Monday, August 05, 2013

eBook Pricing and the DOJ

There have been significant changes in eBook pricing since 2007 when Amazon first launched its Kindle. Initially, Amazon sold many bestsellers for a loss at a $9.99 price point. After agency pricing went into effect in 2010, pricing adjusted and many bestsellers were now priced at $12.99 or $14.99, 50% of the hardcover list price. In 2012, the Department of Justice filed a collusion lawsuit against Apple and 5 of the big 6 publishers. While the publishers settled and agreed to put a certain amount of pricing power back in retailers' hands, Apple choose to fight, and in a 2013 trial, they lost.

Now, the DOJ is recommending several items to fix the harm that Apple caused consumers through collusion. One key thing the DOJ wants is to force Apple to allow other retailers to link to content through their iOS app, something Apple only allows for a 30% cut of all sales currently. If this does happen, it could mean significant market share shifts in the digital book market.

I fully expected the judgement to end with a large fine for Apple, but forcing them to link to other retailers book catalogs seems like overreach by the government since they don't have to approve all app developers products to be allowed for download in their store. We'll see how this plays out in the next few weeks, but I don't think Apple will wind up having to allow links to other company's products for free. Of course, with all the appeals, we may not know for a while.


http://gigaom.com/2013/08/02/feds-say-apple-must-give-access-to-amazon-and-barnes-noble-e-bookstores/

Apple must also for two years allow other ebook retailers like Amazon and Barnes & Noble to provide links from their ebook apps to their e-bookstores, allowing consumers who purchase and read ebooks on their iPads and iPhones easily to compare Apple’s prices with those of its competitors.

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