Consumers are the big winners — at least in the short term — from a settlement approved last week between three major publishers and the Justice Department, which accused the companies of illegal collusion in pricing digital books.
The Justice Department argued that the publishers and Apple had colluded in 2010 to hike the price of e-books — with the result that many volumes that had been available for $9.99 at Amazon saw their price rise by several dollars. The settlement orders the publishers to end their contracts with Apple and allow retailers to set their own prices for e-books instead of having the publishers stipulate the prices in advance.
Presumably, this action should result in price reductions on many digital books. And that’s obviously good news for e-book buyers.
We say this even though we recognize that an impressive number of serious critics have stepped forward in recent months — everyone from The New York Times’ David Carr to the Competitive Enterprise Institute’s Wayne Crews — to take issue with the government’s decisi0n to go after the publishers and Apple in the first place.
Those critics have made a variety of arguments. However, the main one seems to be that at one point prior to the publishers’ deal with Apple, Amazon controlled 90 percent of the e-book market and might regain a similar monopoly by selling digital books at a loss to strengthen its Kindle platform. In the long run, they argue, this would not be good for consumers, authors or publishers.
Indeed, Apple and two other publishers, Macmillan and Penguin, rejected the settlement and will defend their actions at a trial next year. They insist that they did nothing wrong and that the “agency model” they adopted for setting the price of books has a long and legal pedigree.
It will be interesting to see how those arguments hold up at trial. Whatever the final judicial ruling, however, we’d be surprised if any single company such as Amazon managed to hold on to an overwhelmingly dominant position in e-books for long. The digital and publishing worlds are simply too dynamic to permit it.
Booksellers and authors who feel threatened by Amazon’s possible hegemony will find innovative and perhaps more direct ways to compete. For example, as The Economist pointed out when discussing this case last spring, J.K. Rowling “recently starting selling digital versions of all her titles on her own site” (although encryption is a major obstacles in choosing this course).
In the meantime, prices of e-books will probably dip and consumers will be able to save a great deal of money — which in this economy should be counted as no small triumph.
