Tuesday, August 27, 2013

Apple Concedes to New Terms with Publishers, Resists eBook App Changes

Publishers Lunch

The Federal Court docket now includes two separate filings from Apple's attorney on Friday, presenting the company's revised approach to the proposed injunction. Apple is walking a line between Judge Denise Cote's guilty verdict and the company's belief that they are innocent and their hopes to prevail on appeal. Nonetheless, Apple attorney Orin Snyder insisted in his letter to Judge Cote on Friday that the company "has attempted in good faith to listen carefully to the court's concerns and address those concerns in a forthright manner, even while it pursues what it believes to be strong arguments on appeal."

Our focus remains the implications for publishing rather than the larger effects on Apple and there one thing remains clear: The settling publishers are getting thrown under the bus one way or the other. Apple happily "tracks and implements precisely the Court's suggested requirement that Apple engage in staggered and independent negotiations with defendant publishers starting in two years" after the entry of final judgment. Their only variation from the revised DOJ proposal is that Apple wants "the right to select the order of publishers for renegotiation" every six months after the two-year period, rather than following the DOJ's list -- which calls out Macmillan for a little special punishment by putting them last in the sequence, no doubt retaliation against company ceo John Sargent.

Absent any extraordinary change in course from Judge Cote, the publishers who thought that their court-approved settlements assured them two years only (or less, for Macmillan and Penguin) of limited agency will find themselves subject to new, far stiffer requirements on their Apple contracts. At a minimum, they will be subject to three or more years of court-modified terms ("time served" plus the new, more severe two year called for in the Apple injunction), with some publishers affected for six years or beyond. The more the judicial process is delayed -- including the possibility of a stay of the injunction pending appeal -- the longer publishers will operate under the new, two-tiered set of penalties.

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