Ever wonder why e-books aren’t cheaper?

Many consumers were hoping they would get a better deal by ordering electronic books rather than getting that bestseller off the shelf at a local bookstore.

Such deals, however, haven’t materialized for many and the Justice Department apparently thinks it knows why. The agency is  suing Apple Inc., the maker of the popular iPad e-reader, and several publishers, accusing them of scheming to manipulate e-book prices to limit competition. Apple gets a big chunk of the e-book sales, while the publishers get to protect revenue in the face of growing competition from Amazon.com and its Kindle, and other e-reader competitors.

In addition to Apple, which is dominating the e-reader industry, the Justice Department is suing Hachette SA, HarperCollins, Macmillan, Penguin and Simon & Schuster. Several of the publishers – Simon & Schuster, Hachette and HarperCollins -  reportedly want to settle with the government to avoid a lengthy legal battle.

At the core of the case is the publisher’s decision to stop selling ebooks at wholesale prices to Amazon, Barnes  & Noble, which makes the Nook e-reader,  and others. As the LA Times and Bloomberg explain:

Under the original system, publishers sold ebooks to retailers at about half the cover price and let the retailers determine what to charge consumers for them. Amazon had been selling popular new ebooks at a loss — and, to the publishers’ chagrin, at a far lower price than hardback editions — to promote sales of its Kindle reader….When Apple came out with the iPad in 2010, it let publishers set their own prices for e-books as long as it got a 30 percent cut and the publishers agreed to offer their lowest prices through Apple.

Apple and Macmillan haven’t signaled they are willing to settle with the government. They are expected to argue that Apple’s relationship with the publishers actually enhances competition. The government, however, says online retailers should decide how much they want to charge consumers.

Some argue that if Apple and the publishers lose, it would hurt the rest of the book industry and give Amazon an inside track to a publishing monopoly.

Should the government get involved in this e-battle?

18 comments Add your comment

BigDawg

April 11th, 2012
12:30 pm

Give the students a break!

Rhonda

April 11th, 2012
12:33 pm

I asked an author friend awhile back about the prices of ebooks versus physical ones. She said that the authors receive more money on those sales, assuming they were smart at contract signing time. You might want to look into that angle for your article as well. This is what made me decide to go ahead and buy ebooks over physical when they are similarly priced.

Captain Jack

April 11th, 2012
1:07 pm

Take all you can, give nothing back.

Factchecker

April 11th, 2012
2:15 pm

This is what happens when the democrats are in charge. Hardworking innovative companies like Apple are punished just because they are trying to make some money selling books. Doesn’t this government have more important things to worry about like abortions all over the place and offensive video games.

JASon

April 11th, 2012
2:27 pm

Force the publishers to sell the e-books at the same price to either company. Case closed. Of course apple is going to make some bogus argument against it. I just think this is a non-story.

Patrick

April 11th, 2012
3:22 pm

Publishers are just cutting their own throat. I hope they die quickly so that authors can “publish” their own ebooks online. That is what these publishers are angry about. They are being cut out of the market. The days of “middle men” being needed are coming to an end. While I love the feel of holding a book, I do like being able to carry my whole library with me.

Maybe the publishers can find solace with the RIAA and MPAA.

Jeff

April 11th, 2012
3:29 pm

I know one author I’ve been tracking and conversing with via FB and twitter (and Myspace, which should tell you how long ago we met) over the years who has actually been able to move to authoring as his sole day job – and he is a self publisher/ owner of a small independent publishing company now. He and several of his friends (who are also now FB friends of mine) are doing it very well primarily as eBook shops where they build the base via eBooks before getting paper publishing deals and putting paper books in stores across the country. For any interested, I HIGHLY recommend them: Jeremy Robinson and his Chesspocalypse friends: David Woods (until recently based in Social Circle area), Kane Gilmour, David McAffee (also a regional base- TN and more recently AL), and Sean Ellis. Between them, you’ll find most any kind of action/ adventure type books to suit your fancy, from young adult to “normal” (think: Clive Cussler/ Dale Brown) to scifi to horror and nearly everything in between.

