Explaining Southern California's economy

Apple e-book price-fixing lawsuit reveals Cupertino's weakness

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Photo by pablofalv via Flickr Creative Commons

E-books cost more here.

Apple and a couple of holdout publishers have been hit by a Department of Justice lawsuit accusing them of colluding to fix e-book prices at a level higher than Amazon's flat $9.99 rate for the Kindle reader and other devices. The practice, which was allegedly timed to happen when the original iPad was released, allowed publishers to set the price at as much as $14.99, with Apple taking its customary 30 percent cut.

This is from the Wall Street Journal:

The government's lawsuit, filed in Manhattan federal court, described CEO-only meetings of publishers at which the alleged conspiracy was hashed out. The suit alleged that the publishers' chief executives met starting in September 2008 or earlier "in private dining rooms of upscale Manhattan restaurants" and "no legal counsel was present at any of these meetings."

The suit describes the shift from the traditional "wholesale" pricing model, under which retailers set the price of both electronic and physical books, to an "agency" model under which publishers set the price and retailers take a commission.

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