As an owner of an iPad, when I want to purchase an e-book, I can either buy it from the Apple iTunes store and read it on Apple’s iBooks app, or I can buy it on Amazon and have it wirelessly delivered to my iPad and read it on the Kindle app. I quickly learned it didn’t matter much where I purchased an e-book, Apple or Amazon, it cost the same. I wondered why this was the case.
It seemed like a strange coincidence that both Apple and Amazon would charge the same price for the same e-book. It turns out, I’m not the only one to think this was a weird coincidence these two retailers of e-books would just happen to always change the same price.
The Justice Department is planning on suing Apple and five publishers for price-fixing.
The Justice Department is a lot like the Justice League, except of course nobody in the Justice Department wears a cape or is vulnerable to a chunk of Kryptonite. Other than that, the two entities are just the same.
Evidently some guy named Steve Jobs struck a deal with at least five book publishers that took pricing for e-books out of the hands of the retailer, Amazon and Apple, and instead made setting the price the sole responsibly of the publisher. Also under Jobs’ plan, retailers were forbidden to charge less than the suggested retail price of an e-book. Retailers of physical books pay roughly half-price of the suggested retail price and are then free to then sell the book for whatever they wish. Jobs struck a deal with the publishers that retailers of e-books would make a flat 30% commission of every e-book sold.
Though I didn’t attend law school, I do watch Judge Judy. This pricing scheme seems a lot like price-fixing to me.