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Apple price-fixing verdict may not result in cheaper e-books

Chris Ratcliffe | Bloomberg | Getty Images

A federal judge's ruling Wednesday that Apple conspired to raise e-book prices in violation of antitrust law isn't likely to mean cheaper e-books for consumers.

U.S. District Judge Denise Cote in Manhattan said Apple played a central role in a conspiracy with publishers to bypass Amazon's discount pricing structure and "raise, fix and stabilize" e-book prices. Cote said she will schedule a trial for damages claimed in the suit.

Apple spokesman Tom Neumayr said the company did not conspire to fix e-book pricing. "We've done nothing wrong and we will appeal the judge's decision," he said in a statement to CNBC.

(Read More: Judge: Apple Conspired to Raise E-Book Prices)

The Justice Department last year settled with the six major publishers—Macmillan, Random House, Lagardere SCA's Hachette Book Group, News Corp.'s HarperCollins Publishers, Pearson's Penguin Group (USA) and CBS's Simon & Schuster—over alleged collusion with Apple.

U.S. Assistant Attorney General Bill Baer said in a statement that the result is "a victory for millions of consumers who choose to read books electronically."

"Consumers are again benefiting from retail price competition and paying less for their e-books," Baer said. But in practice, they have been benefiting since well before Wednesday. Prices have been steadily trending downward since fall, as many of the publishers sign new agreements with book retailers that reflect the settlements reached with the DOJ. Publishers' new deals give e-booksellers such as Amazon and Barnes & Noble more flexibility to temporarily cut prices to boost sales.

As a result, the average price of a best-selling e-book has dropped from an average of $11.79 in October to $7.29 in early July, according to Digital Book World, an industry group.

The verdict against Apple isn't likely to move the needle further. "The publishers have already made their adjustments," said Peter Hildick-Smith, president of research firm Codex-Group. "I don't know that there will be any more implications on book pricing."

That's not to say consumers won't see more cheap e-books.

(Read More: Why Apple's Court Battle May Not Cut E-Book Prices)

"Apple has always been the third man in the market," behind Amazon and Barnes& Noble, he said. Now, Apple may have to use more competitive pricing to compete for e-book sales.

Sellers are also likely to continue offering more temporary price breaks on popular titles. Readers who can time purchases to the deals may be able to save 50 percent or more off the book's usual price.

For example, Amazon recently offered the Kindle version of "The Third Wheel (Diary of a Wimpy Kid, Book 7)" for $1.99, a 75 percent discount off its previous price of $7.94. To nail the timing for such flash sales, sites such as BookBub.com and eReaderIQ.com aggregate offers, noting freebies, daily deals and other big price drops.

(Read More: Apple's 'Zombie Apps' Cloud App Store's Birthday)

A growing number of self-published titles have also led to more low-priced offerings on the market. "Because e-books aren't subject to the same economic constraints as a print book, you can publish a few thousand words and sell it for 25 cents or even free," said Michael Norris, a senior analyst for Simba Information, a publishing market intelligence firm.

A May survey of self-published e-books from distributor Smashwords found that price points of $5 and up have "lost favor" over the past year. And increasingly, those cheap e-books prove popular enough to land on best-seller lists. "A year ago, that was really rare, two years ago, it was unheard of," said Mark Coker, Smashwords' founder.

But don't expect the free fall of e-book prices to continue.

Publishers' costs to produce e-books are lower compared to print books, but regularly cheap e-books don't leave much room for profit, Hildick-Smith said.

That's true for self-published titles, too. According to the Smashwords survey, last year's most popular price point was 99 cents; this year, it's $2.99. "High-quality authors do want to be compensated for their work," said Coker.

Falling sales of e-readers and the rise of tablet computers may further limit e-book price drops. (Barnes & Noble announced Monday that William Lynch resigned as chief executive officer, after a fourth-quarter earnings report in which it saw losses for its Nook division more than double from the previous year.)

(Read More: With the Nook's Future Uncertain, What to Buy)

"You may spend 18.5 hours a week on an iPad, but just an hour or two of that reading," said Hildick-Smith.

Consumers with e-readers read 50 percent of their materials in a print format and 50 percent digital, according to Codex-Group data. Among tablet owners, the split is closer to two-thirds print, one-third digital. That requires publishers to balance pricing so that readers who want a paperback are still enticed to buy, Norris said.

By CNBC.com's Kelli B. Grant. Follow her on Twitter @KelliGrant.

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