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Lower e-book prices ahead as government threatens Apple, publishers?

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(Read caption) The government's concern is that the fixed pricing model introduced by Apple – and adopted by five of the big six US publishers – has reduced competition in the e-books industry and raised e-book prices for consumers.

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E-books are at the center of a government crackdown and that might mean lower e-book prices ahead.

The Justice Department has warned Apple and five major publishers that it plans to sue them for price fixing e-books, according to a report in The Wall Street Journal.

The antitrust lawsuit alleges Apple and five publishers, including HarperCollins, Hachette Book Group, Macmillan, Penguin Group Inc., and Simon & Schuster Inc., colluded to fix e-book prices. Some of those publishers have already moved to settlement discussions with the government before any such suit could be filed, in the hopes of avoiding a public fight, according to the WSJ report.

At stake: Apple’s signature agency pricing model. When the iPad was released, Apple introduced a pricing model with major publishers that allows publishers to set prices. In this model, publishers set fixed prices across all e-bookstores and retailers get a fixed percentage of sales. (In contrast, Amazon takes pricing decisions out of publishers’ hands.)

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