An article from Publisher’s Lunch on a suit filed over price collusion for e-books (for those who don’t know, collusion is when several companies ‘set’ the price of a certain item, disallowing competitive pricing).

I was used to buying e-books from fellow indie authors, usually priced from $0.99 to $6.99, and when I finally bought an e-reader, I was shocked by the price of ‘industry’ e-books. Some are more expensive than the paperback, which makes no sense at all. It takes a tiny amount of development to produce an e-book, and there are no printing, shipping, warehousing and inventory costs, and no returns. This means they should be only a fraction of the price of print books! So if the e-books cost the same as paperbacks (or more), yet are without all those overheads, who is making all that extra profit? Is it the author? I suspect not, but I’d like to know…!

Well, another reason for people to buy indie books, I guess! I’m really interested to know what happens to the pricing of Industry e-books, and what it will do to sales if they stay as high as $12.99.

“Class-action law specialists Hagens Berman filed suit in a San Francisco Federal Court against Apple, along with Hachette Book Group, HarperCollins, Macmillan, Penguin and Simon & Schuster, over the agency model of ebook pricing. On behalf of two people who bought ebooks, the firm alleges that Apple and the publishers are “in violation of a variety of federal and state antitrust laws, the Sherman Act, the Cartwright Act and the Unfair Competition Act.”

Aside from explaining the agency model in florid terms, the essence of the complaint appears for now to rest on twists of logic and reasoning–or tautologies–rather than any evidence not already known to the world. The firm asserts that “on information and belief, in the course of entering into agreements with Apple, Apple and the Agency 5 communicated the terms of the agreements and pricing information with each other, including signaling to each other that they would agree to the MFN Clause and price formula that would increase and standardize pricing to a range between $12.99 to $14.99.” And they claim publishers’ “unlawful combination and pricing agreement would not have succeeded without the active participation of Apple. Apple facilitated changing the eBook pricing model and conspired with the Publisher Defendants to do so.”

But the filing does not assert any new evidence to back up those claims. Rather, they reason that “no single major publisher would risk such loss of sales and insist on the agency model by itself. Thus, as a matter of economics, the agency model works only if there is an agreement by a significant number of publishers to the new pricing model.” The complaint also alleges “collusion was a necessary ingredient of the Publisher Defendants’ anticompetitive plan to gain direct control over eBook pricing. If they had not all conspired to force retailers like Amazon to adopt the Agency model under the same terms and at the same time, consumers would have simply reacted to rising eBook prices by choosing to purchase their eBooks from publishers or retailers who did not participate in the Agency model.” So, by the suit’s reasoning, publishers must have colluded because it would have been riskier not to.

For more on the lawsuit, visit PublishersMarketplace.com.”