Apple is currently facing a lawsuit against the Department of Justice, in which they are claiming that Apple’s agency model is a product of conspiracy.
Newspapers, magazines, and other traditional media outlets want a pass. They don’t even want to pay the 30% that Apple is being sued against.
‘I don’t think you understand. We can’t treat newspapers or magazines any differently than we treat FarmVille.’
With those words, senior Apple executive Eddy Cue stuck to his take-it-or-leave-it business model of a 30% revenue share payable for transactions through the iTunes service. Despite my arguments to Mr. Cue in Apple’s Cupertino, Calif., offices last year on behalf of news publishers seeking different terms, to him there was no difference between a newspaper and an online game.
In the end, media brands don’t get special treatment in the ‘new digital world’.
The Model that works
The model looks the same as Apple’s arrangement for apps and music, right down to the same percentage Apple takes from sales. It’s the publishers that have control over pricing, and Apple just needs 30 cents to take care of it’s platform.
Apparently if you’re the CEO of a large company you need to avoid posh restaurant dining with other executives in your industry.
Allegations of price fixing are hard enough to prove in mature industries such as steel or railroads, where arguably executives could control prices by dining together in posh restaurants.
There is little to be said for the DOJ’s claims. They are simply showing how clueless they are. If they were more technology-savvy they would have understood the impact this case might have. Apple and the iBookstore might have had an impact on Amazon’s monopolistic, single price point hold on the ebook industry.