With all due respect, I don't see the DoJ haymaker here.
Steve Jobs, with his typical bluntness, is sketching an entirely likely scenario of what would be likely happen if Amazon regained a monopsonistic 80-90 per cent of the market . " Sell to us at our price or we'll pull your BUY buttons and you won't make anything". See IPC.
So Mcmillan is negotiating with Apple over Apple's cut. Big deal. My guess is that everybody tries that. Apple's response was that " Johnny, it's the same for EVERYONE-whether BPH, record label or game developer".
As to Random House, let me outsource to ( surprise!
Mike Shatzkin:
Quote:
Second, the David Shanks email to Barnes and Noble. In the email, Shanks urges Barnes & Noble to punish Random House for not hopping aboard the pricing agreements that the other publishers had agreed to with Apple. This type of email is evidence that the DOJ will point to as attempting to police or enforce a collusive agreement. In other words, if there is only conscious parallelism why would Shanks need Random House to engage in the same type of pricing. That is one piece of evidence that seems to rule out independent action.
There is absolutely nothing strange about this nor is there any reason to think Shanks wasn’t acting totally independently.
Remember that Barnes & Noble entered the ebook market with the Nook in November 2009. They were very explicit and clear with all their trading partners that the Amazon pricing was a big problem for them. You don’t need to have it spelled out to you or be a rocket scientist to see the unpleasant consequences of having to give away all that ebook margin: fewer brick stores, less resources to develop the Nook against the Kindle, and perhaps the need for more margin from the publishers on the print and store side. All the publishers were aware of that.
When Random House stayed out at first, some people were confused about that choice but the insiders understood that they had “gamed the system”. Now they’d sell their ebooks to Amazon at the old (higher) wholesale prices and get the benefit of the lower retail prices because they had the branded loss leader category to themselves. And perhaps they’d even get better treatment from Amazon on their print books too, because, after all, their titles were the ones Amazon could promote which would promote their ebook pricing policy at the same time.
I can tell you that this caused massive teeth-gnashing at all the other houses. But there was, actually, not a damn thing they could do about it. They had to swallow lower revenue per copy for their books as well as a price-disadvantage in the marketplace and they did it because they thought leveling the playing field on price was so critical to their futures. Meanwhile, from their perspective, the biggest player sat out the fight.
And from Random House’s perspective, they did the best thing for their owners and their authors.
At the time, all the other houses were aware that they had done all this partly for B&N and that B&N was presumably being hurt by Random House’s unwillingness to go to agency, and, dammit, why wasn’t Barnes & Noble doing something to push Random House in the right direction?
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This is pretty "inside baseball" but it is a plausible explanation for the Penguin email. Remember, the burden of proof on the DoJ to prove its case, not on Penguin to disprove it. If its 50-50 on the issue of whether Penguin was acting iindependently here , Penguin wins.