5/22/13 22:50
This is one of the most informative articles I've read on the eBooks “price fixing” case. It chronicles a series of email exchanges between Steve Jobs and News Corp, who owns Harper Collins, around the iBooks negotiation.
The US Government is currently investigating to see if Apple illegally brokered a deal with publishers to raise eBook prices. The outward fact seems to be that Amazon used to sell eBooks for $9.99, and with iBooks, the average selling price has increased to $12.99.
Mechanics aside, the ultimate problem with this argument is that the $9.99 price was never sustainable:
“The economics are simple enough. [Amazon] Kindle pays us a wholesale price of $13 and sells it for 9.99."
— James Murdoch of News Corp, in an email to Steve Jobs
Sooner or later, Amazon would have to stop losing $3 per sale on eBooks. Steve Jobs was advocating for a retail price range of $12.99 - $14.99 per eBook, essentially the same "wholesale price" Amazon was getting at the time.
Reading the email exchange, it's clear that while News Corp would prefer to sell eBooks at higher prices, Jobs was pushing for the $12.99 - $14.99 range. Obviously, Apple would prefer it if publishers set even lower prices for eBooks.
No doubt the legal arguments are much more complicated. However, the bottom line is simple: $9.99 was never a sustainable price for bestselling eBooks. Something would have had to give eventually. Apple chose a course that was sustainable for current publishers.
As with most government investigations, this one is likely to be completely moot by the time it is resolved. Amazon and others are already aggressively moving toward a world of
self-publishing, cutting out publishers altogether. This is clearly the model of the future, and one that Apple is likely to follow soon.
Related: Business.