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Apple and the four publishers offered to let Amazon and other retailers sell e-books at a reduced price for two years

Apple and the four major book publishers under the EU microscope have officially offered a solution to their e-book troubles: allow Amazon and other e-tailers to sell e-books at a discount. 

This proposal was originally brought up back in August, where Apple and publishers Harper Collins (News Corp., USA), Simon & Schuster (CBS Corp., USA), Hachette Livre (Lagardère Publishing France) and Verlagsgruppe Georg von Holzbrinck (owner of inter alia Macmillan, Germany) attempted to settle the investigation by the European Commission. Penguin, the fifth book publisher involved in the case, did not submit a settlement proposal.

The proposal is that the publishers will not restrict or limit an e-book sellers' ability to set, change or reduce e-book prices for two years. They also won't interfere with an e-book retailer's choice to offer discounts. 

In addition, Apple and the publishers have agreed to suspend "most favored nation" contracts for five years, which stopped publishers from allowing other e-book sellers, like Amazon, sell e-books at lower prices than Apple. 

The Commission said it is considering the settlement proposal offered by Apple and the four publishers. It will now allow third parties to offer their opinions, and in one month, the Commission will decide to either end the investigation or continue. 

While the EU investigation may soon come to a close, the same can't be said for the U.S. Department of Justice's investigation into the same issue. DOJ sued Apple and the same five publishers in April 2012, and soon after three publishers made settlement deals with the government (Harper Collins, Simon & Schuster and Hachette Livre). 

Apple, Penguin and Macmillan, on the other hand, will duke it out with the DOJ at the U.S. bench trial on June 3, 2013.

Source: Reuters

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RE: Backward
By Trisped on 9/20/2012 6:18:42 PM , Rating: 2
Apple's customers were not guaranteed preferential status ("most favored nation" status) they were guaranteed not be be in a disadvantaged position ("best customer" status).
There in you are backwards. The problem was not that Apple had a "best customer" status with the publishers. The problem is that Apple had a "best customer" status and did not allow publishing books in the 7.99-13.99 dollar range. In fact Apple still does not allow vendors set their price, instead forcing them to pick from one of the prices Apple allows (though last I checked you can pick any dollar amount, but the cents stays at .99 unless it is free).

This then meant that any publisher which gave "most favored nation" status to Apple (which was all of them) could not sell a book with Apple which was sold anywhere in the unsupported price range. This then forced publishers who wanted to use Apple's store to sell their products to raise the price of their eBooks to 14.99 at all stores (including Amazon) at 14.99, even if they had previously been selling it at that store for less (like if the book had been selling for 9.99 on Amazon).

While it makes more sense as a consumer to think of the publishers selling to Apple (giving Apple "best customer" status), the model is actually Apple selling its services/products to the publishers.

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