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US DoJ and EU Commission investigating ebook price fixing

Posted: , by Michael H.

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US DoJ and EU Commission investigating ebook price fixing
If you're anything like us, you've gone into the iBookstore, the Kindle bookstore, or the Google Bookstore and wondered why exactly an ebook, which has no associated printing costs, could be priced around $15. The entire point of digital media is that copies are infinite and so cheap as to effectively be free to produce, unlike physical media. In the beginning, Amazon Kindle set a standard ebook price of $10, which made sense. Then, when Apple came into the business, it allowed publishers to break that standard and begin charging more, which then pushed prices up across ebook sellers.

In the last two days, both the US Department of Justice and the European Commission have confirmed investigations into possible price fixing on ebooks by publishers and what role Apple may have played in it. The EU Commission mentioned five publishers in the announcement of its investigation: HarperCollins, Penguin, and Simon & Schuster of the US, Hachette Livre of France, and Verlagsgruppe Georg von Holzbrinck of Germany. The Commission said these publishers, "possibly with the help of Apple", took part in anti-competitive practices in regards to ebook pricing.

The investigations both seem to be focused on the publishers, because in the "agency model" being used, it is publishers setting the price, then Apple, Amazon, etc taking a cut of the sales. However, Apple may see a bit of extra heat because it was Apple that gave the publishers leverage to raise prices across the ebook ecosystem. It'll be interesting to see how this plays out.

source: WSJ & EU Commission via The Verge

16 Comments
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posted on 08 Dec 2011, 18:20 1

1. akhi216 (Posts: 61; Member since: 01 May 2011)


Siri, why did Apple engage in price fixing?

posted on 08 Dec 2011, 19:22

6. metoyou (Posts: 277; Member since: 19 Oct 2011)


Siri: Oops

posted on 08 Dec 2011, 18:46 2

2. Sniggly (Posts: 7082; Member since: 05 Dec 2009)


So... this completely destroys the iFanboy theory that Apple drives prices down for customers. Though I'm not a fan of the State by any means, I would find a price fixing conspiracy rather despicable.

posted on 08 Dec 2011, 21:34 2

8. antifanboy (banned) (Posts: 67; Member since: 06 Dec 2011)


If true it would be bad obviously. So far nothing has been proven to show Apple was involved in price fixing. On the other hand Apple has driven price down with music and smartphones. That's a fact whether Apple was involved here or not. Love how you completely ignore everyone else accused and focus on Apple.

posted on 08 Dec 2011, 22:06 1

9. Sniggly (Posts: 7082; Member since: 05 Dec 2009)


This is a cellphone site, not Barnes and Noble Fans Anonymous. Also, the price didn't increase by 50 percent until Apple got involved.

posted on 08 Dec 2011, 22:25 2

11. antifanboy (banned) (Posts: 67; Member since: 06 Dec 2011)


Apple said set your own price. That would be a free market. You said I'm not a fan of the state, but you're against companies setting their own price? Amazon put a cap on ebook prices. So which is it? Are you for a free market or not? Or is it hip that you're pro free market as long as Apple doesn't profit? Again if there was price fixing going that is not ok, but you lay the blame squarely on Apple without any facts and ignore the other culprits. This also, in your mind, erases previous times where Apple has lowered prices for consumers.

posted on 08 Dec 2011, 23:28

13. Sniggly (Posts: 7082; Member since: 05 Dec 2009)


I'm against companies abusing the power that they have to gouge customers. Granted, I don't advocate state solutions to such problems, but I can still sit back and say "I wouldn't do that if I was in charge of the company."

Also, I get that the other companies involved are just as complicit, and I'm not in the habit of *always* blaming Apple when controversies arise. For instance, in the CarrierIQ scandal I very clearly stated that the carriers were to blame for the issue, even though CIQ was on Apple devices as well as Android devices (besides the Nexus series and the XOOM).

Even during the Apple location tracking controversy I only expressed my wish for Apple to fix the software issue itself, and did not support any lawsuits against Apple for the bug/software design flaw.

