Apple hadn’t wanted Cook to testify, writing in a letter to the court on Monday (PDF) that the government’s original complaint didn’t mention him (it only refers to former CEO Steve Jobs) and that Cook — who was previously the company’s chief operating officer — doesn’t possess any “unique knowledge about Apple’s decision to enter the ebooks market and recalls no relevant ‘private conversations’ with Mr. Jobs.”

However, according to Reuters, Judge Cote said in a teleconference Wednesday that because of Jobs’ death, “I think the government is entitled to take testimony from high-level executives within Apple about topics relevant to the government case.” Court documents supporting her decision have not yet been posted to PACER.

The DOJ sued Apple and five book publishers last April for allegedly conspiring to set ebook prices. All five publishers in the case have settled.

Class action lawyers had earlier demanded that Isaacson provide evidence, based on his interviews with Steve Jobs, about why Jobs asked publishers to sell books on Apple’s iPad device. Isaacson refused to hand over his notes and invoked a New York law that allows journalists to shield their sources in many situations.

The lawyers, who want Apple to pay for allegedly fixing book prices, had subpoenaed Isaacson and said the reporters’ shield did not apply. Last week, however, court documents show the parties agreed to drop Isaacson from the case.

The Isaacson dispute comes at a time when Apple’s antitrust showdown with the Department of Justice and class action lawyers is coming to a head. While the five publishers who were also named as defendants decided to settle, Apple is rejecting the accusations that it acted as the hub for an illegal conspiracy to raise book prices and thwart Amazon. Meanwhile, Amazon executives are poised to testify against Apple.

Even though the Isaacson biography is no longer part of the case, a court transcript shows Steve Jobs will remain a central figure. In response to a question about who decided to sign contracts with book publishers, Apple executive Keith Moerer said, “Ultimately, I would say it was — Steve. But working closely with — with Eddy, Mr. Cue.”

Meanwhile, other recently filed court documents identify one recipient of a highly publicized Jobs email about Amazon and pricing — the recipient was James Murdoch, a senior executive at News Corp, parent company of HarperCollins. The other recipient(s) are still redacted. You can see the email below:

Steve Jobs Emails by

1. What major U.S. mobile carrier is still operating under its original name?

A: AT&T
B: Verizon Wireless
C: Sprint
D: T-Mobile

2. In April, the Department of Justice and 31 states sued book publishers and Apple for allegedly colluding to set ebook prices. Which of the following did NOT APPEAR in the DOJ and states’ original complaints?

A: A “decisionmaker” was quoted as saying “F*** Amazon.”
B: A publishing executive was quoted as instructing someone to “double-delete this email.”
C: Publishing CEOs were described as meeting in “‘The Chef’s Wine Cellar,’ a private room at Picholene,” where “business matters were discussed.”
D: Publishing executives referred to themselves in an email as “the Club!”

3. Just as Twitter launched its own photo editing and filters service, Instagram released updates to its popular app, including the addition of a new photo filter. What was this filter called?

A. Wander
B. Willow
C. Wrestle
D. Tousle

4. We’re producing and consuming data at the same rate your kids attack the bowls of holiday M&Ms left around the house this time of year. But as we move past petabytes and exabytes to the even more esoteric zettabytes and yottabytes what comes next?

A: Googolbytes
B: Brontobytes
C: Gegobyte
D: Mondobytes

5. What was one of the big secrets about Apple revealed during executive testimony at the Apple-Samsung trial?

A: Jony Ive had been lobbying for years for an iPhone with a 5-inch screen
B: Scott Forstall was not Steve Jobs’ first choice to run the iPhone team
C: Steve Jobs was not against the idea of 7-inch tablets after all
D: Google’s Eric Schmidt had helped convince Jobs to build the iPad

6. Long before the iPhone, Androids and Windows Phone, Microsoft did have a sizable percent of the personal digital assistant (PDA) market. These devices eventually turned into Windows Mobile smartphones and at one point, the platform was forecast to surpass that of Symbian. Which of these companies did NOT make a Microsoft-powered PDA:

A: Casio
B: Handspring
C: Toshiba
D: Compaq

7. What event set the new world record for the most simultaneous tweets per minute in 2012?

A: The closing ceremonies of the Summer Olympics
B: A live Twitter interview with Justin Bieber
C: Pope Benedict’s first Twitter conversation
D: The night of the federal election

Click through to see the answers.