Jed

April 11th, 2012
3:31 pm

Y’all,
Read the story on AJC’s front before discussing this.
@ Factchecker, this has nothing to do with Democrats. This is about businesses colluding to price set instead of letting the free market reign. Does fighting against that not sound very GOP-ish to you?
From the article: “According to Pozen, Apple’s Steve Jobs told publishers involved in the alleged conspiracy that ‘the customer pays a little more, but that’s what you want anyway.’”
Jobs was a complete jerk, I think we all know that by now. This just reinforces it.
If Amazon purchases an e-book from a publisher at whatever price the publisher sells to them, it’s up to Amazon to charge what it wants. End of story.

Rich

April 11th, 2012
3:32 pm

Apple is dominating the e-reader industry? Tablets, yes, but I would question the statement with regards to e-readers.

From Wikipedia (the Kindle entry):

In 2010, Amazon remained the undisputed leader in the e-reader category, accounting for 59% of e-readers shipped, and it gained 14 percentage points in share.[63] According to an IDC study from March 2011, sales for all e-book readers worldwide reached 12.8 million in 2010; 48% of them were Kindle models.[64]

In December 2011, Amazon announced sales figures for the first time: since the end of November customers bought “well over” one million Kindles per week; this includes all available Kindle models and also the Kindle Fire tablet.

DandT

April 11th, 2012
3:55 pm

I know a publisher and she said that selling books requires her to give 60 -70% to Amazon. How is that possible? Ok so they have the platform but at the end it is still her book, content and she took the time to write it.

mountain man

April 11th, 2012
6:38 pm

So why should I pay the same to Apple for an e-book as for a physical book that it cost $8.00 to produce? So they can make $8.00 more profit? Our economic system is based on competition, so if Amazon wants to pay the publisher $5.00 per book sold and sell it for $6.00 per book, that is their business. The publisher should set their price to ANY seller and should stick to it, no “commissions” to Apple over Amazon. The publisher should not care whether Apple or Amazon sells its book.

Dave

April 11th, 2012
7:05 pm

@Factchecker- you might want to try living up to your name before you comment. Apple and the six major publishing companies got together and came up with a new system- “the agency model” that allowed them to make more money while charging readers more and paying authors less, then forced that model on Amazon and other distributors. Those publishing companies are supposed to be in competition with one another but they acted in collusion to fix prices. That’s not how the free market works.

Ben

April 11th, 2012
9:02 pm

I agree with the G on this one. There is no reason for e-books to cost so much. They should look closer at the e-music model.

James Jordan

April 12th, 2012
1:05 am

Stop complaining, if you think they cost to much then simply don’t buy them – eventually, when sells aren’t there the price will come down!

mejane

April 12th, 2012
7:12 am

Doesn’t Attorney General Eric Holder have anything better to do? What happened to all those bankers who haven’t paid for their crimes? And he’s going to save me a buck on e-books? Thanks a lot.

Derwood

April 12th, 2012
7:41 am

I think our efficient (?) intelligent (?) and all-american (?) elected officials need to worry more about high unemployment rates, the price of gas and diesel, the fact the nut in the White House is selling America out instead of Amazon, Ebooks and Apple.

charles cathey

April 12th, 2012
7:51 am

What? College textbook suppliers and college officials have been ripping college students for at least 40 years with over priced, YOU MUST BUY THIS BOOK ONLY, overly pontificant instructional guides….and the gumment is worried about a consumer ‘choice’ of reading material…..hahahaha! Visualize older gentleman slapping his knee and laughing loudly at the hasty nonsense of today’s observer of events.

ACBTAYLOR

April 13th, 2012
6:04 pm

@Jason “Force the publishers to sell the e-books at the same price to either company. Case closed. Of course apple is going to make some bogus argument against it. I just think this is a non-story.”

Why should the publishers be forced to do anything? Why should government be forcing anybody to do anything?