Does the Agency Pricing Lawsuit Have Merit?

Some may call this an era of evolution in book publishing, but it also could be called the Era of Major Lawsuits taking on golliaths, such as Google ... and now Apple and five major publishers: HarperCollins Publishers, Hachette Book Group, Macmillan Publishers, Penguin Group Inc. and Simon & Schuster Inc.

The issue at the center of the lawsuit against Apple and the five publishers is one that has plagued virtually every crevice of the industry: e-book pricing.

The nationwide, class-action suit was announced on Tuesday and filed by Hagens Berman law firm in the U.S. District Court for the Northern District of California on behalf of plaintiffs Anthony Petru of Oakland, Calif., and Marcus Mathis of Natchez, Miss.-who each have purchased at least one e-book for more than $9.99, following the implementation of the agency model. The suit alleges that "the publishers and Apple colluded to increase prices for popular e-book titles to boost profits and force e-book rival Amazon to abandon its pro-consumer discount pricing," according to the press release from Hagens Berman, announcing the suit.

"Fortunately for the publishers, they had a co-conspirator as terrified as they were over Amazon's popularity and pricing structure, and that was Apple," commented Steve Berman-the attorney representing the plaintiffs in the case-in the press release. "We intend to prove that Apple needed a way to neutralize Amazon's Kindle before its popularity could challenge the upcoming introduction of the iPad, a device Apple intended to compete as an e-reader."

The suit calls into question the "agency model," which puts publishers in control of e-book prices; it claims that the publishers named in the suit "forced Amazon to abandon its discount pricing and adhere to a new agency model, which ... extinguished competition so that retailers such as Amazon could no longer offer lower prices for e-books.