iBooks on iPad

The U.S. Justice Department has just slapped Apple and their various publishing partners, like HarperCollins, Macmillan, and Penguin, with charges of e-book pricing collusion. Sources say that HarperCollins is in a hurry to get the issue settled as soon as today, but Penguin was ready to put up a fight in court. Apparently Apple's contract demands that publishers sell their e-books on iOS for the lowest price that's currently being offered by competitors. This supports the agency model, whereby publishers are the ones setting the price, while the Justice Department wants things to stick with the wholesale model, where retailers set the price. We had heard last month that publishers were willing to concede to the Justice Department over the issue, but apparently settlement talks haven't been as productive as expected.

The idea here is that by having all of the publishers agreeing on the same pricing structure, it stagnates competition. Amazon still has a big lead in the e-book world, and under its current model, Apple won't be able to put up much of a fight if their prices aren't competitive. On the one hand, consumers should be getting the best prices possible, but on the other, publishers and their authors will have a rough time staying in business with smaller margins.

How often do you use Apple's iBooks? Do you prefer Amazon Kindle, or Kobo? Regardless of who you use, how much are you willing to pay for an e-book?

UPDATE 1: John Sargent from Macmillan has published an open letter on the matter:

But the terms the DOJ demanded were too onerous. After careful consideration, we came to the conclusion that the terms could have allowed Amazon to recover the monopoly position it had been building before our switch to the agency model. We also felt the settlement the DOJ wanted to impose would have a very negative and long term impact on those who sell books for a living, from the largest chain stores to the smallest independents.

Go read the whole thing via the TOR link below.

UPDATE 2: Nilay Patel of The Verge got his hands on the DOJ's paperwork, including references to the involvement of the late Steve Jobs, and Apple's head of internet services, Eddy Cue.

the government alleges that the publishing industry openly colluded to raise ebook prices and end Amazon's dominance, and that Apple was a willing participant in the scheme. What's more, the alleged conspiracy sounds like it was actually quite a conspiracy, with secret CEO meetings in private New York dining rooms and promises made to bosses up and down the chain.

Again, hit the source link for a lot of great info.

Source: Bloomberg, TOR, The Verge