ONTD Political

Lawsuit alleges Apple, other publishers fixed e-book prices

7:46 pm - 04/12/2012
The U.S. Department of Justice (DOJ) yesterday announced that it has filed a lawsuit against Apple, along with five major book publishers, alleging the parties fixed prices on the eBook market.

At a press conference yesterday, Attorney General Eric Holder announced that the Department had filed a lawsuit in U.S. District Court for the Southern District of New York, against Apple and five different book publishers – Hachette, HarperCollins, Macmillan, Penguin and Simon & Schuster. He said that Hachette, HarperCollins and Simon & Schuster have agreed to a proposed settlement, which if approved by the court would resolve the Department’s antitrust concerns with these companies.

The settlement would require those publishers that settled to grant retailers, such as Amazon and Barnes & Noble, the freedom to reduce the prices of their eBook titles. The settlement also requires the companies to terminate their anticompetitive "most-favored-nation agreements" with Apple and other eBook retailers.

In addition, the companies will be prohibited for two years from placing constraints on retailers’ ability to offer discounts to consumers. They will also be prohibited from conspiring or sharing competitively sensitive information with their competitors for five years. Each is required to implement a strong antitrust compliance program.

Scrutiny around eBook pricing is nothing new. In December of last year, the European Commission announced that it was looking into possible collusion amongst Apple and the same major publishing houses included in the suit. Immediately following the European announcement, the DOJ said it too was looking into a possible antitrust suit.

The investigation is aimed at uncovering Apple's role in the current state of the eBook market and dates back to launches of both the Amazon Kindle and Apple's iPad.

When Amazon first launched its Kindle eReader, it did so in conjunction with heavily discounted eBooks, pricing many popular bestsellers at $9.99 and subsidizing the loss on the titles.

Later, Apple launched the iPad in April of 2010. The company went directly to the publishers, telling them that they could price their books as they saw fit and Apple would take a 30 percent cut of anything sold through iTunes. Amazon eventually had to bend to the new model, effectively raising the price of eBooks across the board.

Acting Assistant Attorney General Sharis Pozen, speaking at yesterday's press conference, provided "a flavor of the egregiousness" of the alleged behavior, which she said "took place at the highest levels of these publishing companies."

Pozen said CEOs of the publishers bemoaned the “wretched $9.99 price point.”

"One executive said that, 'the goal is less to compete with Amazon as to force it to accept a price level higher than 9.99,'” Pozen said, adding that another executive said, "’we’ve always known that unless other publishers follow us, there’s no chance of success in getting Amazon to change its pricing practices.’”

The DOJ's complaint also quotes Apple’s then-CEO Steve Jobs as saying, “the customer pays a little more, but that’s what you [he’s referring to the publishers here] want anyway.”


The DOJ alleges that publishing company executives held "regular, near-quarterly meetings," to discuss confidential business and competitive matters, including Amazon’s eBook retailing practices, as part of a conspiracy to raise, fix and stabilize retail prices.

"Our investigation even revealed that one CEO allegedly went so far as to encourage an e-book retailer to punish another publisher for not engaging in these illegal practices," Holder said.

In an official statement, Amazon called the lawsuit "a big win for Kindle owners," saying that it "look[s] forward to being allowed to lower prices on more Kindle books."

Apple declined to comment on legal matters and the publishers involved could not be reached for comment before press time.

Source.

GOOD. There's no way an e-book should cost as much as a paperback, that's fucking ridiculous.

What are y'all reading, ontd_p?
effervescent 13th-Apr-2012 02:31 am (UTC)
Yeah, I've seen references to this in a few places - but I've also seen articles that say that the publishing industry is antiquated and bloated, and I think there's some truth on both sides. Also... There's a really good question brought up in the comments. Paperbacks are traditionally much lower than hard copies... If physical copies don't cost all that much, then are hardcovers just gouging to drag in the first profits, or is that where publishers make their money, before they're willing to take a cut as the paperbacks come out? What about all the books that are sold as paperback only?

I think the struggle that I have with the pricing of ebooks even when I'm somewhat aware of that fact is illustrative of the problem that the industry is facing... I think eventually humans will start to put more value on 'virtual' things, but right now it's going to be a struggle as people weigh the seeming value in a physical book in their hand and an e-book.

Also, sometimes I feel a bit gouged, when I see books I know to be bestsellers that have likely more than made back any expense in releasing them priced $2 to $10 more than others.

Edited at 2012-04-13 02:45 am (UTC)
liret 13th-Apr-2012 03:18 am (UTC)
It's kind of like movies in the theater vs dvd - the hardcover release does have more profit, and can hopefully do more to pay back the actual expenses of the book so it can start earning actual money. (Books first released in paperback generally aren't expected to sell as many copies at first, but might build a new author or catch on after a while.) Part of the problem for publishers and authors with ebooks is that they have to skip that and go pretty much to paperback pricing - so they have to sell more to make the same amount.
effervescent 13th-Apr-2012 03:34 am (UTC)
Hmm. Now that I think about it, I suppose there's more books released as hardcovers than I thought - I hate the things, in part because of size and also because of cost, so I never buy them.

