Terse Testimony Flows in E-Book Price-Fixing Trial - CIO Today

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Macmillan CEO John Sargent, who testified this week at a trial over alleged price-fixing of e-books, was no one's idea of a friendly witness. Of the five publishers the U.S. Justice Department sued last year, Macmillan was the last to settle and the most defiant. The government alleged that Macmillan, HarperCollins, Simon & Schuster, Penguin Group (USA) and Hachette Book Group illegally conspired to raise wholesale prices in an effort to help Apple make headway against Amazon in the e-books market. Speaking last month at BookExpo America, the publishing industry's annual convention, Sargent labeled the government's view of the e-market as "extraordinarily myopic.""They carried the water for Amazon, when it had 92 percent of the market," he said, criticizing the justice department for caring more about price than a possible monopoly. "The senior guys, (Attorney General) Eric Holder, are just incompetent."
Apple is the only defendant left in the antitrust suit, filed in response to the 2010 launch of the iBookstore and a new "agency" pricing system. Publishers, who had worried that Amazon's pricing of some new e-book releases at $9.99 was crippling to the industry, welcomed the arrival of Apple and an "agency" model that allowed publishers, not retailers, to set the cost of e-books. Many new releases were sold for $12.99 or $14.99, a change the government has cited as unfair to consumers.
Apple has insisted that its entrance into the e-book market improved the online book industry and stabilized prices for the long term.
Sargent, 56, has said he only settled because Macmillan, owned by the German-based Holtzbrinck Publishers, was "not large enough to risk a worst-case judgment," an opinion he clearly still held on the stand. Whether under direct or cross testimony in U.S. District Court on Monday and Tuesday, the lean, graying Sargent changed neither his posture nor manner of speaking. His dark, deep-set eyes stared right at the questioning attorney, his head was erect, chin upturned, his answers crisp and often terse.
"What I'm doing here is negotiating," he said in response to questions from Justice Department lawyer Mark Ryan about exchanges he had with Apple over contract terms.
Sargent is seasoned in conflict. In January 2010, soon before Apple announced its e-book store, Sargent became the point man in the publishers' dispute with Amazon when the online retailer disabled the "buy" tabs for releases by Bill O'Reilly, Jonathan Franzen and other Macmillan authors.
Sargent said that he had proposed that Amazon either accept the agency model or face a "window" of seven months before new e-books would become available -- a policy that had become common among publishers in 2009 because of fears that cheap e-books of new releases were harming the hardcover market. The standoff ended after a few days with Amazon agreeing to the agency system. (continued...)
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