updated 11:00 am EDT, Wed June 2, 2010
Texas AG thinks iBookstore pricing may be unfair
Texas' attorney general is investigating Apple and publishers for possible anti-competitive e-book pricing, multiple sources said on Wednesday [sub. required]. At least Hachette and HarperCollins have confirmed they were asked to provide documents, but Apple is also believed to be a target. The WSJ speculates that the investigation may have to do with Apple's preference for an agency model on the iBookstore, where publishers have control over the pricing.
The focus likely would be on the higher prices that have stemmed from Apple's approach, which has transferred to Amazon as publishers negotiate similar terms for the Kindle. Although some books for the iPad cost the same $10 as they have on the Kindle, many newer bestseller titles cost $13 to $15. Texas may be concerned that the rejection of the Kindle's wholesale model, where books carry a fixed pre-sales price, is artificially driving prices upwards.
It's not clear if the investigation, which hasn't yet resulted in formal accusations, will make progress. Amazon when it has used the wholesale model has often deliberately sold books at a loss, paying as much as $15 for a book but selling it below cost to boost market share. The Agency approach reduces the amount publishers can charge but lets them set prices closer to the originally targeted value and creates the perception that the books are worth more.
The investigation is separate from any federal-level investigation but would be part of a possible all-out investigation of Apple's behavior in media, which may now include videos and apps in addition to music. Officials are rumored worried that Apple is strongarming labels and studios into denying exclusives to others and otherwise negotiating terms most favorable to its own commanding share of downloadable media.
Neither Apple nor the Texas attorney general's office have commented on the subject.