DOJ Agrees On E-Book Price-Fixing Settlement With Three Publishers

Only hours after filing suit against Apple and six book publishers over allegations of e-book price-fixing, the Justice Dept. said has agreed on settlement terms with three of those publishing companies — HarperCollins, Simon & Schuster, and Hachette.

Said U.S. Attorney General Eric Holder in his statement regarding the settlement:

If approved by the court, this settlement would resolve the Department’s antitrust concerns with these companies, and would require them to grant retailers – such as Amazon and Barnes & Noble – the freedom to reduce the prices of their e-book titles. The settlement also requires the companies to terminate their anticompetitive most-favored-nation agreements with Apple and other e-books retailers.

In addition, the companies will be prohibited for two years from placing constraints on retailers’ ability to offer discounts to consumers. They will also be prohibited from conspiring or sharing competitively sensitive information with their competitors for five years. And each is required to implement a strong antitrust compliance program. These steps are appropriate – and essential in ensuring a competitive marketplace.

The DOJ lawsuit alleges that the “agency pricing” model adopted by these publishers after Apple entered the e-book market has allowed the plaintiffs to determine market prices for titles, rather than allowing e-book sellers to set prices.

“As a result of this alleged conspiracy, we believe that consumers paid millions of dollars more for some of the most popular titles,” said Holder.

The DOJ accused publishers and Apple of “a conspiracy to raise, fix, and stabilize retail prices.”

What this settlement means is that sellers like Amazon and Barnes and Noble will now be able to set their own prices for e-book titles, and determine how much of a profit or loss they want to make off each sale.

Comments

Edit Your Comment

  1. Tarceinus says:

    I hope this doesn’t lead to the Publishers focusing their attention on Library and school based E-Book lending. It’s hard enough to wait in a line of 50 people for one of their 3 copies of a book I want to read.

    • bhr says:

      I’ve been reading on this, 4 of the 5 major publishers already have stopped selling to libraries

  2. Lyn Torden says:

    So what does this mean for how much I get out of the books I wrote?

    • caradrake says:

      You’ll probably still be able to select the price. On Create Space they give you different options and you choose based on how much royalty you want from each.

      They may lower the possible prices down, but I don’t really see this as having much of a difference on the indie market.

      Hopefully. :/

  3. Cat says:

    Amazon and Barnes and Noble will now be able to set their own prices for e-book titles, BUT WILL THEY ACTUALLY DROP PRICES?

    • qwickone says:

      I think Amazon will. This is based solely on the fact that they have been vocal in their opposition of the agency pricing model. I feel like Amazon generally looks out for their customers, so I’ll be really disappointed if they don’t start dropping prices…

      • Tiercelet says:

        Amazon looks out for Amazon and Amazon alone.

        The only reason they’re against the agency model is that they want to drive conventional publishers out of business and take over publishing in-house as an on-demand business with basically no editorial involvement. Which, incidentally, is why ebooks cost so much — they take just as much work to make and market as a real book.

        • thedarkerside.to says:

          Yes, the initial set up is expensive (or can be), you have your editor, type setter and… well, that’s pretty much. I guess the software license cost to spin the epub.

          Guess you could add any author advances on top of it, but that’s it.

          No cost for printing, shipping, warehousing. Sorry, but that’s still the highest cost centre PER BOOK and publishers saved themselves the hassle.

          Not only that, they can keep books for sale for eternity, no need to stash them somewhere or do a minimum print run of a few thousands to keep a book available.

          But yes, others will most likely barge into the publisher market now. Just take a look at Amazon’s store, many self published authors sell books there for a buck basically and they make their coin over volume.

          • cigsm says:

            no actually, shipping & printing isn’t the highest cost of a book.

            Marketing is.

            However, I do agree that The Anxiety & Phobia Workbook, which sells in paperback for $7.49 on Amazon should not be $14.99 on iBooks.

