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E-book price fixing lands Apple with $840 million damages claim

by Mark Tyson on 3 February 2014, 09:04

Tags: Apple (NASDAQ:AAPL)

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As a result of it conspiring with publishing companies to raise e-books prices, a state and consumer antitrust claim of over $840 (£510) million has now hit Apple. This latest action stems from the successful antitrust lawsuit against the firm by the US Justice Department from last year.

Using evidence provided by last year's trial, lead attorney Steve Berman is determined to make Apple pay for its deal with publishers and its hike of the price of E-books from $9.99 to $12.99. The non-jury trial was concluded by U.S. District Judge Denise Cote, finding the company liable for the conspiracy and also to 33 states that joined the U.S. Justice Department in its suit.

Cote concluded following the trial that "the publisher defendants conspired with each other to eliminate retail price competition in order to raise e-book prices, and that Apple played a central role in facilitating and executing that conspiracy." Also due to this big-player conspiracy "the prices in the nascent e-book industry shifted upward, in some cases 50 percent or more or an individual title," Cote added.

The damages claim, filed last Friday in New York, asserts that Apple owes American E-book customers a minimum of $280 as a consequence of the industry-wide rise in E-book prices during its period of collusion with the publishers. However various states and consumers are intending to file for the amount to be tripled ( to $840 million) under antitrust law as the conspiracy has already been "conclusively proven". Bloomberg notes that this sum, though it sounds large, is a mere 0.5 per cent of the $158.8 (£96.4) billion cash Apple hold as of the end of 2013.

Apple is appealing the trial judgement and asking for a compliance monitor to be removed; "The monitorship the district court imposed on Apple is unprecedented, impermissible, and unconstitutional," said Apple in an appeals court filing. The monitor has been put on hold for the last two weeks but a hearing will take place tomorrow to decide if it will be reinstated.



HEXUS Forums :: 7 Comments

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I have to say, I've never got why the ebook version is often much more expensive than the printed version. Far fewer costs (obviously). Always thought it was a bit fishy.
Nobull
I have to say, I've never got why the ebook version is often much more expensive than the printed version. Far fewer costs (obviously). Always thought it was a bit fishy.

Increased proof reading costs, i.e. "0010001001000010001010111011100001100111100000101001000101...." takes a while to audit.

Joking aside I wondered too - especially as I'd assume that the vast majority of books these days are laid up digitally anyway, so surely it's just a case so "Print to eBook" in whatever authoring software is being used.

That said I just bought two Dale Brown technothrillers off of Amazon, the printed one cost me over £6 and the eBook £1.59, then again that second one was in Amazon's sale.

Back to the story in question though - time for punitive damages I think, with some going back to the "victims" (the consumers). How about a refund of $3 from Apple and another $3 from the publishers to go to the consumer, with the same amount again to go to federal government. Oh, and this would apply to every book sale on the Apple Book Store by the publishers concerned, not just the ones that had their price bumped.
iBook's store has always been incredibly overpriced with a lot of books costing more than their paperbacks.

Amazon's Kindle store used to be just as bad but has improved over the last couple years. I've purchased loads of books from the kindle store and never paid more than £1.99 (mostly 49p or 99p).
I'm not 100% sure, but I think a lot of the price disparity is to do with the different pricing models used for the two formats. With physical books the retailer buys them and can then sell them at whatever price they want. The more they buy at a time, the better price they will get on it. The can sell at a massive loss if they want (often the case, especially in supermarkets with the latest blockbuster*). With eBooks it is the publisher that sets the pricing and the retailer just takes a percentage cut for handling the sale and transaction. So unless there is a special promotion negotiated with the publisher, the online ebook store has no control over pricing.



*Harry Potter books were usually sold at a loss by supermarkets and advertised heavily to get people through the door on the expectation they would then buy other things and the final transaction would lead to a profit for the store.
And you have to pay VAT on ebooks, but not on physical books.