Amazon Begins Issuing Credits From E-Book Price-Fixing Lawsuit

aamazonWhile Apple is still fighting the court’s ruling that it was involved in e-book price-fixing with America’s largest book publishing companies, those publishers have all reached settlements with the various regulators, attorneys general, and others over the same allegations that they colluded to set an inflated price on e-books. Today, Amazon began issuing credit to its customers who paid too much because of the publishers’ actions.

In e-mails going out to customers, Amazon writes:

“Good news! You are entitled to a credit of $X.XX for some of your past Kindle book purchases. The credit results from legal settlements reached with publishers Hachette, HarperCollins, Simon & Schuster, Macmillan, and Penguin in antitrust lawsuits filed by State Attorneys General and Class Plaintiffs about the price of eBooks.

You don’t have to do anything to claim your credit, we have already added your credit to your Amazon account. We will automatically apply your available credit to your next purchase of a Kindle book or print book sold by Amazon.com, regardless of publisher. The credit applied to your purchase will appear in your order summary. If your account does not reflect this credit, please contact Amazon’s customer service.

For more information about the settlements, please visit http://www.amazon.com/ebooksettlements

Your credit is valid for one year and will expire after 03/31/2015. If you have not used your credit, we will send you another email 90 days before it expires to remind you that it is still available.

Thanks for being a Kindle customer.”

For those coming into this story late, here are the basics. When e-books first launched, they were priced and sold in much the same way that traditional books are. Publishers sold them to online retailers at wholesale prices and these e-tailers could then determine whether to sell at the sticker price or offer discounts at their own discretion.

Then Apple, wanting to wrest some e-book market share from e-tail leader Amazon, convinced the publishers to switch to what’s known as the “agency model,” in which the publisher is the one determining the final retail price, with the e-tailer getting a fixed percentage of that amount. Thus, publishers could set e-book prices at a level that best benefited them and Apple benefited by taking away Amazon’s ability to offer deep discounts.

Unfortunately, publishers got greedy and set e-book prices at curiously high levels, meaning one could often buy a physical copy of the book — which requires paper, printing, binding, shipping, and storage — from Amazon for less than an e-book that only requires the transmission of a handful of kilobytes over the Internet.

Additionally, publishers often refused to offer bundled pricing for series of e-books. One of the most notable examples was the set of the first four books in George R.R. Martin’s A Song of Ice and Fire series (on which the HBO series Game of Thrones is based). Consumers could snap up the slipcased paperback set of these four titles for about $15 on Amazon, but had to pay $36 if they wanted the e-books because the publisher demanded the full $9 price for each title.

As each of the publishers reached settlement deals, they agreed that consumers who paid too much for e-books — not just on Amazon, but from Barnes & Noble’s Nook store, Apple’s iTunes bookstore, and via Kobo — would receive some credit for overpayment.

According to New York Attorney General Eric T. Schneiderman, the total amount of refunds expected to be handed back to consumers is $166 million to people in 32 states.

“Illegal actions by these publishers forced consumers in New York and across the nation to pay artificially inflated prices for E-books,” said Schneiderman in a statement. “Companies engaging in such anticompetitive conduct will be punished—and starting today, those injured by their actions will start to receive full and fair compensation.”

You can find out more about the details of the lawsuits and the settlements here.

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  1. jdgr says:

    In September 2013, Barnes & Noble sent the first notice that a settlement was reached and that funds would be delivered for Nook purchases at some point in the future. They sent a follow-up notice in October, but just sent the notification that funds were released yesterday as well.

    We are happy to let you know you are about to receive your portion of the eBook settlement as an electronic credit. You can use your credit to buy eBooks on your NOOK, on the NOOK Reading App, and online at BN.com, and also to buy eBooks or print books at any of our Barnes & Noble stores. Your credit will be placed in your Barnes & Noble account within the next three days.