Lawsuits allege e-book prices kept too high
CHARLESTON, W.Va. -- More people are reading electronic books than ever -- 21 percent of Americans have read at least one in the past year, according to a recent survey by the Pew Research Center.
But the federal government and several states -- including West Virginia -- believe people are paying too much for those e-books. Last month, they sued five major book publishers, and Apple, claiming that they conspired to artificially raise the price of best-selling e-books.
The lawsuit, originally filed in U.S. District Court for the Western District of Texas, alleges that e-book prices were boosted from $9.99 to $12.99 and $14.99.
"They got together and decided to get higher prices at the retail level for their electronic books," said Douglas Davis, West Virginia assistant attorney general.
The book publishers were worried because Amazon -- the biggest bookseller on the Internet -- was selling best-selling books for $9.99 and they were concerned it would negatively affect their hardcover book sales, Davis said.
At first, the publishers -- without input from Apple -- would wait to publish e-books until several months after hardcover book was published, he said.
"The e-book didn't come available until three and four months [after the hardcover book was released]," Davis said. "It had the effect of boosting the sale of hardcover books and making the price of e-books higher."
When Apple stepped in, it offered to sell books directly to customers through its iBookstore and charge a commission. Prices on books that had been selling for $9.99 went up to $12.99 and $14.99, Davis said.
The West Virginia attorney general and U.S. Attorney General Eric Holder, West Virginia Attorney General Darrell McGraw and officials in other states have reached tentative agreements with three of the five publishers: Hachette, HarperCollins and Simon & Schuster.
They're still in litigation with two other publishers -- Penguin and Macmillan -- as well as Apple, which has denied the claims in the lawsuit.
"If we go to trial, we will ask for civil penalties to be imposed," Davis said.
In a filing in federal court in Manhattan this week, Apple said its entry into the e-book market actually helped consumers, by forcing other makers of e-book readers to compete harder and come up with new technology for e-readers.
"The DOJ's accusation of collusion against Apple is simply not true," Apple spokesman Tom Neumayr said earlier. "The launch of the iBookstore in 2010 fostered innovation and competition, breaking Amazon's monopolistic grip on the publishing industry. Since then customers have benefited from eBooks that are more interactive and engaging."
Penguin and Macmillan, too, have denied wrongdoing, saying that the decision not to settle was not made lightly.
"HarperCollins did not violate any anti-trust laws and will comply with its obligations under the agreement," a company spokesperson wrote in part. "HarperCollins' business terms and policies have been, and continue to be, designed to give readers the greatest choice of formats, features, value, platforms and partners - for both print and digital."
A statement from Hachette said the company "reluctantly" agreed to the settlement.
"Hachette was not involved in a conspiracy to illegally fix the price of e-books, and we have made no admission of liability," the company statement read, in part. "Although we remain confident that we did not violate the antitrust laws, we faced the prospect of lengthy and costly litigation with government plaintiffs with virtually unlimited resources. Hachette has decided that the costs, uncertainties, and distractions of this litigation would be too disruptive to our business."
As far as a timeframe for getting any restitution to West Virginia readers, Davis said that -- and figuring out how to get the money back to the customers who bought e-books -- could take a while.
"I'm not expecting to see it this year," Davis said. "I would hope to see it in 2013, but that may be [too soon] as well."
Reach Lori Kersey at firstname.lastname@example.org or 304-348-1240.