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Reuters reports that regulators with the European Union are preparing to approve an offer from Apple and four book publishers to settle an antitrust action related to e-book pricing.
Apple, Simon & Schuster, News Corp unit HarperCollins, Lagardere SCA's Hachette Livre, and Verlagsgruppe Georg von Holtzbrinck, the owner of German company Macmillan, made the proposal to the European Commission in September.
The move came after the EU antitrust authority opened an investigation into the companies' e-book pricing model, which critics say prevents Amazon and other retailers from undercutting Apple.
Officials in the U.S. and Europe have been taking on Apple and publishers over a shift to an agency model for pricing in which publishers set retail prices for books and distributors such as Apple and Amazon receive a set percentage of the sales price. The model, championed by Apple for the 2010 launch of the iBookstore, was intended to reduce Amazon's dominance in a market where it could purchase books at wholesale prices and sell them at a deep discount to undercut other retailers.
A key part of Apple's agency model was a "most favored nation" clause that prevented publishers from selling books to other retailers at prices lower than those offered to Apple. The clause was intended to prevent Amazon from striking deals to continue undercutting other retailers, but quickly drew criticism and the attention of regulators for potential price collusion effects.
Under concessions offered by Apple and publishers in the European case, Apple's agency model would be significantly unraveled, with Amazon and others being allowed to set their own pricing for books.
Top Rated Comments
Publishers are paid FULL price
The publishers set the wholesale price, then Amazon sells it for whatever they want.
The publisher needs to set the wholesale price at a level that meets their profit needs.
This is how just about every other product works (including paper books), why should ebooks be different?
I don't buy into "lowering customer expectation" of price.
So you're saying it's wrong for one company to do that to LOWER prices, but it's ok to do it to RAISE prices?
That's what it boils down to.
Amazon only paid-out 30% of each sale, whereas Apple proposed 70% -- Apple's bottom line for eBook sales doesn't benefit, but the halo effect does. And this is exactly what Amazon is doing but at a far higher profit on smaller margins.
Amazon wants to destroy the publishing market and has the buying power to tie-up the best authors by bidding higher than any publishing house -- eventually, Amazon will be the only book publisher around.
Right - so explain how the VALUE of the product is diminished? It's not. It's the same content.