Earlier this year, the US Department of Justice filed a lawsuit against Apple and 5 major publishers for allegedly conspiring to fix e-book prices. The trial is set for June of next year.
Apple maintains that the lawsuit is ridiculous, and vows to fight the allegations. But not everyone is so sure. A federal judge just approved settlements from three of the publishers…
“In a move that could reshape the publishing industry, a federal judge has approved a settlement with three of the nation’s largest book publishers over alleged collusion in the pricing of e-books… Apple has previously indicated in court papers that it would seek to appeal any decision approving the settlement. As a result, it could take some time before consumers see lower prices on e-books… “It’s devastating to bookstores,” said Paul Aiken, executive director of the Authors Guild. “For two years the settling publishers must allow vendors to discount e-books at any price they want. The court acknowledges that this restores the status quo conditions before 2010, when Amazon was able capture 90% of the e-book market. The Justice Department is reshaping the literary marketplace without submitting a single economic study to the court to justify its actions.”
Yikes. The settlement offer is said to be in the $70 million range and will essentially require the three publishers to terminate their contracts with Apple, as they go back to setting lower e-book prices.
This will be good for consumers, who should start seeing prices drop on Amazon.com and other services, but bad for Apple’s business, as the company typically takes 30% off the top of all iBook sales.
Apple tried to have these settlements delayed until after next summer’s trial, but obviously its efforts weren’t fruitful. It’ll be interesting to see how this high-profile case unfolds over the next several months.