Settlement over e-Book Pricing to Undo Apple's Agency Model for Pricing?

ibooks iconEarlier this month, we reported on word from the U.S. Department of Justice that regulators were looking at filing suit against Apple and e-book publishers over the "agency model" of pricing championed by Apple leading up to the launch of its iBookstore. Under the model, retail book prices are set by publishers, with retailers receiving a cut of the proceeds.

Of most concern to regulators, Apple's agreements with the publishers included "most favored nation" clauses that prevented publishers from selling their books through any other retailers at lower prices than offered through Apple's iBookstore. Reuters now reports that the parties involved in the dispute are continuing to move toward a settlement in order to ward off a lawsuit, and that the settlement is likely to see the removal of these clauses. As a result, the publishing industry will likely in some form return to the previous wholesale model in which retailers set their own prices for books.

While negotiations are still fluid, the settlement is expected to eliminate Apple's so-called "most favored nation" status, which had prevented the publishers from selling lower-priced e-books through rival retailers such as Amazon.com Inc (AMZN.O) or Barnes & Noble Inc (BKS.N), the people said.

The deal could also force a shift, at least temporarily, in pricing control from publishers to retailers, one of the people said.

Such a move to a "wholesale model" would not only benefit consumers but also Amazon, which had been the leading bargain e-book retailer with its Kindle reader.

Under the wholesale model, Amazon priced e-books at or even below cost in many cases in order to draw in customers who would then purchase other items from its online store. But the practice generated concern among publishers that their works were being devalued, and many were happy to sign on with Apple's agency model in order to create more price stability.

Analysts estimate that a return to the wholesale model could add $1 billion to Amazon's revenues this year given its commanding 65% share of the e-book market and the impact of discounted pricing on sales of other items in its store. Book sales make up only a small portion of Apple's revenue, with estimates pegging iBookstore sales at roughly $50 million annually, and the company is expected to see little impact from any pricing changes in the book market.

Top Rated Comments

charlieegan3 Avatar
132 months ago
the whole price thing with e-books puts a lot of people off. shame really
Score: 16 Votes (Like | Disagree)
sha4000 Avatar
132 months ago
I just want the price of an e-textbook to go down some.
Score: 15 Votes (Like | Disagree)
NorEaster Avatar
132 months ago
By allowing amazon to undercut others forces them to lower prices as well. price fixing is so subjective.
How is this any different than any other retailer lowering prices because they can afford to make lower margins for a given product by making it up elsewhere? For Pete's sake...your local grocery store does this every week. They put certain items (like cereal) on sale so you go to their stores, buy the cereal, and then buy other items that yield a better margin for the store.

Are you telling me you never comparison shop?!
Score: 14 Votes (Like | Disagree)
barkomatic Avatar
132 months ago
I have to agree this practice by Apple is pretty obviously anti-competitive.
Score: 13 Votes (Like | Disagree)
Anaemik Avatar
132 months ago
I read to many....

Good for you! To a class of kids? Or perhaps to the blind or the elderly? Either way, I applaud your efforts to help keep literacy alive!
Score: 12 Votes (Like | Disagree)
a.jfred Avatar
132 months ago
the whole price thing with e-books puts a lot of people off. shame really

That's the one thing that's really put me off ebooks: why pay more than the PB book price when I can buy it at a used book store for less?
Score: 12 Votes (Like | Disagree)

Popular Stories

Prosser Series 8 3

Apple Watch Series 8 Rumored to Feature New Design With Flat Display

Wednesday May 18, 2022 6:21 am PDT by
The Apple Watch Series 8 could feature an all-new design with a flat display, according to the leaker known as "ShrimpApplePro." In his latest video on the YouTube channel Front Page Tech, Jon Prosser highlighted information from ShrimpApplePro that suggests the Apple Watch Series 8 could feature a flat display in what seems to be a design originally rumored for the Apple Watch Series 7. ...
anker 563 dock ports

Anker's Latest USB-C Docking Station Brings Triple-Display Support to M1 Macs

Wednesday May 18, 2022 7:06 am PDT by
While Apple's early M1-based Macs can only officially support a single external display, there are ways around the limitation. Anker is launching a new 10-in-1 USB-C docking station today which delivers just that. The Anker 563 USB-C dock includes two HDMI ports and a DisplayPort port, and it leverages DisplayLink to carry multiple video signals over a single connection. Given that this hub...
macOS Monterey 2

Apple Releases macOS Monterey 12.4 With Support for Studio Display Webcam Update

Monday May 16, 2022 10:10 am PDT by
Apple today released macOS Monterey 12.4, the fourth major update to the macOS Monterey operating system that launched in October 2021. macOS Monterey 12.4 comes over two months after the launch of macOS Monterey 12.3, an update that added Universal Control. The ‌‌‌‌‌macOS Monterey‌‌ 12.4 update can be downloaded on all eligible Macs using the Software Update section of System...
Whatsapp Feature

WhatsApp to Let Users Leave Group Chats 'Silently' and View Rich Link Previews in Status Updates

Tuesday May 17, 2022 3:07 am PDT by
WhatsApp is working on a new feature that will allow users to "silently" leave group chats hosted by the messaging platform instead of all members of the group being notified when they do. As it stands, when someone leaves a group chat, WhatsApp announces their exit to the entire group, making the act of leaving very public. It's not possible right now to leave a group quietly, but WhatsApp...
apple data auction iphone privacy ad

Apple Highlights iPhone's Latest Privacy Features in New 'Data Auction' Ad

Wednesday May 18, 2022 9:00 am PDT by
Apple today shared a new ad highlighting iPhone privacy features like App Tracking Transparency and Mail Privacy Protection that are designed to give users more transparency and control when it comes to their personal data being collected. The ad revolves around a young woman named Ellie who discovers that her personal data is being sold at an auction house, with bids being placed on her...
airpodsproinear

Apple Facing Lawsuit After AirPods Allegedly Ruptured Child's Eardrums With Amber Alert

Tuesday May 17, 2022 11:40 am PDT by
Apple's AirPods ruptured the eardrums of a 12-year-old boy in 2020 when a loud Amber Alert was issued, according to a lawsuit filed against Apple in California (via Law360). The child, identified as B.G. in the filing, was watching a movie on Netflix on his iPhone in 2020 while wearing AirPods Pro. The AirPods Pro were allegedly set at a low volume, but an Amber Alert sounded without warning ...
apple store palo alto

Apple Reinstating Employee Mask Mandate at Approximately 100 U.S. Retail Stores

Tuesday May 17, 2022 11:11 am PDT by
Apple retail employees at around 100 stores will need to go back to wearing a mask while working, according to Bloomberg's Mark Gurman. Apple is mandating masks for employees again due to a rising number of COVID cases across the United States. Customers who visit an Apple Store are not required to wear a mask at this time, but Apple is continuing to recommend masks for all Apple Store...