DOJ Reportedly Close To Deal That Would Lower E-Book Prices

Ever since Apple got into the e-book business, publishers have been determining their own prices for titles, meaning that e-books, in spite of having minimal overhead costs, are often sold for higher prices than their print counterparts. But it looks like the Justice Dept. antitrust investigation into this so-called “agency pricing” model is nearing an end — and may result in more affordable e-books for everyone.

According to Bloomberg, the DOJ is close to finalizing an accord with Simon & Schuster, HarperCollins and the Hachette Book Group and could announce details as early as next week.

What might delay the deal is that the two remaining publishers involved in the investigation, the Penguin Group and Macmillan, are reportedly not as close to an agreement as the other three book businesses.

On print books, Amazon and other retailers buy copies at wholesale prices (often around 40-50% of the cover price) and choose how much they want to discount the title. This model had been used until Apple unleashed the iPad and began offering e-books as downloads. To get a competitive edge in the market, Apple allowed publishers to set whatever price they choose, so long as Apple received 30% of each sale. This quickly became the model for e-book pricing with Amazon and other vendors.

Thus, you end up with things like the newly released Harry Potter e-books, which are more expensive than paperback versions of the same titles.

And last year, as Game of Thrones became a hit on HBO and readers clamored to catch up on the Song of Ice and Fire series of books on which the show is based, e-book users were livid over the fact that you could buy a boxed set of the paperbacks for around $20 but the Kindle price was around $36. That price has since dropped to $30, but is still significantly more than what you’d pay for paperbacks.

DOJ Said Near E-Book Pricing Settlement With Publishers [Bloomberg]