News Column

Settlement Announced With e-Book Publishers

Oct. 15, 2012

Gitte Laasby

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If you bought an e-book in the past few years, you probably overpaid. But you may soon be able to get some compensation.

Attorneys general around the nation announced Friday that they have reached settlements with three of the nation's top publishers and others accused of conspiring to fix and raise retail prices of electronic books.

Wisconsin Attorney General J.B. Van Hollen said in a news release Friday that the proposed settlements -- if approved by the United States District Court for the Southern District of New York -- will provide checks or credits to people who purchased e-books published by Hachette, HarperCollins, Simon & Schuster, Penguin and Macmillan between April 1, 2010, and May 21, 2012.

There will be two levels of payments based on categories of books, the release said, but the exact amount of each payment has yet to be determined.

"Although the settlements are subject to final court approval, claims under the proposed settlements will begin to be processed before approval occurs," the release said.

Officials said most people who bought qualifying e-books will receive written notice that they are eligible for a credit. Those who follow the instructions provided with the notice will receive a credit into their e-book retailer account or a check.

According to the antitrust lawsuit:

Amazon.com started offering New York Times best sellers for $9.99 in 2007 and by 2009 accounted for at least 80% of e-book sales. The "big six" publishers -- the settling ones plus Random House -- were afraid that Amazon would seek lower wholesale e-book prices from them and become a direct competitor by contracting directly with authors to publish e-books. They were also concerned that Amazon would cannibalize the sales of printed books by selling lower-priced e-books.

So chief executives of the big publishers started meeting regularly over exclusive dinners in private rooms at elite New York restaurants in 2008 and 2009. Subsequently, the companies tried to find a way to force Amazon and other retailers to increase their bestseller prices. Simon & Schuster increased its wholesale prices in early 2009 in an attempt to get online retailers to raise their prices, but online retailers didn't budge.

"The conspiring publishers reached an agreement that something had to be done to end Amazon's $9.99 pricing of NYT-Bestsellers and they were collectively searching for the means to effectuate a price increase," the lawsuit states.

By mid-December 2009, Simon & Schuster, Hachette, HarperCollins and Macmillan had agreed to delay publication of their e-books until several months after the first print editions came out. That was done to enhance their ability to negotiate higher retail prices from Amazon and other distributors. The publishers shared information with each other about which titles would be delayed and for how long, the complaint says.

By January 2010, Apple Inc. had facilitated the implementation of the scheme to increase prices, according to the complaint. Instead of selling their books through retailers and letting them set prices, the publishers would start selling their own books directly to consumers through Apple's iBooks store at a higher retail price. That eliminated e-book price competition between Apple, Amazon and other outlets and ensured that Apple earned a 30% gross margin on e-books.

As a result of the conspiracy, consumers nationwide paid "substantially more than" $100 million in overcharges, the complaint says.

If the court approves the settlements and the attorneys general's distribution plan, the publishers will contribute $69 million into a settlement fund that will be distributed to eligible consumers.

The New York court has scheduled a hearing on the settlement for Feb. 8, 2013.

Van Hollen noted that the settling publishers deny that they did anything wrong. A separate lawsuit with similar claims continues against two other publishers and Apple Inc.

Collectively, the settling publishers and Random House are responsible for 60% of all revenue generated from print titles sold in the United States, including 85% of the revenue generated from New York Times best sellers.

E-books have increased significantly in popularity over the past five years, making up 2% of all titles in the United States in 2007 but 25% in 2011.

HOW TO FILE A CLAIM

To see a full list of the publishers and imprints included in the settlement, and to see the conditions in case you bought e-books but weren't notified, visit www.EBookAGSettlements.com.

To learn more, to explore your legal rights and options, and to decide whether to file a claim form, call (866) 621-4153. Claim forms must be filed online or postmarked by Dec. 12.



Source: (c)2012 Milwaukee Journal Sentinel Distributed by MCT Information Services


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