Feature photo courtesy of Shutterstock user Shawn Hempel; Tim Cook/Dave Grohl photo courtesy of @tim (Tim Bradshaw)

Go to page 2 (of 2) on paidContent .

While Simon & Schuster has placed particular emphasis on online video, other publishers are also using it as a promotional tool. Reading community site Goodreads has its own video section, and website Book Riot has a separate section for book trailers. Readers and fans have come to expect “readily available and entertaining information both about their favorite authors and those they’re considering reading,” said Simon & Schuster EVP and chief digital officer Ellie Hirschhorn. “Video is now a critical part of that mix.”

Since many web users search for topics, not individual titles, Simon & Schuster has created three video channels that will appear on Roku and Blinkx. Two of the channels, “Tips on Healthy Living” and “Tips on Life and Love,” focus on videos from lifestyle and relationship authors (and have corresponding blogs), while “Book Stew” features author interviews for pop culture and general interest books.

Hirschhorn said Simon & Schuster’s most popular videos have been Walter Isaacson speaking on his book Steve Jobs (13,562 views on YouTube) and a book trailer for Hunger Games parody The Hunger Pains (over 1.5 million views on YouTube). The most successful videos, she said, provide “entertainment that is not an advertisement,” and tend to be under two minutes long.

The ruling came after plaintiffs issued a subpoena in May that required Isaacson to hand over his source materials. Their lawyers claim his notes and interview recordings with Jobs will help establish that the late Apple founder brokered a conspiracy with publishers. In their lawsuit, the plaintiffs have already jumped on passages in Isaacon’s biography (such as Jobs saying consumers would “pay [] a little more”) to support their case.

Isaacson, a prominent historian and journalist, is willing to authenticate passages in the book. But he invoked the reporter’s privilege and refused to hand over his source material or even a list of Jobs-related documents and recordings. His lawyers then asked U.S. District Judge Denise Cote to quash the subpoena.

On July 20th, Cote agreed that Isaacson did not have to comply with the subpoena. She added, though, that the lawyers could try again if they can pass a legal test that allows the disclosure of journalists’ non-confidential material in some circumstances.

Isaacson’s attorney, Elizabeth McNamara, said in a phone interview that the class-action lawyers faced a high bar to show the “notes are highly relevant and necessary to the case.” She added that none of Isaacson’s taped recordings with Jobs discuss e-book pricing.

Plaintiffs’ lawyer Steven Berman has argued that the reporter’s privilege shouldn’t apply because Jobs didn’t ask Isaacson for confidentiality. He also claims that they can get Jobs’ information on ebooks from other sources.

The dispute comes at a time when the reporter’s privilege has been in the spotlight for the federal government’s effort to knock it down in military cases. A Virginia appeals court, for instance, is preparing to rule on whether the Justice Department can compel a Wall Street Journal reporter to testify in a case against a former CIA officer.

The Second Circuit Court of Appeals, which oversees New York courts, has affirmed the reporter’s privilege numerous times. It recently warned:

“wholesale exposure of press files … would burden the press with heavy costs of subpoena compliance, and could otherwise impair its ability to perform its duties … [it] would risk “the symbolic harm of making journalists appear to be an investigative arm of the judicial system, the government, or private parties.”

The ruling was first reported by Publishers Weekly.

