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Summary:

At the Apple ebook trial on Monday, HarperCollins CEO Brian Murray and Macmillan CEO John Sargent offered testimony as witnesses for the government. Emails showed that News Corp CEO Rupert Murdoch expressed the desire to “screw Amazon.”

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U.S. vs. Apple  resumed in New York Monday after a three-day break. Amazon executives, plus Google’s Tom Turvey, had testified Thursday; Monday brought testimony from HarperCollins CEO Brian Murray and Macmillan CEO John Sargent, both appearing as government witnesses. A roundup of the day’s proceedings:

  • The day “provided more examples that publishing CEO’s are not necessarily very helpful or illuminating witnesses for the government,” Publishers Marketplace notes. HarperCollins CEO Brian Murray said without pressure from News Corp executives (as a reminder, News Corp is the parent company of HarperCollins), he likely would not have signed an agency agreement with Apple in January 2010 before the iBookstore launched: “If I was making this decision at this point in time for only HarperCollins, I would not sign the deal. I would have waited and continued to negotiate…I thought the best chance of me getting good terms with Apple was if I was able to engage Amazon or Barnes and Noble in a conversation at the same time, and both of them had told me they were not ready to begin a discussion.”
  • One of the government exhibits was an email exchange in which News Corp CEO Rupert Murdoch told Murray he wanted to “screw Amazon,” after Amazon announced that it would offer authors a 70 percent royalty through Kindle Direct Publishing (essentially the same terms as an agency model). “That move infuriated a number of publishers,” reports Publishers Weekly, “including Murdoch, apparently, who saw the move as a threat from Amazon and more proof that Amazon would one day seek to woo publishers’ authors directly.”Screen Shot 2013-06-11 at 8.44.15 AM
  • HarperCollins negotiated an “Author Outs” provision with Apple, reports the New York Post, “which meant not all new releases would sell under the agency model” if an author didn’t want to, but it’s unclear whether this option has ever been exercised.
  • Macmillan CEO John Sargent told DOJ attorney Mark Ryan ” he never believed Sony could compete, doubted whether Barnes & Noble could succeed as a device-maker, and said that Google, while great at search, is a terrible retailer,” Publishers Weekly reports. And “Sargent also made no bones about what Macmillan hoped to accomplish with Amazon. ‘Typically one party controls price, and one party controls availability. Amazon wanted both. And we were going to force them to choose one or the other.'”

On Tuesday, Sargent will complete his testimony, followed by either Hachette CEO David Young or Apple director Keith Moerer. On Wednesday, the government’s expert witnesses are expected to testify, and Apple SVP Eddy Cue is set to take the stand Thursday.

If you want some separate background reading in the meantime: Gordon Crovitz has a Wall Street Journal editorial that describes the ebooks case as “Exhibit A in the case against market meddling,” and The Verge profiles Apple’s lead counsel Orin Snyder, writing, “Snyder is not yet the household name that David Boies or Alan Dershowitz are, but he’s speeding in that direction.”

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  1. Thanks for the recap. Any idea who the “government’s expert witnesses” are?

    1. Jack, the names I have are Orley Ashenfelter, Richard Gilbert, and Jonathan Baker.

  2. Madelyn Griffith-Haynie, MCC, SCAC Saturday, June 15, 2013

    Thanks for keeping us informed about the current situation. I’d like to ring in with my take on the entire dynamic.

    The Publishing Industry, the Movie & TV Industries and the Music Industry are being dragged, kicking and screaming, to a table where the central question hovers like the proverbial elephant in the room: “Who is the OWNER of the product?”

    Because only ownership *guarantees* the right to be paid fairly for your work. It is obscene, IMHO, for Unions to be forced to *negotiate* for fair compensation. The number of walk-outs and picket lines lends credence to the idea that those negotiations seldom proceed in good faith from “the big boys.”

    For far too long, creators have been treated like galley-slaves with lottery tickets — if you work for us long enough to climb to the top tier of a small percentage of “super names” (where you have us over a barrel), you have a shot at being paid a fairly for the reality that, without you, we have no product.

    Thanks to the web, the worms are turning. Capitalist Greed will not be tolerated for much longer.

    BY THE WAY, I am not one who demonizes the contributions of the any of the above Industries

    * They are valuable as venture capitalists, and deserve a respectable and respectful ROI.

    With the Publishing Industry as an example, it seems to me that a 30% return is better than they’ll get with most investment vehicles. I don’t understand their objection to Amazon’s model, looked at in that light – IMHO, it seems high, especially as a first-tier solution.

    * They are valuable as marketing engines (*as long as* they DO market), and deserve to recover their expenses in addition to a piece of the profit pie.

    * They are valuable as service providers who can offer “economies of scale” – copy editing services, layout & graphic design advice and services, their function as retail outlet placement agents, liaisons with print services, etc. This function, too, deserves expenses repayment and a piece of the profit pie.

    B-U-T, when the pie is sliced so that the individuals who create the product to begin with get little more than a taste or two as compensation, those who believe they sit in some kind of catbird seat are foolish to communicate as if they also believe that current compensation structures will continue to be tolerated as other options become available.

    ~~~~~
    Madelyn Griffith-Haynie, CMC, SCAC, MCC
    – ADD Coach Training Field founder; ADD Coaching co-founder –
    (blogs: ADDandSoMuchMore, ADDerWorld & ethosconsultancynz – dot com)
    “It takes a village to transform a world!”

  3. Thanks for the recap Laura. Fascinating case with big implications for the publishing industry. Any idea when this case will wrap up?

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