Arik Hesseldahl

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Kindle Users to Get Refunds and Lower Prices on E-Books After Settlement

Good news Kindle owners: If you’re the owner of an Amazon Kindle and you bought e-books from certain publishers in the last few years, you’re getting a refund on past purchases, and future purchases will be a little cheaper.

But don’t get too excited, unless you’ve been a really heavy buyer. In an email to Kindle customers today, the retailer said that a legal settlement between the attorneys general of most of the states in the union and publishers including Hachette, Simon & Schuster and Harper Collins (which, like this Web site, is owned by News Corp.), entitles consumers to refunds of between 30 cents and $1.32 on each book purchased.

Additionally, the publishers will have less power to set future prices, which means that the prices on e-books for the Kindle may be a little lower in the near future.

Collectively, the three publishers agreed to pay $69 million to settle charges that they were fixing prices on electronic books. The settlement must still be approved by the court, and a final hearing is scheduled for February of next year.

This all came about when the U.S. Department of Justice decided to sue Apple and several publishers in a federal court in New York, alleging that they colluded to inflate prices on electronic books as part of a plan to fight back against Amazon’s dominance of the e-book business. There’s a lot of detail in the original complaint via The Wall Street Journal here, and it’s worth reading The Journal’s story covering the initial filing of the suit from April.

Essentially, the DOJ claimed that the five publishers named in the suit banded together to boost the prices on best-selling books on the iTunes store to $12.99 or $14.99, and then agreed to force the same pricing structure onto Amazon. Attorneys general from many states quickly followed with a suit of their own.

The three publishers named today had agreed to settle the case right away, rather than bother with time-consuming and expensive litigation. Two others, Macmillan and Pearson, haven’t settled. Amazon was never a partner to the suit, but now is in the enviable position of letting Kindle customers know that they’re getting both a refund and probably better pricing.

At $69 million, the settlement fund is relatively small, amounting to a little less than 3.5 percent of the $2 billion worth of e-books sold last year, and even smaller when compared to the $11 billion worth of old-fashioned paper books sold last year.

The federal case is still ongoing, and as you can see from this collection of documents on the DOJ Antitrust Division site, Apple is still fighting the issue. At the time the complaint was filed, it called the accusation of collusion “simply not true,” and said that publishers, just like developers on the App Store, have been allowed to set their own prices.

Anyway, here’s the text of the email Amazon sent out today. If you’re one of the lucky ones getting a refund, you don’t have to do anything. After the court approves the settlement, it will just appear in your account.

Dear Kindle Customer,

We have good news. You are entitled to a credit for some of your past e-book purchases as a result of legal settlements between several major e-book publishers and the Attorneys General of most U.S. states and territories, including yours. You do not need to do anything to receive this credit. We will contact you when the credit is applied to your Amazon.com account if the Court approves the settlements in February 2013.

Hachette, Harper Collins, and Simon & Schuster have settled an antitrust lawsuit about e-book prices. Under the proposed settlements, the publishers will provide funds for a credit that will be applied directly to your Amazon.com account. If the Court approves the settlements, the account credit will appear automatically and can be used to purchase Kindle books or print books. While we will not know the amount of your credit until the Court approves the settlements, the Attorneys General estimate that it will range from $0.30 to $1.32 for every eligible Kindle book that you purchased between April 2010 and May 2012. Alternatively, you may request a check in the amount of your credit by following the instructions included in the formal notice of the settlements, set forth below. You can learn more about the settlements here:
www.amazon.com/help/agencyebooksettlements

In addition to the account credit, the settlements impose limitations on the publishers’ ability to set e-book prices. We think these settlements are a big win for customers and look forward to lowering prices on more Kindle books in the future.

Thank you for being a Kindle customer.

The Amazon Kindle Team

(Image courtesy of cheezburger.com)


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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work