An international agreement between publishers has driven massive increases in the price of e-books for Australian readers, who also continue to be treated as mugs by companies selling the same titles more cheaply overseas.

Crikey’s tip last week about e-book prices has generated a big response from readers, with example after example of how prices had risen significantly in recent months and how titles were more expensive in Australia than overseas.

The issue has generated extensive discussion at Amazon’s Australian Kindle users’ thread and at the Teleread site where Blue Tyson has detailed some remarkable pricing differentials for titles from Hachette, News Corporation’s Harper Collins and MacMillan.

The recent surge in e-book prices arose from an Apple-initiated agreement with major publishers designed to stymie Amazon’s dominance of the e-book market and its loss-leader approach to e-books, which saw many popular titles selling for $US9.99.

In 2010, when Apple launched the iPad, it convinced major publishers Hachette Livre, Harper Collins, Simon & Schuster, Penguin and Macmillan to begin switching to “agency pricing” whereby retailers must sell at a fixed price, but receive a large share of the price. The move was a deliberate attempt by Apple to destroy Amazon’s dominance of e-book sales.

The US Department of Justice and European Commission are now investigating the deal as a possible illegal agreement and at least one class action is under way in the US. The ACCC declined to say whether an investigation was currently under way here or if it had received complaints about e-book prices, despite some subscribers indicating they’d contacted the Commission.

As many Crikey subscribers explained, e-book title prices have soared in recent months. Many titles available from Amazon more than doubled from their previous $US9.99 price. Several people identified Stephen King’s new novel 11.22.63 from Hachette, which had been sold by Amazon for $US9.99, but is now $US17.51, after temporarily selling for over $US20. Subscribers reported a similar price spike effect for many titles, suggesting publishers had realised they had pushed agency prices too high.

Broadcaster Derryn Hinch contacted us about a similar spike with his own book. “Many Australians are paying far too much for e-books,” he said. “It ultimately hurts the authors. My latest, Human Headlines, was first listed at $16.95 with some sellers. I discovered that Amazon has a $9.99 policy and won’t push anything over that. I also talked to a senior editor who loves e-books but says she only ever looks at the ‘under 10 bucks’ lists. Mine’s now listed at $9.99. You hope the increased volume pays off.”

But worse, and not directly related to the agency pricing agreement, the Kindle edition of 11.22.63 sells more cheaply to US readers, at $US14.99. In both cases the price is set by the publisher. For once, though, Australians aren’t being ripped off any more than some other non-US customers: Canadians can only buy the King e-book for $US22.39 and UK users for $US15.62 — in all cases the prices are set by the publishers. The case for investing in a US billing address for Amazon purchases appears stronger than ever: last year Crikey explored international pricing differentials on a wide range of products, which revealed Australian consumers were being dudded compared to US purchasers.

The higher prices mean that, in what is becoming an increasingly common differential, the e-book version costs more than the hardcover version available via Amazon, albeit before delivery costs, undermining the entire format.

Speculation from industry observers is that the model is designed to both undermine Amazon, which publishers feel is “devaluing” books with is $US9.99 e-book strategy and becoming too powerful, and to prop up their print operations.

Of course, we’ve seen this strategy before, from other sections of the copyright industry, trying to protect their analog business models by refusing to provide online content in the form consumers want, encouraging the remorseless rise of filesharing, while digital natives move into their space. E-book piracy is a growing issue but plainly of a wholly different order of magnitude to music, movie and software piracy. And the irony of course is that in trying to undermine Amazon, Apple know perfectly well what it is doing, because it has played exactly the same role as Amazon, even more effectively, with music via iTunes.

The outcome is the same, though: industry treating consumers like mugs.

Hachette did not respond to Crikey’s request for comment by deadline.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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