AfterDawn: Tech news

Apple, book publishers threatened with lawsuit by DoJ

Written by James Delahunty (Google+) @ 08 Mar 2012 13:07 User comments (3)

Apple, book publishers threatened with lawsuit by DoJ Justice Department warns that it is preparing to file a lawsuit.
Apple Inc. and five book publishers are in the sights of U.S. antitrust regulators over alleged anti-competitive price fixing practices in the electronic books market. The five publishers involved are Simon & Schuster Inc. (CBS Corp.), Hachette Book Group (Lagardere SCA), Penguin Group (Pearson PLC), Macmillan and HarperCollins Publishers Inc. (News Corp.)

The case stretches back to 2010 with the debut of the first iPad from Apple, which quickly became a competitor for Amazon's Kindle line of e-readers. Amazon had been charging low prices ($9.99 for new releases) in order to push up purchases of its electronic readers.

Publishers were concerned about Amazon selling e-books at such low prices (often sold for less than Amazon paid for them) because consumers might become accustomed to the lower prices. Also, publishers feared being in the same situation as record labels were when iTunes picked up stream, but Apple insisted on keeping single song costs at 99c, and that Amazon offering consistently steep discounts might discourage other traditional retail partners from offering e-books altogether.

Apple decided that it would put more power into the publishers hands by going with an agency model, in which publishers set the price and Apple took a 30 percent cut. However, Apple also made a deal that the publishers could not allow rival retailers, such as Amazon, sell the e-books at a lower price than through its own platforms.

"They went to Amazon and said, 'You're going to sign an agency contract or we're not going to give you the books,'" Steve Jobs reportedly told his biographer, Walter Isaacson.

This is where antitrust regulators on both sides of the Atlantic took notice. In the Justice Department's opinion, Apple and the five publishers acted in concert to raise prices across the industry, and is now prepared to sue them for violating federal antitrust laws, the Wall Street Journal is reporting.

There has reportedly been some negotiations between the parties, seeking to avoid a costly legal battle. They deny acting in concert to raise prices, but are against abandoning the agency pricing model would have the effect of a single player gaining more market share than it has now (clearly, Amazon).

In the European Union, regulators have also made it clear that they are concerned about what happened in the e-book market since 2010.

Previous Next  

3 user comments

18.3.2012 14:40

Frankly I'm tired of new technology continually driving the price UP rather than down all the time. Back when CDs came out the word was that CDs were to eventually become the same price as albums (about $7) once the tech caught on. Right. $20 releases, my ass...

Now the public is pay basically the same thing for digital releases that are of absolutely NO composition (literally no physical medium) whatsoever & the music producers merit this belligerent cost How? [that's rhetorical, I already know the dog & pony show...]

Facts are when I was buying music on 45s (that would be single MP3s for you younger folks) they were indeed a $1 back then, so the price points are ludicrous for anyone bitching against Amazon or Apple.

Frankly, brand new albums should be $9, doubles should be $12 & anything on the rack for over 90 days should go back to being $7. 75% profit going to the actual artists after 30 days, 100% after the 90 days. case closed.


29.3.2012 22:18

@ LordRuss

You are forgetting the buying power of your buck. In 1972 I bought a brand new Pontiac LeMans - without trade - in for $ 3000/=. Chevy Impala was available for $ 4000/- and a Cadillac cost around $ 8000/= I have also bought gas at $ 0.18 per gallon !!!

I was saving half of my $ 13,000/ take home annual pay !

At current cost of living levels you are getting a bargain.

310.3.2012 19:38

Originally posted by pmshah:
@ LordRuss

You are forgetting the buying power of your buck. In 1972 I bought a brand new Pontiac LeMans - without trade - in for $ 3000/=. Chevy Impala was available for $ 4000/- and a Cadillac cost around $ 8000/= I have also bought gas at $ 0.18 per gallon !!!

I was saving half of my $ 13,000/ take home annual pay !

At current cost of living levels you are getting a bargain.
Not necessarily... The dollar was stronger. I'm not going to say by an exaggerated margin, but it was indeed stronger.

In the 50s/60s it was still thought/believed that you could save 10% of your take home pay & it was still a single income home. By the time I hit the work force in the mid 80s, the late 70s already started proving that society started moving to a 2 income establishment. Plus 'saving' had somehow become a 4 letter word.

Even still, a $15K car was still obtainable, but you didn't get dinner & a movie every weekend either. Not to mention the housing market obviously took a turn for toward sublime stupidity.

Frankly, 14 years later (1986) I was making $16K a year, driving a 74 Monte Carlo, paying $1 a gallon for gas & was literally just getting by in the burbs of Chicago.

Getting rid of Mrs. Russell #1 & Rock & Roll saved my life...

Comments have been disabled for this article.

News archive