The Wall Street Journal reports that the U.S. Department of Justice has for the first time publicly confirmed that it is conducting an antitrust investigation of the e-book industry, joining yesterday's announcement of a similar probe by the European Commission.
The U.S. Justice Department confirmed Wednesday that it is conducting an antitrust investigation into the pricing of electronic books, the latest antitrust watchdog to probe whether there was improper collusion by publishers and Apple Inc. to prevent discounting.
At a congressional hearing, Sharis Pozen, the Justice Department's acting antitrust chief, said: "We are also investigating the electronic book industry, along with the European Commission and the states attorneys general."
The attorney general of Connecticut was first to launch a probe into the issue last year in the wake of the launch of Apple's iBookstore.
Regulators are interested in examining the potential antitrust implications of the agency pricing model championed by Apple in which publishers control book pricing and retailers receive a commission (30% in Apple's case) based on the sales price. Publishers had previously sold books for set wholesale prices with retailers allowed to set retail pricing, but with Apple pushing the agency model, other major retailers such as Amazon have also signed on and remade the book pricing landscape as e-books have become increasingly popular.
Top Rated Comments
Then again, isn't everything more expensive these days? ;)
I'm not saying you are right or wrong, just that I remember when a cup of joe was a nickle and you could go to the moving picture show for ten cents. :D
Too bad it is probably legal but I think it stinks.
Amazon had been pricing books to what people expected e-books to cost.
In comes Jobs and tells the publishers, we will let you sell at whatever price you want but if someone sells it cheaper, we can drop the price.
This let's the publisher tell Amazon, if you drop the price, we won't let you sell our books.
If this would have happened with music, we would be paying $4-$5 per song.
For people that have no problem with what Apple has done to e-book pricing...
Ever notice how the price of the major e-books don't fluctuate?
Hardcover versions vary wildly (up to 40% off) during the first weeks/months of release but the e-book price stays exactly the same on both iBooks and Amazon.
Isn't there something wrong with that?
Is that a free market system?
Because of Apple, the publishers get to say, pay what we want or you can't sell our product.
Lucky for me, there are easy ways to circumvent their "practices".
I'm very curious to see what the US and EU investigations lead to, but it's hard to argue against the data that, with Apple's entry into the market, many eBooks that cost $9.99 now cost $11.99-12.99 and relatively few are offered at prices substantially lower than the $9.99 to offset. Likewise, before Apple revised it's pricing model for digital music, it all cost $0.99 on iTunes and often $0.89 on Amazon, and now most of the music costs $1.29. In neither case is it clear that the move caused broader adoption of the medium by publishers.
I'm not saying I'm against the agency model, and it has all kinds of advantages in leveling the playing field for smaller publishers and independents, but the net impact (I was buying both eBooks and downloaded music before this pricing model) is that stuff costs more now than it used to.
If the system is composed of more, smaller companies, publication houses in this case, I don't see how the agency model will be a problem at all. Much like what is happening now in the app space.