A Question of (Anti) Trust

March 12, 2012

A big story right now in the publishing world is a threatened Justice Department lawsuit against Apple and five of the “big six” publishers (namely, Hachette, MacMillan, Simon & Schuster, Penguin, and HarperCollins, with Random House not included).  This follows on a class action submitted by a Seattle law firm last year.  The allegation is price fixing through the adoption of the agency model for ebooks, whereby Apple or other distributors take a 30% cut and allow publishers to set retail prices, thereby undermining the wholesale discount pricing model favored by…Amazon for instance.   It is against the law for large providers to collude to keep prices artificially high for consumers.

In this case, though, the collusion could be defensive and prompted by competition from Amazon’s popular Kindle and Amazon’s claimed ability to price low enough to stifle competitors, which could also be a potentially illegal practice if it became “predatory pricing” (though that seems difficult to prove under US law).  The charge of predation comes periodically from booksellers, publishers, and others.

There is a lot of interesting dispute about pricing models and which help and hurt what suppliers and consumers.

Price-fixing versus cut rate prices from one aggressive vendor? For whom should consumers really root?  It may be a case of Mothra vs. Godzilla.  Take your pick.

 

Posted by Darren

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