U.S. Justice Department Accuses Apple of Colluding with Publishers to Fix Price of eBooks
Look, iBooks is a great app, and Apple has done a wonderful job of making reading an enjoyable experience on any iOS device. But I don’t think I’m the only one who’s ever raised an eyebrow at the price of the latest bestellers… Turns out, The U.S. Justice Department thinks something might be amiss, as Apple is suspected of colluding with major publishers to raise prices… Let the great investigation begin.
At the heart of the alleged lawsuit coming from the Department of Justice is something called “agency pricing.” It appears that Steve Jobs may have been a proponent of this format—which basically amounts to price-fixing… When the iPad launched a few years ago, Apple apparently persuaded some major publishers from the Big Six to go along with agency pricing for ebooks, and the agreement involving Apple was then used to force Amazon to stop selling ebooks at a loss in the Kindle store.
In case you missed it, that previous sentence could be interpreted as blatant collusion… Just like that, the price of that digital Stephen King was raised. And fixed. There would be no undercutting within the agency pricing model, and publishers could count on getting their 30% cut.
It’s simple enough. But it’s also illegal, and this whole thing—if confirmed—could result in big trouble for companies like Apple, Simon & Schuster, Hachette Book Group, Penguin Group, and HarperCollins, and Mcmillan. We’ll keep an eye on this bookish drama as it unfolds, and be sure to let you know if cheaper ebook prices are on the horizon.