Apple to control Music, Amazon to control Books – Apple’s Wishful Thinking

Wow! The DOJ’s Trial against Apple is the gift that keeps giving. Yesterday we found out that Apple claims 20% share of the ebook market, 100% growth in ebook sales in 2012, and 100 million customers of the iBookstore.

Today, we find out two big things (thanks to Eddy Cue, the senior most Apple executive questioned so far (SVP of Internet and Services)).

  1. Apple considered splitting Books & Music between Amazon and Apple. The key part from CNet’s coverage of DoJ vs Apple

    Eddy Cue, Apple’s senior vice president of Internet software and services, who took the stand Thursday in district court in lower Manhattan, also said Apple considered splitting the market with Amazon in a setup where Apple would control the music market, while Amazon would monopolize books.

  2. Apple’s Eddy Cue pretty much admitted that ebook prices went up because of Apple’s deal with Publishers.

This is a bit of a surprise. On the one hand, Apple claims it did nothing wrong. On the other hand, their senior executives are admitting Apple’s moves led to higher ebook prices.

Apple’s Reality Distortion Field affects Apple Executives too?

Apparently, Mr. Cue got testy when asked what he thought about ebook prices going from $9.99 to $12.99 to $14.99. He didn’t think it hurt consumers. Here’s what he said –

“Our consumers were protected by my price points,” he said. “I thought we were going to treat our consumers very, very fairly.”

Wait a minute. Books were $9.99. Then Apple struck a deal with Publishers and caused prices to rise to $12.99 to $14.99.

Apple executives actually thought by doing this they were protecting consumers?

That’s some good Kool-Aid they’re serving at Apple’s SpaceShip One HQ.

Apple to control Music? Amazon to control Books?

The juiciest part of this entire conversation is this:

Apple considered splitting the market with Amazon in a setup where Apple would control the music market, while Amazon would monopolize books

Let’s get this straight – In the middle of a collusion/price-fixing trial, Apple’s most senior executive questioned so far, brings up the fact that Apple was discussing what would be an EVEN MORE ILLEGAL arrangement.

Amazon to control Books and in return Apple gets to control Music.

Bonus Points for using ‘control the music market’ and ‘monopolize books’. Let’s not leave any room for doubt, shall we.

This is just madness. Why on Earth would you mention this? Does anyone see any reason for Apple to mention it was considering this whole ‘Let’s collude with Amazon and split and monopolize the Music and Books markets’ idea?

It’s an interesting thought. There are probably all sorts of illegal arrangements and secret/silent partnerships that happen all the time. However, bringing up that you were considering it in the middle of a DoJ trial – that’s just amazingly foolish.

How would an ‘Apple to control Music, Amazon to control Books’ arrangement work?

Apple probably considered music very important for selling iPods and for maintaining its ‘coolness’. It perhaps thought Amazon valued books a lot because Amazon had the Kindle and a huge revenue stream from selling paper books.

Perhaps Apple was thinking about asking Amazon to end Amazon Music and/or channel it to iTunes. In return, Apple would channel iBooks to Kindle Store. The arrangement would work well. However, DoJ would come after Apple and Amazon. Perhaps it would be a secret deal where iBooks either stalls or Apple secretly promotes Kindle a ton. In return, Amazon would ramp down Amazon Music.

At this point, it seems pretty obvious that the DoJ needs to investigate how many of these ‘secret’ partnerships there are between the big technology companies.

Apple wanting to partner up with Amazon and secretly carve out monopolized markets for each other. Wow! Every day you learn something new.


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