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Apple official says he ‘didn’t raise prices’ on e-books

Cecilia Kang (via WP Bloomberg/ AFR) | June 14, 2013
Apple senior executive Eddy Cue said in federal court Thursday that some popular e-book titles may have gotten more expensive after his company got into the business but that Apple was not to blame for those price hikes.

Apple official says he ‘didn’t raise prices’ on e-books
Eddy Cue, Apple’s senior VP of internet Software and Services, centre, exits Manhattan federal court following his testimony in the e-book pricing trial. Photo: AP

Apple senior executive Eddy Cue said in federal court Thursday that some popular e-book titles may have gotten more expensive after his company got into the business but that Apple was not to blame for those price hikes.

Cue, the head of Apple's iTunes business, has been portrayed by the government as the "chief ringleader of the conspiracy" between Apple and major publishers that worked together to force all retailers to increase e-book prices.

To provide evidence of that collusion, federal prosecutors noted the dozens of email exchanges and records of more than 100 phone calls and handwritten notes sent between Cue, other Apple executives and the publishers.

In response, Cue admitted he simultaneously negotiated deals with five major publishers - Penguin, Simon & Schuster, HarperCollins, Hatchette and Macmillan. He even shared with publishers the progress of negotiations with rivals in general terms.

But he stressed he was solely focused on winning contracts for Apple to enter the digital books market, not to unfairly hamper rivals such as Amazon.

"I didn't raise prices," Cue said.

In a rare emotional moment, Cue said he had been working "24/7" because he wanted to complete arrangements with publishers so the e-books store could launch with the introduction of the iPad. It was something he wanted to do for late Apple founder Steve Jobs, who was growing increasingly sick at the time.

"Steve was nearing the end of life when we launched the iPad. . . . I wanted be able to get that done in time for that because it was important to him," Cue said.

As chief negotiator for Apple in all its content deals with record labels, book publishers and movie studios, Cue is a central witness in the Justice Departments's antitrust lawsuit.

30 PER CENT CUT
The government contends Apple in late 2009 and early 2010 pushed publishers to go with a so-called agency model. That structure allowed publishers, rather than retailers, to set the price of e-books, while Apple would receive a 30 per cent commission from the sales.

The publishers then pushed Amazon, which held 90 per cent of the e-books market, to adopt a similar model, with Apple's backing, the government has said. Meanwhile, prices rose by as much as $US2 to $US4 for popular titles, US attorneys said.

During Thursday's testimony, prosecutors introduced a Feb 10, 2010, email from Jobs to Cue to prove Jobs knew of the scheme to fix prices and force Amazon to hike its e-book prices.

 

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