Are Apple and Amazon price-fixing e-books?

August 3, 2010

According to the attorney general of the state of Connecticut, Apple and Amazon have made deals with major book publishers which may amount to price-fixing, robbing consumers of purchasing choices.

Connecticut Attorney-General Richard Blumenthal says that he has begun an investigation into these agreements to determine whether they stifle competition in the e-book market. According to News.Com.AU, Blumenthal says:

Both Amazon and Apple have reached agreements with the largest e-book publishers that ensure both will receive the best prices for e-books over any competitors.
These agreements appear to deter certain publishers from offering discounts to Amazon and Apple’s competitors – because they must offer the same to Amazon and Apple.
This restriction blocks cheaper and competitive prices for consumers.
This news comes as Apple is having problems signing deals with magazine publishers, stumbling over who get the rights to own and use subscriber information, and how the revenue is split between Apple and the publisher. There were also announcements today that Amazon is selling by far the lion’s share of e-books in the U.S. market, by far outstripping sales by Apple and Barnes & Noble.

The publishing industry is in extreme disarray at this point in time, with newspapers going under on a regular basis, magazines folding or being sold, and book publishers trying to cope with e-book pricing and distribution. The entire industry is acting as if electronic publishing has caught it by surprise and they don’t know quite how to handle it, despite the history lived by the music industry a few years earlier which should have been an excellent example.

Regardless, the publishing industry continues to flail about looking for a business model in the digital age. Newspapers are getting behind the idea of paid firewalls, pun intended. Magazines are at least trying to sort out per-issue prices and subscriber data rights.  And book publishers are at least trying to come up with workable pricing for e-books, even if they are likely to be called into court for collusion in Connecticut.

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