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    Apple and publishers reportedly near DOJ settlement over ebook pricing

    Apple and publishers reportedly near DOJ settlement over ebook pricing


    Reuters is reporting that the Department of Justice has been having successful talks with Apple and five different book publishers over price-fixing allegations in ebooks, and may be nearing a settlement agreement.

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    Earlier this month it was reported that the Department of Justice was considering filing lawsuits against Apple and five different book publishers over allegations of collusion in connection with ebook pricing. Things may not end up coming to that, however, as Reuters reports that settlement talks between the different entities have been progressing, with a deal possibly a few weeks away. A key element of the proposed settlement is said to be the elimination of Apple's "most favored nation" status, which essentially puts other ebook retailers on the same contractual footing with publishers as Cupertino. When Apple released the iPad, it struck a deal with publishers based on the "agency model," where publishers set the price, and retailers then take a cut (in Apple's case, 30 percent). Prior to that, Amazon had been using the wholesale model, wherein it bought books wholesale from publishers and sold them at whatever price it saw fit. Amazon's aggressive discounting, which helped build up the Kindle user base, had worried publishers that books would become devalued in customer's eyes. It made them all the more receptive to resetting the playing field by shifting industry-wide to the agency model — a shift that also saw the price for ebooks go up across the board.

    A move back to the wholesale model would reap tremendous benefits for Amazon, which could resume using books as a loss-leader. While lower prices will be good news for consumers, not everyone is looking forward to the change, with Authors Guild President Scott Turow recently raising concerns about the detrimental effects of a de facto Amazon monopoly. Of course, with no settlement yet reached, everything is still very much in the air — but it's clear that changes are coming, one way or another.