Will E-Book Prices Fall? No - Wall Street Journal

By Jeffrey A. Trachtenberg Prices of many best-selling e-book titles had already come down before a federal judge's ruling Wednesday that Apple colluded with publishers to drive up prices. That is because the five major publishers targeted in the Justice Department's 15-month-old civil antitrust suit over e-book pricing have settled with the agency. As a result, the decision by U.S. District Judge Denise Cote will have little immediate impact for consumers. The big winner from the court's decision is Amazon.com Inc., the country's largest digital bookseller, which marketed discounted best-sellers as a key feature of the Kindle e-reader when it launched the device in late 2007. In 2010, after Apple unveiled its iPad tablet, five major publishers began selling their digital books under a pricing program in which they set the retail prices and retailers collected 30% of the revenue. The transition to the so-called agency pricing model prevented Amazon and other booksellers from discounting many popular books. While it meant that Amazon made money on hot titles that it had once sold for a loss, its inability to discount books enabled other retailers, including Apple and Barnes & Noble Inc., to gain market share. The dynamic started changing after the publishers settled with the Justice Department. Four publishers that settled— CBS Corp.'s Simon & Schuster; News Corp.'s HarperCollins Publishers; Lagardere SCA's Hachette Book Group; Macmillan, a unit of Germany's Verlagsgruppe Georg von Holtzbrinck GmbH—have already agreed to allow discounting for two years. Today a broad pricing battle is already under way. Apple's iBookstore, for example, is discounting many of the country's best-known titles, as are the digital bookstores operated by Barnes & Noble, Amazon, and Google Inc. On Wednesday, for example, Amazon and Barnes & Noble were pricing the digital copy of Neil Gaiman's new novel "The Ocean at the End of the Lane" at $12.80, while Apple was selling it for $12.99, and Google priced it at $13.59. The agency price set by the publisher, Morrow, an imprint of HarperCollins Publishers, is $15.99. News Corp owns The Wall Street Journal as well as HarperCollins. "Amazon got what it wanted when the publishers folded and agreed to let their books be discounted," said Lorraine Shanley, president of industry consultancy Market Partners International Inc. "On a personal level this was disheartening and on a business level, destabilizing." Penguin Group (USA), which settled with the Justice Department last December, is negotiating new contracts with booksellers, a spokeswoman said. Penguin Group (USA) is part of Penguin Random House, which is majority owned by Bertelsmann SE & Co. Random House was never accused of collusion. Its titles can't be discounted by retailers without its permission, which explains why Dan Brown's new novel "Inferno" is priced at $12.99 on Amazon instead of $9.99 as might be expected. Amazon's website notes that the $12.99 price was set by the publisher. via Technology - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNFSqR6wE0hl1xxuN4LIWH2dP8v3Ig&url=http://stream.wsj.com/story/latest-headlines/SS-2-63399/SS-2-273902/

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