Thursday, March 8, 2012

Reason #149: The DOJ Strikes Again

As someone who is generally a fan of Apple yet also owns, and makes frequent use of, an Amazon Kindle, I have a special interest in the news that the Justice Department is officially planning to bring an antitrust lawsuit against Apple and a bevy of major publishers for allegedly fixing the price of e-books. This line from last year's incredibly-timed Steve Jobs biography sums it up very well:
"So we told the publishers, 'We'll go to the agency model, where you set the price, and we get our 30 percent and yes, the customer pays a little more but that's what you want anyway.' ... So they went to Amazon and said, 'You're going to sign an agency contract or we're not going to give you the books.'"
The "agency model", basically, is one in which retailers are not buying the content outright, but buying the rights to resell it at a pre-approved price. The DOJ is accusing Apple of lauching the iPad amidst a deal with several publishers to keep e-book prices at a high enough level to offset the production costs that went into making the iPad in the first place.

They then told Amazon, whose bare-bones Kindles are presumably a good deal cheaper to produce and distribute, that they had to charge the same amount as Apple or the publishers would pull out of the Kindle Store altogether.

I appreciate that Apple is driving innovation, and having worked in the electronics industry (read: Staples and GameStop) for a few years, I can appreciate that new hardware of any kind is a giant money pit and it's not unreasonable to ask customers to pay a premium for content on said hardware.

But teaming up with the publishers to force Amazon to play ball is bullshit - the whole reason I got a Kindle is because I don't need a $600 e-book reader when a $130 one does the trick. Making Amazon punish its customers for their frugality is nothing short of bullying, and it should be beneath any company founded by a Buddhist.

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