Apple and most of the world’s major publishers are being sued for the illegal price fixing of ebooks.
Finally action is being taken to deal with the unreasonable price structure that the world’s main Publishers of ebooks have compelled online ebook sellers (mainly Amazon) to adopt.
A class action case has been lodged with a Californian Court by Hagens Berman Sobol Shapiro, a Seattle law firm well known for their track record as class action lawyers, in which Apple and five publishers (HarperCollins Publishers, Hachette Book Group, Macmillan Publishers, Penguin Group and Simon & Schuster.) are accused of conspiring to illegally fix the prices of e-books.
All to do with the so-called Agency Model: Price fixing in plain English.
The charge is apparently based on the idea that Apple in the run up to the launch of their iPad were concerned that the normal $9.99 that Amazon were charging for ebooks wouldn’t be financially possible for them to compete with, so, it is claimed, they conspired with the publishers named, to force online ebooks sellers to charge prices that would be set by the publishers. Prior to this, sellers of both ebooks and paper books were allowed to set the sale price of the books they sold themselves.
The net result of this so called Agency Model has been a marked increase in the price of ebooks, frequently to the point that an ebook can cost several dollars more than the hardback version of the book. Obviously a ludicrous situation, but one which these publishers and good old Apple were very happy with.
Well, with any luck the days of the Agency Model may now be numbered, and it will disappear into the mists of history as it so richly deserves to do, and we will return to the sensible and reasonable world of prices being set by normal market forces.
If this class action really takes off, those publishers, and Apple could well find themselves being faced with enormous damages I gather, since if the action is won by the plaintiffs, then all purchasers of over priced ebooks will be able to claim back the difference in price that they have had to pay.
The European Union is gazing at this price ring as well……
Further, the European Union has also been looking at this price fixing ring, with a view to see if it is also illegal in the European Union.
So, greedy, out of touch and unpleasant ways of doing business may well be punished.
And then we will be back to the happy days of being asked to pay reasonable prices for our ebooks again.
Share with us:
What are your views on this one? Have those companies indulged in a bit of good old price fixing – illegally? And if so, what should be done about it?
August 11th, 2011 at 12:48 pm
But all prices of books — digital or otherwise — are going to be ‘fixed’. That’s because cost is one thing and price is another. The complication is what is the actual cost of producing a book? In the case of ebooks the key outlay has to be to the initial producer — the writer or writers — as well as the editors. After that, cost is gilding the lilly. and is the province of the publishing companies. The problem is that the value added — publishing costs — of ebooks are so out of step with those for hard copy that there is a disjunction in the value of the product. The equation gets turned on its head. Even if ebooks are $9.99 a pop how reflective of actual cost/actual returns to the producers is that?
I think we are at a watershed moment in regard to publishing as digital is a great leveller.
The irony is that I have rarely bought books, being library dependent. But since embracing ebookery I have purchased more books than in past years combined. There is a price threshold at stake which promises much more than a table full of remainders.
All I want for what I pay is a guarantee that the author and the editor or translator get their due. Who really needs the big boys being big and imposing their cut on the transaction?
August 11th, 2011 at 12:54 pm
PS: maybe what we need is a book cover note — like they do with donations: ‘x” number of dollars from the sales of this book goes to the author… The sharp irony will be, or course, that it will be so little.
August 11th, 2011 at 2:22 pm
@ Dave,
You are correct in the production costs of paper and ebooks, they are the same (editing, publicity, royalties and so on), where the ebook scores over the paper one is in production costs (once the ebook is ready to be sold) which are effectively zero, and in distribution costs, also zero, so no remainders tables for ebooks.
So the price fixing we are seeing, when it is above the price of paper books is obviously wrong, and apparently a simple case of price fixing, to a large degree I believe brought about by the fact that so far publishers, and author’s agents have yet to reach a full understanding of this new market, and are fighting to save their traditionnal market..the paper book.
I am watching this class action with interest, as I suspect it will also be a sort of water shed decision when it is finally decided and may if it goes the right way, bring ebooks into honest competition with the paper sort.
August 11th, 2011 at 2:26 pm
@ Dave,
Given that another part of that class action concerns underpayment of royalties to authors of ebooks by these same companies, I suspect that idea of yours wouldnt really work either………
August 12th, 2011 at 8:18 pm
Unfortunately, it isn’t clear that agency pricing = price fixing. The first hurdle the lawsuit has to overcome is how to determine what is the product. For example, is ebooks the product or does each book title stand on its own? A very good case can be made that each ebook has to stand on its own. That raises the next problem. If the product is each ebook, you can’t have price fixing because each ebook doesn’t have a competitor — each is unique.
Another problem is that the practice of manufacturer setting a floor pricing has been approved by the U.S. Supreme Court in recent years. Consider this: Want to buy a Kindle? Every seller of a Kindle charges the exact same price as Amazon — no discounting (same is true for Nook, Kobo, and Sony). In the olden days, before the George W. Bush Supreme Court, Staples could have offered the Kindle for $39 with the purchase of a $199 paper shredder; now it cannot sell the Kindle for less than the Amazon-approved price.
Although I find the lawsuit interesting (I am a former practicing lawyer), I’m not sure, based on what I have read so far, that the lawsuit has merit.
September 27th, 2011 at 10:54 pm
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