Friday, March 9, 2012

Justice Dept. Warns of e-Book Pricing Lawsuit

Apple and five of the largest U.S. publishers are in danger of being sued by the Justice Department, according to Reuters News Service and the Wall Street Journal, for allegedly conspiring to raise the prices of electronic books. The publishers include Simon & Schuster of the CBS Corporation, Lagardere SBA’s Hachette Book Group, Pearson PLC’s Penquin Group; and MacMillan, a division of News Corp, which owns the Wall Street Journal.

Representatives of some of aforementioned companies have held talks to settle the potential anti-trust case and a spokesman said that a settlement could lead to cheaper consumer prices. The publishers in question have denied agreeing to raise prices, according to the Journal, and insist that an agency pricing model has enhanced competition by encouraging more online booksellers.

Publishers set e-book prices under the “agency model” and Apple earns 30% of retail, but Apple won’t allow publishers to let rival retailers sell ebooks at a lower price (which is also an policy). 

Amazon Inc. has sold new bestselling books at $9.99 as a way to promote its Kindle e-readers, but the practice has “ruffled the features of many publishers.”
What does all this mean to writers? Lower royalties for one thing. Many e-books are already selling at 99 cents or lower, and Amazon’s Kindle Select Program offers free e-book promotions for any writer who signs on exclusively for the 90-day program as well as royalty payments for its book borrowing program. That's a lot of free e-books for potential buyers. KSP was designed to provide free e-books to Amazon's Prime members and even offers a free one-month trial to entice readers to join. 

Why? Rumor has it that is in financial trouble and that a number of writers are threatening a class action lawsuit because royalties haven’t been paid, or their sales figures have disappeared off the Kindle Direct Publishing Bookshelf report.
Has the e-book revolution reached its peak and begun it’s retreat into cyberspace? Only time will tell.


Marilyn Meredith a.k.a. F. M. Meredith said...

This is a most interesting development. However, it seems to me that whoever develops a product ought to be able to price it themselves. If the big 5 or 6 New York publishers want higher prices for e-books fine, those who are willing to pay will, those who aren't wont.


Morgan Mandel said...

As an author, sure, I'd like to charge more for my books, but I'm realistic enough to know readers don't have much money these days. If Amazon is selling kindle bestsellers at $9.99, that seems a fair price. If they're print books, I'd expect them to go for more. My new one is at $12.87 in print, which is a reasonable price to pay for printing costs and get any return.

Morgan Mandel

Jean Henry Mead said...

I agree. Whatever the market will bear. If the Big Six wants to sell at the same price to be competitive, I do't see anything wrong with it. I would think the Justice Dept. has better things to do than sue for price fixing.

Helen Ginger said...

Ebooks have been a revolution in the way readers read and buy books. It's also been a revolution for writers. It's still new, though. I don't know where it will all be when things settle. I just hope the end result will be good for writers.