I don't want the publishers to go out of business - like I said, I'm wary about Amazon, especially if squished profits mean the authors suffer. I do wonder if there's room for downward pressure on the salaries of those at the top.

Mostly, though, I think the industry has a perception problem... I see it in myself, because I love books and I still balk at the price of ebooks. They could benefit with some honest, direct communication with the public instead of relying on news outlets to do it for them.
homasse 13th-Apr-2012 03:40 am (UTC)
It's the same problem in the games industry - people rail about the prices (OMG $60 WTFBBQ), without realizing that, when you account for inflation, games are actually cheaper than they used to be, even though production costs have shot up.
etherealtsuki 13th-Apr-2012 04:28 am (UTC)
For me, my issue with the game industry is less about the games and more about ekeing new generation consoles too fast and they get so unbelievably pricy. That's how the PS3 and GB3DS suffered at first because they seriously thought that people will unbashedly plunk down $500/$250 for a console/handheld like that.
homasse 13th-Apr-2012 05:26 am (UTC)
...you do know game consoles are sold at massive losses, right? Sony and the other console makers actually lose money, and quite a bit, on every console sold. They try to make up the costs with video games sold, but they still try to mitigate how much they're losing per console.

PS3s may have been $500 when they came out, but it was still cheap enough that the US government snapped up a metric fuckton of them to hook together to use as supercomputers than it was to actually buy supercomputers.

I also hope you don't complain about the working condition of factory workers in China, if you're complaining about the costs of the things they make, because trying to keep costs down so consumers don't balk is precisely why things are built in sweatshops :/

(That said, Sony has pulled a lot of dick moves, like trying to sell the PSPGo for more than a regular PSP, and them intentionally making the PS3 hard to program for because they were trying to freeze out chances of porting games to other consoles.)
etherealtsuki 13th-Apr-2012 06:30 am (UTC)
I'm well aware, and it was a kinda stupid business move to assume that a lot of people will drop $500 for a console even if said console was around $800. I was pretty shocked that they didn't see how bad sales going to be everytime I heard what new thing they were adding to it.

Also, I really don't like that it some travesty to complain about it. I don't care if the US government uses them, I don't have the resources of money that the government do even though I do contribute to it. That's nice for them but it really has very little to do with me as a personal consumer. And yes, I really hate a giant amount of stuff comes from cheap labor especially when said workers get shit pay for it. But that's more on the company's greed to squeeze out as much profit as they can. It's pretty hard to try to avoid a lot of stuff that isn't from cheap labor, even things one may consider neccesities.

I just felt like the game industry are so caught up doing the new and better technology and sometimes forgetting that most of their customers won't just open their pockets for it. I mean, people was alright with the increasing prices but it was done in a manner that you can deal with. Then consoles went from $300 in the previous generation to $500 or so and people balked. Nintendo bit themselves in the ass with the GS3DS because they had set up a pricing model that handhelds were notably cheaper than consoles and the 3DS was pretty much close to the price Wii nearly were.

The game situation never really bothered me because they have more or less been fairly priced. Like I can deal with Wii Title prices after chunking down prices that N64 titles used to be. But one can argue that Game Stop, like Amazon, always undersell it (and that it's shady-ass resale business model is screwing the industry by not giving them any profit off of it).
kittymink 13th-Apr-2012 07:56 pm (UTC)
I just don't buy them if they cost too much and I'll wait. 3DS was too much and now so is Vita.

GameStop are terrible - none of the money goes to the developers and you only save like $5 off the cost of a new game. But sometimes buying used is the only way you can go - I also like that PS2 and PSP games are so cheap now.
kittymink 13th-Apr-2012 07:50 pm (UTC)
>...you do know game consoles are sold at massive losses, right?

Is this true anymore though? Maybe about Sony and idk about MS but I thought Nintendo actually turned a profit on hardware sales now.
kittymink 13th-Apr-2012 07:57 pm (UTC)
I'm more worried about the reliance on DLC.

Consoles are expensive though, I still havent gotten anything newer than a PS2. Or PSP and DS. Even though I'm an unlucky person who can't actually see 3D I want a 3DS now that the price is reasonable. Waiting for Vita to drop or get some more games.
kittymink 13th-Apr-2012 07:45 pm (UTC)
Totally, these people don't remember how much SNES and Sega carts cost.
lozbabie 13th-Apr-2012 06:16 am (UTC)
Those two comparisons aren't really valid though. Paying to go to a movie you pay to see it once. Buying the DVD you are paying to own the copy forever. You also get a boatload of extras.

The only difference between books and e books is one you own a physical copy and the other a digital.

Because of the overblown prices a lot of people have turned to piracy and now no-one gets any money.
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