(Image by Bedrin via Shutterstock)

We do — that was that state of digital media when paidContent launched in 2002. Other weird things were happening back then too: People still got much of their news from television and newspapers, and they learned about major events after they had already happened.

There have been some huge shifts since 2002: Tablets and smartphones are now ubiquitous, lots of people read on their digital devices, and just about everyone is part of a social network or three. This summer is the tenth anniversary of our launch. In an effort to gain some perspective on the past decade in digital media, I’ve been reading back through paidContent’s archives — a collection of over 80,000 posts.

Since I was only a freshman in college when paidContent came to life, I often didn’t know, as I read through the stories from the early days, how things had begun or how they turned out. As I watched them unfold, I wanted to grab our readers’ arms and give them advice (“Don’t buy that Zune!” “Invest in Facebook!” “Go for the good Twitter handle now!”). But I also realized how difficult it is to predict success.

Some takeaways from my trip through the archives:  Some companies — AOL and Yahoo come to mind — have been consistently bad at predicting what consumers want. And a couple of companies, namely Apple and Amazon, have been very good at it. Also, being a native digital company helps, but it’s no guarantee of success (what up, MySpace?). And after all these years, it’s still not clear what content customers will pay for, or how much they’ll pay.

Streaming and Moviebeaming

What do analysts, CEOs and bloggers have in common? None of us can predict the future. Roger Ebert joked in 2002 that “on-demand streaming movies on the Web, like HDTV, are five years in the future — and will be for at least another 10 years.”

If Disney’s Moviebeam had been the only game in town, Ebert probably would have been right. When it launched in three cities in 2003, customers paid $6.99 a month to use a device that could hold 100 movies and plugged into the back of a TV set. They also had to pay for each movie they watched– billing was done via the phone line. The company went through various unsuccessful iterations before India’s Valuable Group bought it in 2008. It was never heard from again.

Netflix almost went down the same road. It had a plan to release a Moviebeam-like “proprietary set-top box with an Internet connection that could download movies overnight.” But instead, it decided to forge ahead with streaming — starting with a complicated “quota hours” system in 2007 and moving to unlimited streaming in 2008. By 2010, the majority of subscribers were streaming something, and the company began offering streaming-only subscriptions, though CEO Reed Hastings said that same year that the company would keep shipping DVDs until 2030. (We’ll see about that.)

ABC was the first network to sell episodes of its shows on iTunes, back in 2006, and to stream shows free with ads on ABC.com — and later on AOL. But by the time premium subscription service Hulu Plus launched in 2010, the platforms getting the attention were devices with built-in access, like Internet-enabled TVs, Blu-ray players, and tablets.

Return of the living dead

Speaking of AOL: It’s something of a miracle that the company still exists. In 2000, when it merged with Time Warner, it was valued at $350 billion, and the next year, more than 24 million people in the U.S. were paying for its Internet access service. By the end of last year, that number had dwindled to just 3.3 million subscribers. Here’s a quick recap of some of AOL’s miscues over the years:

• AOL Voicemail ($5.95 per month)
• A teen service called Red (featuring “a talking head—using the image of an actual employee—that uses software to answer users’ questions”)
• A digital music partnership with Burger King
• A reality show called “Gold Rush”
• Social networking site AIM Pages
• Going free
• The hyperlocal Patch blogs

Though AOL was once a high flier, no other company ever liked it quite enough to buy it. Google bought a five-percent, $1 billion stake in AOL in 2005, leading analysts to wonder if Microsoft missed out. That resulted in a $726 million writedown in 2009. Time Warner bought back Google’s stake and finally spun off “the albatross” in December 2009.  AOL is still promising a bounceback. “The executive team expects a profitable content business by next year,” CEO Tim Armstrong said in May 2011.

Yahoo hasn’t fared much better. The company launched Yahoo Platinum in 2003; for $9.95 a month, subscribers got access to audio and videos.  The program was dead by October of that same year. It later tried a Twitter-wannabe microblogging service (“Meme…where you share everything that you find that’s interesting,”). Perhaps the smartest move Yahoo ever made was not buying AOL.

