
One publisher “bemoaned the ‘wretched $9.99 price point,’” according to the complaint. The Justice Department also details how — after Amazon rolled out a proposal to “prominent authors and agents” in January 2010, whereby copyright holders could bypass publishers and sell directly to Amazon — a “decisionmaker” said “he was ‘p****d at Amazon for starting to compete directly against the publishers and expressed his desire ‘to screw Amazon.’”
For an explainer about the Big-6 publishers, go here.
To read the entire filing by the DOJ, go here.
And for the best prices on e-books, go here.
Updated to add: David Gaughran just posted a superb review of the entire anti-trust case that is a must read for those interested. It reviews the entire history of agency pricing, what is known about the alleged collusion between Apple and the publishers, and the implications for the case for indie authors and big publishers alike. Bravo, David!