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E-Book Pricing Settlement Approved Between DOJ and Publishers

By Publishing Perspectives

The New York Times reported that  a federal judge has approved a settlement between the Justice Department and three of the five major publishers in a civil antitrust case that accused the companies of collusion in the pricing of digital books, a decision that could start an e-book price war in the publishing industry.

The government had alleged that Apple had conspired with the publishers to raise the cost of e-books. Hatchette, Simon & Schuster and HarperCollins agreed to settle with the government; Penguin, Macmillan and Apple rejected it, setting the stage for a trial next year.

The decision allows digital publishing powerhouse Amazon to drop the price of many e-books to $9.99 (or even lower), back to the price they were when the company controlled close to 90% of the market.

“I think that everybody competing with Amazon in the e-book market had better fasten their seat belts,” Mike Shatzkin, the founder and chief executive of the Idea Logical Company, a consultant to publishers, said in an interview. “I would expect Amazon to be leading the charge to cut prices on the most high-profile e-books as soon as the decision allows them to do so. As soon as that starts to happen, all the books that are competing with them will have to reconsider their prices.”

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