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Justice Department Opens Probe Into Ebook Pricing

The U.S. Justice Department announced it is opening an investigation into ebook prices and whether Apple and several 

major publishers conspired to block price discounting. 

The European Union is also investigating. At the heart of the investigation is so-called “agency pricing”. First introduced by Apple, which insisted publishers stop the practice of selling their books at wholesale prices so that retailers could set the end price if they wanted their books included on the iPad’s iBookstore. Publishers agreed to the new pricing model, which included a 30% cut for Apple, and then turned around and insisted Amazon abide by agency pricing as well. They protested at first but eventually gave in, effectively ending their ability to discount Kindle books. This infuriated many Kindle owners since Amazon made the fact that most Kindle books would be available for $9.99 or less a big selling point for the device. In an effort to deflect such anger, they began adding “This price was set by the publisher” to book listings affected by agency pricing.

The publishers under investigation, which include Penguin, HarperCollins and Simon & Schuster, have been rather tightlipped about the Justice Department’s product, either dismissing the allegations or saying only that they would cooperate. Apple refused to comment at all.

The publishers under investigation are already known as being hostile toward ebooks in general, either by refusing to let libraries lend out digital copies of their books, refusing to release the ebook version of a book until months after the hardcover, or slapping ridiculously high prices on them.

If you are an ebook buyer, how do you feel about agency pricing? Do you feel the investigation is warranted? Why or why not? Please leave a comment and let us know your thoughts!