Steve Jobs email may doom Apple defense against ebook price fixing scheme suit; in wake of Justice Dept. action, Amazon slashes ebook prices

Book publishers, petrified that Amazon.com would wreck their wholesale bookselling model with agressive ebook pricing, adopted an agency model with Apple to regain pricing control over their wares, which was perfectly legal. What was not was conspiring amongst themselves to do so, which the Department of Justice alleges they did in multiple meetings in private dining rooms at exclusive New York restaurants without the presence of their lawyers.

Jobs is quoted in the complaint as having said at one point during the negotiations: “We’ll go to [an] agency model, where you set the price, and we get our 30 percent, and yes, the customer pays a little more, but that’s what you want anyway.”
     The suit notes: “Apple saw a way to turn the agency scheme into a highly profitable model for itself. Apple determined to give the publisher defendants what they wanted while shielding itself from retail price competition and realizing margins far in excess of what e-book retailers then averaged on each newly released or bestselling e-book sold.”
     Under the agency model, the publisher would set the price and the retailer would be required to maintain that price. Thus, the publishers could end Amazon’s $9.99 e-book discount sales by simply setting the price higher.