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They offered to let Amazon and other retailers to sell ebooks at a discount for two years

An Apple ebook deal may be in the works after a long 10 months of investigation by the European Union (EU).

Apple and four major publishers that are being investigated have started offering antitrust concessions in an effort to ward off fines and further trouble. The four publishers are Harper Collins (News Corp., U.S.A.), Simon & Schuster (CBS Corp., U.S.A.), Hachette Livre (Lagardère Publishing France) and Verlagsgruppe Georg von Holzbrinck (owner of inter alia Macmillan, Germany).

Penguin (Pearson Group, United Kingdom) is also being investigated, but did not submit a proposal.

One offer from Apple and the four publishers was to allow Amazon and other retailers to sell ebooks at a discount for two years. The Commission is now looking into whether these concessions are enough by taking opinions from the industry.

Last December, the European Commission opened a formal antitrust investigation into whether the five international e-book publishers had been practicing anti-competitive tactics with the help of Apple and its e-book store iBooks. More specifically, the Commission wanted a closer look at the agency pricing model that the publishers adopted with Apple, which allows publishers to set a price for their ebooks and Apple takes a 30 percent cut. However, the publishers can't sell those same books on other retail sites like Amazon for a lower price.

This was not only seen as anticompetitve by the European Commission, but also the U.S. Department of Justice (DOJ). DOJ sued Apple and the publishers in April 2012 over the agency pricing model.

Harper Collins, Simon & Schuster and Hachette Livre decided to settle the case with the U.S. DOJ. However, Apple, Penguin and Macmillan have decided to fight the antitrust case.

The U.S. bench trial in the Apple e-book case will start June 3, 2012.

Source: Reuters

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RE: How Generous
By lightfoot on 8/31/2012 2:28:06 PM , Rating: 4
That is a misrepresentation of Apple's most favored nation clause.

Apple says we sell at X price. Apple takes 30% off the top and the publisher gets the rest. The publisher is forbidden from allowing other sellers to sell the book for a lower price. Even when other sellers are willing to take a lower percentage of the sale price.

If Apple sells a book for $10, Apple takes $3 and the publisher gets $7. Amazon was willing to sell the same book for $8, take only $1 and pay the publisher the same $7. The inclusion of the most favored nation clause would have forced the publisher to then sell the same book to Apple for only $5.60 (Apple still taking their 30% and selling the book for the same price as Amazon.)

The end result was not that publishers sold books to Apple cheaper, but that the publishers forced resellers to sell the same books at a higher price than they previously did.

If you refused to pass on the higher price, you were prevented from selling that publisher's works.

Because each publisher has a defacto monopoly on their books, this appeared to be illegal collusion and price fixing. And that is very illegal in both the E.U. and the U.S.

RE: How Generous
By RufusM on 8/31/2012 2:48:17 PM , Rating: 2
It's exactly why the publishers should be banding together to sell and distribute their own content. If they don't, someone else will and they will eventually be cut out of the transaction all together. Authors can already dis-intermediate publishers, hire their own editor for cheap and go straight to Amazon. Instead they try to protect their existing business model when it's obsolescence is virtually guaranteed if they stay the course.

RE: How Generous
By Trisped on 8/31/2012 11:57:05 PM , Rating: 2
There is also the fact that iTunes did not allow publishers to set any price they wanted at launch. I am having trouble finding the articles, but original you could not publish a book on iTunes in $7-14 range. Those tiers were added later.

"So, I think the same thing of the music industry. They can't say that they're losing money, you know what I'm saying. They just probably don't have the same surplus that they had." -- Wu-Tang Clan founder RZA

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