DOJ Threatens Apple, Book Publishers with Lawsuit Regarding E-Book Sales
March 8, 2012 9:55 AM
comment(s) - last by
Apple and five book publishers were using an agency sales model that raised the prices of e-books
The U.S. Department of Justice (DOJ) is planning to launch a lawsuit against Apple and five U.S. publishers for allegedly conspiring to raise e-book prices through an agency sales model.
Last December, the
European Commission opened a formal antitrust investigation
into whether five international e-book publishers had been practicing anti-competitive tactics with the help of Apple and its e-book store iBooks. Shortly after, the U.S. Justice Department climbed aboard the investigation as well.
After investigating the suspicious tactics, the DOJ has now warned Apple and the five book publishers that it plans to sue them for raising the prices of e-books. The five book publishers involved are
Hachette Livre (Lagardère Publishing France), Harper Collins (News Corp., U.S.A.), Simon & Schuster (CBS Corp., U.S.A.), Penguin (Pearson Group, United Kingdom) and Verlagsgruppe Georg von Holzbrinck (owner of inter alia Macmillan, Germany).
Traditionally, publishers sell physical books to retailers for about half of the cover price, which is considered a wholesale model. Retailers then had the power to sell those books to customers for a lower price if they wanted to.
However, the e-book industry rocked this model and rubbed publishers the wrong way. Amazon started selling best sellers for as low as $9.99 in an effort to encourage Kindle sales. When Apple came along with iBooks, publishers were worried that the tech giant would take over the book industry the way it did the music industry with iTunes.
Apple then struck a deal with publishers in 2010, where they'd settle on an agency model instead. The agency model allowed publishers to set the price of the book and Apple would receive a 30 percent cut. However, publishers were not allowed to let rivals sell
the same book
for a lower price.
According to the DOJ, Apple and the five publishers did this to raise the prices of e-books, which violates federal antitrust laws. The publishers reacted to these claims, saying that the agency model was used to "enhance" competition in the e-book industry by helping e-book sellers to make some money out of the deal.
The DOJ isn't buying this excuse, though. The government is wondering how competition could have increased when prices were increasing.
Apple, the publishers and the DOJ are currently in talks regarding e-book prices. While the DOJ warned Apple and the publishers that it plans to sue them for allegedly conspiring to raise prices, some publishing executives associated with the talks have said that a settlement is being considered. Some solutions that have been passed around included the idea to keep the agency model, but allow booksellers to offer some discounts.
Apple has jumped heavily into the
book selling and publishing business
with the recent launch of iBooks 2, which is the sequel to the iBooks app that provides students with books they need as well as study features, and iBook Author, which is Mac software that allows textbook writers and publishers to create textbooks for the iPad.
Undoubtedly, e-books are an essential part of the iPad experience, and with the announcement of
the iPad 3 release
just yesterday, Apple likely wants to get this DOJ business figured out quickly.
The Wall Street Journal
This article is over a month old, voting and posting comments is disabled
RE: About Time!
3/12/2012 11:29:05 AM
LOL! No they won't! Have you been drinking the Anti-Kool Aid??
People will imitate whatever they think is "cool" so they can be part of the "in crowd", so they too can be cool, while failing to reason that genuinely "cool" people don't give a shit what the hoi polloi beneath them think... that's what makes them "cool" in the first place.
I've tried to express this to my baby sister in the past, who used to go around wearing the "cool" clothes, the "cool" shades, buying a "cool" iPod nano. In fact, the only thing she has bought in the past that wasn't "cool" is a Galaxy S phone... and those are cool now.
She finally came to terms with it when I came home for Christmas holidays 2 years ago and I went out with her and her friends to clubs and all her friends kept telling her, "Your big brother is really cool!" She was floored. She told me the next day what they were saying, and that she didn't understand why they thought I was cool. I told her its simple... I don't give a damn what anyone thinks about me. I dress how I want, I act how I want, I do what I want. That's why they think I'm cool, because I'm not doing what everyone else is doing to be "cool".
Same for these Apple zealots. You're "cool" if own an Apple. People are stupid, and they fall for marketing. Brands don't make you cool. Your style and attitude make you cool. Its a real shame people think some product they can buy will make them "cool".
"Game reviewers fought each other to write the most glowing coverage possible for the powerhouse Sony, MS systems. Reviewers flipped coins to see who would review the Nintendo Wii. The losers got stuck with the job." -- Andy Marken
Apple Launches Third Generation iPad with Retina Display, LTE; 16GB iPad 2 Drops to $399
March 7, 2012, 1:29 PM
Apple's New iBooks 2, iBooks Author Apps Hit 440,000 Downloads Combined in First 3 Days
January 23, 2012, 9:56 AM
Apple Reinvents Textbooks/Publishing with iBook Author, iBooks 2
January 19, 2012, 11:49 AM
European Commission Targets Apple, Publishers in E-Books Antitrust Probe
December 6, 2011, 12:55 PM
Report: Apple’s iPhone 6 to Get NFC Payment Capabilities
August 28, 2014, 11:43 AM
Samsung Announces Tizen-based Gear S Smartwatch That Can Make/Receive Phone Calls
August 28, 2014, 12:00 AM
LG Announces G Watch R Smartwatch, Will Launch in Q4
August 27, 2014, 11:45 PM
Archos Offers $99 WinPhone, $150 x86 Win8.1 Tablet, Android Trio
August 27, 2014, 7:07 PM
HTC Desire 510 Officially Announced, May be First 64-Bit Android Smartphone
August 27, 2014, 3:50 PM
Report: Apple to Unveil "iWatch" at iPhone 6 Event on September 9
August 27, 2014, 2:00 PM
Most Popular Articles
Microsoft's Surface 2 Tablet Family Gets a $100 Price Cut
August 25, 2014, 1:16 AM
Report: Microsoft to Announce Windows 9 on September 30
August 21, 2014, 11:20 AM
From HULC to FORTIS: the Evolution of Lockheed Martin's Incredible Exosuit
August 22, 2014, 12:45 PM
SpaceX Falcon 9-R Rocket Suffers Malfunction, Self-Destructs During Test Flight
August 23, 2014, 9:36 AM
Owner of "Decepticon" Maserati Ordered to Appear in Court This Thursday
August 25, 2014, 7:55 AM
Latest Blog Posts
Space Terrorism is a Looming Threat For the United States
Apr 23, 2014, 7:47 PM
Facebook Aims to Provide Internet to "Every Person in the World" with Drones, Satellites
Apr 1, 2014, 10:20 AM
Retail Mobile Sites Experience Outages in Light of Simplexity's Bankruptcy
Mar 14, 2014, 8:48 AM
Tesla vs. BMW: Who Has the Safer EV?
Feb 1, 2014, 2:56 PM
Justice Leaks Details of Next HTC One Two Flagship Phone
Dec 5, 2013, 4:04 PM
More Blog Posts
Copyright 2014 DailyTech LLC. -
Terms, Conditions & Privacy Information