Daily Archives: March 8, 2012

John Gapper

I fear that the US Department of Justice is heading firmly into the territory of unintended consequences by threatening to sue Apple and five of the biggest US book publishers for colluding to raise the price of electronic books.

The Wall Street Journal reports that the Department of Justice is unconvinced by the arguments of book publishers, including Penguin, which is owned along with the Financial Times by Pearson. It is threatening to take action over their “agency” pricing model for ebooks.

I should note that I have an interest in all this since, as well as being a Pearson employee, I wrote an ebook last year which was published by Penguin and sold, among other places, on Amazon’s Kindle store.

I wrote about this issue in a column in December and concluded that eliminating agency pricing, under which publishers rather than ebook distributors, set the prices for their books, would reinforce Amazon’s dominance:

“If some publishers want to set ebook prices above the level Amazon prefers, that is fine providing they do not collude to fix prices and there are alternatives. There is little danger on the latter front – anyone can now become a publisher and new ones are springing up all the time. Amazon has itself become a publisher and displays its titles generously in the Kindle store.

“Minimum prices deals helped to erode Amazon’s initial dominance in ereaders by encouraging competition from B&N and others. Even so, the Kindle still accounts for 60 per cent of ebook sales. It is not the job of antitrust officials to hand Amazon back its monopoly.”

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If Harvard Business School graduates ruled the political world, Mitt Romney would be the US president instead of struggling in the Republican primary against Rick Santorum, whose bugbears are gay marriage and contraception.