In a recent move by the department of justice in the US Apple and the ‘Big 5’ publishers are in the line of fire as proceedings are now imminent. Though it would seem the cause of action is to be determined.
Apple are well known for constructing deals which change markets look at what started with iTunes. Apple negotiated to a position so that they could dictate the price for a song to the music industry. (Getting to yes – hello) The iTunes experience has since culminated in another model – the Agency model. In the Agency model the seller determines the price and this as it was expected by the late Steve Jobs and it happened – the customer paying a ‘little more’
“We told the publishers, ‘We’ll go to the agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that’s what you want anyway’.”
Source article here which is a good read too.
On this blog we argued before the holidays that a little more expense might not be such a bad thing (…more for a better product – right?), but what has actually occurred in the aftermath is that consumer’s have ended up paying more much more to the tune of US$100 Million approx.
The publishing houses included are Macmillan, Penguin, Hachette, HarperCollins and Simon & Schuster, the real nugget in the facts is the way in which this deal was carved out there is mention (and proof TBC) of secret meetings and a theme of a lack of written documentation it is rumoured that Apple and Amazon may have even conspired to carve up the digital content market between them.
There is no crime in holding a dominant position in any marketplace, this is of course the price we pay for living in the ‘free market economy’ but abuse of a dominant position is unfair and generally quite illegal.
The image above was created by digitalart / FreeDigitalPhotos.net who are here.
By 3D Issue