Ebook price fixing costs big bucks

Grant Gross
10 April, 2012
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Ebook price fixing will cost consumers more than US$200 million this year, and U.S. antitrust authorities should take action against Apple and a group of publishers, the Consumer Federation of America said Monday.

The U.S. Department of Justice should take “vigorous action to stop this abusive practice,” wrote Mark Cooper, director of research for the Consumer Federation of America, in a letter to the U.S. Senate Judiciary Committee’s antitrust subcommittee.

Apple did not immediately respond to a request for a comment on Cooper’s letter.

In December, a U.S. Department of Justice official said the agency was investigating ebook price fixing. A similar investigation by the European Union has targeted Apple and five ebook publishers.

The price-setting practices by Apple and the five publishers “constitute anticompetitive, anti-consumer collusive” behaviour, Cooper wrote in his seven-page letter to the subcommittee. “Collusion between firms to set minimum prices is ‘slam dunk’ illegal, especially when one of the first effects of the price fixing, after increasing consumer cost, has been to raise publisher profits.”

A lawsuit seeking class-action status filed in August in U.S. District Court for the Northern District of California, accuses Apple, HarperCollins Publishers, Hachette Book Group, Macmillan Publishers, Penguin Group and Simon & Schuster of working together to raise ebook prices in response to a discounted pricing strategy from Amazon.com.

The effect of raising ebook prices from an average of US$9.99 to US$12.99 or more raises publisher profits, Cooper wrote in his letter. Ebooks are cheaper to produce and distribute, leading book publishers to increase profits even as revenue is flat, he said.

“As technologies lower the cost of production and distribution, a scrum develops over the social surplus that is released,” he wrote. “The sellers of information goods seem to think that because consumers were willing to pay a high price for their physical products in the past, they can keep the price high for digital products and pocket the cost savings as increased profit.”

He called on the antitrust committee to pay close attention to ebook prices.


One Comment

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  1. umojaresearch says:

    The idea of fixed pricing on any book is not right and although eBooks may be a cause for the United States Department of Justice and the States to defend, what about School Books?

    The U.S. Department of Justice should take “vigorous action to stop this abusive practice,” with all High School and College Books,not just eBooks, this would be a much nobler battle to fight. Publishers have profited from fixed pricing on School Books for decades.

    When will the United States Department of Justice and the States defense Students from excessively overpriced books for education??


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