Apple Sued by the FTC for Price Fixing

The Federal Trade Commission

Image Source: Forbes.com

 

You know those cheap Amazon ebooks that you love so much? Well apparently, those low-low prices were irritating the heck out of Apple execs. And in a nefarious move that is unfortunately not terribly surprising, Apple tried to fix the prices of ebooks in the United States and make us go through them to get ’em.

The Amazon Model

Now that book retailers all over the planet are closing their doors, Amazon.com is one of the few places where you can find a wide variety of the digital copies of the books you actually want to read.

And despite their virtual monopoly, Amazon has kept their ebook prices relatively low — under $10 for the most part. That makes perfect sense to anyone with any sense of equity.

Unlike paper books which require ink, paper and printing facilities, ebooks cost next to nothing to manufacture. So Amazon can still make a profit without charging you exorbitant non-sensical prices.

 

Dirt Cheap Books

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The Apple Model

But if you know anything about Apple at all, that’s just not the way they roll. They’ve built their brand on exorbitant nonsensical prices. And Amazon’s budget prices were taking a chunk out of their potential profits. To bring more money into their coffers, Apple tried to bring its own business model to the book world.

And here’s how they tried to do it: Apple went around to New York’s biggest publishing houses and tried to get the publishers to set fixed prices for the ebook’s that originated from their writers. Instead of the $1 – $10 model that Amazon was working with, Apple and the New York publishers wanted to set the price closer to paper book prices: $12 to $15 a book to leave plenty of room for profit for Apple and the publishers.

Anyone who sold the books originating from those publishers (most of the popular books in existence) would be considered selling “agents”, not retailers as people who sell things have been referred to for centuries. These new “agents” could only sell the ebooks they get from the publishers at this “fixed” price.

 

Amazon Kindle Books

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Apple’s Never Heard of Price Fixing

We’re not lawyers or economists, but that sounds like price fixing to us. But apparently that’s not what it sounded like to Apple. When the Department of Justice sued Apple for price fixing, Apple acted like it had never heard of the concept.

Lucky for us, playing dumb isn’t a viable defense. And Apple and Amazon will continue to sell super-cheap books. But the lawsuit does raise an interesting question. Now that publishers and authors are making so much less profit from their books, what will happen to the state of books in the world?

Will more publishing houses go the way of the dodo? Will books be reduced to high-readership titles like the Bro Code for Parents? Or will small-scale, specialist printing presses be the wave of the future?

  • anonymicus

    Great article…always knew Apple sold stuff at ridiculous prices, didn’t think they’d actually go as far as price fixing to keep it that way!