Apple e-book price-fixing case

The U.S. Supreme Court has rejected Apple’s appeal in its iBooks antitrust lawsuit, leaving the iPad maker to pay a $450 million penalty for conspiring with five publishers to artificially inflate e-book prices

Traditional wholesale pricing model

PUBLISHER $5.00 BOOK SELLER $4.99 $9.99 CUSTOMER

PUBLISHER Sells printed book to bookseller at discount, typically 50%

Bookseller: Chooses how much to sell to customer

2010: Apple launches iBooks. Apple and five publishers switch from wholesale pricing to so-called agency pricing. Publishers set prices and receive 70% of retail price – Apple takes 30% commission. Publishers agree not to sell at discount to Apple’s rivals, including Amazon

Agency pricing model

PUBLISHER $9.09 e-BOOK SELLER $3.90 $12.99 CUSTOMER

Deal lifts price of best-selling e-books to between  and $14.99

2009 2010

0 6 8 10 $12

Change in average e-book retail prices

Apr 1, 2010: Implementation of agency agreements 

Hachette

Simon & Schuster

Penguin

Macmillan 

HarperCollins

Publishers’ settlement: For e-books purchased between Apr 1, 2010 and May 31,2012 $166m

Source: U.S. Department of Justice Powerpoint presentation

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