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Judge approves settlement for Hachette, Simon & Schuster and HarperCollins in e-book lawsuit
It's a big day in the world of e-books, and not just for the crew at Amazon. Today, Judge Denise Cote approved settlement terms for three of the publishers accused by the Justice Department of price fixing. Hachette Book Group, Simon & Schuster and HarperCollins each agreed to settle with the government, rather than face trial -- as Apple, Macmillian and Penguin Group will do in June of 2013. As part of the settlement agreement, each of the publishers will be required to terminate their contracts with Apple within one week. Similarly, they will be required to end contracts with other e-book retailers where clauses exist that would hinder the seller's ability to set pricing. Further, the settling companies won't be able to form contracts for the next two years with e-book retailers that would hinder the seller's discretion to set pricing. During the settlement approval period, individuals and companies alike were given 60 days to weigh in on the matter, which included objections from the American Booksellers Association, the Authors Guild and Barnes & Noble. Ultimately, Judge Cote determined that arguments against the settlement were "insufficient" to block the approval.
More eBook trouble for Amazon
Amazon has run into more trouble with its pricing -- after Macmillan and HarperCollins, a third company has pressured the online book retailer to raise prices on their Kindle eBooks. This time it's the Hachette Book Group, and their CEO in an internal memo says that the company will switch to an "agency model" for eBook sales. What's an agency model? Why, it's the 70%/30% split between platform and content provider currently used in the App Store, and the same model that's planned to be used in iBooks on the iPad. And it's important to note that this is exactly what Jobs said would happen -- that publishers would move away from Amazon when they had another system to go with. What we don't yet know is where prices will end up on the iPad -- Jobs said that prices would be "the same," and it's looking more and more like the $9.99 bestseller price is going to be abandoned for $14.99 or even higher. But that's only because Amazon is fighting shadows with the iPad right now. If they can actually woo some content back to their side when the iPad actually releases, we may see prices get a little more competitive. Until then, the iPad hasn't even come out and it's already shaking up the ebook industry completely.
Hachette Book Group also pulls away from Amazon
It looks like the tide is starting to turn decisively against Amazon's $9.99 e-book publishing model -- first MacMillan fought back and won, then HarperCollins dragged Bezos and Co., back to the negotiating table, and now Hachette is beating on the door. That's at least the word according to a leaked memo from Hachette Book Group CEO David Young, in which he says the "agency" pricing model favored by MacMillan -- and used by Apple new iBooks store -- is the way to go. Ultimately this all comes down to power and control, and we're getting the feeling the publishers have realized that they have to exert it in order to keep it -- and oddly enough, it seems like Apple and the iPad are the leverage they've been waiting for. Get ready for the shakeout. P.S.- Charlie Stross has a nice breakdown of the differences between the Amazon model and the agency model, if you're interested in the nitty-gritty.