Where did these companies go wrong? In 2010, former Time Warner CEO Gerald Levin pondered that question in an interview with the New York Times . The AOL-Time Warner deal was “undone by the Internet itself,” he said. “I think it’s something that no one could have foreseen, and to this day, whether Apple is going to dominate entertainment or whether Amazon is going to dominate publishing, all the old business plans are out the window. How do you get paid for content?”

Know what’s cool? A billion dollars

In 2006, an RBC Capital analyst estimated that a certain social networking company would be worth $15 billion in a few years, based on “raw, unprecedented user/usage growth.”

Six years later, Facebook went public with a valuation of $104 billion. Too bad the analyst wasn’t talking about Facebook but about MySpace. The social networking company that Rupert Murdoch acquired for $580 million in 2005 sold for just $35 million in 2011.

Why did Facebook soar while MySpace — and other social networking services like Friendster — sank? It allowed people to build real connections using their actual personal information, and rolled out a product that was ready to scale and had good technology. Other companies realized sharing was important too — in 2005, Yahoo SVP Jeff Weiner called sharing “the next chapter of the World Wide Web” — but Facebook was able to implement it in a way that kept users coming back. The site surpassed Yahoo and AOL for “stickiness” in 2009, when Nielsen found users spending an average of four hours and thirty-nine minutes a month on Facebook.

Social has already disrupted some industries — witness the rise of Twitter and the way it has changed the way news is reported, with stories like Osama Bin Laden’s assassination breaking there first. In a sign of the importance of these emerging platforms, newspapers like the Wall Street Journal and New York Times are launching “Everywhere” initiatives to deliver news to readers where they are already hanging out.

Fast food and music don’t mix

Hard to believe it now, but there was real skepticism that iTunes’ 99-cent songs would be able to compete with peer-to-peer file-sharing services. “According to academics who’ve studied the economics of digital music distribution,” we wrote in 2003, the year iTunes launched, “the cost still seems too high to attract users of peer-to-peer file trading services.” The piece cited an economist who believed “the appropriate price of a downloaded song is 18 cents.” In fact, Real Networks dropped its song prices to $0.49 in an attempt to compete against Apple.

In the end, consumers choose selection and convenience over P2P networks. We called iTunes “a kickstart for the micropayments industry.” Was it? While Steve Jobs said in 2004 that Apple wouldn’t hit its one-year, 100 million songs downloaded goal, global digital music sales crossed $1.1 billion in 2006. In April 2008, Apple surpassed Walmart  as the largest music seller in the United States.

The company that arguably started the digital music revolution — Napster — didn’t survive. Once it no longer offered “free,” it was done, though it tried to reincarnate itself: launching a mobile music service, “Napster To Go,” with AT&T in 2004 (the one smartphone that supported it could hold up to 6 songs), partnering with Circuit City on a digital music store, getting itself acquired by Best Buy in 2008 ,and then being bought back by Rhapsody in 2011. Unfortunately, Rhapsody was already losing out to newer (and free) streaming services like Pandora and Spotify.

The partnerships with Circuit City and Best Buy, though, were probably the kiss of death. One of the big trends of the past 10 years has been brick-and-mortar retail stores’ consistent failure to compete effectively against digital-native companies. Best Buy wasn’t the only retailer to try to crack the digital-content business — and fail: Target and Sears both took a shot. And McDonald’s sold digital content over its WiFi network and even tried DVD rentals in its restaurants.

Do you like the feel of paper?

Just as digital music didn’t really take off until Apple introduced the iPod, the ebook revolution didn’t take place until the arrival of the Kindle. In paidContent’s early years, ebooks were written off as a failure in part because publishers couldn’t figure out what to do with DRM. (In 2003, “temporary electronic ink” that would disappear after a few months was floated as a possible solution.) Barnes & Noble decided to stop selling ebooks in 2003, and Yahoo stopped selling them in 2004.

