A few days after the Department of Justice reached a settlement between retailers and ebook publishers, ebook prices are finally slowly going down. Many books are now being sold in lower prices after Apple’s agency model pricing has been relegated to the sidelines.
Apple is under examination after using the agency model in its pricing hoping to make a huge profit. Apple is cutting 30% of the publishers price for e-books they sell in Apple’s iBookstore. Thus, publishers raise their ebook prices to compensate for the cut by adjusting prices if they want to profit from sales. Apple further applied pressure on other competitors by allowing publishers to sell their books only if they are not sold at a lower price anywhere else.
In April, the Department of Justice sued Apple and other publishers like HarperCollins, Hachette, and Simon and Schuster for their antitrust practices. The publishers involved prompty decided to settle the case immediately by paying back $69 million to customers affected by the price fixing. However, Apple decided to slug it out by counterclaiming that its rival, Amazon, is trying to monopolize the ebook market. Fortunately for Amazon, the judge did not buy Apple’s contention.
The effects of the lack of price fixing was felt immediately as HarperCollins also tried to enter into new contracts with retailers. All the books affected by the previous pricing scheme are now being sold at a much lower price by Google Books, Barnes and Noble, and Amazon. Only one book, Telegraph Avenue by Michael Chabon, was found to be a dollar above the list price laid out by paidContent. While lower prices for ebooks may be good for consumers at this time, some experts voice pessimism about it citing a possible downside.
The most common objection to the current ruling to lower ebook prices will give retailers like Amazon big control on prices that can discourage competitors.
Ebook sales is growing and is believed to have comprised around 25%-30% of the total book sales. The figure shows the exponential growth of ebooks compared to four or five years ago. Growth has slowed down this year though and experts attribute the trend to higher prices charged under Apple’s price fixing to a supposed maturation of the e-market.
With no clear resolution on the horizon soon, experts believe booksellers and publishers may find themselves tangled in price wars when books become scarce due to busy fall season.
Barnes & Noble.com and some retailers have already felt the pressure and are now trying to lower their prices to compete with Random House and Amazon.com. Random House previously agreed to follow the sales model of HarperCollins and others involved in the legal battle, but may also find itself charging a few more dollars for more popular ebooks.