Originally Posted by Phone-UI-Guy
The point that keeps getting missed is in what Steve said in your quote. It was not guaranteed that the prices would go up, only that Apple would get the same sell through price as the competitors. It could have driven prices down, but the publishers pushed them up and that is why they settled. The publishers had pricing control and raised the prices.
Exactly. Apple only secured the right for Publishers not to undercut Apple's prices elsewhere. Apple didn't care what the pricepoint of ebooks was. Steve knew that if the price was the same people would opt for customer experience they could outmanoeuvre Amazon with in-app purchasing. Amazon would have to swallow the in-app purchasing fee or make customers pay outside of their app to comply with App store rules.
Once the publishers had signed with Apple they knew that they would either have to:
a) Allow Amazon to continue to loss lead and risk a breach of their agreement with Apple
b) Decline supply to Amazon and lose book sales
c) Renegotiate their agreement with Amazon to allow publishers to set prices
Since option c was the only one without significant downside for publishers and they could assume that each of them were signing into similar contract terms with Apple (and at around the same time) that all of the other publishing houses would be choosing option c.
Note that none of this requires overt collusion to achieve a synchronous outcome; only independent bodies functioning separately under the same set of assumptions.
At any point in time under the no favoured nations agreements any of the publishers can increase their market share relative to the other publishers by adjusting their retail prices across the board. Market forces will sort this out and we've already seen some movement in ebook prices. It is not surprising that the average price of an ebook has increased however, since Amazon was loss leading at the expense of the publishers other sales. Don't forget that this is an unsustainable practice that is ultimately bad for book consumers. No profit means no publishers, which means no books. Amazon had an agenda to drive sales of ebook readers (disclosure: I own one), nudge paper publishing out of the market, then allow authors to publish directly.
Collusion between publishers over an agreed price point is an entirely different matter, and one Apple neither has a mechanism to control, nor any specific benefit to derive from such activity.