In what feels like ancient history, in March of 2013, I wrote about the anti-trust suit that had been filed against Apple and five of the (at the time) big six publishers by the Department of Justice and 33 state Attorneys General. (Random House was not involved in any of this.) In
All Things Bookstore: e-books, Amazon, Apple, the Big Six and the Independent Bookstore I provided a explanation of the conspiracy and the agreement by the book publishers to settle with the DOJ.
In a nutshell, Amazon developed the ebook industry with the introduction of its digital reader, the Kindle. In order to sell the reader, Amazon discounted its ebooks, capping New York Times bestsellers at $9.99. The book publishers, afraid that this would undercut their hardback sales, met frequently to discuss ways to counter Amazon. When Apple decided to get into the ebook business the publishing executives took advantage of Apple's willingness to accept an agency model for selling ebooks, in which Apple got 30% of the price that was set by the publisher. In exchange, Apple received "the assurance that the Publisher Defendants would raise retail e-book prices at all other e-book outlets, too." After getting Apple on board, the publishers then forced Amazon to increase its sale price for ebooks by requiring that Amazon agree to the same agency model agreement that Apple had agreed to.
The publishers settled. Apple fought the charges. They lost. What it means to you is below the fold.
Shows that I spent way too much on eBooks
during the period covered by the lawsuit.
This was
the announcement that Amazon sent to its customers when the publishers settled with the DOJ and the state Attorneys General who had also participated in the suit. The agreement with the publishers resulted in a settlement amount of $166 million. That was distributed by Amazon to purchasers of ebooks in the form of credits on future ebook/paperback book purchases.
The Apple settlement amount that will go to consumers is $400 million, according to a Reuters story. As I wrote last July:
When a defendant, under the Sherman Anti-Trust Act, loses its case in a courtroom, it is exposed to a judgement of triple the actual damages incurred. Based on the estimate of one of the plaintiff's lawyers in the civil suit, those were actually $280 million. Triple that would be $840 million, which was the number bandied about earlier this year.
Apple is still appealing its guilty verdict in the DOJ case, but has agreed to a settlement with the 33 states and e-book consumers. The parties have agreed to a $450 million settlement, of which the consumers will receive $400 million. (Which is about 2.4 times as much as the earlier settlement that you may have gotten as a credit at your ebook retailer.)
Apple lost its appeal to the 2nd U.S. Circuit Court of Appeals today. Apple has not announced what its plans are, but if it honors the earlier settlement agreement, credits should be coming to consumers who purchased ebooks covered under the lawsuit.
By the way, the big dispute between Amazon and Hatchette last summer sprang from the result of the publisher's settlement with the DOJ. That Amazon eventually caved to Hatchette's demands can be assumed by the increase in prices of Hatchette ebooks which are now clearly labeled as "This price was set by the publisher." See Preston & Child's book Blue Labyrinth which is priced at $9.99 for the digital book while the paperback sells for $7.74. On the other hand, Connie Willis' To Say Nothing of the Dog, published by Random House, sells for $7.59 in ebook format, and $8.99 for the paperback edition.