Justice Department Threatens Apple With Lawsuit Over Ebook Price Fixing

The Justice Department has warned Apple, along with five major publishing houses, that it plans to sue them for joining forces to raise the price of ebooks, according to the Wall Street Journal. If successful, this could signal a future of affordable digital reading.

The case is centered on the way Apple tried to change the way publishers charged for ebooks, prior to the launch of the first iPad in 2010. From the Wall Street Journal:

"Traditionally, publishers sold books to retailers for roughly half of the recommended cover price. Under that "wholesale model," booksellers were then free to offer those books to customers for less than the cover price if they wished. Most physical books are sold using this model...

"As Apple prepared to introduce its first iPad, the late Steve Jobs, then its chief executive, suggested moving to an "agency model," under which the publishers would set the price of the 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...

"The publishers were then able to impose the same model across the industry..."

While publishers deny colluding to raise prices, the evidence doesn't weigh in their favor. With digital reading fast becoming common place, a move to also make it more affordable could see its success cemented for good. It will be interesting to see how this progresses. [Wall Street Journal]