WSJ: U.S. Warns Apple, Publishers: Justice Department Threatens Lawsuits, Alleging Collusion Over E-Book Pricing

WSJ: U.S. Warns Apple, Publishers: Justice Department Threatens Lawsuits, Alleging Collusion Over E-Book Pricing

Thanks to one of my most reliable readers, who gave me the heads-up to this story in a private e-mail (if you’d like credit, just let me know):

WSJ article

It talks about inside sources saying the the DOJ (Department of Justice) is letting Apple and five publishers (the five that initially agreed to the Agency Model) know that they will take legal action against them for collusion if a settlement can’t be reached.

I thought the Agency Model might go away in this way in 2011, and obviously, I was wrong about that.

This article by Thomas Catan And the ever reliable Jeffrey A. Trachtenberg does a good job of summing up the situation.

The publishers have to decide if it’s worth getting into a public legal case, or just dumping the Agency Model (or seriously modifying it in some way).

My guess?

They don’t love the Agency Model anyway. Pricing is hard. The Agency Model has only given them bad will with the serious book buyers. iBooks has not been a success (so they don’t have to fear Apple’s power as much), and the person who allegedly…guided the Agency Model for e-books isn’t part of the situation any more.

I’m thinking this does settle out of court. That doesn’t immediately mean lower e-book prices…nothing forces the prices to be as low as Amazon had been setting them in the beginning.

You might be wondering why Random House (which joined the Agency Model in 2011) isn’t mentioned in the article as part of it. The wheels of the Department of Justice turn slowly, for one thing…Random House could be in it later. Also, the charge is collusion: The other five all had the same action at the same time…Random House was almost a year later.

Could the publishers win this? The defense would have to be that Apple suggested the idea to each publisher individually and they all agree to it, without consulting with each other. That’s one possibility, and that has to do with price-fixing. However, there are other anti-competitive charges that could be involved, as I understand it.

I just don’t see the publishers fighting this in court. Even if you think what they did with the Agency Model is fine, I don’t see it being worth a public trial.

My feeling is that the Agency Model, at least as we know it, will be over in the USA this year.

I’ve been wrong before, though. :)

I strongly suggest you read the article.

This post by Bufo Calvin originally appeared in theĀ I Love My Kindle blog.

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9 Responses to “WSJ: U.S. Warns Apple, Publishers: Justice Department Threatens Lawsuits, Alleging Collusion Over E-Book Pricing”

  1. Lynn Says:

    I had almost given up hope on this issue ever being brought up my the justice Dept. It needs to be addressed. Has always smelled to high heaven (IMHO). I’ve always believed Jobs was behind the whole thing. He was always hedging his bets.

  2. Tom Semple Says:

    Hope you’re right about Agency going away.

    In the meantime Google and Amazon are having a price war on ebooks: 25 cents for Fight Club and Extremely Loud and Dangerously Close (Google has 25 cent deals each day so I will be checking to see what Amazon will be selling for 25 cents as well).

    • Bufo Calvin Says:

      Thanks for writing, Tom!

      I considered writing about “Play” (Google’s new move…overshadowed in the media by the “New iPad”…and I didn’t write about that either, except for the Intro Event humor piece).

      https://play.google.com/store/books

      Amazon is always in a price war with everybody…unless it’s an Agency Model book, where they can’t discount it. :)

      As you know, you can report a lower price at a competitor, and if they can set the price, they’ll match it.

      I haven’t tried using Google books on my Fire yet…I should do that. In the case of the two books you mentioned, neither of them are Agency Model books. I would have snapped up one of them if it didn’t block text-to-speech access.

    • Dave Says:

      I saw those $.25 books last night as well and gobbled them both up. Great deals on great books. I didn’t know it was coming from Google’s pricing though, so that’s interesting and something to definitely keep an eye on!

  3. Lynn Says:

    Well, I guess he won’t be going to court after all. Seems kinds seedy to go after damages against his estate. Anyway, he was a geniius, but that (contrary to his stated beliefs) doesn’t mean the rules don’t apply to you. I hope this rattles the big six’s cages. They are so on my list!!!

    • Bufo Calvin Says:

      Thanks for writing, Lynn!

      At this point, it wouldn’t be damages from Steve Jobs. He was named in the class action suit as being involved while he was alive…and the DoJ is reportedly going after the publishers and Apple, not Jobs as an individual.

      • Lynn Says:

        If he was still alive, I would be dismayed because I believe this was his brainstorm creating a way to make as much as possible and to thwart Amazon. It was totally fixed. He said as much.

      • Bufo Calvin Says:

        Thanks for writing, Lynn!

        I think your second point, thwarting Amazon, was the important one. Apple wanted to sell hardware (the new iPad…no, not the new new iPad, the original one). ;) They weren’t going to compete with Amazon on content, so messing up that market was okay.

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