Disputes over ebook pricing models

The ebook pricing war rages on, with such heavy-hitters as the Department of Justice, Amazon, Apple, and most major publishers continuing to tussle over the price of ebooks.

To recap: Amazon has been selling ebooks at a loss for some time, to increase sales of their Kindle device. Apple, looking to take some ebook business away from Amazon, then offered a higher pricing model to the major publishers. Apple’s model would keep them in business through the change of book formats. The Department of Justice, urged on by Amazon, sued the major publishers claiming that they worked together to fix prices. The DOJ charged that this collusion is a breach of Federal Antitrust laws. After they filed the suit, a handful of publishers settled.

Still, this is far from over.

The Consumer Federation of America, an association of nearly 300 nonprofit consumer groups, released a statement claiming that, “Books are being devalued, literature is not.”

Consumer Good

By restoring competitive pricing to the market (a race to the bottom for ebook prices) the consumer wins. But at what cost? Surely the major publishers cannot continue peddling a product they can’t make a profit off of.

The CFA outlined in their statement, “The competitive structure built on a cartel agency pricing model increased the price to consumers and the profits of colluding publishers and selected brick-and-mortar retailers. There are no indications that the book market performed better in the aggregate under the cartel agency model than it would have if the offending practices had not been present.”

In plain-speak: Apple’s supposed co-ordination of the major publishers drove up the price of ebooks and the profits of publishers and big stores like Barnes & Noble. Book sales were steady throughout and were not affected by this practice. In essence, the practice works against the free market.

Once again, we’re brought back to a landscape of some pretty substantial market domination (Amazon), and the loss of the bedrock of American publishing, the big six publishers.

Adapting Ebook Pricing

Still, when the music industry was collapsing a decade ago, many decried the end of music as we know it. And yet, music went on. Artists adapted, became their own labels, and today we see a vibrant music scene, dominated by independent artists and labels.

So what do you think? Would you rather see a race to the bottom on ebook pricing, or some stability in the market? Is the DOJ investigating the wrong companies? Should a company be able to sell a product at a loss when their competitors cannot?

2 thoughts on “Disputes over ebook pricing models”

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