Meanwhile, Amazon and Google were pushing forward. Google launched Google Print – now called Google Book Search, and still besieged by lawsuits seven years later. Amazon tested two now-defunct programs: Amazon Pages, which allowed customers to buy access to digital copies of select pages from books, and Amazon Upgrade, which bundled print books with online access to the complete work.

Customers weren’t biting. Then Amazon came out with the Kindle in 2007 for $399. Less than two years later, Amazon was selling more Kindle books than print books, and ebooks now make up over 20 percent of some big-six publishers’ sales. Barnes & Noble has had some success with its Nook e-reader and digital bookstore, but bankrupt Borders shuttered all its stores in 2011. Meanwhile, the Department of Justice suit against Apple and five big publishers for allegedly colluding to set e-book prices drags on.

Good thing Steve Jobs looked beyond ringtones

A Forbes survey back in 2002 found that “business professionals” would be willing to pay for “news content to be delivered to their cellular devices,” and some media companies tried early mobile experiments. Verizon offered a cell phone version of the Yellow Pages — which, at $19.95 per year, gained 15,000 subscribers in three months. But starting in 2004, everyone decided the future was in ringtones. A $4 billion global business by the end of the year, one company projected.

So, so many ringtones. You could buy them from Rolling Stone or from an ATM-like device called E2Go. A fall 2004 marketing campaign let you mix your own ringtones on Levi’s website. Billboard launched a top ringtones chart.

Could ringtones “prove to be a passing fad”? we wondered late in 2004. Luckily, yes — a new technology came along to shake up the mobile market. No, it wasn’t the $500 ESPN phone, but the iPhone, which came out in 2007. And by opening its platform up to third-party app developers, Apple got users ready for its next ecosystem-changing device, the iPad, in 2010.

Monetizing mobile

Advertising has always been a fuzzy business — how exactly do you measure engagement and success? Well, that’s still the big debate about advertising in the digital era.  ”If here’s anything that’s really holding back ad spending on the web, it’s the lack of good measurements,” Tim Armstrong, then Google’s VP of national sales, said in 2007.

Mobile advertising has also faced obstacles. In 2006, mobile carriers began allowing advertising despite fears of annoying customers. Customers were indeed annoyed – 79 percent of them found mobile advertising annoying, according to a 2007 Forrester study — but they could “see the potential benefits of mobile advertising and marketing to themselves,” particularly if they could get a useful special offer or coupon.

Further complicating matters for advertisers: The smartphone market is fragmented among different brands — marketers don’t want to spend the money to create different ads for Android and iOS — and there are two mobile ad universes: mobile browser and apps.

Nevertheless, mobile advertising has gained ground, crossing  $1 billion in the U.S. for the first time in 2011, according to the Interactive Advertising Bureau, totaling $1.6 billion for the year.

The next opportunity is social media advertising. And once again, it will be a challenge to figure out some standardized metrics. What’s a retweet worth, anyways?

Back to where we all began

Though micropayments worked well for music when Apple launched iTunes, the path to payments for written content has been rockier. In 2004, we wrote that “micropayments today are still characterized by a large number of competing transaction types” – including direct-to-bill, merchant aggregation, prepaid accounts and direct transfer – and “each of these face the current incumbent in digital content distribution: the flat-fee subscription model.”

Eight years later, it appears that the subscription model has won out. The iPad opened the door for magazine and newspaper publishers to create new revenue selling content on that platform, but the results have been mixed. When Rupert Murdoch’s “The Daily” iPad newspaper launched in early 2011, the company called it “the model for how stories are told and consumed.” We wrote, “The bet here is that while consumers are less and less likely to reach into their pocket for a few quarters to buy a newspaper, they might not care about the 14 cents on their credit card for a copy of an e-newspaper.” A year and a half later, The Daily has over 100,000 paying subscribers — but it’s living on borrowed time and may not get through the five years its publisher has said it needs to break even.

