The U.S. Department of Justice has recently passed a verdict due to which 3 publishers had to abandon the agency pricing model. Huge discounts are being offered for ebook versions of titles from HarperCollins, which is one of those publishers. In a surprising move, Apple Inc.(NASDAQ:AAPL) is competing with Amazon.com, Inc.(NASDAQ:AMZN) in terms of the prices of those titles in their iBooks Store.
Apple Inc. and 5 out of the 6 big shot publishing names in the US has been sued by the DOJ for violating antitrust laws. The lawsuit was slapped on Apple after it signed agreements to bring ebook versions of the titles released by the publishers to iPhone and iPad. Apple was to get a 30% cut and the rights to those books were exclusively held by them. However, the publishers coerced other retailers like Amazon to sign similar agreements. But Amazon had already done away with Kindle versions of books, which is why they are safe from DOJ.
Numerous authors, publishers, retailers are protesting that the lawsuit is unjust and is a ploy to tip the scales in the favor of Amazon. The online retailer used to sell best sellers at a price that was lower than what they had paid for them. This move helped them to secure 90% of the ebook market share as competitors could not sell books by incurring a loss.
Apple, Penguin Group, and MacMillan are still appealing the charge, but HarperCollins, Hachette, and Simon & Schuster have settled. Apple claimed the settlement was unlawful and a petition was submitted in protest, but Judge Denise Cote gave the go ahead. In 2010, Apple switched the publishers to the agency model so that there was no competition on the price, but is unwilling to take the same stand now.
Amazon has been dabbling in various gray SEO techniques to rig search results so that the Kindle version of all but one of these books are listed before the print editions. The ebook and publishing industry will be hugely affected as Amazon is diminishing the value of books and reducing the chances of making profits for others in the chain. Apple profits mainly from its hardware, which is why the Apple-Amazon rivalry will be an interesting albeit powerful one.