Why e-books could be getting cheaper

Consumers may just be the winners in a court battle over e-book pricing.

It’s not often that a judge throws in a literary quotation during a court ruling, but a federal judge let the words of Emily Dickinson make her point in a case about e-book price fixing.

“There is no Frigate like a Book/ To take us Lands away,” said a federal judge while approving the US Department of Justice’s settlement with three major publishers.

The department of justice had accused five publishers – Simon & Schuster, Penguin, Macmillan and HarperCollins – of conspiring with American technology giant Apple to push the prices of e-books up after fears that prices of $9.99 for e-books would adversely affect their profits.

The DoJ said the publishers had decided to take collective action to force Amazon to stop offering discount prices.

It all began in 2009 when publishing executives met with Apple to discuss competition issues, including Amazon’s e-book prices, said Attorney General Eric Holder. Apple has denied any wrongdoing but Mr Holder said this was “part of a conspiracy to raise, fix and stabilize retail prices”.

Now, three of the publishers, Simon & Schuster, Hachette and HarperCollins , have agreed to a a settlement fund of $69m to compensate readers who bought e-books between April 2010 and May 2012. They have also agreed to stop existing arrangements which allow the publisher rather than the retailer to set the price of e-books.

Penguin, Macmillan and Apple however are continuing the fight the accusations.

This means that retailers, including the internet retailing behemoth Amazon, will no longer have to abide by terms under which the publishers set the price.

For customers, this could mean we see bestseller prices dropping significantly in the coming weeks.

But many in the publishing industry say the government’s actions will mean publishers and authors could struggle to make a living in the future.

The Society of Authors said only the agency model, under which publishers set prices, stood in the way of Amazon using its massively dominant position to discount e-books to prices no other retailer would be able to match.

Deputy general secretary Kate Pool said if this happened it would “devalue the product to the extent that, in the long-term, everyone, including Amazon, loses out”.

But US district judge Denise Cote said two wrongs did not make a right. “Even if Amazon was engaged in predatory pricing,” she said, “this is no excuse for unlawful price-fixing. She added: “The familiar mantra regarding ‘two wrongs’ would seem to offer guidance in these circumstances.”

District judge Cote said her judgement was calculated to restore retail price competition to the market to benefit e-book readers and the public.

Penguin, Macmillan and Apple will now face trial next June. But district judge Cote said that the agreement and the halt that had been called to agency pricing by the three publishers who had now settled meant “consumers should not be forced to wait until after the June 2013 trial to experience the significant anticipated benefits of the decree.”