Opinionated Take on Apple’s Reasoning for Overpriced Books

If you haven’t already heard, amid fights with other companies, Apple is fighting a war with the Department of Justice (DOJ) regarding allegations of overpricing e-books. They have offered justification – we offer our opinion.

Quick background: Apple and a few other publishers are fighting the DOJ after being accused of overpricing their iBook e-books rather than sticking to Amazon’s current low pricing model.

Apple has publicly stated that they simply cannot treat app developers differently than publishers. They want to apply their 30% revenue share policy universally to all of their markets, which is what they’ve dug up in defense for the overpriced books; they allow publishers to set their own price to accommodate themselves while also working in Apple’s given margins.

The following comes from iPhoneHacks, which was originally reported by The Wall Street Journal:

“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.

This justification may or may not work as a first line of defense for Apple when they have their case heard in court. It has some slight meaning/logic in it, but otherwise it’s not too promising. Apple went for years assigning prices to songs, and they now allow publishers to set the price given their 30% revenue share policy. This makes everything equal; App Store developers, music rightholders/publishers and iBook publishers all get the same treatment from Apple; they’re all allowed to set their own prices.

While Amazon’s low pricing model may be in favor of its customers, it doesn’t cater to publishers. By offering publishers to set their own prices, Apple are firstly winning over publishers to slowly shift to using iBooks prominently. It may turn a few potential customers off, but Apple, truly, has power and influence. People are going to buy from Apple regardless – that’s what Apple wants: satisfy publishers, get all of their fanboys to purchase and ultimately become the most favorable e-book market for both of the aforementioned groups.

It’s understandable why Apple would prefer not not to price media manually. It would need a ton of manpower, and they wouldn’t know what would be the “correct” price for a certain type of media. In the case of books, also, there are tons of factors that make the price between varying books fluctuate: length, popularity, age, etc.

And of course Apple wouldn’t want to be seen as a discriminatory company by allowing some markets’ publishers to price their own media and not let another’s.

It’s only natural for the DOJ to be crawling all over Apple, though. I’m not a professional in law or any other related field that would in anyway pertain to my opinions above; just my two cents. Without criticism, feel free to leave what you think below in the comments.