Social Dinner or Conspiracy?

In a recent New York Times article, both John Makinson, CEO of Penguin Group USA, and John Sargent, CEO of Macmillan, countered conspiracy charges leveled against them, three other publishers, and Apple. Specifically, that they conspired over a series of dinners in fancy restaurants.

According to the lawsuit filed in April, Penguin Group USA, Macmillan, Simon & Schuster, HarperCollins, and the Hachette Book Group all colluded with Apple to coordinate the pricing of their books. According to the New York Times, the plan would have limited price competition  “and caused consumers to pay tens of millions more for e-books than they would have otherwise. ” Three of the publishing houses—Simon & Schuster, HarperCollins and the Hachette Book Group—have already settled despite denying any wrongdoing.

Both Sargent and Makinson claim the dinners were social events.

E-books are a big deal. While their forms and platforms will change with innovations in technology, electronic and digital books are here to stay. According to a December 2011 forecast by GigaOm writer Michael Wolf,the United States e-book marketplace swelled from a $2 billion industry in 2011 to over $5.2 billion by 2016.

For the struggling publishing industry, this new medium allows companies to benefit from cheaper materials and the chance to ditch some of the more out-dated business practices (like pulping overstock). But Amazon’s $9.99 pricing strategy—leading to comparisons between the e-tailer and Walmart—have cut into these potential profit margins. Some publishers have gone so far as to call the Amazon strategy “predatory” and “monopolistic.”

While very little has been decided in this case (aside from the three publishing houses that have settled), it’s clear this case and its ramifications will be around as long as the e-book.

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