Writing for the web, of course, has been around for awhile. At the beginning of the decade, blogging was called “nanopublishing,” and the question was how blogs could support themselves doing it. All sorts of models have arisen. For example, Gawker tried a licensing deal with Yahoo, but that relationship ended a year later. The deal “garnered way more attention than we expected, but less traffic,” Gawker CEO Nick Denton said in 2006.

Some bloggers have stayed independent and make a living from advertising (or from their day job); others write their blogs under a newspaper, website or larger magazine’s umbrella — see the Dish’s Andrew Sullivan, FiveThirtyEight’s Nate Silver, WaPo’s Ezra Klein. Or, they go to work for the Huffington Post!

Magazine companies have grappled with whether to bundle digital editions with print subscriptions or charge for them separately. Time Inc. — which first put digital editions of its magazines behind AOL’s paywall in 2003 — started out charging separately, but today Time Inc. and Condé Nast print subscribers get the digital edition free. Hearst, meanwhile, is charging separately, and it said its digital business in the U.S. became “solidly profitable” for the first time in 2011.

Could there ever be a Netflix for magazines? Time tried it for print versions with its 2008 Maghound service. It failed, due to a lack of marketing and reader interest. Magazine publishers are trying again with joint venture Next Issue Media.

Many newspaper publishers, most notably the New York Times, tried paywalls at the start of the decade and then abandoned them – only to return to the model in the past couple years.  In its most recent earnings report, the NYT said it has 454,000 digital subscribers. Is that enough to sustain the newspaper in its 21st-century transition?  Probably the best answer to that came from  Vivian Schiller. But it was in response not to the NYT’s recent digital subscriber numbers, but to the NYT’s decision in 2004 to close the paper’s first paywall, known as TimesSelect. Schiller, then the SVP and general manager of NYTimes.com, was asked whether TimesSelect had worked.  “It did work,” she said. “It’s just a matter of as compared to what.”

Birthday cake photo courtesy of Shutterstock user [Robyn Mackenzie].

TV photo courtesy of Shutterstock user [Somchai Buddha].

Zombie hand photo courtesy of Shutterstock user [lineartestpilot].

Piggybank photo courtesy of Shutterstock user [cardiae]

Fast food photo courtesy of Shutterstock user [Sergio Martinez].

Book photo courtesy of Shutterstock user [TrotzOlga].

Ringtones and apps photo courtesy of Shutterstock user [violetkaipa].

Cash register photo courtesy of Shutterstock user [titelio].

Magazines photo courtesy of Shutterstock user [bernashafo].

Apple set out the claims in a legal filing this week that responds to a sprawling class action suit. The suit seeks millions on behalf of consumers who allegedly overpaid for e-books after Apple and publishers changed to agency pricing.

The new filing is part of a complicated legal two-step in which Apple and two publishers are fighting both Justice Department antitrust claims and a parallel suit in which class action lawyers and state governments seek money.

Apple’s latest arguments comes after a colorful filing last week in which it said the Justice Department’s case was “fundamentally flawed” and mischaracterized Steve Jobs’ description of an “akido move” on Amazon:

“Akido” is not a team sport like football with a quarterback directing the plays; it is a defensive martial art practiced one-on-one by individuals, requiring use of little strength or power, based on redirecting an attacker’s own force.

This week’s filing has less flair and instead sets out point-by-point refutations of the class action lawyers’ claims. The most notable of these addresses a famous episode in which Steve Jobs told a Wall Street Journal reporter that “Publishers are actually withholding their books from Amazon because they’re unhappy.” Apple says this statement and another account in which Jobs said “Amazon screwed it up” and “We pulled it off” will “speak for themselves.”

