Who Cares About E-Book Price Fixing?

An advertisement for the Apple iPad shows its virtual bookshelf and e-book selection

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It looks like the DOJ is going to pull the trigger on a lawsuit accusing Apple of conspiring with six incumbent book publishers to fix prices in the e-book market. I am not a lawyer and it’s very possible that the conduct described in the suit is in fact illegal, but from an economic point of view I continue to think that worrying about price-fixing in an industry that’s under relentless assault from shifting underlying technology is somewhat bizarre.

Think about it this way: Suppose these six firms forgot about shady cartelization meetings and just submitted papers to merge. Back in 1982, the Antitrust Division would have to say no way. A book publishing monopoly would have retailers and authors under their thumb and there would have been massive barriers to entry into the business of publishing and distributing books. Today the landscape is totally different. The price-fixing conspiracy you’d worry about is one among Apple, Amazon, and Barnes & Noble who, among the three of them, dominate the distribution channel. The only thing the incumbent publishers dominate is the back catalogues. But if we’re worried about inefficiently high monopoly prices for old books (and we should be) the place to point the finger is at copyright law. In a sensible world, a book would get a decade or three (or even five or seven) under copyright and then enter the public domain where it would be widely available in digital form for free. Instead, the U.S. Congress has indicated its determination to have no new works ever enter the public domain. That drastically raises the price of old books and consequently reduces competitive pressure on new ones.