Think e-books are overpriced? Apple and Amazon may be price fixing

Apple has been in the walled garden business for a long time with the Macintosh, iPhone and most recently the iPad. In some ways Amazon seems content to follow with its most recent e-reader, the Kindle 3. Both companies are trying to build walls around their customers by offering them unique features, and device features are great but the real long term cost arrives with purchasing e-books. Unfortunately for consumers, prices on e-books are for the most part flat right now – where is the competition?

Connecticut's Attorney General Richard Blumenthal wants to know the answer to that question and he’s asked lawyers from both Apple and Amazon for information on their deals with e-book publishers. The biggest concern revolves around “most favored nation” clauses which block publishers from offering discounts to other e-book distributors.

If such clauses are part of the contracts between Amazon, Apple and e-book publishers then that would help to explain why prices are so static. When Amazon first introduced the Kindle it fought to enforce a regular price of $9.99 for each e-book but that arrangement disintegrated with the debut of Apple’s iPad. The book publishing industry is anxious to avoid the pricing trap the music industry finds itself in right now with iTunes.

“Blumenthal said his office surveyed e-book prices for several bestsellers offered by Amazon and Apple, as well as competitors Borders Group and Barnes & Noble, and found prices were identical across all four companies,” according to CNNMoney.

Looking at the top 5 sellers on nook.com today: The Girl Who Kicked the Hornet's Nest (Millennium Trilogy Series #3), The Girl Who Played with Fire (Millennium Trilogy Series #2), Charlie St. Cloud, and Eat, Pray, Love, they all have the same price on Amazon’s Kindle store.

Another force at play here is the nature of the Internet, which makes it very easy for shoppers to price check an item before they buy it – unless they’re trapped inside a walled garden.