My original comment here pertained to the idea iFanboys have that Apple is always working on behalf of the customer, when more often than not Apple is doing its best to squeeze every penny it can from customers AND its business partners.

If it was a free market situation where the companies chose their own prices, fine. If Amazon capped prices on their own site then that's a free market situation too. It would only cease to be a free market situation if Amazon tried to force other sites to lower their prices on books as well. However, Amazon was just keeping in line with its own business model of offering the lowest prices it can.

Apple did not start out by lowering prices for smartphones; in fact, its $600 subsdized price tag for the iPhone was outrageous and the subject of ridicule. Also, I'm not entirely sure that smartphones were all that pricey when subsidized before the iPhone. The Wikipedia article states that the pricing change for the iPhone was the de facto pricing for the industry at the time.

Anyway, Apple's overall track record is to make maximum money for Apple. This would be in line with that track record. Philanthropy and/or doing what's best price wise for the customer is not.

posted on 09 Dec 2011, 00:07 1

15. antifanboy (banned) (Posts: 67; Member since: 06 Dec 2011)


Making the most money possible is just about every corporations goal

posted on 09 Dec 2011, 00:39

16. Sniggly (Posts: 7082; Member since: 05 Dec 2009)


Yes, but some companies go way beyond the bounds of human decency. Apple of course is not the only company to do this, but they are one of the most obvious transgressors in the mobile industry. Apple's goal is profit at all costs.

Profits are essential to gain, but they should not overshadow a company's ability to deal equitably with competitors, business partners, and customers.

posted on 08 Dec 2011, 22:28 1

12. ardent1 (Posts: 1997; Member since: 16 Apr 2011)


The man who puts his foot in mouth strikes again.

Can someone please explain to Sniggly that these are two different markets -- the old and traditional market and e-book market. The e-book is still cheaper than a traditional book.

There is no more collusion than how the big wireless carriers all seem to set the SAME prices for monthly services.

posted on 08 Dec 2011, 23:30

14. Sniggly (Posts: 7082; Member since: 05 Dec 2009)


Hi Mister Bitter. How are you tonight?

I'm just going off the info available to me. What are you doing?

posted on 08 Dec 2011, 18:57 1

3. Kallistos (Posts: 24; Member since: 17 Oct 2011)


For a mass-market paperback, $15 could be a bit much. Though the printing costs may be high, having a team of programmers and/or voice-actors to to enable all the content that an eBook should have, could be equally as high. (Shudders) We all know how much audio books can cost.

As a college student, I'd like more options for purchasing eBooks than hard copy, and the navigation needs to be just as good as the real thing (programmers needed). Outside of the eBooks included in the course materials, it would be great to get a college text book on the cheap in eBook format.

posted on 08 Dec 2011, 22:16

10. RageQuit (Posts: 41; Member since: 05 Sep 2011)


Really? because my mom can doo all that needs to be done to the file to make it readable on an ereader including front covers in under an hour. its not like they need to re-type the book or anything all they do is take the files that would be used for printing the book and convert it into a file that a reader can read. Either my mom is a as productive as a team of programers(which would not be surprising) or Companies just want massive profits, or both. I like both.

posted on 08 Dec 2011, 19:01 1

4. Hello-dirt (Posts: 102; Member since: 02 May 2010)


What's the difference between a price fixing scheme and multiple businesses trying to rip customers off? If the price is too high, I'm sure that eventually they will drop because not enough volume is going out. I buy paper because electronic is not cheap enough. If the publishers and vendors are hoping for more margin, I am not going to help them.

posted on 08 Dec 2011, 19:20

5. mctcm (Posts: 204; Member since: 19 Oct 2011)


Exactly

posted on 08 Dec 2011, 20:51

7. p0rkguy (Posts: 684; Member since: 23 Nov 2010)


Good thing I haven't even purchased any ebooks yet. etextbooks are so limited...

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