Apple is actually innocent here. What Apple wanted was the dinosaur publishing industry to adopt the agency model for pricing ebooks. The publisher sets the price, and revenue is split 70/30. This was the model for all digital goods on iTunes for the previous decade. The publishing industry had always been a wholesale model. They set the 'list' price on the book jacket, and the retailer would 'discount' it to the consumer. The retailer would pay the publisher the wholesale price, which was about 50% of list. Amazon loved the wholesale model because they compete on price.
Amazon, at the time, was trying to create an expectation for consumers that all ebooks were $9.99. What the consumer didn't know was that Amazon was taking a loss on each ebook. Amazon was able to get publishers on board with their plan by paying the 'list' price on an ebook, and turning around and selling it for a loss at 9.99. Amazon's long play was 1) creating a market for ebooks in a price band they thought was attractive and 2) forcing the publishers to capitulate later when they had more leverage. Amazon never wanted agency pricing since they would lose their competitiveness if it ever came to bare.
But Apple was successful - it eventually got publishers to adopt agency pricing, and that also meant Amazon ebooks had to adopt agency pricing (if you're setting the price, you can't give one outlet a better price). Amazon hated this development and championed this price fixing suit as a result.
If you ever wondered why physical books are priced less than ebooks at times, this is why. Agency pricing.
Ok, I get that they were going up against a monopolist who appears to be dumping. In what world does responding to that by building a cartel of suppliers engaging in monopolistic behavior to raise the pricing above the price of physical books and fix the pricing across all retailers turn into "innocence"?
We as consumers are worse off for what Apple did here.
I'm not so sure that ever came to pass. I think all Jobs was saying is, if you don't adopt agency pricing, the value of your goods will be artificially low. If you adopt agency pricing, you can keep it high (that is, the same as physical).
Amazon, at the time, was trying to create an expectation for consumers that all ebooks were $9.99. What the consumer didn't know was that Amazon was taking a loss on each ebook. Amazon was able to get publishers on board with their plan by paying the 'list' price on an ebook, and turning around and selling it for a loss at 9.99. Amazon's long play was 1) creating a market for ebooks in a price band they thought was attractive and 2) forcing the publishers to capitulate later when they had more leverage. Amazon never wanted agency pricing since they would lose their competitiveness if it ever came to bare.
But Apple was successful - it eventually got publishers to adopt agency pricing, and that also meant Amazon ebooks had to adopt agency pricing (if you're setting the price, you can't give one outlet a better price). Amazon hated this development and championed this price fixing suit as a result.
If you ever wondered why physical books are priced less than ebooks at times, this is why. Agency pricing.