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Will Probe Cut E-Book Prices?

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American regulators this week confirmed that they have joined forces with the European Union in an investigation of e-book pricing – but experts say the inquiry’s impact on prices may be limited.

Government intervention may encourage the market to act first, experts say. “E-book prices are already pretty low,” says Michael Norris, senior analyst and editor of book publishing for market research and forecasting firm Simba Information. “The market can decide if a book is overpriced.” Seth Rabinowtiz, partner at management consulting firm Silicon Associates. “The government action will encourage the market to find a lower margin solution on its own,” he says.

To be sure, the investigation is in its early stages, and experts say the potential impact is unclear. In a statement, the Department of Justice said, “Sharis Pozen [the Justice Department's acting antitrust chief] confirmed at her hearing today that the antitrust division is investigating the possibility of anticompetitive practices involving e-book sales. She said we have been working with the European Union and state Attorney Generals.”

The EU has launched an investigation in conjunction with the U.S. It’s looking at five publishers and Apple over the way they sell e-books and what it describes as their “agency pricing model,” The inquiry focuses on five publishers that have agreed to the same pricing scheme and then let retailers act as agents for each sale, taking 30% and returning 70% to the publisher. (Apple declined to comment.)

Other says that e-books are still priced too high. Many e-books are still only slightly less than paper books despite the lack of printing and distribution costs, according to BlogKindle.com, an unofficial website for Amazon’s Kindle. That site lists prices for a typical e-book at around $12 across a range of countries. Nyquist says this will create a problem for publishers of e-books. “It’s clear that e-book pricing will come down,” he says.

However, there are also free and lower-priced alternatives to $12 e-books. Amazon, Barnes & Noble, Google Books and other sites have thousands of out-of-copyright titles available for free. Project Gutenberg, a site devoted to free e-books, offers 36,000 titles. Failing that, Rabinowtiz says, “There’s always eBay.”

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  • Pay Dirt examines the millions of consumer decisions Americans make every day: What to buy, how much to pay, whether to rave or complain. Lead written by Quentin Fottrell, the blog examines these interactions, providing readers with news, insight and tips on shopping, spending, customer service, and companies that do right – and wrong – by their customers. Send items, questions and comments to quentin.fottrell@dowjones.com or tweet @SMPayDirt.

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