UPDATE: U.S. Department Of Justice Is Suing Apple And Publishers Over eBook Pricing
UPDATE: According to Publishers Weekly, HarperCollins, Hachette and Simon & Schuster will settle. Here's a link to the settlement. It's a legal document, and it's long, but a quick scan indicates that these three publishers will allow retailers--like Amazon, or iBooks, or Kobo, or whoever--to sell their book using the wholesale model (see below). Bad news for Apple.
via the Wall Street Journal:
The Department of Justice has filed an antitrust lawsuit against Apple and five of the Big Six publishing houses over eBook pricing.
Just last week there was talk of a settlement, but it appears as though that fell through. Apparently two of the publishers, and Apple, didn't want to cede to the DOJ's demands.
There's talk that some of the publishers might still settle. But Macmillan CEO John Sargent said he won't be one of them.
In 2010, to make iBooks and the iPad more competitive against Amazon, Steve Jobs got five of the Big Six publishing houses--HarperCollins, Hachette, Macmillan, Penguin, and Simon & Schuster--to abandon the "wholesale model" of pricing for eBooks in favor of the "agency model."
Under the wholesale model, the retailer determines the price of a product. Under the agency model, the publishing house determines the price. The idea was that if everyone was charging the same for eBooks, people would have no choice but to buy eBooks other than at the prices set by the agencies, and Amazon couldn't undercut anyone with lower pricing.
Random House has been held harmless in all this, as they signed onto the agency model afterwards and weren't party to the original agreement.
And that's why most traditionally-published eBooks cost $9.99.
The problem, of course, is that price-fixing is illegal.
I wish I could remember where I read this, but about a week ago, I saw something that did a good job encapsulating the absurdity of the current pricing model:
Say I want to read the A Song of Ice and Fire series. I could get all five novels for $21 on Amazon. To get all the eBooks, it would cost $50.96. Once the digital file is created, that's it--there's no further printing costs. Storage and delivery costs are negligible. Yet the agency model of pricing has caused these eBooks to cost more than double the cost of print books, which are far more expensive to produce, store and transport.
I'm not saying there's a right or wrong price for a book, just that the agency model is stupid and anti-consumer.
Anyway, what does this all mean? Hard to say. The only guarantee right now is that, with all the parties gearing up for a legal battle, this isn't going to be settled anytime soon.
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