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The court decision finding Apple guilty of playing "a central role" in a conspiracy to raise the prices of e-books is a victory for competition in the marketplace; Consumers Union, the advocacy arm of Consumer Reports today called it "a strong message against price fixing ...that's good news for consumers." But don't slash your e-book budget yet; chances are the decision will have little if any effect on what you actually pay to feed your e-reading habit.
First, some background: The U.S. Department of Justice last year filed suit against Apple and five publishers (Hachette, Harper-Collins, Macmillan, Penguin, and Simon & Schuster). It accused the group of working to set prices among themselves, largely to thwart Amazon, which dominated e-book sales and was heavily discounting titles. The publishers all settled out of court earlier this year, paying hefty fines and restitution to consumers and agreeing to allow retailers, including Amazon, to set prices again.
Apple, however, held out for a trial, and this week the U.S. District Court in New York issued a decision stating that Apple and the publishers "conspired with each other to eliminate retail price competition in order to raise e-book prices, and that Apple played a central role in facilitating and executing that conspiracy." Apple has said it will appeal the decision.
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Will the court outcome change prices much? Probably not. Prior to the court ruling, e-book prices dropped somewhat in the wake of the settlements, though not dramatically. One of the reasons, a publishing source told me, is that some publishers raised their Suggested Retail Prices after the settlements and many of Amazon's post-settlement prices weren't that different than those set by the publishers.
Glance at the pricing of many top titles now in the Kindle Store, for example, and you'll see the $9.99 and $10.99 price tags that were ubiquitous before publishers set prices themselves--but also plenty of $12.60 and $12.99 offerings, too. Adding Apple, a relatively small player in sales of e-books, to the mix isn't likely to have much effect on prices, either up or down.
However, consumers might eventually lose as a result of the settlements and the court decision, in two ways. My source notes that the settlements only prevent publishers from setting their own prices for e-books for two years. While they can't collude to set prices after that, any or all of them could individually decide to resume setting prices themselves, rather than allowing Amazon and other retailers to do so. That might again allow publishers to squelch the likes of the $9.99 e-book best-seller.
In addition, the impact of the decision could extend beyond books--perhaps sooner rather than later. As a number of anti-trust lawyers have noted in various media today, the Apple decision might encourage the company to temper its traditional toughness in negotiations for other types of content, such as movies or music, for fear of prompting another suit. That could result in more favorable payments to content owners that might then result in higher costs being passed along to consumers.
