June 7 – 13, 2010 Edition Texas Attorney General Examines Apple E-Book Pricing

AUTHORLINK NEWS/June 8, 2010—Texas Attorney General Greg Abbott is looking into the electronic book market’s selling and pricing policies, with Apple Inc. among its main targets of interest. According to the Wall Street Journal last week, two major publishers have been approached by the state agency. Spokesmen for both Lagardere SCA’s Hachette Book Group and News Corp’s HarperCollins Publishers have said they have been contacted by the Texas AG, but have declined further comment, as have Apple and Texas Attorney General.

Though details of the general inquiry are unclear, one possible focus is Apple’s e-book pricing and its impact on consumers. Apple, in seeking to attract content for the iPad, opted for an agency pricing model in which publishers set their own retail prices and receive 70% of the price while sellers receive the remaining 30%.

The move boosted prices on some popular e-book titles for iPad. Although some best-sellers are still sold at $9.99—the usual norm on Amazon’s Kindle reader—many of the e-books written by leading authors are now priced at $12.99 or $14.99 as a result of Apple’s pricing policies.

Five of the six major publishing houses now follow the agency model, which enables publishers, not retailers, to set prices, reversing a long-standing practice.

Apple faces major rivals such as Inc., Barnes & Noble Inc. and Sony Corp., which offer e-reader devices and distribute e-books for them.

Antitrust agencies have been taking a closer interest in Silicon Valley companies in general, and Apple in particular. The Justice Department is making preliminary inquiries about Apple’s practices in the music business, according to The Journal.

State antitrust authorities tend to be overshadowed by their federal counterparts. But some states have been particularly aggressive in enforcing antitrust laws—including Connecticut, New York and Texas.