European Regulators Reportedly Set to Approve Apple E-Book Settlement Proposal

ibooks iconReuters 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

Oletros Avatar
125 months ago
Back to the bad old days where the big players can strong arm the publishers into selling at prices that make them little or no profit meaning less money to invest in new titles and back to the race to the bottom.

Publishers are paid FULL price
Score: 6 Votes (Like | Disagree)
Daveoc64 Avatar
125 months ago
Back to the bad old days where the big players can strong arm the publishers into selling at prices that make them little or no profit meaning less money to invest in new titles and back to the race to the bottom.
This is nonsense.

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.
Score: 5 Votes (Like | Disagree)
Daveoc64 Avatar
125 months ago
Large retailers, especially multinationals bully most publishers in to lowering their prices.

This happens with publishers, electronics manufacturers, farmers to name a few industries.

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.
Score: 4 Votes (Like | Disagree)
SiPat Avatar
125 months ago
What surprises me the most is that government regulators in some countries are willing to let Amazon establish a monopoly on eBooks by punishing those who want to open-up the market. Makes me wonder whether stuffed brown envelopes are involved somewhere along the line.

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.
Score: 3 Votes (Like | Disagree)
everything-i Avatar
125 months ago
Back to the bad old days where the big players can strong arm the publishers into selling at prices that make them little or no profit meaning less money to invest in new titles and back to the race to the bottom.
Score: 3 Votes (Like | Disagree)
samcraig Avatar
124 months ago
As you said, apple makes those profits on hardware. Each sale is for something that has to be built each time for each sale. An e-book (or any other digital media) on the other hand, only needs to be 'built' once.

Physical books require editing, typesetting, cover art, printing, binding, sales to bookstores, shipping and buy backs from the bookstores (and other things I'm sure I'm leaving out). This is used to justify the cost (and how little the author actally gets from each sale). An e-book only needs the editing, typesetting (formatting) and cover art, which are already done for the physical version. After that, its just place it online and sell it over and over again.

Right - so explain how the VALUE of the product is diminished? It's not. It's the same content.
Score: 2 Votes (Like | Disagree)

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