Is Apple’s New E-Book Trick Tripping Up Amazon?
Apple (NASDAQ:AAPL) may still be battling the e-book issue in court, but the iPhone maker has begun playing a pricing game to ward off possible Amazon.com (NASDAQ:AMZN) gains in the meantime. It has made a deal with at least one book publisher — HarperCollins (NASDAQ:NWSA) — to lower prices of e-books, and the changes are already evident in its iTunes store.
Don’t Miss: Apple-nomics Trickles Down to Semiconductors.
According to paidContent, not only is Apple now selling new bestselling e-books for $9.99, in some cases its price is lower than Amazon’s Kindle Store price for the same title. HarperCollins is one of the three publishers that settled with the U.S. Department of Justice, along with Hachette and Simon & Schuster (NYSE:CBS). Under the settlement, the three have agreed to scrap the agency model deal they had with Apple and have signed new agreements that prevent them from assigning a most-preferred status to any retailer.
When Amazon first launched its Kindle e-reader years ago, it started offering big discounts on content such as e-books to attract new customers. The DOJ alleges that Apple and five book publishers reacted to that by colluding to raise prices of content, in turn hurting consumers. Apple and the two other publishers, Penguin Group (NYSE:PSO) and Macmillan, declined to settle and a trial in the case is expected to start next June.
Apple’s cash funds, of course, allow it to take on Amazon in the pricing game much more strongly than other e-book retailers like Barnes & Noble (NYSE:BKS) and Kobo.