Apple’s antics forced Amazon to raise ebook prices

Apple’s price cartel with publishers forced Amazon to raise the prices of its books and enter into similar deals with its publishers.

Russell Grandinetti, Amazon’s vice president for Kindle content told a court that strengthened by an agreement with Apple that set the prices for their respective e-books higher, publishers strong-armed Amazon into giving them similar terms.

The US Department of Justice has taken Apple to court over price-fixing, after reaching out-of-court settlements with five publishers HarperCollins, Simon & Schuster, Hachette Books, Penguin and MacMillian. Apple’s CEO Steve Jobs bragged about the deal in his biography and admitted that the deal meant higher ebook prices.

According to Reuters, Grandinetti sat down with Macmillan CEO Jon Sargent, who offered a stark choice. It could face a months-long delay between the hardcover debut of a book and its appearance on Kindle, or convert from the reseller to agency model, in which publishers have a heavier hand in setting retail pricing.

Macmillan and Amazon ended up in conflict and Amazon yanked the publisher’s e-books from its digital shelves.

In the end it backed down and let customers decide if they believe it’s reasonable to pay $14.99 for a bestselling e-book.

Emails emerged in which Apple co-founder Steve Jobs insisted to News Corp executive James Murdoch that Amazon’s pricing was ultimately unsustainable. Mostly because he said so. 


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