Apple and five book publishers were slapped with a lawsuit from the U.S. Department of Justice yesterday, with charges that they have conspired to fix prices on eBooks. If you remember, back in late 2007, Amazon refused to sell eBook titles for more than $9.99, and publishers feared that these low retail prices would in turn spark lower wholesale prices for eBooks and potentially print books as well, further down the line.
So when Apple introduced its iPad, the manufacturer and the five book publishers — Hachette Book Group, HarperCollins Publishers, Macmillan, Penguin Group, and Simon & Schuster — pursued an "agency model" of pricing, rather than a more traditional "wholesale model," as a way to combat Amazon's stance. The agency model differs in that, allegedly, the publishers and retailer collectively agreed to set book prices higher than they normally would, and in turn the retailer (Apple) received a 30% commission for sales. The Wall Street Journal even notes that a damning Steve Jobs quote was cited in the DOJ lawsuit in which the Apple creator said, "We'll go to [an] agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that's what you want anyway."
Amazon is predictably thrilled about the lawsuit, since it was allegedly forced to accept this new pricing model and charge its customers accordingly. The WSJ states that three publishers have already settled with the DOJ, and have agreed to "refrain from limiting any retailer's ability to set eBook prices for two years," adding that the agreement, "could help Amazon resume deep discounts on new eBooks."
The potential for lower prices is obviously great for the budget-conscious shopper, and we eagerly await such discounts. But this also raises the issue: How much do you think an eBook should actually cost? The suit alleges that the group's new model caused titles to increase to a price range of $12.99 to $16.99. It is often assumed that a digital copy of any media should cost less than the physical counterpart, since there are no manufacturing costs. But this hasn't always been the case with eBooks, perhaps because of the aforementioned agency model. On the other hand, some might argue that the convenience of downloading an eBook immediately puts a premium on the digital version.
So readers, what do you think? Should eBooks ever cost more than the print editions? If Amazon returns to its price model where no eBook is priced over $9.99, would you be more likely to buy more eBooks? Sound off in the comments below.
Front page photo credit: TechCrunch