Department of Justice Sues Apple and 2 of the Big 6

We previously reported the possible lawsuit against Apple and 5 of the Big 6  here... Apple created an Agency Model which changed the way publishers sold e-books to retailers. Instead of allowing Retailers to create their own profit margin, there was implemented a 30% flat profit rate.

Well, the investigation is over and Apple along with TWO of the Big 6 have officially had the DOJ file an antitrust lawsuit against them. The lawsuit claims, "To effectuate their conspiracy, the publisher defendants teamed up with defendant Apple, which shared the same goal of restraining retail price competition in the sale of e-books,"

The US District Court in Manhattan has settled with the other 3 publishing houses, but some are standing firm in their belief that they have done no wrong.

So, What's the Deal and how will it affect consumers?



HarperCollins, Hachette, and Simon + Schuster have come to an agreement with the Department of Justice. Included in their settlement, they have agreed that for two years they will not restrict, limit or impede an e-book retailer's ability to set their own pricing. The agreement also prohibits any further conspiritory contracts- meaning no more attempting to fix, raise, or otherwise rig the retail price of e-books.

So what does this mean for us? It means that if Amazon wants to list a brand new title at $9.99 or any other price to encourage readers to buy it, they are welcome to. If they want to lower pricing, bundle books together, or otherwise make our reading habits more affordable, they can.

Who is included in the lawsuit?  Apple is being sued along with Penguin Group and Macmillan. Macmillan is the only one of the three who has come forward and made any type of statement at this time.

Macmillan's CEO stated that they were unable to come to an agreement because:

1. They feel that they have done nothing illegal.
2. The Settlement that was proposed would allow Amazon to recover the monopoly they feel they  held in the ebook market before the agency model.
3. The settlement would have a long term negative impact on all who sell books, from large chains to small independents.

I can't say that I completely disagree with Macmillan. E-books have changed the industry. They have altered the way we purchase our books, the way we read them, and our expectations on pricing. Just as iTunes changed the music industry, Kindle has changed books and somehow the Big 6 will have to find a way to adapt. So far I have to believe that the Big 6 have been able to utilize ebook technology- bringing down their cost for printing ARC copies- bringing down the overhead cost to produce a book. How much do you think they spend to release a Hardback copy vs. an ebook copy of a book? I doubt this will be their undoing.

Perhaps eBook will be the new Paperback? I don't know what the future holds, but the book industry as we know it is changing. Independent Bookstores are adapting, self published authors are arising, and Big Chain Bookstores have either fallen or changed their stratagies (Borders vs Barnes and Noble) Only time will tell who can keep up as we go forward.