It looks like Apple is going to be paying a grand total of US$400 million to 23 million consumers, in a settlement that will see the tech giant reimbursing readers who bought e-books from its iBooks online store.
Apple will pay a total of US$450 million (the extra US$50 million is for legal fees) to resolve claims that they conspired with major publishers, including Penguin Group, HarperCollins, Simon & Schuster, Hachette, and Macmillan to fix e-book prices.
While this case is definitely one of the more high profile ones, it’s not the first litigation suit brought against vendors in the e-book sphere regarding pricing strategies. Almost all the publishing houses are continuously handling similar claims against e-retailers and other entities involved in the e-book value chain.
It turns out that the Global E-book Market is actually a cesspool of corruption, price fixing, and morally questionable business choices. And yet, despite the legal challenges, the market is still projecting decent growth with a CAGR of 17.40 percent from 2015-2019. This is mostly due to the fact that consumers are armed to the teeth with more devices than ever before, all of which can be used to access and read e-books.
However, the market continues to be plagued by a few key challenges that, while not critical, are still serious enough to stand in the way of more impressive growth through the projected period.
Difficulty Creating New Revenue Streams
The evolution of e-books has resulted in leading publishing houses going digital along with their existing print business.
E-book revenue currently accounts for approximately 15 percent of the total revenue for the five main publishing houses. However, the frequency and range of discounts on e-books is much higher than on their print counterparts, which ultimately hampers profit margins.
Additionally, there has been an influx of indie authors and publishers, largely promoted by retailers like Amazon. While this is generally good news for the literary landscape and for consumers (indie publishing circumvents the distribution chain, so these books are much cheaper than traditional published books and even other e-books) it is hampering e-book business revenue for global publishing houses.
The large players can’t continue their business solely on cheap digital revenues. As a result, publishers are looking to launch businesses in areas such as conferences and education to generate digital reading revenues.
However, such initiatives require substantial investment and the ROI is not guaranteed, which is creating a bit of a murky outlook in this segment.
Conflict between Publishers and Retailers
There are ongoing conflicts between publishers and retailers over issues like e-book pricing (see aforementioned Apple case), promotional offers and discounts. Another example is the recent battle between Amazon and Hachette, in which Amazon is accused of delaying delivery of Hachette titles and not offering discounts for many of its titles.
Market Regulations
Market regulations imposed by governing bodies restrict publishers and retailers from formulating unethical strategies to enhance their revenue. Yes, not being allowed to act in an ethically wrong way is actually something standing in the way of market growth.
Regulations in various countries are also stopping publishers and retailers from breaking into foreign markets, which has limited the scope of the e-book market.