Apple also notes that a series of bilateral contracts it negotiated with the publishers in January of 2010 have similar terms but are not identical. The point is intended to emphasize that Apple didn’t quarterback a conspiracy.

The most intriguing part of Apple’s filing, however, comes at the conclusion. That’s where Apple suggests that the class action can’t go ahead in the first place because some publishers are already paying money to state governments to settle some of the claims. Apple says it would be unfair for both actions to go forward at the same time.

Apple and two of the five publishers who are still holding out (Macmillan and Penguin) face an uphill legal battle as a federal judge earlier this month emphatically refused to dismiss the case.

To learn more about what the fuss is about, see our “Everything you need to know about the e-book lawsuit in one post.” Also, legal lovers can check out the new filing for themselves below:

Apple Response to Class Action
(Image by Robert Kneschke via Shutterstock)

According to Reuters’ copy of the filing, Apple stated:

“Apple’s entry into e-book distribution is classic procompetitive conduct” that created competition where none existed, Apple said in its court papers.

“For Apple to be subject to hindsight legal attack for a business strategy well-recognized as perfectly proper sends the wrong message to the market,” it added. “The government’s complaint against Apple is fundamentally flawed as a matter of fact and law.”

Apple also denied that the government “accurately characterized” the comment attributed to Jobs.

The “comment attributed to Jobs” is referring to a January 2010 email from Steve Jobs in which he seems to suggest how to set prices of e-books between $12.99 and $14.99.

The “fundamentally flawed” characterization of the case by Apple in the latest filing is a slightly more agressive version of the company’s initial response to the suit last month, when Apple called the accusations from the DOJ “simply not true.”

In April, the DOJ filed suit against Apple and five publishers – Hachette, Simon & Schuster and HarperCollins (who quickly agreed to settle), Macmillan and Penguin — accusing them of colluding to keep Amazon out of the e-book market unless it changed its pricing structure.

To get up to speed on the case since then, see my paidContent colleagues’ “Everything you need to know about the e-books lawsuit” post.

The states’ class action suit, which was filed the same day as the Department of Justice’s lawsuit, alleges that Apple and book publishers conspired to set e-book prices. Unlike the DOJ, the states seek monetary restitution for consumers. (They have already reached a settlement with Hachette, Simon & Schuster and HarperCollins.)

The states’ amended complaint makes public information that was redacted from the version filed in April. (It’s not clear why the information was originally redacted.) Much of the now-public information is duplicated in the Department of Justice filing against Apple and publishers, but some of it is new, including an e-mail from Steve Jobs. Among the content previously redacted and now public:

–Negotiating on Apple’s take: Macmillan CEO John Sargent attempted to negotiate with Apple’s Eddy Cue on a way to make agency pricing less painful for publishers (publishers actually make more money under the wholesale model, where they are paid based on a book’s retail list price, than from the agency model). On January 11, 2010, Sargent wrote to Apple in an e-mail, “Am thinking a possible way to ease the financial pain for the publishers and authors of moving to the agency model. Could you take a reduced cut on hardcover first releases (where we are presently making 14.00 in revenue and would make 9.00 under your assumptions)?” Apple did not agree to take less than its customary 30 percent cut.

–Publisher e-mail: A “Conspiring Publisher executive” e-mailed his or her parent company’s CEO on January 21, 2010:

[Eddy Cue] … was eloquent on why they would be a great partner, that price could and would be experimented with as Apple want [sic] to drive high revenues; that this would be for a one year term; that one major publisher (clearly RH) was out and that ne [sic] need the five majors in but maybe four. He said that he was sure he would close on two today and two tomorrow. Amazon is in town being provocative and with, as Jeff Trachtenberg said to me this morning, ‘a swagger in their step’. I’m off to the AAP so will try and discover what is going on.”

Trachtenberg is the book publishing reporter at the Wall Street Journal. Amazon had just announced it would raise its royalty rate to 70 percent on many self-published titles.

