I believe that the agency pricing model (spearheaded by Jobs) would help writers and book publishers stay in business in the digital era and thereby give consumers more choices by allowing new retailers (like Apple) to enter the market and compete with Amazon. Apparently, Obama did not want competition. He did not want consumers to have choices. He wanted to bring yet another industry under government control. So, Obama’s DOJ sued Amazon’s competitors in order to further strengthen Amazon’s e-book monopoly.
On July 10, a lone judge, ruling without a jury—declared Apple guilty of violating antitrust laws by conspiring to raise the price of e-books. The deck was stacked against Apple from the very beginning, with the judge, Denise L. Cote, delivering a pre-trial opinion that she believed Apple would be found guilty.
When Apple’s attorney, Orin Snyder, asked Cote to retract her pre-trial opinion, she denied his allegation that she was pre-dispositioned to rule against Apple. Then, low and behold, without any evidence, she declared Apple guilty of anti-trust violations.
Thankfully, Apple is holding strong and plans to appeal this unjust verdict. “So sue me, right.” Obama once quipped on The Tonight Show with Jay Leno. Obama deserves a taste of his own medicine after suing Apple and its co-founder Steve Jobs when it was too late for Jobs to defend himself. Maybe someone should file an anti-trust lawsuit against Obama for attacking the free markets and protecting Amazon’s monopoly.
It’s Undeniable: Amazon Has a Monopoly
The purpose of anti-trust laws is to promote and maintain market competition by regulating anti-competitive conduct by companies, including setting unnatural prices that inhibit free competition. When Apple collaborated with publishers, I contend that it did not violate anti-trust legislation because Apple’s agency-pricing model actually brought more competition and consumer choices into an e-book market that was—and still is—monopolized by Amazon.
Back in 2009, Amazon was a lone shark, controlling 90 percent of the e-book market. By April of 2012, even after Apple and others had entered the market, Amazon still controlled the majority (60 percent) of the e-book market. Barnes and Noble controlled 25 percent and Apple commanded a scant 15 percent. Yet Obama’s administration sued Apple, the smallest player, for conspiring to undermine Amazon.
Unlike traditional printed books, you can’t physically hold an e-book in your hands; you must purchase a special “e-reader” or tablet to peruse them. Amazon’s e-reader is called the Kindle. So, when Amazon monopolizes the e-book market, it also helps guarantee that people will be more likely to purchase its e-reading device.
Consumers, writers and book publishers have been unhappy with Amazon’s monopoly for some time. From a consumer perspective, Amazon’s monopoly lessens technology options. The Amazon Kindle and Barnes and Noble Nook are not exactly the best options for e-book readers. As of December of 2012, CNET News rates the fourth-generation iPad tablet as the “best full-sized reading tablet” and even the second generation iPad outdoes comparable Android offerings.
Publishers were also unhappy with Amazon’s “wholesale pricing model” because it cannibalized their print businesses. As Jobs explained to his biographer, Walter Isaacson: “Amazon screwed it up. It paid the wholesale price for some books, but started selling them below cost at $9.99. The publishers hated that—they thought it would trash their ability to sell hardcover books at $28. So before Apple even got to the scene, some booksellers were starting to withhold books from Amazon. So 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 [publishers] want anyway.’ But we also asked for a guarantee [per a most favored nation clause] that if anybody else is selling the books cheaper than we are, then we can sell them at the lower price too. So they [publishers] went to Amazon and said, “You’re going to sign an agency contract or we’re not going to give you the books.’”
Jobs further explained: “We were not the first people in the books business. Given the situation that existed [Amazon’s 90 percent monopoly], what was best for us was to do this akido move and end up with the agency model.”
Competition always creates more options for consumers. When publishers can stay profitable and new retailers can enter the e-book market, there are more quality options for readers. And when retailers like Apple can enter the market, they will innovate and offer alternative e-reading devices like the iPad so that Americans have more high-tech options for reading e-books than buying an Amazon Kindle.
Jobs’ Vision Was to Save Journalism, NOT to Rip Off Consumers
Jobs saw an opportunity to provide consumers with more choices. He knew he could turn a profit by competing with Amazon—but money was not his goal. Jobs’ main goal was to save high-quality print media from going extinct in the modern digital era where fewer consumers will pay for printed newspapers and books because they can get so much information and entertainment for free online.
I think Jobs intuitively understood that if major publishers can’t afford to pay writers and journalists, consumers suffer. I think Jobs understood that without media watchdogs, free speech deteriorates and the government is no longer accountable to the people.
For example, Jobs considered the New York to be one of the finest newspapers in America and he wanted to save its journalism for future generations. Isaacson writes: “Jobs was particularly interested in striking a deal with the New York Times, which he felt was a great newspaper in danger of declining because it had not figured out how to charge for digital content. ‘One of my personal projects this year, I’ve decided, is to try to help—whether they want it or not—the Times,’ he told me in early 2010. ‘I think it’s important to the country for them to figure it out.’”
Despite being a Democrat, Jobs also had great success working with Rupert Murdoch, the CEO of News Corp., which owned conservative-leaning media giants like the Wall Street Journal and the Fox News Channel. So, I believe that Jobs’ over-arching vision in implementing the agency model was to preserve all high-caliber media.
Dear Mr. President, please stop favoring Amazon. She already monopolizes the e-book market and consumers deserve choices.
Key pages referenced from Walter Isaacson's biography, "Steve Jobs:" pp. 503-04, 531 and 533-34.