Inside the battle over e-books
In the midst of sky-rocketing e-books sales, the Department of Justice is suing major book publishers over rising prices
The anti-trust lawsuit filed by the Department of Justice on April 11 against five major book publishers and Apple has all the trappings of a David and Goliath tale. Only the parties involved can’t seem to agree on who’s who. The DOJ’s complaint claims that e-book prices were jacked in 2010 due to collusion among publishers. Notably, it also tends to paint Amazon as a victim of this conspiracy. Apple and the two publishers fighting the suit, Macmillan and Penguin (the other three quickly settled), deny the charges and counter that they were actually fighting back against a de facto Amazon monopoly. They claim — and the DOJ’s complaint echoes it — that the online behemoth sold new e-books at a loss to boost sales of its Kindle reader.
It seems inescapable that the publishers acted collusively. Then again, since 2010 Amazon’s hulking 90 percent share of the e-book market has been cut to a far more competitive 60. (Apple has about 10 percent and Barnes & Noble about 25. Microsoft‘s recent deal for a stake in the Nook caused B&N’s stock to tick up, perhaps a sign that the company stands to further increase its share.) Yes, consumers have undoubtedly been paying more — in most cases, three to five bucks per e-book. Sales of e-books, however, have skyrocketed, jumping from a reported seven to 20 percent of the U.S. book market in a year, so buyers haven’t been dissuaded. It’s also noteworthy that last week, Amazon CEO Jeff Bezos touted the company’s exclusive content — a staggering 130,000 in-copyright books are Kindle-only, including 16 of its top 100 titles. Legal issues aside, Amazon clearly isn’t hurting from the competition.
Antitrust specialist Joseph Bauer, professor of law at Notre Dame Law School, is not hopeful that the publishers or Apple would be victorious in court. ”The fact that three publishers have already settled, I would expect the others to follow suit,” he says. Doing so could very well set the market back to where it was in 2010, with one powerful retailer once again dictating terms for both consumers and suppliers.