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Apple sued over price fixing on e-books

Eve Troeh Apr 11, 2012

David Brancaccio: The Department of Justice is suing Apple. The charges? Price fixing. Not for Apple laptops, or Apple iPads — but for the e-books you read on them.

Marketplace’s Eve Troeh is here live in the studio to tell us more. Good morning, Eve.

Eve Troeh: Good morning.

Brancaccio: What’s Apple accused of doing here?

Troeh: Well Apple — the tech company, not the fruit — is being looked at because of some agreements it made with major book publishers. So the publishers used to say to Amazon: Here’s the what we’re going to charge you for this e-book, and you can sell it for whatever price you want.

Apple came in and said, no, we want you — the publishers — to decide the price customers pay, and we’ll take a percentage of that. Oh, and you can’t sell your e-books cheaper than that anywhere else online.

That basically took price competition out of picture, according to the Consumer Federation of America. I talked to Mark Cooper at CFA today.

Mark Cooper: You certainly can’t get together with your competitors and say: Hey guys, let’s put the price up here so we all make more money. That is a slam dunk violation of the antitrust laws.

Brancaccio: Now Eve, e-books do cost a lot less than paper books. What would be a “fair” price?

Troeh: One expert I talked to said it costs about 55 percent less to make and distribute an e-book than a hard copy book — no paper, no ink, no shipping. But like so many digital things, we really have no idea what we should pay. You know, publishers have watched the music industry — a CD used to cost $20 bucks, and now you can get it for free, or close to that. So they want to keep the gap between digital and hard copies as small as possible. Apple says it was just helping them do that. It also says that publishers could have said “no” — Amazon could have said “no” — and that’s why it’s going to court instead of settling.

Brancaccio: Marketplace’s Eve Troeh, thank you very much.

Troeh: You’re welcome.

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