monday, 10 september of 2012

E-books pricing settlement approved

E-books pricing

E-books pricing settlement approved

In a move that could reshape the publishing industry, a federal judge has approved a settlement with three of the nation's largest book publishers over alleged collusion in the pricing of e-books.

The approval comes as Apple Inc. and two other publishers are preparing to defend themselves next June over antitrust allegations by the U.S. Department of Justice that they agreed to keep e-book prices artificially high in an effort to force Inc. to stop its steep discounting.

Lagardère SCA's Hachette Book Group, CBS Corp.'s Simon & Schuster Inc. and News Corp.'s HarperCollins Publishers LLC all agreed in April as part of the settlement to terminate their agreements with Apple and refrain from limiting any retailer's ability to set e-book prices for two years. (News Corp. also owns The Wall Street Journal.)

Apple had hoped to stave off final approval, and termination of the agreements, until after next year's trial, saying their contracts with the publishers couldn't simply be reinstated in the future if they were to ultimately prevail. The approval opens the door for Amazon and other retailers to steeply discount e-book titles.

Apple and Amazon declined to comment.

"The settling defendants have elected to settle this dispute and save themselves the expense engaging in discovery," said U.S. District Judge Denise Cote in Manhattan. "They are entitled to the benefits of that choice and the certainty of a final judgment."

The two publishers that didn't settle in April—Pearson PLC's Penguin Group (USA) and Macmillan, a unit of Germany's Verlagsgruppe Georg von Holtzbrinck GmbH—declined to comment.

Hachette, HarperCollins and Simon & Schuster also declined to comment.

Bob Kohn, an antitrust lawyer who has filed objections to the settlement, on Thursday said that "it appears that the District Court deferred to the Justice Department in its analysis. It's very disappointing that the court has rendered a judgment that will cause great harm to consumers of e-books because the judgment reverses the pro-competitive effects of the agency pricing model."

Apple has previously indicated in court papers that it would seek to appeal any decision approving the settlement. As a result, it could take some time before consumers see lower prices on e-books.

"It's devastating to bookstores," said Paul Aiken, executive director of the Authors Guild. "For two years the settling publishers must allow vendors to discount e-books at any price they want. The court acknowledges that this restores the status quo conditions before 2010, when Amazon was able to capture 90% of the e-book market. The Justice Department is reshaping the literary marketplace without submitting a single economic study to the court to justify its actions."

However, the judge, in a 45-page opinion made public Thursday, said the alleged victims in this case are consumers, not brick-and-mortar bookstores.

"And although the birth of a new industry is always unsettling, there is a limited ability for anyone to foresee how the market will evolve," the judge said. "What is clear, however, is the need for industry players to play by the antitrust rules when confronted with new market forces. It is not the place of the court to protect these bookstores and other stakeholders from the vicissitudes of a competitive market."

Amazon ignited digital reading in the U.S. in late 2007 when it brought out its Kindle e-reader and priced digital versions of bestsellers at $9.99 to win over consumers. Amazon was willing to lose a few dollars on some top titles in order to build stronger relationships with its consumers.

Publishers saw the steep discounting as a threat to the lucrative hardcover book business. They were also concerned that cheap prices would devalue the price of all books in the minds of consumers.

In early 2010 Apple said it was interested in selling e-books as part of the launch of its iPad tablet if publishers would embrace a pricing model in which publishers set consumer prices and retailers, including Apple, would receive a fee for acting as a sales agent. Five major publishers agreed to Apple's request, a step that effectively halted the steep discounting of their most popular new titles. Many new best sellers were subsequently priced at $12.99 or more, leading the Justice Department to file its civil antitrust suit this past spring.

The Justice Department said Thursday that it was pleased that "the court found the proposed settlement to be in the public interest and that consumers will start to benefit from the restored competition in this important industry."

(Published by WSJ - September 6, 2012)

latest top stories

subscribe |  contact us |  sponsors |  migalhas in portuguese |  migalhas latinoamérica