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Thursday, February 29, 2024

Government sues publishers, Amazon lowers prices

In mid-April, the Justice Department sued five major book-publishing companies on antitrust charges for allegedly colluding to raise e-book prices. Simultaneously, Amazon.com announced it would lower its e-book prices, pushing major titles from $14.99 to $9.99.

The government’s decision has put Amazon in a position of power; the company, which already controls 60 percent of the e-book market, may now be able to set the prices for e-books.

Three of the charged publishers, the Hachette Book Group, Simon & Schuster and HarperCollins, have already agreed to a settlement that will most likely overturn their pricing model. Macmillan and Penguin Group USA, were also named in the suit but have not settled yet.

Members of the book world are worried about the potential consequences of the settlement. Publishers and booksellers argue that any victory consumers might gain from Amazon’s lowered prices will be short-lived and that the eventual effect of the antitrust suit will be to exchange a perceived monopoly for a real one. Amazon, already the dominant force in the industry, will have the ball completely in its court.

Amazon, which has eluded collecting sales taxes in more than five states, said that the settlement was “a big win for Kindle owners,” and added that “we look forward to being able to lower prices on more Kindle books.”

The Consumer Federation of America called the settlement “a slam-dunk of collusive, anti-competitive behavior.”

Amazon’s introduction of the Kindle in 2007 resulted in skyrocketing e-book sales. They sold 2 percent of all book titles in the nation that year, and have risen to 25 percent of sales this year. In 2011, about 114 million e-books were sold at a cost of $441.3 million.

In comparison to bestseller list prices of $17 to $20, Amazon offers them for $9.99. It is widely believed Amazon is selling the e-books at a loss as a way of attracting more customers and forcing competitors to lower their prices. Amazon also has been demanding higher discounts from publishers and stopped offering e-books from the Independent Publishers Group, a Chicago-based distributor, after they couldn’t agree to terms.

“I went out of business because of Amazon,” said Amy Sand, former Southern California independent bookstore owner. “Business was really profitable before Amazon started getting big in 2007, but after that we just couldn’t compete with their lowball prices.”

Sand, along with many other independent bookstore owners, said she worries that Amazon’s potential monopoly will negatively impact the literary world on a grander level.
“If they can decide prices of books, what can’t they do?” Sand said.

SARA ISLAS can be reached at city@theaggie.org.


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