Have you noticed that prices for new e-books have risen over the past couple of years, even though e-book readers themselves have been getting cheaper? So did the Justice Department. The agency recently filed an antitrust lawsuit against Apple and five of the six largest book publishers in the U.S., alleging that they conspired together to fix prices and raise the cost of new and bestselling e-books. The legal details are long, complex and yawn-inducing. The important question is: what could the lawsuit mean for you, the e-book devouring consumer?
Fortunately, not all of this is wild theory and conjecture; while Apple, Macmillan and Penguin plan on fighting the lawsuit in court, Simon & Schuster, Hachette and HarperCollins agreed to settle with the Justice Department immediately. The proposed settlement [PDF] shines a light on some of the things we can expect in the future.
Without further ado, here are three good things that may pop up in the coming months:
1. Lower e-book prices. The Justice Department says that the book publishers, at Apple's encouragement, wrestled the ability to set e-book prices away from retailers after the launch of the iPad. That's why hot titles are now $13 to $15 now as opposed to the $9.99 price point Amazon pushed when the Kindle was first getting its legs. If approved, the settlement would force publishers to return pricing control to retailers for at least two years starting in June -- meaning Amazon and others can sell e-books for whatever price they want (within certain limits) during that time frame. Amazon already said it plans to do just that. Expect similar punishments if the DOJ wins its lawsuit against the companies that won't settle.
2. Buy one get one free and other deals. The settlement also forces publishers to allow retailers to run discounts and promotions for e-books, if the retailers so desire.
3. Fewer device restrictions. Digital Rights Management (DRM) is basically a technological lock that prevents you from opening a file on non-allowed platforms. In a nutshell: it's why Kindle books won't open on a Nook. Since the antitrust lawsuit, several high-profile sources -- including GigaOm.com's Mathew Ingram and sci-fi author Charles Stross -- have argued that the book publishers' original insistence on DRM for e-books has essentially married readers to their digital devices. If you decide to switch from the Kindle to the Nook, for example, most of your e-books can't come with you.
Proponents argue that by stripping DRM from e-books, users could read their books on any device and slowly wean off of Amazon, which would be good for the book publishers who worry that Amazon's rock-bottom prices devalue the prices of e-books and hardcover books alike. (Amazon actually loses money on many $9.99 e-books it sells.)
This trend has already started: Macmillian's sci-fi/fantasy arm, Tor, recently announced it was dropping DRM from all of its e-books.
Now, for three not-so-good things the lawsuit could possibly kick up:
1. Fewer available books on the iPad and iBookstore. Currently, Apple requires all e-book publishers to agree to an "agency style" contract that gives publishers the right to set e-book prices while giving Apple a 30 percent cut of gross sales. The settlement agreed to by Simon & Schuster, Hachette and HarperCollins prohibit them from entering that sort of agreement for at least two years. If Apple doesn't budge on its requirements -- and it doesn't lose the antitrust case -- PaidContent.org says that titles from those companies could disappear from iBooks. The opposite is also true; if Apple starts allowing wholesale or straight-royalty contracts, the number of books available through iBooks could increase.
2. Secondary e-book retailers close up shop. "The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon's monopolistic grip on the publishing industry," Apple said in response to the lawsuit. In early 2010 (the time the DOJ alleges the price fixing took place), Amazon commanded over 90 percent of the e-book market, a share that has since eroded to about 60 percent. Some worry that giving Amazon pricing control again will allow it to bludgeon its competitors out of the market by offering hot e-books at prices that others simply can't match.
3. Print dies even faster. Sales of printed books have been suffering while sales of e-books have been skyrocketing. Publishers still worry that dirt cheap e-books reduce the likelihood of people spending $30-plus for new hardcover books.
If the idea of cheap e-books piques your interest, visit our e-book reader report to see which models reviewers recommend.