Earlier in the year, the US Department of Justice filed an antitrust suit against Simon & Schuster and four other major publishers, as well as Apple over the alleged price fixing.
Additionally, 15 states and Puerto Rico filed their own suits. HarperCollins and Hachette quickly reached agreements to avoid court while S&S needed to "discuss" their settlement. Penguin and Apple are fighting the charges.
As of today, however, US District Court Judge Denise Cote agreed to dismiss S&S from the suit as the settlement was reached with the states and the fed.
The case stretches back to 2010 with the debut of the first iPad from Apple. The tablet quickly became a competitor for Amazon's Kindle line of e-readers. Amazon had been charging low prices ($9.99 for new releases) in order to push up purchases of its electronic readers.
Publishers were concerned about Amazon selling e-books at such low prices (often sold for less than Amazon paid for them) because consumers might become accustomed to the lower prices. Also, publishers feared being in the same situation as record labels were in when iTunes picked up stream, but Apple insisted on keeping single song costs at 99c. Amazon offering consistently steep discounts might discourage other traditional retail partners from offering e-books altogether, alleged the suit.
Apple decided that it would put more power into the publishers hands by going with an agency model, in which publishers set the price and Apple took a 30 percent cut. However, Apple also made a deal that the publishers could not allow rival retailers, such as Amazon, sell the e-books at a lower price than through its own platforms.
Written by: Andre Yoskowitz @ 18 May 2012 0:47
