Printed from http://www.electronista.com

DOJ preps antitrust lawsuit versus Apple, e-book publishers

updated 11:45 pm EST, Wed March 7, 2012

DOJ warns Apple must change iBookstore rules

The US Department of Justice is readying an antitrust lawsuit against Apple and publishers unless they change their pricing strategy for e-books, leaks revealed Wednesday night. Agency officials reportedly slipped to the Wall Street Journal that both the iPad designer as well as Hachette, HarperCollins, Macmillan, Penguin, and Simon & Schuster would face legal action for possibly having colluded on e-book pricing. DOJ prosecutors objected to Apple's since confirmed insistence on an agency model, where publishers set the price, as it allegedly kept e-book prices artificially inflated.

Even before the original iPad had been unveiled, Apple was known to have been courted by major publishers looking to raise prices. Many were upset that Amazon's loss-leading $10 maximum price per Kindle book, as well as its use of a wholesale model where it set the price, was setting unrealistically low expectations for e-book pricing. Apple made publishers happy when it flipped to the agency model and let them raise prices, but its demands for having the best price also led to publishers strongarming Amazon and making it difficult or impossible to charge any less than the iBookstore.

Barnes & Noble chief William Lynch has supposedly countered the DOJ in a deposition, in which he was concerned that going back to the wholesale model would lead to once more having a single dominant store, likely a reference to Amazon. Apple in objections to the European Union has argued that its getting into the market by itself created a "vastly larger" group of readers and helped competition.

The DOJ hasn't accepted this point of view, as it sees uniiform price increases as reducing competition rather than making it easier.

"Several" of the targets have been in negotiations for a settlement with the DOJ, although whether that included Apple wasn't determined. Discussions had been going on for "some time," a source explained. One option mentioned by publishers was to keep the coveted agency model but let publishers offer discounts in some cases.

If successful, the move could have a ripple effect on all US e-book stores, not just Apple's, by letting prices at least sometimes go down. It would also represent a rare concession in pricing from Apple, which last had to change its prices for any iTunes content with the DRM-free shift in 2007 and the requirement for variable pricing.



By Electronista Staff
toggle

Comments

  1. Inkling

    Mac Enthusiast

    Joined: Jul 2006

    -1

    DOJ's Misplaced Action

    The DOJ's lawyers seem to be trapped a century in the past, seeing this as Teddy Roosevelt and the trustbusters.

    The real issues have little to do with the agency model. The major publishers adopted that primarily to keep Amazon from driving all its ebook competitors out of business with predatory, well-below-cost pricing. And despite the whining of many readers, the market is quite capable of driving prices down. If there are two authors I like and the ebooks of one are selling for $4.95 and those of the other for $14.95, I know which I will buy.

    Where Amazon and Apple are out of line are in:

    1. Proprietary formats that lock users in and drive up costs, particularly for smaller publishers. Both Apple's iBooks Author and Amazon's KF8 formats are non-standard variations on epub to lock users in. They need legal and other pressure to stick to the standard. This mess is like the HTML wars of the mid-nineties, frustrating and pointless.

    2. Both Amazon and Apple want to dictate what price an author or publisher can sell ebooks on other platforms. That they shouldn't be permitted to do. As long as their ebook formats are different, they have no right to complain if an author or publisher passes along the greater cost of formatting for their non-standard in the selling price. When exactly the same epub file is being displayed on Kindles and iPads, then and only then do they have the right to insist on getting the same price.

    DOJ lawyers should look at bit harder before they leap. Tackle what's really wrong with ebook publishing and not some imagined, circa 1900-ill.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    +1

    Re: DOJ's Misplaced Action

    2. Both Amazon and Apple want to dictate what price an author or publisher can sell ebooks on other platforms. That they shouldn't be permitted to do. As long as their ebook formats are different, they have no right to complain if an author or publisher passes along the greater cost of formatting for their non-standard in the selling price.

    That they shouldn't do regardless of the format of the thing. What you have is big etailer telling someone "You can't sell cheaper than me" without risk of losing out on that. It's like Wal-Mart telling Mitsubishi "You can't allow your TVs to sell at any other place for a price lower than what we offer".

  1. testudo

    Forum Regular

    Joined: Aug 2001

    0

    Re: DOJ's Misplaced Action

    This isn't misplaced. You have multiple publishers and a seller colluding to specify a price. There's something not right there, no matter how you look at it.

    And despite the whining of many readers, the market is quite capable of driving prices down. If there are two authors I like and the ebooks of one are selling for $4.95 and those of the other for $14.95, I know which I will buy.

    That's not 'competition', you're just buying one book over another. Competition is 5 people selling it, and you have the choice where to get the first author and the price of that is driven down because of actual competition. All you're doing is saying "I don't like the collusion on the price of book A, so I'm going to take the collusion on the price of book B".

    They need legal and other pressure to stick to the standard. This mess is like the HTML wars of the mid-nineties, frustrating and pointless.

    You can't legally force anyone to any 'standard'. If so, then we should force all tablets to run a standard OS, and that they all can run the same set of apps.

    If you want to press them, don't buy from Amazon or Apple anything that isn't in an open format.

    Oh, and while you may dismiss the HTML wars as frustrating and pointless, the truth is that it was the browser makers doing their own thing that drove new features and capabilities into the Web. It wasn't the standards makers.

Login Here

Not a member of the MacNN forums? Register now for free.

toggle

Network Headlines

toggle

Most Popular

Sponsor

Recent Reviews

Dell AD211 Bluetooth speaker

For all of the high-priced, over-engineered Bluetooth speakers in the electronics market, there is still room for mass-market solution ...

VisionTek 128GB USB Pocket SSD

USB flash drives dealt the death blow to both the floppy and Zip drives. While still faster than either of the old removable media, sp ...

Kodak PixPro SL10 Smart Lens Camera

Smartphone imagery still widely varies. Large Megapixel counts don't make for a good image, and the optics in some devices are lacking ...

Sponsor

toggle

Most Commented

 
toggle

Popular News