Good news for consumers fed up with the high price of e-books: The Justice Department has warned Apple and five major publishers that it plans to sue them for allegedly colluding to raise the price of electronic books, the Wall Street Journal reported today.
The Journal says the action grew out of talks among the publishers and Apple as it prepared to introduce the iPad in early 2010. All parties wanted to combat Amazon's dominance in e-books, which was gained with deep discounts that often brought prices under $10.
According to the Journal, as Apple prepared to introduce its first iPad, then-CEO Steve Jobs suggested moving to an "agency model." Publishers could set the price of a book and Apple would take a 30% cut. Apple also stipulated that publishers couldn't let rival retailers sell the same book at a lower price.
Publishers facing a potential suit are Simon & Schuster, Hachette, Penguin, Macmillan and HarperCollins, the Journal said.
The upshot of the feds' action could be lower ebook prices overall, and that would be good for consumers. Many have wondered why there is so little price difference between ebooks and those that are printed, bound, shipped and sold in stores. This may restore some of the equilibrium.