On to the next legal round regarding Apple’s role in ebook pricing

An article in the New York Times (July 10,2013) describes the judge’s ruling that Apple coordinated with competing publishers to increase ebook prices. Apple is said to have offered publishers an agency pricing scheme by which it would be paid 30% of the selling price in return for publishers getting to set ebook retail prices, along with a commitment that Apple would get the best selling price (called the most favored nation price). This was in contrast with Amazon’s standard $9.99 pricing, which publishers considered too low. The government claims that Apple’s demand for most favored nation pricing decreased competition and increased consumer prices. Publishers claim that Amazon used its monopolistic hold over ebook sales to push their margins too low, while Apple enabled more reasonable and flexible margins. Does the government’s argument that favors Amazon’s pricing enable variety and consumer choice of books in the long run if publisher and author margins get too low? Does most favored nation pricing increase retail prices or segment markets by book or author genre? Will this ruling, which will effectively reduce information sharing about deals signed by publishers, improve the retail supply chains for consumers ?

About aviyer2010

Professor
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