B OOK S
THE BULLETIN • Sunday, January 31, 2010 F5
ELECTRONIC BOOKS
iPad offers publishers a pricing edge By Motoko Rich New York Times News Service
With a few notable exceptions, the print world welcomed Apple’s new iPad on Wednesday, eager to tap into the 125 million customers who already have iTunes accounts and are predisposed to buying more content from Apple. “We have learned that it is never wise to stand between a consumer and a preference” for how they get their content, said John Makinson, the chief executive of Penguin Group, the book publisher. The iPad may offer an even more attractive prospect: the chance to reset the downward spiral in e-book prices.
When Steve Jobs announced the new iBooks app, he said five of the six largest publishers — Hachette Book Group, HarperCollins Publishers, Macmillan, Penguin and Simon & Schuster— had signed on to provide ebook content for the new tablet. In negotiations with Apple, publishers agreed to a business model that gives them more power over the price that customers pay for e-books. Publishers had all but lost that power on Amazon.com’s Kindle e-reader. With Apple, under a formula that tethers the maximum ebook price to the print price on the same book, publishers will be able to charge $12.99 to $14.99 for most general fiction and nonfic-
Edwards aide’s book details trail of hush money By Mike Baker The Associated Press
RALEIGH, N.C. — Dealing with a pregnant mistress and a suspicious wife, John Edwards and a close aide agreed by the middle of 2007 to solicit funds from a wealthy widow who had promised to “do whatever it takes” to make him president, according to the former confidant’s new book. Bunny Mellon, the widow of banking heir Paul Mellon, began sending checks “for many hundreds of thousands of dollars” hidden in boxes of chocolates, according to “The Politician” by former Edwards aide Andrew Young. The tell-all account describes how Young took the money and used it to keep mistress Rielle Hunter happy, hiding her from the media and a cancer-stricken Elizabeth Edwards. Young claims the former vice presidential nominee later said he didn’t know anything about the cash, even though the two discussed the matter, and the cash began arriving soon after Edwards made a call to Mellon.
Details of probe “The Politician” has received a lot of attention because of its racy details about the affair, the crumbling Edwards marriage and the candidate’s efforts to keep the paternity of his child with the mistress hidden. John Edwards has finally admitted that he was the father of the girl, who is now almost 2 years old. But Young’s reckoning also contains some of the most detailed information about a hanging question for Edwards’ future: an ongoing federal grand jury probe into his campaign’s finances. Prosecutors have refused to comment about the investigation, but Young says he spent hours testifying to the grand jury about the “huge sums of money that had quietly changed hands” during the campaign. Hunter has also made an appearance at the federal courthouse in Raleigh where the grand jury is meeting. Edwards has said that he is “confident that no funds from my campaign were used improperly.” Mellon, now 99, had promised to give money to Edwards’ political groups even before the affair began and eventually gave a total of $6 million for Edwards’ causes, according to Young’s book. Edwards’ political action committee paid Hunter’s production company $100,000 in 2006 for her to work as a videographer to follow around the candidate as he prepared for his second quest for the White House. Months afterward, in April 2007, the PAC received $14,000 from Edwards’ presidential campaign and then paid a similar amount to Hunter’s production company. Later cash destined for Hunter originated directly from Mellon checks that were sent to Young, with notes discussing her contributions to “the confederacy.” Other distributions came directly from Edwards’ former campaign finance chairman Fred Baron, including a FedEx envelope of $1,000 and a note that read: “Old
Chinese proverb: Use cash, not credit cards.” Young said federal prosecutors pressed him last year for details on the names, dates, amounts of the disbursements, “and just who knew what, when.”
Campaign donations? The longtime aide contends in the book that Mellon did not know what the money was being used for, and he argues that the funds “were gifts, entirely proper, and not subject to campaign finance laws.” Joe Sinsheimer, a Democratic government watchdog in Raleigh who is following the case, disagrees. He believes the private exchanges of money described in the book and used to shuttle Young and Hunter around the country should have been classified as campaign donations. “Baron and Mellon gave the money because they wanted to protect the candidacy of John Edwards for president,” Sinsheimer said. “Therefore, the money should be classified as campaign monies.” Mellon’s attorney, Alexander Forger, said he has also testified before the grand jury, while Mellon has been interviewed by prosecutors. He said Young repeatedly pursued Mellon for money, at one point suggesting she mortgage her farm to get cash, but that she didn’t know where the money was going. “She made a personal gift to the senator,” Forger said. “She filed a gift tax return. She intended it for his personal use, and had no understanding of what his need was and where the money would go.” Baron, who died in October 2008, had said that he paid to help Hunter and Young to protect them from public scrutiny.
Political implications The money seemed to have political implications for Edwards: According to Young, Edwards asked him before the presidential primaries to take public responsibility for Hunter’s pregnancy, and to take his family and the mistress and disappear. Baron would let him use his private jet and pay for expenses, Edwards told Young. To convince Young to take the fall, Edwards appealed to their friendship, Elizabeth’s failing health and a cause that is “bigger than any one of us,” Young quoted Edwards as saying. And later, with Young growing restless because Edwards hadn’t come forward to set the record straight, Baron asked the aide to “hold on until August” — when the Democratic National Convention would be — and expected that Edwards would be a big player in the next administration. Soon after, Baron wired “several hundred thousand dollars” to the builder of Young’s home to help with the expenses. As for Edwards, Young described the candidate as someone who wanted his hands clean from the money. He claimed that Edwards wanted the arrangement with Mellon to remain private so that the former trial lawyer would have “plausible deniability.”
tion titles — higher than the common $9.99 price that Amazon had effectively set for new releases and best-sellers. Apple will keep 30 percent of each sale, and publishers will take 70 percent. One book publisher did not sign on to the iPad: Random House, the world’s largest publisher of trade books. Stuart Applebaum, a Random House spokesman, said the company would “look forward to our continuing conversations” with Apple. In the short term, authors and publishers will most likely earn less from book sales on the iPad. On the Kindle, Amazon subsidizes the $9.99 price by paying publishers a higher wholesale price equivalent to what book-
sellers typically pay for print editions. But publishers were concerned that Amazon, as the dominant player, would eventually demand lower digital wholesale prices. Amazon and others are likely to continue selling e-books through the Apple app store even after the iBooks app arrives. No publisher wanted to discuss publicly what would happen if Amazon and others continued to charge $9.99 for new releases. But once Apple begins selling e-books at a higher price, publishers could withhold titles if Amazon continues to discount books to $9.99. Antitrust attorneys suggested there could be legal complica-
tions if Amazon claimed that publishers were colluding to set prices, or dictating prices to retailers, which is illegal under a 2007 Supreme Court decision. Newspapers had mixed reactions to the iPad. Martin Nisenholtz, senior vice president for digital operations of The New York Times Co., said the combination of iPad and app “joins the best of print with the best of digital.” But Christian Hendricks, the vice president for interactive media at McClatchy, which publishes The Miami Herald and The Kansas City Star, said, “We haven’t seen tremendous interest as far as demand for newspaper subscriptions on it.”
Apple via The Associated Press
Apple’s new iPad may be just the device publishers have been looking for to reverse the downward trend in e-book prices. Under the terms of a deal with Apple, they’ll be able to charge $12.99 to $14.99 for most general fiction and nonfiction titles.