In Europe, Apple Concedes; in the U.S., Publishers Pay – Yet Another Argument for Distributing Digital Content Directly

(Reuters) An ongoing antitrust investigation of Apple’s pricing negotiations with European publishers in December 2011 may be coming to a close, though not in Apple’s favor. The four publishers – Simon & Schuster, News Corp (HarperCollins), Hachette Livre and Verlagsgruppe Georg von Holtzbrinck (owner of Macmillan in Germany) – made deals that allowed Apple to sell online versions of their books for set prices, while taking a 30% cut of the revenue. The deals clearly stated that other online retailers, such as Amazon, were strictly prohibited from selling the content at a lower price.

In a bid to end the investigation and avoid heavy penalty fines, the five companies have offered a concession that would allow Amazon and other such retailers to sell ebooks at discounted rates for two years. The Commission conducting the investigation is now determining whether this concession will suffice, and whether they will be able to drop the investigation altogether.

As Apple and its partners concede in Europe, U.S.-based publishers are set to pay off multi-million dollar settlementsto their readers after a lawsuit filed by the U.S. Department of Justice. This turmoil in the market is threatening to publishers, and reinforces the need for them to maintain strict control of their digital content. The major digital distributors are taking unfair control of the market – behaving as publishers, when they are distributors – and the result is price-fixing, lawsuits, and overall chaos for the publishers involved.

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