Steve Jobs on camera: ‘The publishers are actually going to withhold their …
Telegraphing an alleged price-fixing conspiracy 2 years before the DOJ caught up to it
FORTUNE — Paid Content‘s Laura Hazard Owen, combing through documents newly unredacted in the states‘ (as opposed to the U.S. Department of Justice‘s) antitrust complaint against Apple (AAPL) and five book publishers, uncovered a gem: a blunt Steve Jobs e-mail that basically hands the attorneys general their price-fixing case.
In a note to a publishing executive nervous about sticking it to Amazon (AMZN), Jobs wrote:
As I see it, [Conspiring Publisher] has the following choices:
1. Throw in with Apple and see if we can all make a go of this to create a real mainstream ebooks market at $12.99 and $14.99.
2. Keep going with Amazon at $9.99. You will make a bit more money in the short term, but in the medium term Amazon will tell you they will be paying you 70% of $9.99. They have shareholders too.
3. Hold back your books from Amazon. Without a way for customers to buy your ebooks, they will steal them. This will be the start of piracy and once started, there will be no stopping it. Trust me, I’ve seen this happen with my own eyes.
Maybe I’m missing something, but I don’t see any other alternatives. Do you?
Good stuff. But as several readers have pointed out, Jobs telegraphed all this in a brief on-camera exchange with the Wall Street Journal‘s Walt Mossberg at the launch of the original iPad in January 2010, more than two years before the government’s antitrust lawyers caught up to the alleged conspiracy.
It’s in the AllThingsD video here. You can skip Kara Swisher’s irritating preamble and go straight to the Steve Jobs part, which starts at the 1:40 mark. Mossberg asks Jobs why customers would pay $14.99 for an iBook when they could get the same title from Amazon for $9.99.
“The prices will be the same,” Jobs assures him. “The publishers are actually going to withhold their books from Amazon.”
Which they did. Amazon was forced to abandon the $9.99 model and for two years — until the DOJ filed its suit – e-book prices were the same on the iPad, the Nook and the Kindle.
Amazon has now gone back to offering New York Times bestsellers for $9.99.
As we’ve suggested before (see here, here and here), it seems wrong that the government would give a pass to Amazon — an e-book monopolist selling titles below cost — and instead sue five publishers gasping for air in a shrinking market.
Adding insult to injury, Amazon has since started signing up authors for its own imprints, threatening to cut publishers off at the source. For a view of how the whole business looks from Publisher’s Row, see Brad Stone’s excellent “Amazon’s Hit Man,” in Bloomberg Businessweek.