Go feds! E-books are way overpriced

For the last couple of years, electronic book buyers have paid a high price for one Apple CEO's ambition to make life miserable for Amazon.

Sarah Tew/CNET

So Apple was conniving with the nation's big book publishers? At first blush, this probably sounded like the oddest coupling since Felix took up residence with Oscar. But strange bedfellows notwithstanding, that's the story out of Washington, where word is that the two sides colluded on a scheme to raise the price of electronic books.

Now it's payback time and book lovers -- e-book buyers, in particular -- ought to be cheering on the trustbusters.

Far be it for me to root for anything the government does, but in this instance I'll make a big exception.

In his biography of Steve Jobs, author Walter Isaacson offered this revealing quote from Apple's late CEO talking about his negotiations with the big book publishers about how to price e-books.

"We told the publishers, 'We'll go to the agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that's what you want anyway.

"They went to Amazon and said, 'You're going to sign an agency contract or we're not going to give you the books.' "

In other words, take it or leave it. That took brass but, of course, it was vintage Jobs.

That secret agreement between Jobs and a clutch of big book publishers a couple of years ago has done no favors for the e-book reading public.

Jobs knew how much Amazon frightened the book publishing industry and their concerns accelerated as the e-tailer knocked down prices to the point where it was losing money on many e-books -- all in an effort to jack sales of its Kindle. Jobs embodied relentless ambition and he could recognize it in his opposite number at Amazon, Jeff Bezos.

Even though the book publishers made less money than they did under the previous pricing model, they went along with Jobs. This so-called agency model ended the wholesale pricing approach that had allowed Amazon to sharply discount e-books. (The five publishers under investigation include Penguin Group USA, Hachette Book Group, HarperCollins, Macmillan, and Simon & Schuster, which is owned by CNET's corporate parent, CBS.)

And did everyone live happily ever after? Not exactly. Consumers justifiably complained about electronic books costing more than the hardcover version -- or yikes, even the paperback copy of the same work. Indeed, prices on many new e-books climbed from $9.99 to around $14. There was little consumers could do beyond bellyaching in online forums. This was the new market reality.

But as complaints mounted antitrust investigators began poking around. Now the Justice Department seems ready to act. The Wall Street Journal reported on Thursday that the DOJ has threatened to sue Apple and the five publishers on collusion charges.

Separately, PaidContent reported that Apple has filed a court document downplaying comments Jobs made to a reporter just prior to the iPad launch, when he mused that "unhappy" publishers might cut Amazon off from e-books.

Sure.

You never know with these sorts of things but the assumption is that the sides will settle, or at least they'll try to reach an out-of-court agreement. Either way, the outcome can only turn out to be good news for consumers. For the last couple of years, electronic book buyers have paid too high a price for one man's ambition to kneecap a rival. Maybe one day you can read about that tale of intrigue in e-book form-without paying through the nose.

 

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