WSJ: U.S. Warns Apple, Publishers on E-Book Pricing →

Thomas Catan and Jeffrey A. Trachtenberg:

The Justice Department has warned Apple Inc. and five of the biggest U.S. publishers that it plans to sue them for allegedly colluding to raise the price of electronic books, according to people familiar with the matter.

This is—yet again—about the switch in e-book pricing from a wholesaling model, in which publishers sell books to retailers at a wholesale price and retailers are (usually) free to charge whatever they want, to an “agency” model, in which publishers set the retail price and the retailers—like Amazon and Apple—get a fixed percentage, in this case 30%.

Apple suggested the move to the agency model, which is what they’ve been using with other digital sales. Most publishers embraced that idea because they didn’t want to see Amazon end up with a natural near-monopoly on e-books… the way Apple has ended up with one on legal digital music.

I am not sure how many layers this irony cake has in it, but it’s a mighty big slice.

  1. chipotle posted this