Just a month ago we were talking about the shady things Amazon.com does to use its 60% of the ebook market muscle to make smaller publishers lower prices against their better judgement. We were also talking about how the US Department of Justice had announced that it would be investigating six of Amazon’s competitors in ebook publishing (Apple, Simon and Schuster, Hachette Book Group, the Penguin Group, Macmillan, and HarperCollins) for colluding to set prices in the ebook market. Well, it only took about a month for the DoJ to announce that they had indeed found, in their opinion, enough evidence to prove that the six were trying to fix prices. And it took less than a day for Amazon.com to, seemingly coincidentally, announce plans to push down pricing on its ebooks, from $15 to $10 in some cases.
Needless to say, this is making everybody but Amazon nervous. From the New York Times:
Amazon, which already controls about 60 percent of the e-book market, can take a loss on every book it sells to gain market share for its Kindle devices. When it has enough competitive advantage, it can dictate its own terms, something publishers say is beginning to happen.
The online retailer declined to comment Wednesday beyond its statement about lowering prices. Asked last month if Amazon had been talking to the Justice Department about the investigation — a matter of intense speculation in the publishing industry — a spokesman, Craig Berman, said, “I can’t comment.”
The DoJ’s case against the six retailers, begins with Apple’s original rules for publishing on their iBooks platform: that anyone who publishes there cannot publish for other eReader formats at a price lower than what is charged on Apple’s devices, where Apple takes 30% of the cut. Half of the companies involved, HarperCollins, Hachette, and Simon & Schuster, have settled with the Department of Justice already, with Apple, Penguin, and Macmillan staying in for the long haul.
Of course, it’s all bad for sellers of actual books. If the six retailers were working in concert to raise prices in violation of law, that was actually good for them, lessening the competition for sales of their own books. If the six get split up under anti-trust law, the whole ebook market might have to lower prices in order to compete with Amazon, the two-thousand pound gorilla.
(via The New York Times.)