Do you enjoy reading? Do you miss the short span of days when you could buy a book on Amazon for $9.99. Those days should be coming back fairly soon. The US Department of Justice filed an antitrust lawsuit today against Apple and five of the nations largest publishers. The suit claims that these companies conspired to limit competition for pricing of e-books.
When Apple first released the Ipad, they met with the largest publishers to start selling e-books. Apple used its size to corner the e-book market and change the way that publishers sold books. These publishers were use to selling books in a wholesale manner. They then replaced that model with what’s called the agency model. In the agency model, publishers set the price at which their e-books could be sold.
Amazon had been selling e-books for $9.99. In order to limit these discounts, Apple helped build this agency model which would restrict Amazon from selling books at that price. Publishers set the price on their books at $12.99. Without the ability to sell e-books at a lower price than Apple, Amazon had no competitive advantage. This was a huge disadvantage for Amazon.
The agency model also meant publishers would make less money, because Apple would be guaranteed a 30% commission on each book sold. If this doesn’t prove that Apple flexed its muscle I don’t know what would.
Even though I have always been a huge Apple fan, I look forward to saving a few bucks in the future. I think Apple has enough money, and that they don’t need to keep nickel and diming their customers.
How do you feel about this lawsuit?…