Monday, November 30, 2009

Is there an antitrust issue at play with iTunes and

B&H Publishing Group currently has contracts with Apple to distribute our music and applications through iTunes. Terms for sale of these digital products are generally more in our favor than standard retail terms for physical product sales.

Selling Audio books through iTunes, however, requires a relationship with (owned by You will notice that all audio books in iTunes are "published" or "presented" by Audible, however, is only offering standard licensing terms--a tiny fraction of what we earn from music and app sales.

We typically enter audio book licensing deals at the standard (anemic) royalty rates because we bear no burden or risk in cost of recording, distribution, marketing, or sales. In the case of iTunes, however, we own several audio books that we've already produced over the years. We own the content. We own the recording. We are willing to format in whatever way necessary to sell that content and those recordings through iTunes, yet Apple forces us to work through Audible, and Audible (quite smugly, I would add) will only work with us if they get to keep another HUGE percentage (almost double what Apple keeps) on top of Apple's take. For what?

Audible's answer: formatting. iTunes uses some proprietary coding that they (to my knowledge) have not made public. Audible is the only gateway for audio books to go on iTunes, or we can enter a distribution with another audio publisher who is already on terms with Audible and splinter off yet another piece of the revenue. Why?

For new products we are happy to partner with audio book publishers who specialize in the development and distribution of these specialized products, but for assets already in the can, already produced, why should we surrender so much of the revenue just because Apple has placed Audible between us and iTunes? At worst, this feels like extortion. At best, it leaves me simply not wanting to play ball and find other ways to work around selling our audio book content through iTunes.


April L. Hamilton said...

You can publish your audiobooks as apps in the Books category of the app store, since Audible doesn't own the Books category of the app store the way it owns the audiobook category in the main iTunes store.

It's an inelegant workaround, to be sure, but it's one way to do an end-run around the Audible-iTunes monopoly.

Twitter @paulmikos said...

Thanks April. Exactly what I was thinking, at least until the rules or terms change.

mdscott said...

The simple answer is no, it is not an antitrust violation. Neither iTunes nor Audible have a monopoly on selling audiobooks online. Without market power, there is no antitrust violation.

Twitter @paulmikos said...

@mdscott, thanks. Apparently "antitrust" is not the correct term. I'm sure if there were a legal violation it would have been uncovered by someone bigger than B&H and smarter than me before now. It just feels criminal that we can't sell our own content through a channel with whom we are already doing business without involving a third party--especially one demanding an exorbitant share of the net revenue. It is a flawed model based on the old economies of licensing physical book/audio products and I've come to expect more from digital product companies and market leaders as progressive as Apple and Amazon.