Ever since news broke of the DOJ accusing Apple of collusion, I’ve gone back and forth on where I stand on the issue. On one hand, Apple has a point about Amazon’s stranglehold on the e-book market, which isn’t good for anybody. Yet the implication that flipping to an agency model that jacks up prices for consumers isn’t kosher either.
After reading entrepreneur David Parkman’s opinion here on the matter, I’ve fallen more on the pro-Amazon side. A great point here:
The negative coverage of Amazon is centered on them selling eBooks below cost in order to reach the $10 price point. But that is a function of publishers setting the cost higher than $10. If the profit-maximizing price for an eBook is $10, then publishers must adapt to set a wholesale price lower than that, even if it means your legacy cost structure doesn’t allow it. And that’s the rub.
This reminds me about the record companies initial complaints about iTunes store pricing. Apple, in their eyes, was going too low. Yet we all remember life prior to the iPod, where retail prices of $17 or more per CD at a Tower Records was commonplace. It doesn’t fully excuse then some monopolistic like behavior from Apple, but was that pricing structure fair for the consumer?