"Late last week, the [United States] Justice Department warned Apple and five of the nation’s largest publishers that it was planning to sue them for price fixing. At issue is the agency model, a method of wholesaling e-books in which the publisher sets the retail price and the retailer takes a 30 percent cut. Most print and many e-books are sold under the traditional wholesale model, in which publishers sell books at a discounted price, and the retailer can resell them for whatever price it likes.
The unnamed player in this drama is Amazon, which had been selling e-books at a loss until two years ago, when the iPad came along and publishers used the emergence of the new device to pressure the online megaretailer into adopting the agency model, too. If Amazon wanted to sell e-books from the Big Six (as the six largest book publishers are called), it could no longer sell those titles for $9.99.
Publishers actually make less money with the agency model, so why have they insisted on it? The change was designed to limit the growing dominance of Amazon over American book retailing. On Monday, Scott Turow — the bestselling author of “Presumed Innocent” and other legal thrillers, and the president of the Authors Guild — posted a letter to members on the Guild’s web site. In it, he pronounced the Justice Department’s actions bad news for authors, 'grim news for everyone who cherishes a rich literary culture,' and (contrary to first impression) ominous for book consumers. I called him up to find out more."
— Laura Miller, Salon