SEARCH CLINIC

Search engine online marketers
Subscribe Twitter Facebook Linkedin

USA sues Apple and publishers over ebook prices collusion

May 11, 2012 By: Dr Search Principal Consultant at the Search Clinic Category: Amazon, Apple, Customer Service, Ecommerce, internet, Tablets, Technology Companies, Uncategorized

Apple and four other major book publishers are being sued by the US Department of Justice over the pricing of ebooks.USA sues Apple and publishers over ebook prices collusionThe USA accuses Apple and Hachette, HarperCollins, Macmillan, Simon and Schuster and Penguin of colluding over the prices of ebooks they sell.

This lawsuit is over the firms’ move to the agency model where publishers rather than sellers set prices.

Hachette, HarperCollins and Simon and Schuster have already settled.

The case will proceed against Apple, Macmillan and Penguin “for conspiring to end ebook retailers’ freedom to compete on price”, the Justice Department said.

“As a result of this alleged conspiracy, we believe that consumers paid millions of dollars more for some of the most popular titles,” Attorney General Eric Holder said.

“To effectuate their conspiracy, the publisher defendants teamed up with defendant Apple, which shared the same goal of restraining retail price competition in the sale of ebooks,” according to papers filed in New York’s Southern District court.

“Apple facilitated the publisher defendants’ collective effort to end retail price competition by coordinating their transition to an agency model across all retailers.”

In addition, the European Commission has also been probing e-book price fixing.

Apple, Hachette, HarperCollins, Macmillan and Simon and Schuster have now made proposals to settle that probe.

“The European Commission has received proposals of possible commitments from Apple and four international publishers,” said the EU’s competition commissioner Joaquin Almunia.

Electronic books are sold according to a different formula from that governing the sales of physical books.

For most physical books publishers set a wholesale price, often about half the cover price, and then let a retailer decide how much they actually want to charge for the title.

This model was initially adopted for ebooks but has since been changed for what is known as an agency model.

Under this scheme, publishers set the price of a book and the agent selling it gets a 30% cut. The agency model was adopted by publishers largely at the prompting of the late Steve Jobs.

The shift to agency pricing was also seen as a protective measure to head off attempts by Amazon to corner the market in ebooks. It had been aggressively cutting prices to win customers over to its Kindle ebook reader.

Comments are closed.