Apple's Eddy Cue- Yep, we caused e-book pricing to rise

Apple's Eddy Cue: Yep, we caused e-book pricing to rise
NEW YORK -- A high-level Apple executive admitted his company's deal with publishers caused some e-book prices to rise, giving weight to the government's accusation that Apple's machinations hurt consumers.Eddy Cue, Apple's senior vice president of Internet software and services, who took the stand Thursday in district court in lower Manhattan, also said Apple considered splitting the market with Amazon in a setup where Apple would control the music market, while Amazon would monopolize books.Cue's testimony marks a pivotal point in the trial, in which the Justice Department is attempting to prove that Apple's deals with the publishers artificially inflated e-book prices. Apple has maintained it has done nothing wrong. Related stories:Steve Jobs initially didn't want an iBookstore, Eddy Cue saysApple hammers Google witness hard in e-book pricing trialFocus, criticism shifts to Amazon in Apple e-book trialIt was Apple's way or the highway, e-book execs sayApple: We wanted a 'level playing field' for publishersApple and the DOJ face off over e-book prices (FAQ) Cue, however, acknowledged that the price of certain digital books, such as New York Times best sellers, increased after Apple opened its iBookstore in April 2010 and remained elevated through 2012. He noted it wasn't a surprise prices rose because all publishers told him they had problems with Amazon's $9.99 pricing. "They had expressed they wanted higher prices from us," he said.Apple's defense, meanwhile, spent much of the afternoon walking Cue through his responses to DOJ questioning. He sought to show that Apple was looking out for customers and pursuing legitimate business agreements, not trying to change the e-book market. And Cue said he believed that while some prices would be higher, consumers ultimately would benefit from the bigger selection of titles."I knew some books would definitely go up, but others are available for the first time there," Cue said. Cue, who typically sports jeans and a button-down shirt, wore a gray suit, white collared shirt, and red tie to court. He rarely raised his voice and kept a neutral expression on his face, but started to get testy during certain lines of questioning, such as whether Apple cared if consumers had to pay higher prices. By contrast, Cue became more lively and engaged during questioning by Apple attorney Orin Synder, talking animatedly about how he negotiates content deals. The Justice Department tried to show that Apple didn't care if consumers had to pay $12.99 or $14.99 for e-books instead of $9.99, but Cue disputed such comments."Our consumers were protected by my price points," he said. "I thought we were going to treat our consumers very, very fairly."A debate has been going on during the trial about whether digital book prices did in fact rise after the iBookstore launched. Apple's attorneys have argued that pricing has fallen, but the U.S. Department of Justice has said prices spiked "dramatically" after Apple's entry into the market. A Justice Department expert witness -- Richard Gilbert, emeritus professor of economics at the University of California at Berkeley -- on Thursday testified that even if overall average pricing fell, it didn't mean customers weren't harmed or that certain segments didn't rise. "Here you have clear evidence some titles went up in price," Gilbert said, noting overall prices haven't been affected by some new publishers and authors entering the market with books priced very low, such as at $2.99. But pricing for best sellers and other titles have risen, he said.Apple's Eddy Cue introducing iTunes Radio earlier this weekJames Martin/CNETThursday marked the end of the second week of the three-week trial in the district court in lower Manhattan. Testimony will resume Monday, and closing arguments are scheduled for June 20. Cue will take the stand again Monday. Cue is the highest-ranking Apple executive to testify during the trial. The Justice Department has portrayed Cue as the "chief ringleader of the conspiracy" to control e-book pricing, and it has said his testimony would show Apple colluded with the publishers to boost digital book prices and hurt rivals such as Amazon. Conversely, Apple's attorneys are counting on Cue to reinforce their defense that Apple's actions simply were standard negotiation tactics. "Nailing him down to certain facts is really critical," said Chris Sagers, a law professor at Cleveland State University who has been following the case but isn't directly involved. "He's obviously not just going to say what the government wants him to say."The Justice Department, which initially sued Apple and a handful of the nation's largest publishers, contends that Apple forced publishers to move to an agency model, in which publishers set the prices, and away from the traditional wholesale business, which typically results in lower prices for the consumer.Apple executive Eddy Cue in February of 2009 suggested Apple pursue a deal with Amazon to split the music and book markets.U.S. Department of JusticeDuring the course of testimony over the past several days, Apple executives and publishers have discussed the process for reaching deals for the iBookstore, and Amazon and Google executives also have talked about their own negotiations with publishers. Apple has attempted to draw parallels between itself and Amazon, showing that the different nuances of their respective deals are par for the course in the industry, and not a conspiracy to inflate prices.Cue, who described negotiations with publishers as difficult, on Thursday said he didn't believe publishers worked together to change pricing and reach deals with Apple. "They argued different points," Cue said. "If they talked together, I assumed it would be easier to get the deals done."He also noted that he "wasn't trying to negotiate" for the entire e-book retail market or trying to resolve publishers' issues with Amazon's pricing. Updated at 2:50 p.m. PT with information from the defense's questioning.

MySpace Music- Why limit it to majors-

MySpace Music: Why limit it to majors?
But there was always a major gap: if we wanted to sell downloads, CDs, or anything else, we had to guide fans to another site or service, such as our own home page with a PayPal account or CDBaby.Today, MySpace announced a deal with three of the four majors (EMI is sitting out for now) to offer DRM-free MP3 downloads, ringtones, and merchandise through the artist pages on MySpace. This is long overdue: the music industry needs to go where their fans already are, and with 30 million people regularly listening to music on the site, it's a mystery why the labels haven't tried to reach these folks before now.But major label acts are a small part of the MySpace experience. The only reason you ask The Police or Death Cab to be your "friend" is to show off your impeccable taste to your real friends, the individuals and small-time artists who you're actually connected with. These are the folks who leave individualized comments on your page and send you instant messages, and their gigs appear right alongside Radiohead's on your home page. MySpace is the ultimate long tail site for musicians, where bar bands and small-town heroes can appear in the same context as the biggest bands in the world. So I'm not sure that MySpace Music will be a game-changer. Fans of big bands already know where to buy merchandise--the band's Web site, or Amazon's CD section, or iTunes, or their local retail store. Sure, big fans who count major-label acts among their "friends" might now stay within MySpace to buy new songs from these bands, and some MySpace users might discover (and buy music from) new acts via friends of friends. But a lot of fans don't know (or care much about) the difference between major and independent artists, and might wonder why only some acts make their wares available for purchase. The inconsistency will be confusing, and drive users back to the traditional music-buying sites (or free file-trading services, which aren't going away).The real game-changer comes when MySpace offers a full e-commerce store--downloads, CD sales, the works--to every artist with a musician's page on the site. That way, users would never have to leave the site to buy any music they heard on the site. The challenge would be building the infrastructure, but once things like billing and provisioning downloads are in place for the majors, it might not be much harder to set up a CDBaby-like system for everybody else.