Media

Apple takes its knocks in e-books case: No more contracts to limit prices for 5 years

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After being found guilty of e-book price fixing in July, a U.S. District Court judge has finally laid out Apple’s punishment.

Judge Denise Cote of the United States District Court for the Southern District of New York ruled today that Apple can’t enter into agreements with publishers that limit the pricing of e-books for the next five years.

The ruling for the United States v. Apple Inc. et al trial follows a court battle where the U.S. Department of Justice sought to prove that Apple worked with publishers to raise the prices of e-books when it launched the iBooks store in early 2010. Apple, naturally, denied that it had done anything wrong, but the Department of Justice laid out a strong case against it buoyed by e-mail, phone calls, and key witness. (It was also clear to anyone with eyes that e-book discounts disappeared from Amazon and other retailers after Apple entered the market.)

The final ruling is closer to what the Department of Justice wanted, as it applies to Apple’s agreements with all publishers, not just the five big publishing houses it initially formed agreements with. Those publishers, Hachette, Simon & Schuster, Penguin Group, Macmillan, and HarperCollins, previously settled with the DOJ and agreed to allow pricing discounts earlier. Now they’ll be required to allow pricing changes for another five years.

When Amazon initially started selling e-books for its Kindle, it entered into a wholesale pricing model with publishers, which allowed it to offer titles significantly cheaper than retail prices. But with the launch of the iPad, Apple helped coordinate an agency pricing model with publishers, which let them set their own pricing (and it’s why e-books went up in price from around $10 before the iPad to $13-$15 with the launch of the iBooks store).