–Steve Jobs e-mail: In late January 2010, Steve Jobs became directly involved in the agency pricing negotiations “after Eddy Cue could not secure one of the Conspiring Publisher’s commitment directly from an executive.” Jobs “wrote to an executive at the parent company, in part”:

As I see it, [Conspiring Publisher] has the following choices:

1. Throw in with Apple and see if we can all make a go of this to create a real mainstream ebooks market at $12.99 and $14.99.

2. Keep going with Amazon at $9.99. You will make a bit more money in the short term, but in the medium term Amazon will tell you they will be paying you 70% of $9.99. They have shareholders too.

3. Hold back your books from Amazon. Without a way for customers to buy your ebooks, they will steal them. This will be the start of piracy and once started, there will be no stopping it. Trust me, I’ve seen this happen with my own eyes.

Maybe I’m missing something, but I don’t see any other alternatives. Do you?

Note that Jobs predicts that in the absence of credible competitors, Amazon would begin offering publishers less favorable terms.

–Pricing tiers: Here’s how Apple calculated its e-book prices in publisher contracts:

–E-mails to Barnes & Noble: Once five publishers and Apple had enacted agency pricing, the complaint says the five publishers “worked together to force” Random House to adopt it as well. On March 4, 2010, in an exchange also identified in the DOJ’s filing, Penguin CEO David Shanks sent Barnes & Noble’s then-CEO Steve Riggio an e-mail reading in part, “Random House has chosen to stay on their current model and will allow retailers to sell at whatever price they wish…I would hope that [Barnes & Noble] would be equally brutal to Publishers who have thrown in with your competition with obvious disdain for your welfare…I hope you make Random House hurt like Amazon is doing to people who are looking out for the overall welfare of the publishing industry.”

The state complaint additionally says that Shanks was trying to get Barnes & Noble to “stop any promotion or advertising of Random House titles,” and when Barnes & Noble continued to do so, “Shanks went back to Barnes & Noble again. Following this contact, Barnes & Noble’s management decided not to feature Random House in any future advertising.” I asked Barnes & Noble for a statement and a spokeswoman told me the company has no comment. (This is interesting but does not prove the states’ claim that all five publishers acted against Random House, since only one publisher is mentioned.)

–“The Club”: In September 2009 as the publishers considered “windowing,” or staggering the print and digital releases of a book, they “referenced themselves in one email as ‘the Club!’” This was in reference to windowing discussions and not to agency pricing discussions with Apple.

The states’ amended complaint (5/11/12)
The states’ original complaint (4/11/12)
The Department of Justice’s complaint (4/11/12)

The Daily, which launched in early 2011 as a tablet tabloid available only on the iPad, finally is adding an iPhone edition, with Android handsets to follow. The new app includes some free stories but readers will have to subscribe at $1.99 a month or $19.99  a year to get full access. That’s half the price of the tablet edition.

The addition gives the News Corp. startup its best chance for a burst of new subscribers in potentially meaningful numbers. The Daily said it had 100,000 paid subscribers in January; it’s going to need more than that to move from interesting experiment to profitable. Unlike the others, this subscription doesn’t come with a free trial. Instead, it’s a freemium model.

Current Daily subscribers can add the iPhone version at no extra cost. It should expand the amount of time they can spend on the “paper”;  at least, that will be the case for me as a subscriber now that I can check in on a story while waiting in line.

The Daily, started out as an iPad-only app, envisioned by News Corp. Chairman and CEO Rupert Murdoch and nurtured by Steve Jobs. An Android edition launched in January but is available only on a couple of Verizon Samsung tablets. It’s pre-loaded so subscribers don’t have to seek it out. The Verizon version also has a slightly different sales strategy — monthly or annual versus weekly autorenewal or annual subscriptions.

I’m told the Android  handset version is “coming soon” and will be open, not limited to Verizon (which was The Daily’s launch sponsor). That will leave the web as the only major platform without a subscription option.