ADVFN - Advanced Financial Network.
HOME» NYSE » P » PSO Stock Price » PSO Stock News

Pearson Share News

 Pearson Stock Price
PSO Stock Price
 Pearson Stock Chart
PSO Stock Chart
 Pearson Stock News
PSO Stock News
 Pearson Company Information
PSO Company Information
 Pearson Stock Trades
PSO Stock Trades

Amazon Rivalry A Backdrop For Apple's E-Book Troubles

By Ian Sherr and John Letzing Of DOW JONES NEWSWIRES SAN FRANCISCO -(Dow Jones)- Apple Inc. (AAPL) wanted to build an electronic book business to challenge Inc. (AMZN) and enhance the appeal of its iPad device, but the cost now seems high. The Justice Department on Wednesday filed suit against Apple and five book publishers, alleging they violated antitrust rules by conspiring to raise e-book prices. It's a case that can be traced to Apple's increasing rivalry with Amazon. The Seattle-based online retailer competes with the Cupertino, Calif., gadget giant in a number of ways: they both sell music, movies and, now, books. And Amazon has regularly undercut Apple's prices, even if by a few pennies. That competition has expanded as Amazon has grown to include selling devices, such as the Kindle e-book reader. Last year, Amazon released the $199 Kindle Fire tablet as a lower-priced rival to the iPad, which starts at $499. "Amazon really owns the entire value chain for publishing," ranging from devices to its own publishing imprints, said Allen Weiner, an analyst at Gartner Inc. (IT). "Apple does not have a comparable business." The Justice Department suit alleges that Apple and CBS Corp.'s (CBS) Simon & Schuster, News Corp.'s (NWS) HarperCollins, Lagardere S.C.A.'s (MMB.FR) Hachette, Pearson PLC's (PSO) Penguin Group and Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH, had signed agreements to sell books with set prices, rather than allowing retailers such as Amazon the freedom to offer sharp discounts. News Corp. owns Dow Jones & Co., publisher of this newswire, and The Wall Street Journal. The suit alleges Apple got publishers to agree on its pricing scheme by offering to break Amazon's typical e-book prices of $9.99, enabling them to see more revenue per title. Apple's model included a 30% cut on all sales through its App Store and its e-book store. But Apple's agreements allegedly also included rules that e-books would not be sold elsewhere for lower prices than in its store. "Apple realized that, as a result of the scheme, 'the customer' would "pay a little more,'" the Justice Department's suit said. Apple declined to comment. "It's pretty clear Apple didn't want to compete on price," said Steve Berman, a lawyer at Hagens Berman LLP, which is heading up a class action suit against Apple and book publishers in the U.S. District Court in the Southern District of New York. He added that book makers had an incentive to join Apple's alleged scheme. "None of them were happy with Amazon's cost-cutting method of doing business," he said. For its part, pricing has been key to Amazon's broader strategy of delivering relatively-low-cost entertainment across its own devices. In the book market, Amazon's size allowed it undersell traditional sellers, under a wholesale pricing scheme that enables retailers to pay publishers about half of a book's cover price while setting discounts on the remainder. Amazon's advantages were compounded in the many states where Amazon has also not been required to collect sales tax. That helped fuel the dramatic growth at Amazon, which saw annual revenue more than double to $34.2 billion in 2010, the year in which Apple allegedly struck a pricing deal with publishers, from $14.8 billion in 2007, when it had released the Kindle and started offering a wide selection of e-books. Apple's alleged price-fixing agreement upended Amazon's model, and forced it to start raising e-book prices by about three to five dollars. In early 2010, following discussions with Macmillan over the publisher's switch to a new model that would raise prices, Amazon advised its customers that despite its protests to Macmillan, "we will have to capitulate." Last month, as reports of the possible legal action against Apple and publishers related to e-book pricing surfaced, a commenter in an Amazon Kindle forum wrote, "It's nice to finally know why the Kindle prices went up," adding, "As much as I love Apple products, I plan on boycotting them now." An Amazon spokesman said in a statement Wednesday, "This is a big win for Kindle owners, and we look forward to being allowed to lower prices on more Kindle books." --Jessica E. Vascellaro contributed to this report.

Stock News for Pearson (PSO)
12/04/201416:04:18Barnes & Noble, Microsoft Terminate Nook Partnership -- 6th Update
12/04/201409:30:38Barnes & Noble, Microsoft Terminate Nook Partnership -- Update
10/24/201412:30:19LONDON MARKETS: Oil Stocks Knock FTSE Lower For First Time In...
10/24/201407:17:37LONDON MARKETS: U.K. Stocks Slide Amid Ebola Fears
10/24/201403:43:22Pearson Sales Rise; CFO Robin Freestone to Depart
09/16/201414:32:31EUROPE MARKETS: Air France Shares Grounded, Investors Bet On...
09/16/201413:15:15LONDON MARKETS: SABMiller Shares Drag, Pearson Perks Up In London...
09/07/201414:05:19Mobile' Schools Use Technology to Break Free of the Classroom
07/25/201410:15:39EUROPE MARKETS: BSkyB, Vodafone Among European Stocks On The...
07/25/201406:06:37Pearson Swings to Profit in 1st Half
07/25/201405:01:15Pearson Swings to Profit in 1st Half; Confirms 2014 Earnings...
04/25/201411:16:33Pearson: Third of Voters Oppose Directors' Pay Deal at AGM
04/25/201404:20:08Pearson Upbeat As Sales Rise
02/28/201417:03:34ADR Shares End Mixed; Pearson Shares Active
02/28/201412:41:09LONDON MARKETS: FTSE Rises 4.6% On The Month; Pearson Slides
02/28/201409:54:38LONDON MARKETS: FTSE Trims Monthly Gain To 4.5% As Pearson Slides
02/28/201409:45:33EUROPE MARKETS: European Stocks Drop After Euro-zone Inflation...
02/28/201409:42:18EUROPE MARKETS: European Stocks Slip Ahead Of Inflation Data
01/27/201412:18:14LONDON MARKETS: BG Leads FTSE 100 To Five-week Low After Profit...
01/23/201412:50:01LONDON MARKETS: Pearson, Miners Lead FTSE 100 Lower

Pearson and other New York Stock Exchange stock quotes are delayed by at least 20 minutes.
All other stock price data is delayed by at least 15 minutes unless otherwise stated.
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
Contact Us | Copyright 1999-2007 ADVFN PLC. | Privacy Policy | Investment Warning | Data accreditations | Investor Relations