“‘I don’t think you understand. We can’t treat newspapers or magazines any differently than we treat FarmVille,'” L. Gordon Crovitz writes for The Wall Street Journal. “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,” Crovitz writes. “It was a sobering reminder that traditional media brands have no preferred place in the new digital world.”
Crovitz writes, “It also should be the defense’s Exhibit A in the Justice Department’s antitrust case against Apple and book publishers: The 30% revenue-share model is Apple’s standard practice, not, as alleged by the government, the product of a conspiracy. Whether it’s news, games, apps or books, Apple’s position is the same. The market determines the price, and Apple gets 30%. The Justice Department fails to acknowledge anywhere in its 36-page complaint against Apple and book publishers that this is the standard approach. (Indeed, the government complaint inaccurately refers to ‘30% margins’ for Apple. Operating margins are very different from sales commissions.) The government says this ‘agency model’ is inherently wrong (‘per se’ wrong, in legalese) and ‘would not have occurred without the conspiracy among the defendants.'”
Crovitz writes, “The problem for the government is that there’s nothing wrong with the agency model, which has been upheld by federal courts and is common across many industries… A more humble, more technology-savvy Justice Department would have exercised restraint by letting the e-book market evolve instead of ordering it to freeze into a single model with a single provider at a single price point for consumers.”
Read more in the full article here.
MacDailyNews Take: As we stated on April 11th: “The U.S. DOJ is plainly inept.”
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