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Apple Not Eager to Settle in E-Book Case

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Apple Not Eager to Settle in E-Book Case

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Apple is not eager to settle an e-book price-fixing probe.

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After allegations that Apple and traditional publishers colluded to raise e-book prices, Apple and two global publishers aren't eager to settle the case with antitrust authorities.

Three of the five largest publishers in the world, Simon & Schuster, HarperCollins and Hachette Book Group, have expressed interest in a settlement, while Apple and publishers Pearson and Macmillan have stated they aren't inclined to settle, according to the Wall Street Journal, which credited an unnamed source.

Likely the biggest reason is that a settlement would mean making all publisher contracts with Apple null and void. While Apple isn't settling, it likely will if the U.S. Justice Department decides to proceed with an antitrust suit.

The settlement would mean lower prices on e-books for consumers, which now cost upwards of $12.99 per download. Publishers aren't happy because it means that Amazon could discount their e-books rather than use the publishers' own agency model pricing.

This would also hurt Apple because it signed contracts with these publishers to allow the publishing houses to set their own prices in return for some exclusivity and a 30 percent share of profits.That it hurt competitor Amazon was just icing on the cake.

All the companies involved and the Justice Department declined to comment.
 
The trouble started when Apple was preparing to launch its iPad in 2010. Previously publishers would charge booksellers half the cover price and booksellers discounted what they wanted.
 
However, Amazon, in an effort to sell Kindle e-readers and possibly dominate the market, offered many e-books below cost. That freaked out publishers who were scared that readers would abandon hardcovers and that Amazon, which arguably controlled much of the e-book market, had too much power.
 
Apple allowed publishers to continue to use the agency model in the iBookstore and they received 70 percent of profits. However, Apple made a provision that publishers couldn't sell books cheaper to any of its rivals. So the $9.99 bestsellers rose to $12.99 and $14.99 seemingly overnight. Worse, the same e-book selling for $12.99 could be selling as cheaply as $8.82 in paperback.
 
Apple will have to eventually settle and it likely will, but it won't make it simple for the U.S. Justice Department. Hopefully at the end of this we will see much more reasonable e-book prices that reflect the market.

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