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Why E-Book Trial Won't Lead to Lower Prices

/ Source: TechNewsDaily

Apple went on trial this week to fight charges that it conspired with major book publishers to raise the price of e-books from $9.99 to $12.99 and $14.99 prior to the release of the original iPad in 2010. But whether Apple wins or loses, you're unlikely to see much of a difference in e-book prices.

The days of $9.99 best-sellers are gone, but you may find deals on top titles by doing some comparison shopping of your own.

The e-book landscape was very different three years ago. At that time, Amazon, with its popular Kindle, was the arbiter of e-book pricing: To sell e-books on Amazon, publishers had agreed to let Amazon set the price in the same way traditional bookstores could discount physical books. Amazon chose to sell new releases and best-sellers for $9.99, which was below the price it paid to publishers, in an effort to fuel e-book sales.

Book publishers made no secret of the fact they'd like to see  higher prices  on e-books, and that Amazon's discount pricing was "cheapening" their products, according to court documents. Apple offered publishers an agency model that would allow publishers — not e-book sellers — to set prices.

However, Apple set maximum prices for best-sellers as $12.99 and $14.99 in the agreements with publishers. Emails quoted in the filing said prices were still a little low for publishers, but they were ones publishers could live with. The agreements also prevented publishers from selling e-books on the Internet for a price lower than those listed with Apple. In other words, customers could no longer buy $9.99 best-sellers on Amazon.

The agreement led to the current lawsuit filed by the U.S. government in April 2012. Along with Apple, publishers Hachette, Simon & Schuster, Penguin Group, Macmillan and HarperCollins were listed as defendants. Thirty-three states piggybacked on the federal government's antitrust lawsuit.

By settling with the government before the case went to trial, the publishers agreed to  reimburse customers  who had overpaid for e-books in each of the participating states. In all, the publishers owe these customers $164 million, which can be paid out when the court gives its final approval, sometime after the Apple e-book trial is over, which is expected to take about three weeks.

Publishers were also forced to abandon the agency model and let e-book retailers once again set prices. But that may not last forever. Come December 2014, the restrictions of the settlement will expire. In the court's view, two years was a long enough period to re-establish competition between e-book sellers.

If Apple loses, it could be pressured to lower e-book prices as a show of good will. But it is interesting to note that Amazon has not restored its $9.99 best-sellers — those days are gone for good.  E-book sales  are thriving, so the seller likely sees little benefit in cutting prices. But because retailers can now discount any e-books they'd like, it may be worth your time to do a little comparison shopping.

For instance, Nielsen's current top-ranked adult fiction book is Dan Brown's "Inferno," published by Doubleday, which costs $12.99 for an e-book whether you buy it from Amazon, Barnes & Noble or Apple. However, the e-book of another bestseller, "Happy, Happy, Happy" by Phil Robertson and Mark Schlabach, sells for $10.99 from Apple and Amazon, but $12.99 from Barnes & Noble. And don't forget your local library, which likely lends e-books for free.

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