The Lawsuit US Publishers And Apple Are Facing Over Agency Pricing

This article, by Philip Jones, originally appeared on the Futurebook blog on 8/10/11.

Five US publishers and Apple have been named in a US lawsuit that alleges the companies "illegally fix prices of electronic books" and that the publishing houses "forced Amazon to abandon its discount pricing and adhere to a new agency model, in which publishers set prices". The suit alleges that "collusion was a necessary ingredient of the publisher defendants’ anticompetitive plan to gain direct control over e-book pricing".

Sounds scary enough, but if you look at the detail of the complaint there isn’t a whole lot of evidence to back it accusations of conspiracy, though it will nevertheless raise concerns on both sides of the pond, particularly as regulatory inquiries are ongoing.

US law firm Hagens Berman filed the suit in a San Francisco Federal Court against Apple, along with Hachette Book Group, HarperCollins, Macmillan, Penguin and Simon & Schuster, over the agency model of e-book pricing. The same firm is also investigating claims that several large e-book publishers are under-reporting the number of e-books sold, paying authors less than their share of royalties. Worryingly for publishers, the law firm claims that once approved, the lawsuit would represent any purchaser of an e-book published by a major publisher after the adoption of the agency model by that publisher, and has called for "potential plaintiffs" to get in touch via an online form.

The suit has its origins in the switch to the agency model in early 2010, led by Macmillan US, which resulted for a period in that publisher’s e-books being delisted from the Amazon.com website. You can trawl through The Bookseller’s articles from that time here. Though Macmillan moved first, it was closely followed by Hachette USA in early February, and ultimately by the three other US publishers named in the suit – but not by Random House, which did not switch until late last year, and is not named in the filing.

Read the rest of the article on the Futurebook blog.

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