It has been a storied saga that has prompted both a USA Justice Department investigation and in the UK with the European Commission on Apples price fixing collusion with publishers. Basically when Apple was getting into the eBook business with their iBookstore they prompted publishers to establish a level playing field in price fixing. Instead of companies like Amazon, Kobo and Barnes and Noble establishing the prices of books they publishing companies themselves would do it. This really fits into the whole “Cartel” philosophy which is against the law in both Europe and North America. It seems at least in the USA a resolution might be forthcoming in the coming weeks.
Sources close to the situation report that in the next few weeks companies again will be able to dertmine the prices of eBooks. This will allow Amazon to one again offer the lowest prices on digital content. “It would be a positive for Amazon because the company’s greatest strength is as a high-volume, low-price retailer and the wholesale model plays into that,” said Jim Friedland, an analyst at Cowen & Co.
While agency pricing itself is legal, the Justice Department believes that publishers may have colluded to implement it with e-book retailers. The list of publishing companies that colluded with Apple is a whose who of the publishing world. Simon and Shuster, Pearson, Hachette, Penguic, Macmillan and Harper Collins are among the companies involved. Walter Isaacson on this issue with Steve Jobs was quoted as saying: “So we told the publishers, ‘We’ll go to the agency model, where you set the price, and we get our 30 percent and yes, the customer pays a little more but that’s what you want anyway.’ … So they went to Amazon and said, ‘You’re going to sign an agency contract or we’re not going to give you the books.’
So it looks like the Justice Department and companies involved in the case might have a resolution very soon and this will be a landmark case and effect tons of companies. Amazon and the other top online booksellers can afford to keep books at rock bottom prices but smaller companies will have a hard time making a buck.