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UK to investigate Apple, Amazon e-book pricing

updated 06:25 pm EST, Tue February 1, 2011

UK agency joins US in investigating e-book prices

The UK's Office of Fair Trading said on Tuesday that it would look into possible antitrust violations in the pricing set by e-book retailers and publishers. It said it had received a "significant number of complaints" about the pricing. While no companies were named, the WSJ heard the issue was with the agency business model used by Amazon's Kindle store and Apple's iBookstore in collaboration with at least HarperCollins and Penguin.

The system lets publishers set their own prices and leaves both Amazon and Apple to take a fixed percentage of every sale, which now usually equates to 30 percent. It prevents a retailer from deliberately selling books at a loss to unfairly drive market share, as Amazon had been doing until it was strong-armed into agreeing to the agency model. However, it can also lead to the same price across all stores and consequently favor larger bookstores that don't have to worry about price competition from independents.

Both Connecticut and Texas in the US have been investigating the deals for the same reasons.

Office of Fair Trading officials didn't link their own investigation to the American equivalents and warned it was at an "early stage" where it wouldn't necessarily make any formal accusations.

The agency model is widely believed to have been brought on by Apple, which started a pricing war. It hoped to attract publishers afraid Amazon was setting e-book prices too low but also set a no-lower-pricing policy in place that prevented publishers from selling at a lower rate at a competitor. Amazon had already been pushing for a no-better policy but was pushed into making similar deals at the risk of seeing publishers leave for more profitable terms at Apple's store.

A ruling against Apple in any one of the jurisdictions could lead to a radical break in e-book pricing and possibly lower pricing, primarily for more expensive bestsellers. These can often cost $12 to $15 where Amazon had previously been pricing them at $10 and dismissing publisher requests for more.



By Electronista Staff
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Comments

  1. Feathers

    Grizzled Veteran

    Joined: Oct 1999

    +1

    Priorities?

    So the Office of Fair Trading is investigating book pricing and yet two years after the biggest banking collapse in global history, not a single new piece of legislation governing the regulation of the banking system has been introduced. Interesting priorities?

  1. testudo

    Forum Regular

    Joined: Aug 2001

    +2

    so...

    It's OK that Apple can set a price for their product (the iPhone) and make sure no one sells below that, but if a book publisher does it, it's anti-competitive or something?

  1. danviento

    Fresh-Faced Recruit

    Joined: Dec 2005

    0

    Publishers want MORE?

    I think they missed the memo that digital media is cheaper due to less overhead/backstock/transportation costs. $10-$15 a book seems pretty steep when you compare to mass market paperback, even at today's rates.

    I've said it before and I'll say it again, those rates aren't going by the high-sales-low-price model like iTunes.

  1. Feathers

    Grizzled Veteran

    Joined: Oct 1999

    +1

    eBook Pricing

    Coming up to Christmas, my mother (a voracious reader) was interested in the whole eBook reader thing until she heard what eBooks cost. Although not the most technological, she thought that the pricing was simply way too high. In many cases, the physical book can be purchased for less when discounted in many big stores and supermarkets. If publishers can't get people who read a lot to move to eBooks, they're wasting everybody's time.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    0

    Re: Publishers want MORE?

    Except how much of a book's cost is related to shipping/publishing, and how much is related to editing, verifying, etc? Creating a book isn't just a matter of paying an author. There's a lot of back-office work that goes into to producing any type of book. Even more goes into non-fiction and educational books (one of the reasons they cost like $200 a shot).

    And you can't compare paperback prices against initial release prices. Paperbacks are not priced cheaper because publishing them is cheaper. They're priced cheaper because it's a second round of sales, trying to sell to those who didn't buy the first round (the hard-covers). And the costs are less due to up-front costs not needing to be covered.

    And how come people will spend $200 on an ebook reader, proclaiming it's a great thing to be able to lug around 300 books under 2 pounds, but then somehow the book price itself needs to be less than the 'paper' price. Isn't being able to put books on your eReader and being able to carry them around worth more? Especially considering having the capability to insert notes, bookmarks, highlighting, etc, that is easy to find and search? Oh, right, that doesn't count. It's just digitial...

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