Remember a couple of years ago when the price of new Kindle e-books from Amazon.com suddenly rose from a dependable $9.99 to around 14–15 bucks, or even more? The Department of Justice does. The Wall Street Journal reports that the DoJ has warned Apple Inc. and five major publishers that it plans to sue them for colluding to raise the price of electronic books.
The accusation against the six companies is fairly damning, as the WSJ explains it:
The case centers on Apple's move to change the way that publishers charged for e-books as it prepared to introduce its first iPad in early 2010. Traditionally, publishers sold books to retailers for roughly half of the recommended cover price. Under that "wholesale model," booksellers were then free to offer those books to customers for less than the cover price if they wished. Most physical books are sold using this model.It's worth noting that this was all done quite openly at the time, and received a decent amount of coverage in the tech press and, to a lesser extent, the mainstream media. Amazon.com even removed all physical and electronic books published by Macmillan, one of the publishers the DoJ has warned, from its virtual shelves briefly in a highly publicized but ultimately unsuccessful attempt to break the collusion.
To build its early lead in e-books, Amazon Inc. sold many new best sellers at $9.99 to encourage consumers to buy its Kindle electronic readers. But publishers deeply disliked the strategy, fearing consumers would grow accustomed to inexpensive e-books and limit publishers' ability to sell pricier titles.
As Apple prepared to introduce its first iPad, the late Steve Jobs, then its chief executive, suggested moving to an "agency model," under which the publishers would set the price of the book and Apple would take a 30% cut. Apple also stipulated that publishers couldn't let rival retailers sell the same book at a lower price.
As those of us who've grown to love our Kindles know only two well, the end result of all of this maneuvering is that we're paying a lot more for new titles. As of this writing, the book being promoted at the top left of the Amazon.com Kindle book page is Heidi Julavits' novel The Vanishers, published by Random House. Amazon.com sells the hardcover version for $14.98. The Kindle version—which uses no paper or ink, requires no labor to manufacture, and does not need to be shipped either from the publisher to Amazon or from Amazon to you—goes for $13.99, a whopping 99 cents less.
For its part, Apple has responded with a perplexingly dickish court filing in which it claims that it doesn't see the Kindle as a threat, although if that's the case it's hard to see why Steve Jobs wanted to prevent the publishers from letting other retailers sell their books for less money than Apple.
This all seemed pretty clearly illegal to me at the time, and I remember wondering why no one seemed to want to do anything about it. In retrospect, given the Justice Department's traditionally glacial pace on such matters, I suppose we should be pleasantly surprised that it only took two years for this all to come together. In any event, let's hope this portends imminent relief for the reading public.