European Regulators Investigating Apple and e-Book Publishers over Antitrust Concerns

Bloomberg reports that the European Commission has launched an antitrust investigation targeting Apple and five e-book publishers. The publishers targeted in the investigation include five of the six major book publishers: Hachette, Harper Collins, Simon & Schuster, Penguin, and Macmillan.
PricewaterhouseCoopers said in a January report that European e-book sales have been sluggish, partly due to the small range of non-English titles and fixed price agreements between publishers and stores in 13 countries. EU Competition Commissioner Joaquin Almunia said last month that he wanted to fight “artificial restrictions imposed by some companies to cross-border trade” and was examining the way e-books are distributed.

Today’s probe “will in particular investigate whether these publishing groups and Apple have engaged in illegal agreements or practices that would have the object or the effect of restricting competition,” the Brussels-based authority said.
Apple has been targeted by a number of investigations and lawsuits related to its remaking of the book industry. With the launch of its iBookstore, Apple reached agreements with major publishers to adopt an "agency model" in which publishers retain control over sales prices and retailers receive a 30% share of that sales price. Previously, retailers had paid set wholesale prices for books and then priced them for sale at their discretion. With Apple driving the shift to an agency model, Amazon and other major retailers quickly followed suit.

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107 months ago

The EU investigates when an ant crosses the road. Too much government.



The sounds like a waste of time, can you please link and cite that case where they investigated an ant crossing the road.
Rating: 16 Votes
107 months ago

The EU investigates when an ant crosses the road. Too much government.


While I generally agree with you on that, this time there is an aspect that I think is well overdue. And that's about this notion of treating digital the same as physical. My issue with books and ebooks is this notion of territories and releasing in select countries only. I understand it a little for physical books because of sales tax, costs to print and ship etc. But for ebooks a lot of that is gone. The issue is generally that every publisher wants those rights and that money. But some kind of agreement should be possible. If this EU investigation forces them to make that agreement so that ebooks go worldwide at the same time then I say that's not a bad thing. In fact I hope they then do the same thing with TV and movies. Availability is a major excuse used by those that want to justify torrenting etc so drop that one off the list and move on to quality and pricing.
Rating: 12 Votes
107 months ago

Previously, retailers had paid set wholesale prices for books and then priced them for sale at their discretion. With Apple driving the shift to an agency model, Amazon and other major retailers quickly followed suit


This is not a good thing. Before ebooks were a maximum of $10 then apple comes along and agrees to the publishers demands (who know they're going out of business because they do nothing for ebooks except edit and screw over the author) which has risen the average cost of an ebook because these greedy publishers still want their slice of the pie for doing nothing at all. Apple should be fighting for the authors AND for the consumers. Take us back to the days when ebooks were $10. Apple could still keep their $3 per sale and send the $7 directly to the author (instead of a few cents), bypass the publishers entirely.
Rating: 11 Votes
107 months ago

The EU investigates when an ant crosses the road. Too much government.


While I generally agree with you on that, this time there is an aspect that I think is well overdue. And that's about this notion of treating digital the same as physical. My issue with books and ebooks is this notion of territories and releasing in select countries only. I understand it a little for physical books because of sales tax, costs to print and ship etc. But for ebooks a lot of that is gone. The issue is generally that every publisher wants those rights and that money. But some kind of agreement should be possible. If this EU investigation forces them to make that agreement so that ebooks go worldwide at the same time then I say that's not a bad thing. In fact I hope they then do the same thing with TV and movies. Availability is a major excuse used by those that want to justify torrenting etc so drop that one off the list and move on to quality and pricing.


Perfectly put, thank you! :)

It would be nice to see a positive come out of this for the consumer.
Rating: 8 Votes
107 months ago

I'm not sure when e-books were ever $10. Apple actually brought the commission down to 30%, when previously Amazon et al were taking 70% (and still are for some territories - see their e-publishing agreement for details)


It was 70% for people using Amazon's self-publishing system. The big publishers were never on that.

Previously ebooks were treated the same as physical books. The publishers set a RRP, and the sellers paid a wholesale price to the publishers which was a percentage of the RRP price (often around 50%). The sellers were then able to sell the book for whatever they wanted (just like every other commodity in the world), and in Amazon's case that was often at a loss to promote their Kindle devices.

Whatever the retailers sold at made no difference to the publisher's or author's bottom line.

The agency model is far worse for everyone's bottom line except for, ironically, the retailers who were previously selling at a loss.

The agency model has never been about the money, it's about control.

The agency model is illegal in the UK anyway (see Net Book Agreement (http://en.wikipedia.org/wiki/Net_Book_Agreement)) so if the publishers have actually been engaging in it and Apple has actively helped them i hope they have the book thrown at them. :D
Rating: 7 Votes
107 months ago
eBooks should always be dramatically cheaper that real books, as you have nothing that you physically own.

You can't sell the books, given them to charity, give them to your friends, and your friends give you you're to read.
Rating: 4 Votes
107 months ago
I am missing something

What am I missing here?
*Apple takes a cut of the sale
*Publishers get to name their price
*Consumers have choice if they use an iPad (B&N Store, Amazon, iBookstore)

The only things that come off as bad to me are:
*How much of a cut publishers take to "publish" an ebook for the author
*How other readers (kindle/nook) only support THEIR format
*There needs to be a uniform standard format
*Authors need to self publish more (& pay for independent editors)

EU needs to investigate publishing companies for antitrust, but not over the mere e-book portion of the equation.
Rating: 4 Votes
107 months ago

OK, so you say it wasn't 70% cut for big publishers, it was 50%. It's still more than 30% isn't it?


Since Apple takes 30% of the sales price, that computes out to a 43% mark-up over cost. While reading this thread I've noticed several people throwing out percent numbers without identifying whether they are talking mark-up or margin.

The Agency model yields a margin number while the previous profit-over-wholesale-cost model is easier to see as mark-up. The difference between the two numbers widens rapidly as the profit portion grows.

For example:
10% margin is 11% mark-up
20% margin is 25% mark-up
30% margin is 43% mark-up
40% margin is 67% mark-up

You can't mix the two percentages in a sentence and have a reasonable statement while ignoring that the percentages represent two different computations.

If you are not in business a 30% margin may seem like a hefty profit for an e-book because there is actually no physical product to inventory, warehouse, or ship. However, that 30% needs to support the whole infrastructure, wages, and legal costs to cover suits and investigations by gawd-knows-who.
Rating: 2 Votes
107 months ago

They are about the old ways and inefficiency from top to bottom.


I like the old ways.

35-hour work weeks and 6 weeks, minimum, vacation time. Throw in the federal holidays and everyone gets 8 weeks vacation/year.

Totally crappy. I hate it, I should move to the US, where there is no madatory minimal amount of holiday.

Oh yeah, but the ebooks are cheaper.
Rating: 2 Votes
107 months ago

They are about to break up the Euro due to debt and lack of any new growth and they are worried about Apple and e-books!

Someone does not watch the news, they are not breaking up Eurozone (yet), they are however going to tighter fiscal integration.

Also Eurozone and the European Union are two different entities.
Rating: 2 Votes

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