The $9.99 Problem

 

According to the U.S. Justice Department, Apple Inc. (maybe you’ve heard of them?) is getting sued due to an agreement that Apple made with five publishers regarding e-books and their prices, back when the iPad was launching in 2010.

The lawsuit was filed on April 11, 2012 in the United States District Court for the Southern District of New York. The government believes that Apple and five book publishers conspired with one another regarding the prices of e-books, keeping rates at a justifiable price and hoping to beat out the competition (i.e. Amazon and its $9.99 e-books for the Kindle).

“Apple successfully persuaded the publishers to adopt an “agency model” that allowed publishers to set the price of e-books and in turn, Apple would take a 30 percent cut, the government said. The Apple agreements with publishers effectively barred them from allowing rival retailers to sell the same books at lower prices … The agency model of pricing is not itself illegal, but it is illegal for competitors to collude to set prices.” article

According to Reuters, a settlement was reached between three of the five publishers, allowing Amazon to continue discounting books and will end contracts with Apple. The publishers that agreed to settle are HarperCollins Publishers Inc, Simon & Schuster Inc and Hachette Book Group. The other two involved in the suit are The Penguin Group and MacMillan, and along with Apple who are fighting the U.S. Justice Department. Some of the publishers that settled claimed that they were not guilty of the charges of fixing prices and conspiracy; others, like Macmillan, argue that they never conspired to beat out competition but were afraid that after settling, Amazon would once again monopolize the e-book market.

In addition to the settlement, two publishers (Hachette and HarperCollins) also agreed to pay $51 million in restitution to consumers who bought e-books in several states.

At a time when e-publishing is on the rise, and consumers are using technology to enhance their knowledge and education while utilizing its efficiency and convenience, its seems really unfortunate that a large tech giant would need to form a pact with big names in the publishing field to level the playing field and beat out the monopoly that Amazon was becoming in the e-book industry. I applaud them wanting authors  and publishers to get what they deserve ($ and cents) and while it comes off as sketchy, I can understand their reasoning behind it. The integrity of the field is diminishing as e-books and e and self publishing are on the rise, but conspiring against someone who is thinking of the consumer doesn’t quite seem fair either. Even if it is Amazon.

Read the Time article on United States of America v. Apple, Inc.