DOJ's antitrust case may have huge implications for publishing

11.04.2012
The U.S. Department of Justice's antitrust lawsuit against Apple and five book publishers over alleged e-book price fixing means that the publishers have to reinvent their digital futures, some experts said.

The lawsuit, filed Wednesday, accused executives of Hachette Book Group, HarperCollins Publishers, Macmillan, Penguin Group and Simon & Schuster of meeting regularly beginning in late 2008 to discuss e-book pricing and Amazon.com's decision to sell most e-books for US$9.99. Apple later offered agreements with the publishers to sell the books for $12.99 or more, the DOJ alleged.

Hachette Book Group, HarperCollins and Simon & Schuster have agreed to settle the DOJ's lawsuit.

The lawsuit shows a book publishing industry grasping for ways to make money on e-books, said Allen Weiner, vice president of research in Gartner's media research group. "Book publishers have absolutely no idea on how to price e-books," Weiner said.

Publishers make little money on e-books, and the pricing deal, allegedly offered by Apple, was an attempt to make money in the growing area of digital services, Weiner said. The pricing model allegedly agreed upon represented an attempt by the major publishers to stay away from the major business problems encountered by newspapers in the Internet environment, he said.

Publishers, even under the Apple pricing model, make "pennies" per sale on an e-book, compared to dollars per printed book, Weiner said. While more of their business is moving to e-books, publishers continue to pay large sums of money to major authors, who, at any time, could decide to go independent and publish e-books on their own, he said.