According to a March 9 post in The New York Times, the U.S. Justice Department is investigating whether Apple and a group of book publishers have worked together illegally to keep e-book prices artifically high. The story relates to several issues that come up repeatedly in mass communication classes related to the media industries’ struggle to cope with the economic implications of newer, digital media.
The book industry has been weathering the transition to digital comparatively well. Recent data indicate that digital sales have more than made up for declines in physical sales (eat your heart out, music industry). However, there’s been continued tension over e-book pricing. Makers of tablets and e-readers, such as Apple and Amazon, like electronic content to be plentiful and cheap because it makes their hardware more attractive. Publishers have a greater incentive to keep prices higher in order to protect their income from both digital and physical content. (They aren’t ready for low prices for e-books to dramatically lower what consumers are willing to pay for physical books.)
A few years ago, publishers pushed for an “agency” model that allowed them to set book prices while online retailers took a percentage of the sales price. This differed from the previous “wholesale” model, where retailers would buy electronic “copies” of a book, and would then sell them at whatever price they were comfortable with. Since then, retail prices for newly-released, popular e-book titles seem to have settled in at around $13-$14, around the list price of a trade paperback. (This is higher than the $10 Amazon was experimenting with under the wholesale model.) The pressure from the DOJ has the potenital to shift this relatively new balance.
