Apple goes to court over alleged e-book price fixing
The Justice Department has accused Apple of colluding with publishers to fix the price of e-books. A loss in court for Apple could damage the company's brand. The Justice Department's case hinges on a statement that Steve Jobs made in 2011 to his biographer suggesting he worked with the publishers to set prices. Apple says the Justice Department distorted and selectively edited Jobs's words.
The question is whether Apple colluded with e-book publishers to set prices. Think back to 2009: Apple was getting ready to launch its iPad and its e-bookstore. At the time, most e-books were sold by Amazon for $9.99. In some cases, Amazon lost money by selling e-books at that price. But that was ok with Amazon because it was trying to promote its Kindle. The Justice Department is accusing Apple of conspiring with e-book publishers to set higher prices -- and prices did go up according to Roger Kay, a tech analyst with Endpoint Technologies
"The average price was $13.99 then, that's $3.99 more than the that $9.99 Amazon was getting from consumers," he explains. "So more than 30 percent higher pricing which is actually pretty substantial when you think about it."
So, consumers are paying more for e-books by prominent authors. But you can still get an e-book written by someone who's not very well known for a bargain.
The upshot is, e-book publishers have taken pricing power away from e-book sellers like Amazon. Now, publishers have much more say in how much e-books sell for. Apple says it's not responsible for this, that it's a trend that started before it even got into the e-book business. But whoever started it, the pricing of e-books has definitely changed.