Justice Department Threatens to Sue Apple and 5 Publishers Over Price Fixing
What should be the price charged for an e-book? Does it depend upon the book, the bookseller or the publisher? Well, if you purchase on Amazon, you know you will not be paying the same price for an e-book as you would via Apple and others like Lagardere SCA (MMB)'s Hachette Book Group, News Corp. (NWSA)s HarperCollins Publishers, Macmillan, a unit of Vertagsgruppe, Georg von Holtzbrinck GmbH, CBS Corp (CBS);s Simon & Schuster and Pearson Plc (PSON)'s Penguin Group (USA). And that is precisely why the Justice Department has warned these U.S. publishers that they will be sued unless they correct this issue.
Apparently, these companies colluded to RAISE the prices of electronic books, according to Wall Street Journal reports by individuals close to the issue.
In a country that is supposed to sport the free enterprise system, collusion spells MONOPOLY and that is grounds for an anti-trust case. What does that mean? Anti-trust cases are monopoly breaking. (Too bad the same law can't be used against banks that are "too big to fail.") Though you probably weren't around for it, think the break-up of Ma Bell; imagine only one company in the U.S. having control over telephone systems and apparatus? Astounding. Well, imagine 5 publishers controlling the prices of ebooks? Equally astounding and revolting.
Some publishers are in discussions with the Justice Department to resolve the case before it gets nasty. Naturally, a successful settlement would result in consumers having the opportunity to buy cheaper e-books. Consumers winning? What??? Am I getting this picture straight?
Of course, no one amongst the publisher group is talking. And of course, all have denied acting in concert to raise prices which, in effect, would have established a quasi- monopolistic action to stem competition (something which some elites have deemed "a sin" in business, The Unseen Hand, p. 75)
The parties have cried out to investigators about the paradigm shift that is happening with digital publishing. The shift has gone to an "agency pricing model," which is a problem they can't easily wrap their imaginations around having been the lords of the industry for decades. The innovations in technology, in cloud services, in online publishing delivery and retail have flipped them over like turtles who can't flip back to recover and innovate. So the enhanced competition in the industry and their assumption that old methods would keep them steaming along track #1 has been upended by the electronic booksellers which are thriving.
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