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The government views its settlement with, and continuing litigation against, publishers and Apple over e-book pricing as a great victory for consumers. The overwhelming reaction in the book industry, however, is one of bewilderment, with many members believing that the government has no sense of how the book business really works or what the impact its actions will have long term. In his prepared remarks announcing the settlement and ongoing litigation, Attorney General Eric Holder declared the actions to be the "latest progress in protecting American consumers from anticompetitive harm, ensuring fairness in the marketplace, and making certain that cutting-edge technologies are available at the lowest possible price." Yet industry members outside of Amazon view the ruling as a dangerous decision that, in the long run, could mean less competition in the e-book and print book markets and fewer places to buy books.
What follows is a breakdown of how this pivotal moment affects the various industry players and consumers.
For the Settling Publishers
First, the agency model is not dead. This case was never about the agency model, but about how these five publishers got to the agency model. And the settlement is not designed to force fundamental reform on the e-book market, but to sanction publishers for their alleged improper conduct.
The three "settling publishers" (Hachette, Simon & Schuster, and HarperCollins) can still use the agency model, but for a …