Tuesday, March 13, 2012

US Justice Dept. Looks at Price-Fixing in eBooks

Lawyers in the Antitrust Division of the US Department of Justice are threatening to bring a price-fixing lawsuit against Apple and top book publishers.  At issue is the deal between top publishers and Apple for access to their content for the iBooks market.  The Apple deal was different from previous book marketing and distribution arrangements, including previous deals with Amazon, in that it gave publishers not only the right to set suggested retail prices, but also to dictate (and limit) the retailer's ability to discount books.  In discussing the deal, Steve Jobs reportedly told his biographer that "Yes, the customer pays a little more, but that's what you want anyway."  Jobs also reportedly said that the publishers got together and approached Amazon with a "sign the same deal or we'll pull access to all our books" offer.
  The Justice Dept. lawyers contend that this shows collusion among book publishers, and Apple, to fix prices at a level above market value. 
  If Justice proceeds, there's a pretty good chance that they'd be successful against the book publishers, as there looks to be clear collusion among publishers to approach both Apple and Amazon with a uniform position, with what seems to be a clear intent to manipulate prices above market levels and to usurp the traditional ability of retailers to move from the suggested retail pricing in response to shifting market conditions and demand.  The case against Apple might be a bit weaker, as their position was essentially the same position it took with the music industry and other online content producers.  It'll be interesting to see how this proceeds,
  In addition, the position taken by the big publishers may backfire, with their determination to keep prices high driving readers to less expensive options from smaller publishers and self-publishing.  The eBook model already provides smaller publishers with expanded access to eBook markets, and exaggerating price differentials for close substitutes, economic theory suggests, will shift demand to the lower price goods.  By insisting on high-prices, and the high-demand authors that might justify such prices, they seem to be on track to making themselves niche players rather that big, general-interest publishers.

Source -  Steve Jobs, Price FixerWall Street Journal Information Age blog

1 comment:

  1. Ebooks is very useful in this era. You allot very helpful information about apple and Amazon. You have done great job.

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