Monday, 02 April 2012 09:20

Settlement possibly near in US ebook investigation

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The US Department of Justice has been looking at arrangements between several major publishers and Apple that may have affected ebook price levels. A resolution may be just weeks away.

The US Department of Justice has been scrutinising ebook pricing practices involving Apple and publishers Hachette, Harper Collins, Simon & Schuster, Penguin and Macmillan. Reports from the US suggest a settlement may be imminent.

The companies have adopted an agency model which means the publishers set retail prices and Apple takes a commission. The traditional wholesale model allows booksellers to purchase books from publishers and then sell them at whatever price they see fit, even at a loss.

The central issue is not the agency model itself, but whether collusion occurred during its adoption.

The rumoured settlement may also see the end of the 'most favoured nation' clause in the agreements between Apple and the publishers. Such clauses essentially say that either the buyer will receive the lowest price offered by the supplier to any client.

In the case of ebooks, the deal is that the retail price of books in Apple's iBookstore cannot be higher than any version (print or other electronic formats) at other retailers. A similar condition has appeared in at least some of Amazon's ebook contracts.

The publishers and Apple are also being investigated in the European Union over the same issues.


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Stephen Withers

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Stephen Withers is one of Australia¹s most experienced IT journalists, having begun his career in the days of 8-bit 'microcomputers'. He covers the gamut from gadgets to enterprise systems. In previous lives he has been an academic, a systems programmer, an IT support manager, and an online services manager. Stephen holds an honours degree in Management Sciences and a PhD in Industrial and Business Studies.

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