        • thewatchdog says:

          Correct. Amazon does not care about the publishers or the authors or the book market. They are the Walmart of the book industry and will not be happy until everyone else bows to their whim. And for the other poster – why do you think the publishers get to charge more than self-published? Because if the Hunger Games was self-published then 10 people would have read it.

    • elangomatt says:

      I’d put money on Amazon dropping their prices as soon as the can. They have been against the agency model from the beginning so that would be money/time wasted if they don’t lower prices to take care of this “hybrid agency model”. (I just made that name up, but I think its a good title.)

    • iesika says:

      The first one who does drop prices a few bucks and then brags about it gets a hell of a competitive advantage before the others catch up. Like the other responders, my money is on Amazon to get there first. They’re savvy like that.

      I’m betting within 24 hours or so there will be a huge banner up on Amazon.com about it.

  4. Blueskylaw says:

    “this settlement would resolve the Department’s antitrust concerns with these companies, and would require them to grant retailers – such as Amazon and Barnes & Noble – the freedom to reduce the prices of their e-book titles.”

    So a threat was required from the Justice Department to allow companies to sell a product at a lower price???

  5. axolotl says:

    Well that was quick…

  6. YouDidWhatNow? says:

    “They will also be prohibited from conspiring or sharing competitively sensitive information with their competitors for five years.”

    I’m, um, confused about this sort of statement you frequently see attached to these kinds of legal actions.

    I was pretty sure that such conspiracy was already illegal. Like…they shouldn’t be doing it anyway. ?

    • zombie_batch says:

      Apparently they are welcome to try it again without being caught, after the prohibition is ended.

      Realistically, they probably are subject to audits or oversight of some sort for X years on each charge.

    • Conformist138 says:

      I bet they have extra penalties above the standard if they are caught again within 5 years. Like normal probation- you shouldn’t be drunk driving no matter what, but if you are caught while on probation there are even harsher penalties than for someone who isn’t.

  7. cosby says:

    Please let apple fight this as long as possible and let them loose big.

    • Tarceinus says:

      I’d agree with this, but Apple has $100 Billion to throw around. I personally would rather get cheaper e-books now than see Apple throw away what is to them, a pittance.

  8. CoachTabe says:

    Hey, at least the settlement requires that the publishers issue refunds to all the millions of purchases who were illegally overcharged. Oh wait…

  9. Carlos Spicy Weiner says:

    I WONDERED where Apple got all that money. And I thought it was just from overcharging on HARDWARE.

  10. wutname1 says:

    YES! now when will prices start to drop… the book i want is $12 hard cover but $19 for the ebook on amazon!

    • Tiercelet says:

      So buy the hardcover, genius.

      • katarzyna says:

        One of the biggest reasons I got a Kindle was to reduce clutter. Buying a hardcover would defeat this purpose.

        • Tiercelet says:

          I understand.

          The problem with the comment I replied to is that it requires you to believe two contradictory things:

          A) eBooks and print books are totally interchangeable, so they should have the same prices!
          B) eBooks are more desirable than print books, so I only want to buy the eBooks!

          Parent is arguing the equivalent of “Cheese pizza is $12, pepperoni is $19! That’s not fair, I want to eat pepperoni pizza and only pay for cheese!”

          That seems like a very poor reason to allow the government to enable Amazon’s price-dumping rather than letting publishers set the price of the goods they sell.

  11. Gorbachev says:

    Those negotiations must’ve included a really thorough impact analysis on the harm caused for consumers.

  12. alternety says:

    I hope there was a clause in there to stop the rapacious pricing model some of the publishers ae dreaming up for libraries.

    If you want to see a publisher that has a good attitude, go to baenebooks.

  13. Levk says:

    mmmm I dislike ebook prices already, I seen prices for books for well over 15$ for that I may as well get the book itself I seen the same books cheaper on amazon and in book stores.. really to get a download book for the same price or MORE then the hard book, is 100% pointless.

  14. GoJints says:

    Just curious – does this mean I’ll be gettin a rebate on some of the books I’ve already purchased? (Yeah, right)